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)
Scott C. Goebel, 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 |
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Date of reporting period: | July 31, 2008 |
Item 1. Reports to Stockholders
Fidelity® Ginnie Mae Fund
Fidelity Intermediate
Government Income Fund
Annual Report
July 31, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Fidelity Ginnie Mae Fund | ||
| Performance | |
| Management's Discussion of Fund Performance | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Fidelity Intermediate Government Income Fund | ||
| Performance | |
| Management's Discussion of Fund Performance | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Notes | Notes to the financial statements | |
Report of Independent Registered Public Accounting Firm |
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Trustees and Officers |
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Distributions |
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Board Approval of Investment Advisory Contracts and Management Fees |
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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 LLC 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:
Domestic and international securities markets have struggled thus far in 2008. High-grade fixed-income investments produced modestly positive results, but many stock benchmarks suffered double-digit losses through the first half of this year. Financial markets are always unpredictable, but 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, 2008 to July 31, 2008).
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
| Beginning | Ending | Expenses Paid |
Ginnie Mae Fund |
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Actual | $ 1,000.00 | $ 1,003.50 | $ 2.24 |
HypotheticalA | $ 1,000.00 | $ 1,022.63 | $ 2.26 |
Intermediate Government Income Fund |
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Actual | $ 1,000.00 | $ 1,004.50 | $ 2.24 |
HypotheticalA | $ 1,000.00 | $ 1,022.63 | $ 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 182/366 (to reflect the one-half year period).
| Annualized |
Ginnie Mae Fund | .45% |
Intermediate Government Income Fund | .45% |
Annual Report
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, if any) 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, 2008 | Past 1 | Past 5 | Past 10 |
Fidelity® Ginnie Mae Fund | 7.27% | 4.45% | 5.24% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity® Ginnie Mae Fund on July 31, 1998. 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
Bonds with less credit risk generally produced higher returns for investment-grade debt during the 12 months ending July 31, 2008. In that span, the Lehman Brothers® U.S. Aggregate Index - a proxy for high-quality, fixed-rate, taxable bonds - returned 6.15%. Treasuries did the best, buoyed by their reputation as the safest haven in turbulent times, with the Lehman Brothers U.S. Treasury Index up 8.99% during the period. Agency bonds, with their perceived "implicit" government backing, also did well, as the Lehman Brothers U.S. Agency Index rose 7.79%. Mortgage-backed securities ended the period with a gain of 6.96%, according to the Lehman Brothers U.S. Mortgage-Backed Securities Index, while the Lehman Brothers U.S. Credit Index - a measure of high-quality corporate debt - finished with a modest 2.85% increase. The asset-backed sector - home to weak-performing subprime debt - had negative results, as reflected in the 2.69% loss of the Lehman Brothers U.S. Fixed-Rate Asset-Backed Securities Index.
During the past 12 months, the fund returned 7.27%, outpacing the 7.12% gain of the Lehman Brothers GNMA Index. Security selection - which in large measure was predicated on our view that mortgage prepayments would slow even if interest rates declined - bolstered the fund's performance relative to the index. In particular, our larger-than-index exposure to higher-coupon and "seasoned" mortgage securities - meaning those that have not been refinanced despite borrowers being presented with opportunities to do so at lower interest rates - was rewarded. Each segment kept high coupon payments in place for a longer period of time and also enjoyed some price appreciation due to strengthening investor demand. We also gained ground by holding a portion of our higher-coupon and seasoned mortgages as collateralized mortgage obligations (CMOs), which did well when investors sought them out for their resistance to prepayments. We also enjoyed a lift from my use of "to be announced" (TBA) securities, a term that means the actual mortgage-backed bond to be delivered is not designated at the time the trade is made. An out-of-benchmark position in hybrid adjustable-rate mortgage securities (ARMs) benefited us because they generally outpaced the index when adjusted for their lower interest-rate sensitivity. With the benefit of 20/20 hindsight, owning more of these types of securities may have been beneficial given how well they performed, but I was mindful of the importance of diversification.
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 (Unaudited)
Coupon Distribution as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments |
Less than 4% | 2.0 | 3.0 |
4 - 4.99% | 5.7 | 10.9 |
5 - 5.99% | 43.7 | 44.3 |
6 - 6.99% | 35.2 | 33.7 |
7 - 7.99% | 4.7 | 4.4 |
8% and over | 1.0 | 1.1 |
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, 2008 | ||
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| 6 months ago |
Years | 5.4 | 5.0 |
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, 2008 | ||
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| 6 months ago |
Years | 4.5 | 3.1 |
Duration shows how much a bond fund's price fluctuates with changes in comparable interest rates. If rates rise 1%, for example, a fund with a five-year duration is likely to lose about 5% of its value. Other factors also can influence a bond fund's performance and share price. Accordingly, a bond fund's actual performance may differ from this example. |
Asset Allocation (% of fund's net assets) | |||||||
As of July 31, 2008* A | As of January 31, 2008** B | ||||||
![]() | Mortgage |
| ![]() | Mortgage |
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![]() | CMOs and Other Mortgage Related Securities 16.4% |
| ![]() | CMOs and Other Mortgage Related Securities 20.0% |
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![]() | Asset-Backed |
| ![]() | Asset-Backed |
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![]() | Short-Term |
| ![]() | Short-Term |
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* GNMA Securities | 98.8% |
| ** GNMA Securities | 98.2% |
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A Futures and Swaps | (2.6)% |
| B Futures and Swaps | (9.7)% |
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† Short-Term Investments and Net Other Assets are not included in the pie chart. |
Annual Report
Fidelity Ginnie Mae Fund
Investments July 31, 2008
Showing Percentage of Net Assets
U.S. Government Agency - Mortgage Securities - 93.1% | ||||
| Principal Amount (000s) | Value (000s) | ||
Fannie Mae - 5.7% | ||||
3.613% 9/1/33 (e) | $ 1,068 | $ 1,079 | ||
3.732% 6/1/33 (e) | 3,520 | 3,511 | ||
3.737% 6/1/33 (e) | 1,117 | 1,119 | ||
3.741% 10/1/33 (e) | 319 | 321 | ||
3.809% 10/1/33 (e) | 2,955 | 2,971 | ||
3.901% 6/1/33 (e) | 3,139 | 3,140 | ||
3.908% 9/1/33 (e) | 2,857 | 2,909 | ||
3.953% 8/1/33 (e) | 1,373 | 1,390 | ||
4.002% 4/1/34 (e) | 3,587 | 3,616 | ||
4.006% 6/1/34 (e) | 6,996 | 6,992 | ||
4.108% 5/1/34 (e) | 3,625 | 3,653 | ||
4.11% 4/1/34 (e) | 4,400 | 4,419 | ||
4.157% 9/1/33 (e) | 2,278 | 2,297 | ||
4.164% 8/1/34 (e) | 1,740 | 1,751 | ||
4.165% 12/1/33 (e) | 2,722 | 2,762 | ||
4.168% 10/1/33 (e) | 3,189 | 3,234 | ||
4.205% 11/1/34 (e) | 3,132 | 3,154 | ||
4.235% 1/1/34 (e) | 852 | 861 | ||
4.259% 10/1/33 (e) | 134 | 135 | ||
4.284% 3/1/33 (e) | 163 | 165 | ||
4.391% 6/1/35 (e) | 1,187 | 1,188 | ||
4.408% 5/1/35 (e) | 1,888 | 1,900 | ||
4.41% 10/1/34 (e) | 1,700 | 1,714 | ||
4.412% 4/1/33 (e) | 668 | 669 | ||
4.42% 6/1/35 (e) | 1,322 | 1,331 | ||
4.424% 6/1/35 (e) | 964 | 967 | ||
4.451% 5/1/34 (e) | 3,854 | 3,874 | ||
4.473% 7/1/35 (e) | 1,162 | 1,163 | ||
4.499% 3/1/35 (e) | 1,339 | 1,352 | ||
4.545% 5/1/35 (e) | 910 | 917 | ||
4.599% 10/1/35 (e) | 84 | 85 | ||
4.618% 8/1/35 (e) | 3,756 | 3,828 | ||
4.628% 8/1/35 (e) | 1,578 | 1,596 | ||
4.644% 8/1/35 (e) | 1,759 | 1,778 | ||
4.669% 8/1/34 (e) | 5,458 | 5,485 | ||
4.717% 2/1/36 (e) | 4,345 | 4,396 | ||
4.727% 6/1/33 (e) | 100 | 101 | ||
4.731% 3/1/35 (e) | 1,242 | 1,251 | ||
4.749% 1/1/35 (e) | 1,266 | 1,277 | ||
4.774% 12/1/34 (e) | 349 | 353 | ||
4.776% 4/1/35 (e) | 131 | 132 | ||
4.791% 10/1/35 (e) | 788 | 797 | ||
U.S. Government Agency - Mortgage Securities - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Fannie Mae - continued | ||||
4.799% 9/1/36 (e) | $ 2,804 | $ 2,855 | ||
4.821% 9/1/34 (e) | 1,433 | 1,449 | ||
4.837% 10/1/34 (e) | 3,332 | 3,366 | ||
4.844% 9/1/34 (e) | 1,636 | 1,655 | ||
4.847% 1/1/35 (e) | 1,119 | 1,131 | ||
4.852% 9/1/34 (e) | 544 | 551 | ||
4.863% 12/1/35 (e) | 7,390 | 7,488 | ||
4.873% 8/1/34 (e) | 234 | 235 | ||
4.896% 3/1/33 (e) | 920 | 931 | ||
4.918% 8/1/34 (e) | 2,294 | 2,320 | ||
4.942% 9/1/34 (e) | 400 | 404 | ||
4.977% 1/1/35 (e) | 6,357 | 6,401 | ||
5.012% 7/1/34 (e) | 144 | 145 | ||
5.067% 3/1/34 (e) | 5,324 | 5,379 | ||
5.089% 9/1/34 (e) | 301 | 304 | ||
5.1% 7/1/35 (e) | 1,543 | 1,561 | ||
5.127% 8/1/33 (e) | 378 | 381 | ||
5.185% 3/1/35 (e) | 162 | 165 | ||
5.243% 11/1/36 (e) | 1,141 | 1,163 | ||
5.245% 7/1/35 (e) | 138 | 139 | ||
5.298% 12/1/34 (e) | 416 | 421 | ||
5.328% 1/1/36 (e) | 3,797 | 3,850 | ||
5.424% 11/1/36 (e) | 3,738 | 3,791 | ||
5.5% 11/1/13 to 3/1/20 (d) | 13,373 | 13,545 | ||
5.502% 6/1/47 (e) | 800 | 815 | ||
5.513% 3/1/35 (e) | 84 | 85 | ||
5.591% 4/1/37 (e) | 4,051 | 4,127 | ||
5.708% 12/1/35 (e) | 3,840 | 3,882 | ||
5.759% 4/1/36 (e) | 4,290 | 4,382 | ||
5.802% 1/1/35 (e) | 4,904 | 4,900 | ||
5.843% 3/1/36 (e) | 3,446 | 3,497 | ||
5.906% 5/1/36 (e) | 3,261 | 3,334 | ||
6.061% 1/1/35 (e) | 4,103 | 4,122 | ||
6.102% 3/1/33 (e) | 135 | 137 | ||
6.125% 2/1/33 (e) | 278 | 278 | ||
6.398% 7/1/36 (e) | 6,840 | 7,038 | ||
6.5% 10/1/17 to 7/1/32 | 12,813 | 13,309 | ||
7% 11/1/16 to 3/1/17 | 1,612 | 1,687 | ||
7.5% 7/1/09 to 4/1/17 | 1,239 | 1,288 | ||
8.5% 12/1/27 | 198 | 215 | ||
9.5% 9/1/30 | 463 | 517 | ||
10.25% 10/1/18 | 9 | 10 | ||
U.S. Government Agency - Mortgage Securities - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Fannie Mae - continued | ||||
11.5% 5/1/14 to 7/1/15 | $ 23 | $ 26 | ||
12.5% 11/1/13 to 7/1/16 | 51 | 57 | ||
13.25% 9/1/11 | 28 | 31 | ||
| 199,000 | |||
Freddie Mac - 3.3% | ||||
3.758% 10/1/33 (e) | 3,781 | 3,827 | ||
3.789% 5/1/35 (e) | 2,980 | 2,989 | ||
4.121% 7/1/35 (e) | 2,351 | 2,369 | ||
4.21% 6/1/33 (e) | 3,915 | 3,920 | ||
4.221% 1/1/35 (e) | 4,985 | 5,044 | ||
4.301% 6/1/33 (e) | 4,168 | 4,185 | ||
4.336% 6/1/33 (e) | 4,126 | 4,130 | ||
4.35% 6/1/33 (e) | 1,427 | 1,422 | ||
4.458% 3/1/34 (e) | 5,007 | 5,035 | ||
4.806% 5/1/35 (e) | 784 | 789 | ||
4.819% 5/1/35 (e) | 3,068 | 3,089 | ||
4.882% 10/1/35 (e) | 2,050 | 2,080 | ||
5.013% 10/1/36 (e) | 2,029 | 2,071 | ||
5.212% 12/1/35 (e) | 1,898 | 1,918 | ||
5.27% 11/1/35 (e) | 1,920 | 1,936 | ||
5.341% 10/1/35 (e) | 6,330 | 6,439 | ||
5.415% 3/1/37 (e) | 636 | 646 | ||
5.5% 11/1/17 to 1/1/25 | 11,104 | 11,057 | ||
5.601% 3/1/35 (e) | 7,017 | 7,090 | ||
5.64% 4/1/36 (e) | 2,034 | 2,069 | ||
5.804% 11/1/36 (e) | 6,668 | 6,797 | ||
5.832% 5/1/37 (e) | 673 | 685 | ||
5.886% 7/1/36 (e) | 4,026 | 4,058 | ||
6.366% 8/1/34 (e) | 931 | 932 | ||
6.491% 3/1/33 (e) | 86 | 87 | ||
6.594% 10/1/36 (e) | 10,775 | 11,084 | ||
6.734% 9/1/36 (e) | 17,530 | 17,975 | ||
8.5% 2/1/09 to 6/1/25 | 47 | 50 | ||
9% 5/1/09 to 4/1/21 | 38 | 40 | ||
9.5% 7/1/30 | 73 | 83 | ||
10% 1/1/09 to 11/1/19 | 187 | 206 | ||
10.25% 2/1/09 to 11/1/16 | 33 | 35 | ||
10.5% 5/1/10 | 1 | 1 | ||
11.25% 2/1/10 | 4 | 4 | ||
12% 5/1/10 to 6/1/15 | 46 | 51 | ||
12.5% 11/1/12 to 5/1/15 | 58 | 65 | ||
U.S. Government Agency - Mortgage Securities - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Freddie Mac - continued | ||||
13% 5/1/14 to 11/1/14 | $ 9 | $ 10 | ||
13.5% 1/1/13 to 12/1/14 | 5 | 5 | ||
| 114,273 | |||
Government National Mortgage Association - 84.1% | ||||
3.5% 3/20/34 | 1,081 | 957 | ||
3.5% 5/20/35 (e) | 1,554 | 1,530 | ||
3.5% 6/20/35 (e) | 1,477 | 1,459 | ||
3.625% 3/20/35 (e) | 687 | 680 | ||
3.75% 4/20/35 (e) | 549 | 543 | ||
4% 11/20/33 | 1,358 | 1,202 | ||
4% 4/20/35 (e) | 7,968 | 7,864 | ||
4% 5/20/35 (e) | 8,851 | 8,735 | ||
4.5% 7/20/33 to 4/20/34 | 47,862 | 44,164 | ||
4.5% 5/20/34 (e) | 1,014 | 1,027 | ||
4.75% 4/20/34 (e) | 15,111 | 14,945 | ||
4.75% 6/20/34 (e) | 14,648 | 14,486 | ||
4.75% 10/20/35 (e) | 3,930 | 3,932 | ||
5% 8/15/18 to 6/15/38 (d) | 393,792 | 382,661 | ||
5% 4/20/37 (e) | 39,405 | 39,797 | ||
5% 8/1/38 (a)(b) | 200 | 193 | ||
5% 8/20/38 (a)(b) | 100 | 97 | ||
5% 8/20/38 (a)(b) | 200 | 193 | ||
5.25% 7/20/34 (e) | 737 | 740 | ||
5.25% 7/20/34 (e) | 2,282 | 2,300 | ||
5.5% 12/20/18 to 3/15/38 (c) | 379,031 | 378,040 | ||
5.5% 9/20/34 (e) | 3,352 | 3,368 | ||
5.5% 6/20/35 (e) | 2,681 | 2,678 | ||
5.5% 8/1/38 (a) | 6,000 | 5,956 | ||
5.5% 8/1/38 (a) | 39,000 | 38,711 | ||
5.5% 8/1/38 (a) | 17,000 | 16,874 | ||
5.5% 8/1/38 (a) | 3,000 | 2,978 | ||
5.5% 8/1/38 (a) | 3,000 | 2,978 | ||
5.5% 8/1/38 (a) | 50,000 | 49,629 | ||
5.5% 8/1/38 (a) | 15,000 | 14,889 | ||
5.5% 8/1/38 (a)(b) | 95,000 | 93,902 | ||
5.5% 8/1/38 (a) | 25,000 | 24,815 | ||
5.5% 8/1/38 (a) | 15,000 | 14,827 | ||
5.5% 8/1/38 (a) | 85,000 | 84,017 | ||
5.5% 8/1/38 (a) | 36,000 | 35,584 | ||
5.5% 8/1/38 (a) | 25,000 | 24,711 | ||
5.5% 8/1/38 (a) | 83,000 | 82,040 | ||
U.S. Government Agency - Mortgage Securities - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Government National Mortgage Association - continued | ||||
5.5% 8/1/38 (a) | $ 29,000 | $ 28,665 | ||
5.5% 8/1/38 (a) | 27,200 | 26,998 | ||
5.5% 8/20/38 (a) | 20,000 | 19,852 | ||
5.5% 8/20/38 (a) | 15,000 | 14,827 | ||
5.5% 8/20/38 (a) | 3,000 | 2,965 | ||
5.5% 8/20/38 (a) | 400 | 397 | ||
5.5% 8/20/38 (a) | 500 | 494 | ||
5.5% 8/20/38 (a) | 200 | 199 | ||
5.5% 8/20/38 (a) | 500 | 494 | ||
5.5% 8/20/38 (a) | 200 | 199 | ||
5.5% 9/1/38 (a) | 11,000 | 10,838 | ||
5.5% 9/1/38 (a) | 3,000 | 2,968 | ||
5.5% 9/1/38 (a) | 25,000 | 24,736 | ||
5.5% 9/1/38 (a) | 31,000 | 30,673 | ||
5.75% 8/20/35 (e) | 613 | 623 | ||
6% 8/15/17 to 6/20/38 | 919,601 | 936,032 | ||
6% 8/1/38 (a) | 2,000 | 2,020 | ||
6% 8/1/38 (a)(b) | 5,000 | 5,049 | ||
6% 8/20/38 (a) | 300 | 303 | ||
6% 8/20/38 (a) | 300 | 303 | ||
6% 8/20/38 (a) | 200 | 202 | ||
6% 8/20/38 (a) | 400 | 404 | ||
6.5% 4/15/23 to 11/20/37 | 241,818 | 252,884 | ||
6.5% 8/1/38 (a)(b) | 3,000 | 3,092 | ||
6.5% 8/20/38 (a) | 100 | 103 | ||
6.5% 8/20/38 (a) | 200 | 206 | ||
6.5% 8/20/38 (a) | 100 | 103 | ||
7% 10/20/16 to 9/20/34 | 94,666 | 100,321 | ||
7.25% 9/15/27 | 211 | 225 | ||
7.395% 6/20/25 to 11/20/27 | 1,634 | 1,737 | ||
7.5% 5/15/17 to 9/20/32 | 37,377 | 39,912 | ||
8% 8/15/18 to 7/15/32 | 9,633 | 10,386 | ||
8.5% 9/15/09 to 2/15/31 | 3,215 | 3,484 | ||
9% 2/15/09 to 5/15/30 | 1,402 | 1,550 | ||
9.5% 12/20/15 to 4/20/17 | 485 | 535 | ||
10.5% 1/15/14 to 5/15/19 | 611 | 687 | ||
13% 2/15/11 to 1/15/15 | 98 | 111 | ||
13.5% 7/15/10 to 1/15/15 | 15 | 17 | ||
| 2,928,096 | |||
TOTAL U.S. GOVERNMENT AGENCY - MORTGAGE SECURITIES (Cost $3,240,733) | 3,241,369 | |||
Asset-Backed Securities - 0.1% | ||||
| Principal Amount (000s) | Value (000s) | ||
Fannie Mae Grantor Trust Series 2005-T4 Class A1C, 2.6113% 9/25/35 (e) | $ 2,776 | $ 2,762 | ||
Collateralized Mortgage Obligations - 16.0% | ||||
| ||||
U.S. Government Agency - 16.0% | ||||
Fannie Mae: | ||||
floater Series 2007-95 Class A1, 2.7113% 8/27/36 (d)(e) | 25,784 | 25,606 | ||
Series 2003-39 Class IA, 5.5% 10/25/22 (e)(f) | 3,716 | 583 | ||
Series 2006-48 Class LF, 0% 8/25/34 (e) | 79 | 82 | ||
target amortization class Series G94-2 Class D, 6.45% 1/25/24 | 2,397 | 2,467 | ||
Fannie Mae STRIP: | ||||
Series 331 Class 12, 6.5% 2/1/33 (f) | 2,391 | 607 | ||
Series 339 Class 5, 5.5% 7/1/33 (f) | 3,827 | 937 | ||
Series 343 Class 16, 5.5% 5/1/34 (f) | 2,749 | 668 | ||
Freddie Mac Multi-class participation certificates guaranteed: | ||||
floater: | ||||
Series 2861 Class JF, 2.7575% 4/15/17 (e) | 2,268 | 2,252 | ||
Series 3094 Class UF, 0% 9/15/34 (e) | 1,030 | 734 | ||
planned amortization class: | ||||
Series 2220 Class PD, 8% 3/15/30 | 3,250 | 3,404 | ||
Series 2787 Class OI, 5.5% 10/15/24 (f) | 1,395 | 40 | ||
Series 40 Class K, 6.5% 8/17/24 | 1,493 | 1,554 | ||
sequential payer: | ||||
Series 2204 Class N, 7.5% 12/20/29 | 6,314 | 6,587 | ||
Series 2601 Class TI, 5.5% 10/15/22 (f) | 15,618 | 2,609 | ||
Series 2750 Class ZT, 5% 2/15/34 | 6,382 | 5,444 | ||
Series 2866 Class CY, 4.5% 10/15/19 | 4,491 | 4,232 | ||
Series 2957 Class SW, 3.5425% 4/15/35 (e)(f) | 10,955 | 634 | ||
Ginnie Mae guaranteed Multi-family REMIC pass-thru securities sequential payer Series 2002-71: | ||||
Class Z, 5.5% 10/20/32 | 48,210 | 47,693 | ||
Class ZJ, 6% 10/20/32 | 24,689 | 25,033 | ||
Ginnie Mae guaranteed REMIC pass-thru securities: | ||||
floater: | ||||
Series 2001-22 Class FM, 2.8081% 5/20/31 (e) | 596 | 591 | ||
Series 2002-41 Class HF, 2.86% 6/16/32 (e) | 678 | 672 | ||
Series 2007-22 Class TC, 0% 4/20/37 (e) | 1,952 | 2,346 | ||
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 1993-13 Class PD, 6% 5/20/29 | $ 15,222 | $ 15,449 | ||
Series 1994-4 Class KQ, 7.9875% 7/16/24 | 934 | 1,001 | ||
Series 2000-26 Class PK, 7.5% 9/20/30 | 2,535 | 2,602 | ||
Series 2001-65 Class PH, 6% 11/20/28 | 6,323 | 6,491 | ||
Series 2002-5 Class PD, 6.5% 5/16/31 | 4,266 | 4,300 | ||
Series 2002-50 Class PE, 6% 7/20/32 | 17,485 | 17,815 | ||
Series 2003-31 Class PI, 5.5% 4/16/30 (f) | 2,216 | 135 | ||
Series 2003-70 Class LE, 5% 7/20/32 | 44,000 | 42,484 | ||
Series 2004-19: | ||||
Class DJ, 4.5% 3/20/34 | 2,184 | 2,186 | ||
Class DP, 5.5% 3/20/34 | 3,895 | 4,004 | ||
Series 2004-30: | ||||
Class PC, 5% 11/20/30 | 19,736 | 19,518 | ||
Class UA, 3.5% 2/20/32 | 4,134 | 4,079 | ||
Series 2004-64 Class KE, 5.5% 12/20/33 | 22,978 | 22,481 | ||
Series 2004-98 Class IG, 5.5% 2/20/30 (f) | 2,581 | 280 | ||
Series 2005-17 Class IA, 5.5% 8/20/33 (f) | 6,321 | 646 | ||
Series 2005-24 Class TC, 5.5% 3/20/35 | 5,403 | 5,273 | ||
Series 2005-54 Class BM, 5% 7/20/35 | 9,658 | 9,532 | ||
Series 2005-57 Class PB, 5.5% 7/20/35 | 5,673 | 5,591 | ||
Series 2006-50 Class JC, 5% 6/20/36 | 11,780 | 11,300 | ||
Series 2008-28 Class PC, 5.5% 4/20/34 | 18,652 | 19,090 | ||
sequential payer: | ||||
Series 1995-4 Class CQ, 8% 6/20/25 | 688 | 739 | ||
Series 2001-40 Class Z, 6% 8/20/31 | 7,579 | 7,676 | ||
Series 2002-18 Class ZB, 6% 3/20/32 | 7,468 | 7,615 | ||
Series 2002-29 Class SK, 8.25% 5/20/32 (e) | 323 | 336 | ||
Series 2002-42 Class ZA, 6% 6/20/32 | 4,562 | 4,613 | ||
Series 2002-45 Class Z, 6% 6/20/32 | 2,713 | 2,766 | ||
Series 2002-67 Class ZA, 6% 9/20/32 | 87,092 | 88,318 | ||
Series 2003-7 Class VP, 6% 11/20/13 | 4,327 | 4,391 | ||
Series 2004-65 Class VE, 5.5% 7/20/15 | 4,195 | 4,282 | ||
Series 2004-86 Class G, 6% 10/20/34 | 6,273 | 6,387 | ||
Series 2005-28 Class AJ, 5.5% 4/20/35 | 30,674 | 30,898 | ||
Series 2005-47 Class ZY, 6% 6/20/35 | 4,811 | 4,575 | ||
Series 2005-6 Class EX, 5.5% 11/20/34 | 1,001 | 941 | ||
Series 2005-82 Class JV, 5% 6/20/35 | 3,500 | 3,234 | ||
Series 1995-6 Class Z, 7% 9/20/25 | 1,974 | 2,049 | ||
Collateralized Mortgage Obligations - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
U.S. Government Agency - continued | ||||
Ginnie Mae guaranteed REMIC pass-thru securities: - continued | ||||
Series 2003-11 Class S, 4.09% 2/16/33 (e)(f) | $ 9,294 | $ 632 | ||
Series 2003-92 Class SN, 3.97% 10/16/33 (e)(f) | 27,980 | 2,000 | ||
Series 2004-32 Class GS, 4.04% 5/16/34 (e)(f) | 2,523 | 170 | ||
Series 2005-6 Class EY, 5.5% 11/20/33 | 1,016 | 951 | ||
Series 2006-13 Class DS, 7.4128% 3/20/36 (e) | 41,316 | 35,955 | ||
Series 2007-18 Class S, 4.34% 4/16/37 (e)(f) | 42,993 | 3,208 | ||
Series 2007-35 Class SC, 25.44% 6/16/37 (e) | 14,563 | 18,066 | ||
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $556,142) | 558,834 | |||
Commercial Mortgage Securities - 0.4% | ||||
| ||||
Fannie Mae subordinate REMIC pass-thru certificates: | ||||
Series 1998-M3 Class IB, 0.7378% 1/17/38 (e)(f) | 18,265 | 246 | ||
Series 1998-M4 Class N, 1.0775% 2/25/35 (e)(f) | 5,731 | 47 | ||
Ginnie Mae guaranteed Multi-family REMIC pass-thru securities: | ||||
sequential payer Series 2001-58 Class X, 1.0596% 9/16/41 (e)(f) | 126,966 | 2,393 | ||
Series 2001-12 Class X, 0.7887% 7/16/40 (e)(f) | 37,031 | 537 | ||
Ginnie Mae guaranteed REMIC pass-thru securities: | ||||
sequential payer Series 2002-81 Class IO, 1.8292% 9/16/42 (e)(f) | 118,820 | 3,424 | ||
Series 2002-62 Class IO, 1.4027% 8/16/42 (e)(f) | 77,327 | 2,075 | ||
Series 2002-85 Class X, 1.7269% 3/16/42 (e)(f) | 65,008 | 4,013 | ||
TOTAL COMMERCIAL MORTGAGE SECURITIES (Cost $30,832) | 12,735 |
Cash Equivalents - 9.2% | |||
Maturity Amount (000s) | Value (000s) | ||
Investments in repurchase agreements in a joint trading account at 2.19%, dated 7/31/08 due 8/1/08 (Collateralized by U.S. Government Obligations) # | $ 318,963 | $ 318,944 | |
TOTAL INVESTMENT PORTFOLIO - 118.8% (Cost $4,149,427) | 4,134,644 | ||
NET OTHER ASSETS - (18.8)% | (654,196) | ||
NET ASSETS - 100% | $ 3,480,448 |
Futures Contracts | |||||
Expiration Date | Underlying Face Amount at Value (000s) | Unrealized Appreciation/ | |||
Sold | |||||
Treasury Contracts | |||||
216 UST 2 YR Index Contracts | Oct. 2008 | $ 45,792 | $ (88) |
|
The face value of futures sold as a percentage of net assets - 1.3% |
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 3.554% with Credit Suisse First Boston | April 2013 | $ 54,000 | $ 803 | ||
Receive quarterly a floating rate based on 3-month LIBOR and pay semi-annually a fixed rate equal to 4.92% with Morgan Stanley, Inc. | Sept. 2012 | 75,000 | (3,649) | ||
Receive quarterly a floating rate based on 3-month LIBOR and pay semi-annually a fixed rate equal to 5.523% with JPMorgan Chase, Inc. | August 2017 | 12,000 | (1,038) | ||
| $ 141,000 | $ (3,884) |
Legend |
(a) Security or a portion of the security purchased on a delayed delivery or when-issued basis. |
(b) A portion of the security is subject to a forward commitment to sell. |
(c) Security or a portion of the security was pledged to cover margin requirements for futures contracts. At the period end, the value of securities pledged amounted to $650,000. |
(d) 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 $3,221,000. |
(e) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. |
(f) 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 |
$318,944,000 due 8/01/08 at 2.19% | |
BNP Paribas Securities Corp. | $ 23,844 |
Banc of America Securities LLC | 36,982 |
Bank of America, NA | 35,792 |
Barclays Capital, Inc. | 155,708 |
Greenwich Capital Markets, Inc. | 5,839 |
ING Financial Markets LLC | 33,089 |
J.P. Morgan Securities, Inc. | 17,958 |
RBC Capital Markets Corp. | 4,866 |
WestLB AG | 4,866 |
| $ 318,944 |
Income Tax Information |
At July 31, 2008, the fund had a capital loss carryforward of approximately $40,263,000 all of which will expire on July 31, 2015. |
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, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including repurchase agreements of $318,944) - See accompanying schedule: Unaffiliated issuers (cost $4,149,427) |
| $ 4,134,644 |
Commitment to sell securities on a delayed delivery basis | $ (34,002) | |
Receivable for securities sold on a delayed delivery basis | 33,951 | (51) |
Receivable for investments sold, regular delivery | 4,669 | |
Cash | 13 | |
Receivable for fund shares sold | 1,897 | |
Interest receivable | 17,596 | |
Other receivables | 59 | |
Total assets | 4,158,827 | |
|
|
|
Liabilities | ||
Payable for investments purchased on a delayed delivery basis | $ 669,560 | |
Payable for fund shares redeemed | 1,941 | |
Distributions payable | 1,536 | |
Swap agreements, at value | 3,884 | |
Accrued management fee | 907 | |
Payable for daily variation on futures contracts | 98 | |
Other affiliated payables | 394 | |
Other payables and accrued expenses | 59 | |
Total liabilities | 678,379 | |
|
|
|
Net Assets | $ 3,480,448 | |
Net Assets consist of: |
| |
Paid in capital | $ 3,555,150 | |
Distributions in excess of net investment income | (14,848) | |
Accumulated undistributed net realized gain (loss) on investments | (41,048) | |
Net unrealized appreciation (depreciation) on investments | (18,806) | |
Net Assets, for 320,563 shares outstanding | $ 3,480,448 | |
Net Asset Value, offering price and redemption price per share ($3,480,448 ÷ 320,563 shares) | $ 10.86 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Operations
Amounts in thousands | Year ended July 31, 2008 | |
|
|
|
Investment Income |
|
|
Interest |
| $ 177,329 |
|
|
|
Expenses | ||
Management fee | $ 10,438 | |
Transfer agent fees | 3,313 | |
Fund wide operations fee | 1,142 | |
Independent trustees' compensation | 14 | |
Miscellaneous | 9 | |
Total expenses before reductions | 14,916 | |
Expense reductions | (40) | 14,876 |
Net investment income | 162,453 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 24,770 | |
Futures contracts | (190) | |
Swap agreements | (7,770) |
|
Total net realized gain (loss) |
| 16,810 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 48,391 | |
Futures contracts | (88) | |
Swap agreements | (2,404) | |
Delayed delivery commitments | (51) |
|
Total change in net unrealized appreciation (depreciation) |
| 45,848 |
Net gain (loss) | 62,658 | |
Net increase (decrease) in net assets resulting from operations | $ 225,111 |
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 | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income | $ 162,453 | $ 165,363 |
Net realized gain (loss) | 16,810 | (26,430) |
Change in net unrealized appreciation (depreciation) | 45,848 | 33,224 |
Net increase (decrease) in net assets resulting | 225,111 | 172,157 |
Distributions to shareholders from net investment income | (165,414) | (164,399) |
Share transactions | 794,966 | 321,666 |
Reinvestment of distributions | 146,424 | 145,593 |
Cost of shares redeemed | (692,940) | (667,711) |
Net increase (decrease) in net assets resulting from share transactions | 248,450 | (200,452) |
Total increase (decrease) in net assets | 308,147 | (192,694) |
|
|
|
Net Assets | ||
Beginning of period | 3,172,301 | 3,364,995 |
End of period (including distributions in excess of net investment income of $14,848 and distributions in excess of net investment income of $4,664, respectively) | $ 3,480,448 | $ 3,172,301 |
Other Information Shares | ||
Sold | 72,697 | 29,988 |
Issued in reinvestment of distributions | 13,412 | 13,559 |
Redeemed | (63,680) | (62,274) |
Net increase (decrease) | 22,429 | (18,727) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 10.64 | $ 10.62 | $ 11.00 | $ 11.00 | $ 11.05 |
Income from Investment Operations |
|
|
|
|
|
Net investment income B | .534 | .537 | .497 | .443 | .404 |
Net realized and unrealized gain (loss) | .230 | .017 | (.315) | .004 | .027 |
Total from investment operations | .764 | .554 | .182 | .447 | .431 |
Distributions from net investment income | (.544) | (.534) | (.542) | (.447) | (.391) |
Distributions from net realized gain | - | - | (.020) | - | (.090) |
Total distributions | (.544) | (.534) | (.562) | (.447) | (.481) |
Net asset value, end of period | $ 10.86 | $ 10.64 | $ 10.62 | $ 11.00 | $ 11.00 |
Total Return A | 7.27% | 5.29% | 1.70% | 4.11% | 3.96% |
Ratios to Average Net Assets C |
|
|
|
|
|
Expenses before reductions | .45% | .45% | .45% | .57% | .60% |
Expenses net of fee waivers, | .45% | .45% | .45% | .57% | .60% |
Expenses net of all reductions | .45% | .45% | .45% | .57% | .60% |
Net investment income | 4.90% | 5.01% | 4.61% | 4.00% | 3.64% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period | $ 3,480 | $ 3,172 | $ 3,365 | $ 4,033 | $ 3,977 |
Portfolio turnover rate | 227% | 165% | 183% | 160% | 155% |
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 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, if any) 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, 2008 | Past 1 | Past 5 | Past 10 |
Fidelity Intermediate Govt Income Fund | 8.24% | 4.10% | 5.25% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Intermediate Government Income Fund on July 31, 1998. The chart shows how the value of your investment would have changed, and also shows how the Lehman Brothers U.S. Government Intermediate Index performed over the same period.
Annual Report
Fidelity Intermediate Government Income Fund
Management's Discussion of Fund Performance
Comments from William Irving, who became Portfolio Manager of Fidelity® Intermediate Government Income Fund on April 1, 2008
Bonds with less credit risk generally produced higher returns for investment-grade debt during the 12 months ending July 31, 2008. In that span, the Lehman Brothers® U.S. Aggregate Index - a proxy for high-quality, fixed-rate, taxable bonds - returned 6.15%. Treasuries did the best, buoyed by their reputation as the safest haven in turbulent times, with the Lehman Brothers U.S. Treasury Index up 8.99% during the period. Agency bonds, with their perceived "implicit" government backing, also did well, as the Lehman Brothers U.S. Agency Index rose 7.79%. Mortgage-backed securities ended the period with a gain of 6.96%, according to the Lehman Brothers U.S. Mortgage-Backed Securities Index, while the Lehman Brothers U.S. Credit Index - a measure of high-quality corporate debt - finished with a modest 2.85% increase. The asset-backed sector - home to weak-performing subprime debt - had negative results, as reflected in the 2.69% loss of the Lehman Brothers U.S. Fixed-Rate Asset-Backed Securities Index.
For the 12 months ending July 31, 2008, Intermediate Government Income returned 8.24% and the Lehman Brothers U.S. Government Intermediate Index gained 8.42%. What we lost through sector selection - underweighting the better-performing U.S. Treasury and agency segments while overweighting the lagging mortgage-backed sector - we made up for through other Treasury-related decisions. In particular, security lending - whereby we loaned Treasury holdings overnight and invested the proceeds in higher-yielding investments - bolstered the fund's results. Security and sector selection among mortgages also worked in the fund's favor. Specifically, good picks among 15-year securities and collateralized mortgage obligations (CMOs) - which are made up of pools of pass-through securities whose cash flows are carved out into classes with their own expected maturities and cash-flow patterns - aided results. In addition, our decision to maintain exposure to hybrid adjustable-rate mortgage securities (ARMs) - which give homeowners a relatively low fixed-interest rate for an initial period and then convert to an ARM where the interest rate periodically resets - was beneficial because they generally out-paced the index when adjusted for their lower interest-rate sensitivity.
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 Intermediate Government Income Fund
Investment Changes (Unaudited)
Coupon Distribution as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments |
Less than 2% | 12.0 | 0.0 |
2 - 2.99% | 8.8 | 5.8 |
3 - 3.99% | 12.6 | 14.9 |
4 - 4.99% | 28.3 | 33.6 |
5 - 5.99% | 15.6 | 19.3 |
6 - 6.99% | 5.8 | 6.3 |
7% and over | 0.4 | 0.7 |
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, 2008 | ||
|
| 6 months ago |
Years | 3.5 | 3.8 |
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, 2008 | ||
|
| 6 months ago |
Years | 3.4 | 3.5 |
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, 2008* | As of January 31, 2008** | ||||||
![]() | Mortgage |
| ![]() | Mortgage |
| ||
![]() | CMOs and Other Mortgage Related Securities 6.8% |
| ![]() | CMOs and Other Mortgage Related Securities 9.2% |
| ||
![]() | U.S. Treasury |
| ![]() | U.S. Treasury |
| ||
![]() | U.S. Government |
| ![]() | U.S. Government |
| ||
![]() | Asset-Backed |
| ![]() | Asset-Backed |
| ||
![]() | Short-Term |
| ![]() | Short-Term |
| ||
* Futures and Swaps | 1.1% |
| ** Futures and Swaps | 7.2% |
|
† Short-Term Investments and Net Other Assets are not included in the pie chart. |
Annual Report
Fidelity Intermediate Government Income Fund
Investments July 31, 2008
Showing Percentage of Net Assets
U.S. Government and Government Agency Obligations - 76.8% | ||||
| Principal Amount (000s) | Value (000s) | ||
U.S. Government Agency Obligations - 28.5% | ||||
Fannie Mae: | ||||
2.5% 4/9/10 | $ 5,130 | $ 5,083 | ||
3% 7/12/10 | 3,000 | 2,990 | ||
3.25% 8/12/10 | 18,473 | 18,490 | ||
3.375% 5/19/11 | 21,075 | 20,999 | ||
3.875% 12/10/09 | 9,980 | 10,090 | ||
3.875% 7/12/13 | 13,910 | 13,813 | ||
4.75% 11/19/12 | 16,010 | 16,520 | ||
4.875% 5/18/12 | 8,000 | 8,282 | ||
5% 2/16/12 | 15,040 | 15,640 | ||
5.375% 6/12/17 | 19,239 | 20,312 | ||
6% 5/15/11 | 8,545 | 9,102 | ||
Freddie Mac: | ||||
3.25% 7/16/10 | 821 | 822 | ||
3.5% 5/29/13 | 18,200 | 17,788 | ||
3.75% 6/28/13 | 2,250 | 2,222 | ||
3.875% 6/29/11 | 16,481 | 16,626 | ||
4.125% 11/30/09 | 18,200 | 18,466 | ||
4.875% 6/13/18 | 5,501 | 5,590 | ||
5.125% 4/18/11 | 2,000 | 2,083 | ||
5.125% 11/17/17 (b) | 5,000 | 5,182 | ||
5.25% 7/18/11 | 12,000 | 12,564 | ||
5.5% 8/23/17 | 17,907 | 19,027 | ||
Israeli State (guaranteed by U.S. Government through Agency for International Development) 6.8% 2/15/12 | 7,500 | 7,967 | ||
Private Export Funding Corp. secured: | ||||
4.974% 8/15/13 | 3,435 | 3,555 | ||
5.66% 9/15/11 (c) | 9,000 | 9,511 | ||
5.685% 5/15/12 | 3,915 | 4,154 | ||
Small Business Administration guaranteed development participation certificates Series 2004-20H Class 1, 5.17% 8/1/24 | 680 | 672 | ||
U.S. Department of Housing and Urban Development Government guaranteed participation certificates Series 1999-A, 6.06% 8/1/10 | 10,000 | 10,164 | ||
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS | 277,714 | |||
U.S. Treasury Obligations - 48.3% | ||||
U.S. Treasury Notes: | ||||
1.75% 3/31/10 (b) | 140,042 | 138,622 | ||
2.125% 1/31/10 | 16,891 | 16,845 | ||
U.S. Government and Government Agency Obligations - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
U.S. Treasury Obligations - continued | ||||
U.S. Treasury Notes: - continued | ||||
2.75% 7/31/10 | $ 14,000 | $ 14,057 | ||
2.75% 2/28/13 | 49,225 | 48,275 | ||
2.875% 6/30/10 | 11,460 | 11,543 | ||
3.375% 6/30/13 (b) | 25,378 | 25,501 | ||
3.5% 5/31/13 | 1,950 | 1,972 | ||
3.875% 5/15/18 | 3,088 | 3,061 | ||
4% 2/15/14 | 17,519 | 18,112 | ||
4.25% 11/15/14 (b) | 38,000 | 39,802 | ||
4.25% 11/15/17 | 6,000 | 6,135 | ||
4.625% 7/31/12 (e) | 70,500 | 74,570 | ||
4.75% 3/31/11 | 2,182 | 2,101 | ||
4.75% 5/15/14 (b)(e) | 15,608 | 16,764 | ||
4.75% 8/15/17 | 50,213 | 53,285 | ||
TOTAL U.S. TREASURY OBLIGATIONS | 470,645 | |||
TOTAL U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS (Cost $749,175) | 748,359 | |||
U.S. Government Agency - Mortgage Securities - 15.4% | ||||
| ||||
Fannie Mae - 10.1% | ||||
3.613% 9/1/33 (f) | 232 | 235 | ||
3.71% 6/1/33 (f) | 292 | 291 | ||
3.732% 6/1/33 (f) | 768 | 766 | ||
3.737% 5/1/33 (f) | 309 | 309 | ||
3.741% 10/1/33 (f) | 66 | 66 | ||
3.901% 6/1/33 (f) | 684 | 685 | ||
3.906% 5/1/34 (f) | 397 | 399 | ||
3.916% 5/1/34 (f) | 517 | 521 | ||
3.953% 8/1/33 (f) | 299 | 303 | ||
3.98% 9/1/33 (f) | 530 | 533 | ||
3.988% 10/1/18 (f) | 46 | 46 | ||
4% 9/1/13 to 5/1/20 | 2,471 | 2,372 | ||
4.085% 6/1/33 (f) | 57 | 57 | ||
4.108% 5/1/34 (f) | 788 | 794 | ||
4.11% 4/1/34 (f) | 955 | 960 | ||
4.174% 1/1/35 (f) | 173 | 174 | ||
4.235% 1/1/34 (f) | 187 | 189 | ||
4.25% 2/1/35 (f) | 82 | 82 | ||
U.S. Government Agency - Mortgage Securities - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Fannie Mae - continued | ||||
4.251% 8/1/33 (f) | $ 109 | $ 109 | ||
4.259% 10/1/33 (f) | 29 | 29 | ||
4.301% 3/1/33 (f) | 45 | 45 | ||
4.305% 6/1/33 (f) | 700 | 705 | ||
4.306% 5/1/33 (f) | 19 | 19 | ||
4.328% 1/1/35 (f) | 93 | 93 | ||
4.337% 8/1/33 (f) | 316 | 318 | ||
4.341% 10/1/19 (f) | 94 | 94 | ||
4.366% 2/1/34 (f) | 160 | 162 | ||
4.375% 5/1/35 (f) | 190 | 191 | ||
4.378% 1/1/34 (f) | 1,015 | 1,021 | ||
4.388% 2/1/35 (f) | 158 | 160 | ||
4.391% 10/1/33 (f) | 370 | 370 | ||
4.391% 6/1/35 (f) | 264 | 264 | ||
4.41% 10/1/34 (f) | 383 | 386 | ||
4.418% 5/1/35 (f) | 71 | 71 | ||
4.42% 6/1/35 (f) | 289 | 291 | ||
4.425% 8/1/34 (f) | 219 | 221 | ||
4.427% 1/1/35 (f) | 80 | 80 | ||
4.435% 3/1/35 (f) | 140 | 141 | ||
4.441% 8/1/35 (f) | 1,176 | 1,180 | ||
4.447% 5/1/35 (f) | 921 | 923 | ||
4.473% 7/1/35 (f) | 252 | 252 | ||
4.483% 11/1/33 (f) | 131 | 132 | ||
4.485% 12/1/34 (f) | 42 | 42 | ||
4.492% 1/1/35 (f) | 438 | 444 | ||
4.5% 3/1/18 to 11/1/19 | 2,440 | 2,393 | ||
4.545% 5/1/35 (f) | 5,337 | 5,374 | ||
4.561% 2/1/35 (f) | 353 | 357 | ||
4.565% 7/1/35 (f) | 234 | 234 | ||
4.571% 1/1/35 (f) | 738 | 745 | ||
4.599% 10/1/35 (f) | 42 | 43 | ||
4.618% 8/1/35 (f) | 851 | 868 | ||
4.644% 8/1/35 (f) | 384 | 388 | ||
4.65% 10/1/34 (f) | 274 | 276 | ||
4.669% 8/1/34 (f) | 1,193 | 1,199 | ||
4.694% 10/1/34 (f) | 256 | 258 | ||
4.701% 2/1/35 (f) | 1,200 | 1,212 | ||
4.705% 7/1/34 (f) | 238 | 240 | ||
4.707% 2/1/35 (f) | 527 | 535 | ||
4.717% 2/1/36 (f) | 996 | 1,008 | ||
4.727% 6/1/33 (f) | 23 | 23 | ||
U.S. Government Agency - Mortgage Securities - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Fannie Mae - continued | ||||
4.74% 1/1/35 (f) | $ 397 | $ 402 | ||
4.774% 12/1/34 (f) | 72 | 73 | ||
4.776% 4/1/35 (f) | 28 | 28 | ||
4.783% 7/1/35 (f) | 384 | 387 | ||
4.791% 10/1/35 (f) | 162 | 164 | ||
4.797% 6/1/35 (f) | 272 | 273 | ||
4.799% 10/1/35 (f) | 142 | 143 | ||
4.812% 11/1/34 (f) | 200 | 202 | ||
4.821% 9/1/34 (f) | 328 | 331 | ||
4.834% 7/1/36 (f) | 279 | 281 | ||
4.841% 4/1/35 (f) | 939 | 953 | ||
4.847% 1/1/35 (f) | 255 | 257 | ||
4.85% 7/1/35 (f) | 487 | 492 | ||
4.859% 10/1/34 (f) | 807 | 816 | ||
4.873% 8/1/34 (f) | 51 | 51 | ||
4.88% 5/1/35 (f) | 163 | 164 | ||
4.896% 3/1/33 (f) | 211 | 213 | ||
4.926% 8/1/34 (f) | 707 | 714 | ||
4.941% 8/1/34 (f) | 590 | 597 | ||
4.969% 3/1/35 (f) | 422 | 428 | ||
4.985% 2/1/35 (f) | 461 | 467 | ||
4.986% 4/1/33 (f) | 12 | 12 | ||
4.987% 2/1/34 (f) | 629 | 634 | ||
5% 2/1/16 to 4/1/22 | 538 | 531 | ||
5.012% 7/1/34 (f) | 32 | 32 | ||
5.013% 12/1/32 (f) | 846 | 859 | ||
5.047% 10/1/35 (f) | 519 | 525 | ||
5.089% 9/1/34 (f) | 60 | 61 | ||
5.099% 10/1/35 (f) | 361 | 366 | ||
5.127% 8/1/33 (f) | 82 | 83 | ||
5.131% 8/1/34 (f) | 495 | 502 | ||
5.171% 3/1/36 (f) | 1,223 | 1,242 | ||
5.185% 3/1/35 (f) | 41 | 41 | ||
5.199% 5/1/35 (f) | 55 | 55 | ||
5.243% 11/1/36 (f) | 249 | 254 | ||
5.245% 7/1/35 (f) | 30 | 30 | ||
5.267% 12/1/36 (f) | 240 | 245 | ||
5.271% 7/1/35 (f) | 2,239 | 2,270 | ||
5.278% 3/1/35 (f) | 52 | 52 | ||
5.298% 12/1/34 (f) | 83 | 84 | ||
5.326% 4/1/36 (f) | 426 | 438 | ||
5.328% 1/1/36 (f) | 839 | 850 | ||
U.S. Government Agency - Mortgage Securities - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Fannie Mae - continued | ||||
5.349% 2/1/36 (f) | $ 78 | $ 79 | ||
5.349% 2/1/37 (f) | 218 | 223 | ||
5.354% 3/1/37 (f) | 1,602 | 1,631 | ||
5.357% 2/1/36 (f) | 633 | 643 | ||
5.392% 2/1/37 (f) | 1,096 | 1,115 | ||
5.409% 3/1/35 (f) | 470 | 472 | ||
5.448% 2/1/37 (f) | 1,464 | 1,494 | ||
5.5% 1/1/09 to 6/1/20 (d) | 11,246 | 11,386 | ||
5.502% 6/1/47 (f) | 175 | 179 | ||
5.513% 3/1/35 (f) | 18 | 18 | ||
5.524% 11/1/36 (f) | 433 | 440 | ||
5.591% 4/1/37 (f) | 885 | 902 | ||
5.632% 2/1/36 (f) | 260 | 265 | ||
5.641% 4/1/36 (f) | 1,036 | 1,057 | ||
5.665% 6/1/36 (f) | 619 | 632 | ||
5.793% 3/1/36 (f) | 2,107 | 2,152 | ||
5.801% 1/1/36 (f) | 256 | 260 | ||
5.816% 5/1/36 (f) | 1,545 | 1,578 | ||
5.822% 9/1/36 (f) | 407 | 414 | ||
5.896% 12/1/36 (f) | 383 | 392 | ||
5.906% 5/1/36 (f) | 713 | 729 | ||
5.951% 5/1/36 (f) | 244 | 250 | ||
5.955% 2/1/35 (f) | 19 | 19 | ||
6% 5/1/12 to 3/1/31 | 14,243 | 14,633 | ||
6.009% 4/1/36 (f) | 4,352 | 4,457 | ||
6.095% 3/1/37 (f) | 432 | 444 | ||
6.102% 3/1/33 (f) | 30 | 30 | ||
6.125% 2/1/33 (f) | 57 | 57 | ||
6.169% 4/1/36 (f) | 417 | 428 | ||
6.206% 2/1/35 (f) | 22 | 23 | ||
6.226% 3/1/37 (f) | 140 | 143 | ||
6.234% 2/1/35 (f) | 51 | 51 | ||
6.251% 6/1/36 (f) | 59 | 60 | ||
6.5% 6/1/16 to 7/1/32 | 1,799 | 1,866 | ||
7% 12/1/08 to 9/1/31 | 271 | 280 | ||
7.5% 5/1/37 | 339 | 359 | ||
9% 2/1/13 | 69 | 72 | ||
9.5% 11/15/09 | 58 | 59 | ||
10.25% 10/1/09 to 10/1/18 | 6 | 6 | ||
11% 8/1/10 to 1/1/16 | 170 | 180 | ||
11.25% 5/1/14 to 1/1/16 | 45 | 50 | ||
11.5% 9/1/11 to 6/15/19 | 139 | 152 | ||
U.S. Government Agency - Mortgage Securities - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Fannie Mae - continued | ||||
12.25% 7/1/12 to 8/1/13 | $ 6 | $ 7 | ||
12.5% 9/1/12 to 7/1/16 | 126 | 144 | ||
12.75% 10/1/11 to 6/1/15 | 64 | 69 | ||
13% 7/1/13 to 7/1/15 | 58 | 67 | ||
13.25% 9/1/11 | 45 | 50 | ||
13.5% 11/1/14 to 12/1/14 | 13 | 15 | ||
15% 4/1/12 | 2 | 3 | ||
| 98,315 | |||
Freddie Mac - 5.2% | ||||
3.474% 7/1/33 (f) | 721 | 721 | ||
3.789% 5/1/35 (f) | 661 | 663 | ||
4% 1/1/19 to 11/1/20 | 3,862 | 3,668 | ||
4.006% 4/1/34 (f) | 1,310 | 1,310 | ||
4.121% 7/1/35 (f) | 520 | 524 | ||
4.221% 1/1/35 (f) | 1,086 | 1,099 | ||
4.275% 6/1/35 (f) | 116 | 116 | ||
4.307% 12/1/34 (f) | 117 | 118 | ||
4.35% 6/1/33 (f) | 312 | 311 | ||
4.406% 3/1/35 (f) | 128 | 128 | ||
4.422% 2/1/34 (f) | 89 | 89 | ||
4.429% 3/1/35 (f) | 124 | 124 | ||
4.541% 2/1/35 (f) | 235 | 237 | ||
4.556% 5/1/33 (f) | 882 | 885 | ||
4.667% 9/1/36 (f) | 277 | 279 | ||
4.79% 2/1/36 (f) | 110 | 111 | ||
4.791% 3/1/35 (f) | 237 | 239 | ||
4.84% 4/1/35 (f) | 465 | 468 | ||
4.882% 10/1/35 (f) | 449 | 455 | ||
5% 3/1/18 to 9/1/35 | 8,846 | 8,818 | ||
5.013% 10/1/36 (f) | 463 | 472 | ||
5.027% 7/1/35 (f) | 1,355 | 1,370 | ||
5.125% 7/1/35 (f) | 409 | 414 | ||
5.264% 12/1/33 (f) | 752 | 759 | ||
5.27% 11/1/35 (f) | 417 | 421 | ||
5.275% 2/1/36 (f) | 38 | 38 | ||
5.376% 3/1/35 (f) | 80 | 81 | ||
5.415% 3/1/37 (f) | 141 | 143 | ||
5.485% 1/1/36 (f) | 397 | 403 | ||
5.5% 8/1/14 to 11/1/20 | 2,806 | 2,839 | ||
5.52% 1/1/36 (f) | 562 | 570 | ||
5.52% 4/1/37 (f) | 177 | 181 | ||
U.S. Government Agency - Mortgage Securities - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Freddie Mac - continued | ||||
5.579% 2/1/35 (f) | $ 161 | $ 162 | ||
5.592% 3/1/36 (f) | 1,779 | 1,807 | ||
5.743% 10/1/35 (f) | 112 | 114 | ||
5.745% 5/1/37 (f) | 1,872 | 1,902 | ||
5.782% 3/1/37 (f) | 919 | 933 | ||
5.792% 4/1/37 (f) | 856 | 870 | ||
5.814% 5/1/37 (f) | 1,052 | 1,069 | ||
5.816% 6/1/37 (f) | 646 | 657 | ||
5.829% 5/1/37 (f) | 290 | 295 | ||
5.832% 5/1/37 (f) | 148 | 150 | ||
5.949% 4/1/36 (f) | 3,058 | 3,120 | ||
6% 7/1/16 to 2/1/19 | 3,035 | 3,142 | ||
6.021% 6/1/36 (f) | 309 | 315 | ||
6.141% 2/1/37 (f) | 272 | 278 | ||
6.143% 12/1/36 (f) | 1,933 | 1,976 | ||
6.224% 5/1/36 (f) | 253 | 259 | ||
6.273% 12/1/36 (f) | 626 | 641 | ||
6.378% 7/1/36 (f) | 295 | 302 | ||
6.417% 6/1/37 (f) | 69 | 71 | ||
6.483% 9/1/36 (f) | 1,448 | 1,487 | ||
6.491% 3/1/33 (f) | 19 | 19 | ||
6.5% 12/1/21 | 812 | 838 | ||
6.641% 8/1/37 (f) | 495 | 510 | ||
7.581% 4/1/37 (f) | 75 | 78 | ||
8.5% 5/1/17 | 7 | 7 | ||
9% 11/1/09 to 7/1/16 | 27 | 29 | ||
9.5% 7/1/16 to 8/1/21 | 224 | 246 | ||
10% 7/1/09 to 3/1/21 | 431 | 478 | ||
10.5% 9/1/09 to 5/1/21 | 16 | 17 | ||
11% 9/1/20 | 18 | 20 | ||
11.25% 2/1/10 to 6/1/14 | 54 | 60 | ||
11.5% 10/1/15 to 8/1/19 | 41 | 46 | ||
11.75% 7/1/15 | 1 | 1 | ||
12% 10/1/09 to 11/1/19 | 95 | 104 | ||
12.25% 12/1/11 to 8/1/15 | 44 | 49 | ||
12.5% 10/1/09 to 6/1/19 | 445 | 500 | ||
12.75% 2/1/10 to 10/1/10 | 4 | 4 | ||
13% 9/1/10 to 5/1/17 | 81 | 90 | ||
13.25% 11/1/10 to 10/1/13 | 23 | 27 | ||
13.5% 11/1/10 to 8/1/11 | 16 | 17 | ||
14% 11/1/12 to 4/1/16 | 4 | 5 | ||
14.5% 12/1/10 | 0 | 0 | ||
U.S. Government Agency - Mortgage Securities - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Freddie Mac - continued | ||||
14.75% 3/1/10 | $ 0 | $ 0 | ||
16.25% 7/1/11 | 0 | 0 | ||
| 50,749 | |||
Government National Mortgage Association - 0.1% | ||||
8% 12/15/23 | 358 | 385 | ||
8.5% 6/15/16 to 2/15/17 | 5 | 5 | ||
10.5% 9/15/15 to 10/15/21 | 590 | 677 | ||
10.75% 12/15/09 to 3/15/10 | 4 | 4 | ||
11% 5/20/16 to 1/20/21 | 38 | 44 | ||
12.5% 12/15/10 | 1 | 1 | ||
13% 1/15/11 to 10/15/13 | 36 | 40 | ||
13.25% 8/15/14 | 9 | 10 | ||
13.5% 7/15/11 to 12/15/14 | 8 | 9 | ||
14% 6/15/11 | 5 | 5 | ||
| 1,180 | |||
TOTAL U.S. GOVERNMENT AGENCY - MORTGAGE SECURITIES (Cost $148,683) | 150,244 | |||
Asset-Backed Securities - 0.1% | ||||
| ||||
Fannie Mae Grantor Trust Series 2005-T4 Class A1C, 2.6113% 9/25/35 (f) | 607 | 604 | ||
Collateralized Mortgage Obligations - 6.8% | ||||
| ||||
U.S. Government Agency - 6.8% | ||||
Fannie Mae: | ||||
floater: | ||||
Series 1994-42 Class FK, 3.34% 4/25/24 (f) | 3,019 | 2,839 | ||
Series 2007-95 Class A1, 2.7113% 8/27/36 (f) | 1,289 | 1,280 | ||
planned amortization class: | ||||
Series 1988-21 Class G, 9.5% 8/25/18 | 68 | 75 | ||
Series 1994-12 Class PH, 6.25% 1/25/09 | 112 | 112 | ||
Series 2002-83 Class ME, 5% 12/25/17 | 5,150 | 5,063 | ||
Series 2003-28 Class KG, 5.5% 4/25/23 | 725 | 697 | ||
sequential payer Series 1993-238 Class C, 6.5% 12/25/08 | 400 | 400 | ||
Collateralized Mortgage Obligations - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
U.S. Government Agency - continued | ||||
Fannie Mae subordinate REMIC pass-thru certificates: | ||||
floater: | ||||
Series 2001-38 Class QF, 3.4413% 8/25/31 (f) | $ 590 | $ 594 | ||
Series 2002-60 Class FV, 3.4613% 4/25/32 (f) | 214 | 214 | ||
Series 2002-74 Class FV, 2.9113% 11/25/32 (f) | 2,989 | 2,963 | ||
Series 2002-75 Class FA, 3.4613% 11/25/32 (f) | 438 | 438 | ||
planned amortization class: | ||||
Series 2001-68 Class QZ, 5.5% 12/25/16 | 562 | 570 | ||
Series 2002-11: | ||||
Class QC, 5.5% 3/25/17 | 1,229 | 1,249 | ||
Class UC, 6% 3/25/17 | 942 | 963 | ||
Series 2002-16 Class PG, 6% 4/25/17 | 1,211 | 1,244 | ||
Series 2002-18 Class PC, 5.5% 4/25/17 | 1,790 | 1,820 | ||
Series 2002-61 Class PG, 5.5% 10/25/17 | 1,945 | 1,978 | ||
Series 2002-71 Class UC, 5% 11/25/17 | 3,155 | 3,122 | ||
Series 2002-9 Class PC, 6% 3/25/17 | 87 | 89 | ||
Series 2003-122 Class OL, 4% 12/25/18 | 880 | 820 | ||
Series 2003-128 Class NE, 4% 12/25/16 | 1,260 | 1,239 | ||
Series 2003-85 Class GD, 4.5% 9/25/18 | 1,425 | 1,386 | ||
Series 2004-80 Class LD, 4% 1/25/19 | 980 | 953 | ||
Series 2004-81: | ||||
Class KC, 4.5% 4/25/17 | 690 | 691 | ||
Class KD, 4.5% 7/25/18 | 1,315 | 1,295 | ||
Series 2005-52 Class PB, 6.5% 12/25/34 | 1,555 | 1,618 | ||
sequential payer: | ||||
Series 2002-56 Class MC, 5.5% 9/25/17 | 352 | 360 | ||
Series 2002-57 Class BD, 5.5% 9/25/17 | 311 | 319 | ||
Series 2003-18 Class EY, 5% 6/25/17 | 1,638 | 1,654 | ||
Freddie Mac Multi-class participation certificates guaranteed: | ||||
floater: | ||||
Series 2526 Class FC, 2.8575% 11/15/32 (f) | 676 | 669 | ||
Series 2630 Class FL, 2.9575% 6/15/18 (f) | 58 | 59 | ||
Series 2925 Class CQ, 0% 1/15/35 (f) | 225 | 140 | ||
planned amortization class: | ||||
Series 2356 Class GD, 6% 9/15/16 | 365 | 374 | ||
Series 2376 Class JE, 5.5% 11/15/16 | 325 | 327 | ||
Series 2378 Class PE, 5.5% 11/15/16 | 918 | 925 | ||
Series 2381 Class OG, 5.5% 11/15/16 | 263 | 264 | ||
Series 2390 Class CH, 5.5% 12/15/16 | 838 | 848 | ||
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 2425 Class JH, 6% 3/15/17 | $ 445 | $ 456 | ||
Series 2628 Class OE, 4.5% 6/15/18 | 705 | 687 | ||
Series 2640 Class GE, 4.5% 7/15/18 | 3,690 | 3,594 | ||
Series 2695 Class DG, 4% 10/15/18 | 1,635 | 1,521 | ||
Series 2752 Class PW, 4% 4/15/22 | 902 | 903 | ||
Series 2802 Class OB, 6% 5/15/34 | 1,355 | 1,390 | ||
Series 2810 Class PD, 6% 6/15/33 | 1,020 | 1,024 | ||
Series 2831 Class PB, 5% 7/15/19 | 1,975 | 1,955 | ||
Series 2866 Class XE, 4% 12/15/18 | 1,875 | 1,825 | ||
sequential payer: | ||||
Series 1929 Class EZ, 7.5% 2/17/27 | 2,000 | 2,113 | ||
Series 2546 Class C, 5% 12/15/17 | 1,115 | 1,107 | ||
Series 2570 Class CU, 4.5% 7/15/17 | 174 | 173 | ||
Series 2572 Class HK, 4% 2/15/17 | 242 | 239 | ||
Series 2617 Class GW, 3.5% 6/15/16 | 897 | 896 | ||
Series 2860 Class CP, 4% 10/15/17 | 176 | 174 | ||
Series 2866 Class N, 4.5% 12/15/18 | 1,212 | 1,217 | ||
Series 2937 Class HJ, 5% 10/15/19 | 835 | 840 | ||
Series 2998 Class LY, 5.5% 7/15/25 | 295 | 279 | ||
Series 3007 Class EW, 5.5% 7/15/25 | 1,125 | 1,070 | ||
Series 3013 Class VJ, 5% 1/15/14 | 1,721 | 1,739 | ||
Series 3266 Class C, 5% 2/15/20 | 593 | 595 | ||
Series 2715 Class NG, 4.5% 12/15/18 | 890 | 857 | ||
Series 2769 Class BU, 5% 3/15/34 | 1,014 | 904 | ||
Series 2975 Class NA, 5% 7/15/23 | 434 | 439 | ||
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $65,739) | 65,648 |
Cash Equivalents - 19.2% | |||
Maturity Amount (000s) | Value (000s) | ||
Investments in repurchase agreements in a joint trading account at 2.19%, dated 7/31/08 due 8/1/08: | |||
(Collateralized by U.S. Government Obligations) # | $ 15,311 | $ 15,310 | |
(Collateralized by U.S. Government Obligations) # (a) | 172,048 | 172,038 | |
TOTAL CASH EQUIVALENTS (Cost $187,348) | 187,348 | ||
TOTAL INVESTMENT PORTFOLIO - 118.3% (Cost $1,151,552) | 1,152,203 | ||
NET OTHER ASSETS - (18.3)% | (178,075) | ||
NET ASSETS - 100% | $ 974,128 |
Futures Contracts | |||||
Expiration Date | Underlying Face Amount at Value (000s) | Unrealized Appreciation/ | |||
Purchased | |||||
Treasury Contracts | |||||
7 UST 2 YR Index Contracts | Oct. 2008 | $ 1,484 | $ 4 | ||
58 UST 5 YR Index Contracts | Oct. 2008 | 6,457 | 34 | ||
TOTAL TREASURY CONTRACTS |
| $ 38 |
|
The face value of futures purchased as a percentage of net assets - 0.9% |
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 5.35% with Bank of America | March 2037 | $ 1,800 | $ (118) | ||
Receive semi-annually a fixed rate equal to 3.1899% and pay quarterly a floating rate based on 3-month LIBOR with Goldman Sachs | April 2010 | 3,300 | 20 | ||
| $ 5,100 | $ (98) |
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 $9,511,000 or 1.0% of net assets. |
(d) A portion of the security is subject to a forward commitment to sell. |
(e) Security or a portion of the security was pledged to cover margin requirements for futures contracts. At the period end, the value of securities pledged amounted to $316,000. |
(f) 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 |
$15,310,000 due 8/01/08 at 2.19% | |
BNP Paribas Securities Corp. | $ 1,145 |
Banc of America Securities LLC | 1,775 |
Bank of America, NA | 1,718 |
Barclays Capital, Inc. | 7,474 |
Greenwich Capital Markets, Inc. | 280 |
ING Financial Markets LLC | 1,588 |
J.P. Morgan Securities, Inc. | 862 |
RBC Capital Markets Corp. | 234 |
WestLB AG | 234 |
| $ 15,310 |
$172,038,000 due 8/01/08 at 2.19% | |
Bank of America, NA | $ 172,038 |
Income Tax Information |
At July 31, 2008, the fund had a capital loss carryforward of approximately $17,628,000 of which $155,000, $6,019,000 and $11,454,000 will expire on July 31, 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, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $168,203 and repurchase agreements of $187,348) - See accompanying schedule: Unaffiliated issuers (cost $1,151,552) |
| $ 1,152,203 |
Commitment to sell securities on a delayed delivery basis | $ (7,031) | |
Receivable for securities sold on a delayed delivery basis | 7,081 | 50 |
Receivable for investments sold, regular delivery | 558 | |
Cash | 2 | |
Receivable for fund shares sold | 1,533 | |
Interest receivable | 7,569 | |
Receivable for daily variation on futures contracts | 33 | |
Other receivables | 1 | |
Total assets | 1,161,949 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 14,068 | |
Payable for fund shares redeemed | 962 | |
Distributions payable | 249 | |
Swap agreements, at value | 98 | |
Accrued management fee | 251 | |
Other affiliated payables | 112 | |
Other payables and accrued expenses | 43 | |
Collateral on securities loaned, at value | 172,038 | |
Total liabilities | 187,821 | |
|
|
|
Net Assets | $ 974,128 | |
Net Assets consist of: |
| |
Paid in capital | $ 990,984 | |
Undistributed net investment income | 388 | |
Accumulated undistributed net realized gain (loss) on investments | (17,885) | |
Net unrealized appreciation (depreciation) on investments | 641 | |
Net Assets, for 94,056 shares outstanding | $ 974,128 | |
Net Asset Value, offering price and redemption price per share ($974,128 ÷ 94,056 shares) | $ 10.36 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Operations
Amounts in thousands | Year ended July 31, 2008 | |
|
|
|
Investment Income |
|
|
Interest |
| $ 36,020 |
|
|
|
Expenses | ||
Management fee | $ 2,633 | |
Transfer agent fees | 835 | |
Fund wide operations fee | 288 | |
Independent trustees' compensation | 4 | |
Interest | 1 | |
Miscellaneous | 2 | |
Total expenses before reductions | 3,763 | |
Expense reductions | (15) | 3,748 |
Net investment income | 32,272 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 22,485 | |
Futures contracts | 512 | |
Swap agreements | 2,863 |
|
Total net realized gain (loss) |
| 25,860 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 1,397 | |
Futures contracts | 38 | |
Swap agreements | (638) | |
Delayed delivery commitments | 50 |
|
Total change in net unrealized appreciation (depreciation) |
| 847 |
Net gain (loss) | 26,707 | |
Net increase (decrease) in net assets resulting from operations | $ 58,979 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Intermediate Government Income Fund
Financial Statements - continued
Statement of Changes in Net Assets
Amounts in thousands | Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income | $ 32,272 | $ 31,542 |
Net realized gain (loss) | 25,860 | (5,105) |
Change in net unrealized appreciation (depreciation) | 847 | 9,911 |
Net increase (decrease) in net assets resulting | 58,979 | 36,348 |
Distributions to shareholders from net investment income | (33,538) | (32,742) |
Share transactions | 459,861 | 66,477 |
Reinvestment of distributions | 29,780 | 28,271 |
Cost of shares redeemed | (241,009) | (157,163) |
Net increase (decrease) in net assets resulting from share transactions | 248,632 | (62,415) |
Total increase (decrease) in net assets | 274,073 | (58,809) |
|
|
|
Net Assets | ||
Beginning of period | 700,055 | 758,864 |
End of period (including undistributed net investment income of $388 and undistributed net investment income of $1,908, respectively) | $ 974,128 | $ 700,055 |
Other Information Shares | ||
Sold | 44,265 | 6,665 |
Issued in reinvestment of distributions | 2,886 | 2,831 |
Redeemed | (23,326) | (15,756) |
Net increase (decrease) | 23,825 | (6,260) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.97 | $ 9.92 | $ 10.11 | $ 10.18 | $ 10.17 |
Income from Investment Operations |
|
|
|
|
|
Net investment income B | .398 | .435 | .414 | .330 | .274 |
Net realized and unrealized gain (loss) | .413 | .067 | (.219) | (.084) | .014 |
Total from investment operations | .811 | .502 | .195 | .246 | .288 |
Distributions from net investment income | (.421) | (.452) | (.385) | (.316) | (.278) |
Net asset value, end of period | $ 10.36 | $ 9.97 | $ 9.92 | $ 10.11 | $ 10.18 |
Total Return A | 8.24% | 5.14% | 1.97% | 2.43% | 2.84% |
Ratios to Average Net Assets C |
|
|
|
|
|
Expenses before reductions | .45% | .45% | .45% | .57% | .60% |
Expenses net of fee waivers, | .45% | .45% | .45% | .57% | .60% |
Expenses net of all reductions | .45% | .45% | .45% | .57% | .60% |
Net investment income | 3.86% | 4.36% | 4.14% | 3.23% | 2.67% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (in millions) | $ 974 | $ 700 | $ 759 | $ 884 | $ 963 |
Portfolio turnover rate | 318% | 121% | 97% | 90% | 152% |
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
Notes to Financial Statements
For the period ended July 31, 2008
(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. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Funds:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Wherever possible, each Fund uses independent pricing services approved by the Board of Trustees to value their investments. Debt securities, including restricted securities, 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. Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded. Swaps are marked-to-market daily based on dealer-supplied valuations and changes in value are recorded as unrealized appreciation (depreciation). 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. Actual prices received at disposition may differ.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
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 per share for processing shareholder transactions is
Annual Report
2. Significant Accounting Policies - continued
Investment Transactions and Income - continued
calculated as of the close of business of the New York Stock Exchange (NYSE) normally 4:00 pm Eastern time and 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.
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 substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. Each Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Funds' federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service.
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.
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
Capital accounts within the financial statements are adjusted for permanent book-tax differences. Certain adjustments have been made to the accounts relating to prior periods. Collectively, 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 | Unrealized | Unrealized | Net Unrealized |
Ginnie Mae Fund | $ 4,166,569 | $ 25,019 | $ (56,944) | $ (31,925) |
Intermediate Government Income Fund | 1,151,435 | 7,600 | (6,832) | 768 |
| Undistributed | Undistributed | Capital Loss |
Ginnie Mae Fund | $ 1,537 | $ - | $ (40,263) |
Intermediate Government Income Fund | 68 | - | (17,628) |
The tax character of distributions paid was as follows:
July 31, 2008 | Ordinary | Long-term | Total |
Ginnie Mae Fund | $ 165,414 | $ - | $ 165,414 |
Intermediate Government Income Fund | 33,538 | - | 33,538 |
July 31, 2007 | Ordinary | Long-term | Total |
Ginnie Mae Fund | $ 164,399 | $ - | $ 164,399 |
Intermediate Government Income Fund | 32,742 | - | 32,742 |
New Accounting Pronouncements. 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 results in expanded disclosures about fair value measurements.
Annual Report
2. Significant Accounting Policies - continued
New Accounting Pronouncements - continued
In addition, in March 2008, Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (SFAS 161), was issued and is effective for fiscal years beginning after November 15, 2008. SFAS 161 requires enhanced disclosures to provide information about the reasons the Funds invest in derivative instruments, the accounting treatment and the effect derivatives have on financial performance. Management is currently evaluating the impact the adoption of SFAS 161 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 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
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except ratios)
3. Operating Policies - continued
Delayed Delivery Transactions and When-Issued Securities - continued
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.
Futures Contracts. Certain Funds may use futures contracts to manage their 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 each applicable fund's Schedule of Investments. Securities deposited to meet margin requirements are identified in the Schedule of Investments. Futures contracts involve, to varying degrees, risk of loss in excess of any futures variation margin reflected in each applicable fund's Statement of Assets and Liabilities. The underlying face amount at value of any open futures contracts at period end is shown in each applicable fund's Schedule of Investments under the caption "Futures Contracts." This amount reflects each contract's exposure to the underlying instrument at period end. 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. 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. 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). Periodic payments received or made by each applicable Fund are recorded in the accompanying Statement of Operations as realized gains or losses, respectively. 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 Funds 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. Certain Funds may enter into dollar rolls in which the Fund sells mortgage-backed securities, realizing a gain or loss, and simultaneously agrees to repurchase substantially similar securities at a future date. In addition, certain Funds may enter into reverse dollar rolls in which the Fund purchases and simultaneously agrees to sell substantially similar securities at a future date. During the period between the sale and repurchase in a dollar roll transaction, the 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 that are permissible investments of the Fund. During the period between the purchase and subsequent sale in a reverse dollar roll transaction, the Fund is entitled to interest and principal payments on the securities purchased. 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, the Fund's right to repurchase or sell securities may be limited.
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
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except ratios)
4. Fees and Other Transactions with Affiliates - continued
Management Fee - continued
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 Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Funds' transfer, dividend disbursing and shareholder servicing agent. FIIOC receives an asset-based fee of .10% of each Fund's average net assets. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. Prior to January 1, 2008, Fidelity Service Company, Inc. (FSC), also an affiliate of FMR, was the Funds' transfer agent.
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 | $ 8 |
Intermediate Government Income Fund | 2 |
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 | $ 729 |
7. Bank Borrowings.
Each Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. Each Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. At period end, there were no bank borrowings outstanding. Each applicable Fund's activity in this program during the period for which loans were outstanding was as follows:
| Average Daily | Weighted Average | Interest |
Intermediate Government Income Fund | $ 7,508 | 2.31% | $ 1 |
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except ratios)
8. 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.
| Fund Wide Operations expense | Transfer |
|
|
|
Ginnie Mae Fund | $ 7 | $ 33 |
Intermediate Government Income Fund | 5 | 10 |
9. 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 positions of Fidelity Ginnie Mae Fund and Fidelity Intermediate Government Income Fund (funds of Fidelity Income Fund) at July 31, 2008, 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, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
September 26, 2008
Annual Report
Trustees and Officers
The Trustees, Member 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 Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 159 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 377 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 Member 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 funds' 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 (78) | |
| Year of Election or Appointment: 1984 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; 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 and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). Mr. Edward C. Johnson 3d and Mr. Arthur E. Johnson are not related. |
James C. Curvey (73) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
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 | |
Albert R. Gamper, Jr. (66) | |
| 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), a member of the Board of Governors, Rutgers University (2004-present), and Chairman of the Board of Saint Barnabas Health Care System. Previously, Mr. Gamper served as Chairman of the Board of Governors, Rutgers University (2004-2007). |
George H. Heilmeier (72) | |
| 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), Compaq, Automatic Data Processing, Inc. (ADP) (technology-based business outsourcing), 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. |
Arthur E. Johnson (61) | |
| Year of Election or Appointment: 2008 Mr. Johnson serves as Senior Vice President of Corporate Strategic Development of Lockheed Martin Corporation (defense contractor). In addition, Mr. Johnson serves as a member of the Board of Directors of AGL Resources, Inc. (holding company), and IKON Office Solutions, Inc. (document management systems and services). Mr. Arthur E. Johnson and Mr. Edward C. Johnson 3d are not related. |
James H. Keyes (67) | |
| 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 Navistar International Corporation (manufacture and sale of trucks, buses, and diesel engines) and Pitney Bowes, Inc. (integrated mail, messaging, and document management solutions). Previously, Mr. Keyes served as a member of the Board of LSI Logic Corporation (semiconductor technologies, 1984-2008). |
Marie L. Knowles (61) | |
| 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 McKesson Corporation (healthcare service). 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. Previously, Ms. Knowles served as a Director of Phelps Dodge Corporation (copper mining and manufacturing, 1994-2007). |
Kenneth L. Wolfe (69) | |
| Year of Election or Appointment: 2005 Mr. Wolfe is Chairman and a Director of Hershey Foods Corporation (2007-present), where prior to his retirement in 2001, he was Chairman and Chief Executive Officer. Mr. Wolfe currently serves as a member of the board of Revlon Inc. (2004-present). Previously, Mr. Wolfe served as a member of the boards of Adelphia Communications Corporation (2003-2006) and Bausch & Lomb, Inc. (1993-2007). |
Advisory Board Member and Executive Officers**:
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 (64) | |
| 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. |
John R. Hebble (50) | |
| Year of Election or Appointment: 2008 President and Treasurer of Ginnie Mae and Intermediate Government Income. Mr. Hebble also serves as President and Treasurer of Fidelity's Fixed Income and Asset Allocation Funds (2008-present) and is an employee of FMR (2003-present). Before joining Fidelity Investments, Mr. Hebble worked at Deutsche Asset Management where he served as Director of Fund Accounting (2002-2003) and Assistant Treasurer of the Scudder Funds. |
Boyce I. Greer (52) | |
| Year of Election or Appointment: 2006 Vice President of Ginnie Mae and Intermediate Government Income. Mr. Greer also serves as Vice President of 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). Mr. Greer is President and a Director of Fidelity Investments Money Management, Inc. (2007- |
Dwight D. Churchill (54) | |
| Year of Election or Appointment: 2008 Vice President of Ginnie Mae and Intermediate Government Income. Mr. Churchill also serves as Vice President of Fidelity's Bond Funds (2008-present). Mr. Churchill is Executive Vice President of FMR (2005-present), FMR Co., Inc. (2005-present) and Fidelity Investments Money Management, Inc. (2008-present). Previously, Mr. Churchill served as Senior Vice President of FMR (1997-2005) and Senior Vice President of Fidelity Investments Money Management, Inc. (2000-2006). |
Scott C. Goebel (40) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of Ginnie Mae and Intermediate Government Income. Mr. Goebel also serves as Secretary and CLO of other Fidelity funds (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present); and Deputy General Counsel of FMR LLC. Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
Nancy D. Prior (41) | |
| Year of Election or Appointment: 2008 Assistant Secretary of Ginnie Mae and Intermediate Government Income. Ms. Prior also serves as Assistant Secretary of Fidelity's Fixed Income and Asset Allocation Funds (2008-present) and is an employee of FMR (2002-present). |
Holly C. Laurent (54) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) officer of Ginnie Mae and Intermediate Government Income. Ms. Laurent also serves as AML officer of other Fidelity funds (2008-present) and is an employee of FMR LLC. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (49) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of Ginnie Mae and Intermediate Government Income. Ms. Reynolds also serves as Chief Financial Officer of other Fidelity funds (2008-present). Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was an audit partner with PwC's investment management practice. |
Michael H. Whitaker (41) | |
| Year of Election or Appointment: 2008 Chief Compliance Officer of Ginnie Mae and Intermediate Government Income. Mr. Whitaker also serves as Chief Compliance Officer of Fidelity's Fixed Income and Asset Allocation Funds (2008-present) and is an employee of FMR (2007-present). Prior to joining Fidelity Investments, Mr. Whitaker worked at MFS Investment Management where he served as Senior Vice President and Chief Compliance Officer (2004-2006), and Assistant General Counsel. |
Bryan A. Mehrmann (47) | |
| 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). |
Robert G. Byrnes (41) | |
| 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 Fidelity Pricing and Cash Management Services (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 (54) | |
| 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-present) and is an employee of FMR. |
Paul M. Murphy (61) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of Ginnie Mae and Intermediate Government Income. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (49) | |
| 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 Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Distributions (Unaudited)
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 | 15.94% |
The funds designate the amounts noted below as distributions paid during the period January 1, 2008 to July 31, 2008 as qualifying to be taxed as interest-related dividends for nonresident alien shareholders.
Fund |
|
Ginnie Mae | $ 95,007,957 |
Intermediate Government Income | $ 20,873,244 |
The fund will notify shareholders in January 2009 of amounts for use in preparing 2008 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 and, acting directly and through its separate committees, requests and receives information concerning, and considers at each of its meetings factors that are relevant to, its annual consideration of the 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 a written charter outlining the structure and purposes of the committee. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts.
At its June 2008 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew each fund's Advisory Contracts. 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 each fund's management fee and total expenses; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its 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 agreements with foreign sub-advisers Fidelity Management & Research (U.K.) Inc., Fidelity Management & Research (Japan) Inc., and Fidelity Management & Research (Hong Kong) Limited.
In considering 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 and through the exercise of its business judgment, 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. The Board's decision to renew the Advisory Contracts was not based on any single factor noted above, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, 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' investment personnel 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 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 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 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 Fidelity has taken a number of actions over the previous year 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 fees on Fidelity's Institutional Money Market Funds and launching Class IV and Institutional Class of certain of these funds; (iii) reducing the transfer agent fees for the Fidelity Select Portfolios and Investor Class of the VIP funds; and (iv) launching Class K of 29 equity funds as a lower-fee class available to certain employer-sponsored retirement plans.
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, 2007, 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 investment performance of the fund was lower than its benchmark for all the periods shown. The Board discussed with FMR actions that may be taken by FMR to improve the fund's below-benchmark performance and how investment personnel evaluate potential for incremental return against the risks involved in obtaining that incremental return. The Board considered the steps that FMR has taken to strengthen and refine its risk management processes in light of recent credit events that have affected various sectors of the fixed-income markets.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Fidelity Intermediate Government Income 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 investment performance of the fund was lower than its benchmark for all the periods shown. The Board discussed with FMR actions that may be taken by FMR to improve the fund's below-benchmark performance and how investment personnel evaluate potential for incremental return against the risks involved in obtaining that incremental return. The Board considered the steps that FMR has taken to strengthen and refine its risk management processes in light of recent credit events that have affected various sectors of the fixed-income markets.
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.
Annual Report
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 9% means that 91% 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.
Fidelity Ginnie Mae Fund
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
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 2007.
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.
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.
Annual Report
The Board noted that each fund's total expenses ranked below its competitive median for 2007.
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. The Board noted, however, that because the current contractual arrangements set each fund's 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.
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.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
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.
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 each 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 each fund will benefit from economies of scale through increased services to the fund, through waivers or reimbursements, or through fee or expense reductions. The Board concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
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 certain topics, including (i) fund performance trends and actions to be taken by FMR to improve certain funds' overall performance; (ii) portfolio manager changes that have occurred during the past year; (iii) Fidelity's fund profitability methodology, the profitability of certain fund service providers, and profitability trends for certain funds; (iv) Fidelity's compensation structure for portfolio managers and key personnel, including its effects on fund profitability and the extent to which portfolio manager compensation is linked to fund performance; (v) Fidelity's fee structures; (vi) the funds' sub-advisory arrangements; and (vii) accounts managed by Fidelity other than the Fidelity funds.
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
For mutual fund and brokerage trading.
For quotes.*
For account balances and holdings.
To review orders and mutual
fund activity.
To change your PIN.
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 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
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Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
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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
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Fidelity®
Government Income
Fund
Annual Report
July 31, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
Performance | How the fund has done over time. | |
Management's Discussion | The manager's review of fund performance, strategy and outlook. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, | |
Notes | Notes to the financial statements. | |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Board Approval of Investment Advisory Contracts and Management Fees |
|
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 LLC 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.
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 fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Domestic and international securities markets have struggled thus far in 2008. High-grade fixed-income investments produced modestly positive results, but many stock benchmarks suffered double-digit losses through the first half of this year. Financial markets are always unpredictable, but 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
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, if any) 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, 2008 | Past 1 | Past 5 | Past 10 |
Government Income | 8.25% | 4.69% | 5.39% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Government Income on July 31, 1998. 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
Bonds with less credit risk generally produced higher returns for investment-grade debt during the 12 months ending July 31, 2008. In that span, the Lehman Brothers® U.S. Aggregate Index - a proxy for high-quality, fixed-rate, taxable bonds - returned 6.15%. Treasuries did the best, buoyed by their reputation as the safest haven in turbulent times, with the Lehman Brothers U.S. Treasury Index up 8.99% during the period. Agency bonds, with their perceived "implicit" government backing, also did well, as the Lehman Brothers U.S. Agency Index rose 7.79%. Mortgage-backed securities ended the period with a gain of 6.96%, according to the Lehman Brothers U.S. Mortgage-Backed Securities Index, while the Lehman Brothers U.S. Credit Index - a measure of high-quality corporate debt - finished with a modest 2.85% increase. The asset-backed sector - home to weak-performing subprime debt - had negative results, as reflected in the 2.69% loss of the Lehman Brothers U.S. Fixed-Rate Asset-Backed Securities Index.
For the 12 months ending July 31, 2008, Government Income returned 8.25%, beating the 8.20% return of the Lehman Brothers 75% U.S. Government/25% U.S. Mortgage-Backed Securities Index. What we lost by underweighting Treasuries - the index's biggest sector concentration and its best performer during the period - we more than made up for through other Treasury-related decisions. In particular, security lending - whereby we loaned Treasury holdings overnight and invested the proceeds in higher-yielding investments - bolstered the fund's results. We also were successful with tactical trades of Treasury Inflation-Protected Securities (TIPS), which are not part of the index. Advantageous yield-curve positioning also benefited the fund's performance. In the mortgage sector, good picks among 15-year securities and collateralized mortgage obligations (CMOs) - which are made up of pools of pass-through securities whose cash flows are carved out into classes with their own expected maturities and cash-flow patterns - worked in the fund's favor. Likewise, my decision to maintain a larger-than-index exposure to hybrid adjustable-rate mortgage securities (ARMs) - which give homeowners a relatively low fixed-interest rate for an initial period and then convert to an ARM where the interest rate periodically resets - benefited relative performance, as they generally outpaced the index after adjusting for their lower interest-rate sensitivity. With the benefit of 20/20 hindsight, owning more of these types of securities may have been helpful given how well they performed, but I was mindful of the importance of diversification.
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
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, 2008 to July 31, 2008).
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.
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. In addition, if these transactional costs were included, your costs would have been higher.
Annual Report
Shareholder Expense Example - continued
| Beginning | Ending | Expenses Paid |
Class A |
|
|
|
Actual | $ 1,000.00 | $ 999.60 | $ 3.98 |
HypotheticalA | $ 1,000.00 | $ 1,020.89 | $ 4.02 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 1,000.70 | $ 3.88 |
HypotheticalA | $ 1,000.00 | $ 1,020.98 | $ 3.92 |
Class B |
|
|
|
Actual | $ 1,000.00 | $ 996.10 | $ 7.54 |
HypotheticalA | $ 1,000.00 | $ 1,017.30 | $ 7.62 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 996.00 | $ 7.64 |
HypotheticalA | $ 1,000.00 | $ 1,017.21 | $ 7.72 |
Government Income |
|
|
|
Actual | $ 1,000.00 | $ 1,001.40 | $ 2.24 |
HypotheticalA | $ 1,000.00 | $ 1,022.63 | $ 2.26 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 1,002.10 | $ 2.49 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized |
Class A | .80% |
Class T | .78% |
Class B | 1.52% |
Class C | 1.54% |
Government Income | .45% |
Institutional Class | .50% |
Annual Report
Investment Changes (Unaudited)
Coupon Distribution as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments |
Zero coupon bonds | 1.2 | 1.6 |
Less than 2% | 2.8 | 0.8 |
2 - 2.99% | 5.5 | 1.6 |
3 - 3.99% | 10.1 | 8.7 |
4 - 4.99% | 14.1 | 25.6 |
5 - 5.99% | 27.4 | 24.9 |
6 - 6.99% | 12.7 | 14.7 |
7% and over | 1.9 | 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, 2008 | ||
|
| 6 months ago |
Years | 4.8 | 4.6 |
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, 2008 | ||
|
| 6 months ago |
Years | 5.1 | 4.5 |
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, 2008* | As of January 31, 2008** | ||||||
![]() | Mortgage |
| ![]() | Mortgage |
| ||
![]() | CMOs and Other Mortgage Related Securities 8.3% |
| ![]() | CMOs and Other Mortgage Related Securities 7.7% |
| ||
![]() | U.S. Treasury |
| ![]() | U.S. Treasury |
| ||
![]() | U.S. Government |
| ![]() | U.S. Government |
| ||
![]() | Asset-Backed |
| ![]() | Asset-Backed |
| ||
![]() | Short-Term |
| ![]() | Short-Term |
| ||
* Futures and Swaps | 11.1% |
| ** Futures and Swaps | 5.7% |
|
† Short-Term Investments and Net Other Assets are not included in the pie chart. |
Annual Report
Investments July 31, 2008
Showing Percentage of Net Assets
U.S. Government and Government Agency Obligations - 56.0% | ||||
| Principal Amount (000s) | Value | ||
U.S. Government Agency Obligations - 21.7% | ||||
Fannie Mae: | ||||
2.5% 4/9/10 | $ 46,360 | $ 45,939 | ||
3% 7/12/10 | 150,000 | 149,515 | ||
3.25% 8/12/10 (b) | 157,020 | 157,168 | ||
3.375% 5/19/11 | 24,967 | 24,877 | ||
3.625% 2/12/13 (b) | 32,905 | 32,437 | ||
3.875% 7/12/13 (b) | 26,275 | 26,091 | ||
4.75% 11/19/12 | 29,255 | 30,187 | ||
4.875% 4/15/09 | 43,349 | 43,966 | ||
4.875% 5/18/12 | 170,000 | 175,996 | ||
5% 2/16/12 | 31,355 | 32,606 | ||
5.125% 4/15/11 | 188,800 | 196,783 | ||
5.375% 6/12/17 | 49,471 | 52,231 | ||
6% 5/15/11 | 10,130 | 10,790 | ||
6.625% 9/15/09 | 149,585 | 155,586 | ||
Freddie Mac: | ||||
3.25% 7/16/10 | 11,145 | 11,162 | ||
3.5% 5/29/13 (b) | 123,800 | 120,997 | ||
3.75% 6/28/13 | 5,000 | 4,938 | ||
3.875% 6/29/11 | 19,531 | 19,703 | ||
4.75% 3/5/12 | 10,000 | 10,316 | ||
4.875% 2/9/10 | 27,220 | 27,962 | ||
4.875% 6/13/18 (b) | 44,378 | 45,095 | ||
5% 6/11/09 (b) | 100,000 | 101,783 | ||
5% 1/30/14 | 25,000 | 25,973 | ||
5.125% 11/17/17 (b) | 25,000 | 25,911 | ||
5.25% 5/21/09 | 154,235 | 157,143 | ||
5.25% 7/18/11 | 29,530 | 30,918 | ||
5.75% 1/15/12 | 32,906 | 34,934 | ||
Israeli State (guaranteed by U.S. Government through Agency for International Development): | ||||
5.5% 9/18/23 | 110,500 | 118,392 | ||
6.8% 2/15/12 | 30,000 | 31,869 | ||
Overseas Private Investment Corp. U.S. Government guaranteed participation certificates: | ||||
6.77% 11/15/13 | 5,627 | 5,944 | ||
6.99% 5/21/16 | 19,051 | 20,852 | ||
Private Export Funding Corp. secured: | ||||
4.974% 8/15/13 | 22,940 | 23,745 | ||
5.66% 9/15/11 (c) | 18,000 | 19,023 | ||
5.685% 5/15/12 | 24,035 | 25,501 | ||
U.S. Government and Government Agency Obligations - continued | ||||
| Principal Amount (000s) | Value | ||
U.S. Government Agency Obligations - continued | ||||
Private Export Funding Corp. secured: - continued | ||||
6.67% 9/15/09 | $ 3,500 | $ 3,644 | ||
Small Business Administration guaranteed development participation certificates: | ||||
Series 2002-20J Class 1, 4.75% 10/1/22 | 5,675 | 5,494 | ||
Series 2002-20K Class 1, 5.08% 11/1/22 | 12,402 | 12,225 | ||
Series 2003-P10B, Class 1 5.136% 8/10/13 | 8,023 | 8,027 | ||
Series 2004-20H Class 1, 5.17% 8/1/24 | 3,521 | 3,480 | ||
Tennessee Valley Authority 5.375% 4/1/56 | 8,429 | 8,485 | ||
U.S. Department of Housing and Urban Development Government guaranteed participation certificates Series 1999-A, 5.96% 8/1/09 | 18,380 | 18,660 | ||
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS | 2,056,348 | |||
U.S. Treasury Obligations - 34.3% | ||||
U.S. Treasury Bonds: | ||||
4.375% 2/15/38 | 130,700 | 125,952 | ||
4.75% 2/15/37 (f) | 19,000 | 19,398 | ||
5% 5/15/37 (b) | 139,000 | 147,677 | ||
6.125% 8/15/29 | 162,102 | 193,712 | ||
6.25% 8/15/23 | 1,500 | 1,777 | ||
8% 11/15/21 (f) | 146,794 | 198,585 | ||
U.S. Treasury Notes: | ||||
1.75% 3/31/10 (b) | 341,106 | 337,642 | ||
2.125% 1/31/10 (f) | 198,280 | 197,738 | ||
2.5% 3/31/13 | 43,781 | 42,454 | ||
2.75% 2/28/13 | 54,231 | 53,185 | ||
2.875% 6/30/10 (b) | 308,061 | 310,299 | ||
3.125% 11/30/09 | 29,100 | 29,421 | ||
3.375% 11/30/12 (b) | 217,916 | 219,993 | ||
3.375% 6/30/13 (b) | 95,927 | 96,392 | ||
3.375% 7/31/13 | 80,000 | 80,375 | ||
3.5% 5/31/13 | 55,000 | 55,610 | ||
3.5% 2/15/18 (b) | 78,000 | 75,154 | ||
3.625% 12/31/12 (b) | 32,788 | 33,423 | ||
3.875% 5/15/18 (b) | 41,449 | 41,093 | ||
4% 9/30/09 | 3,000 | 3,060 | ||
4% 2/15/14 | 43,031 | 44,487 | ||
4.25% 11/15/14 (b) | 77,185 | 80,845 | ||
4.25% 11/15/17 (b) | 189,000 | 193,238 | ||
4.5% 2/28/11 | 4,190 | 4,374 | ||
U.S. Government and Government Agency Obligations - continued | ||||
| Principal Amount (000s) | Value | ||
U.S. Treasury Obligations - continued | ||||
U.S. Treasury Notes: - continued | ||||
4.625% 8/31/11 | $ 593 | $ 624 | ||
4.625% 7/31/12 | 20 | 21 | ||
4.625% 11/15/16 (b) | 117,000 | 123,645 | ||
4.75% 5/15/14 (b) | 28,328 | 30,426 | ||
4.75% 8/15/17 (b) | 231,000 | 245,131 | ||
5.125% 5/15/16 | 249,330 | 272,588 | ||
TOTAL U.S. TREASURY OBLIGATIONS | 3,258,319 | |||
TOTAL U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS (Cost $5,281,922) | 5,314,667 | |||
U.S. Government Agency - Mortgage Securities - 30.9% | ||||
| ||||
Fannie Mae - 22.1% | ||||
3.695% 10/1/33 (g) | 577 | 581 | ||
3.71% 6/1/33 (g) | 1,871 | 1,867 | ||
3.737% 5/1/33 (g) | 2,933 | 2,940 | ||
3.741% 10/1/33 (g) | 525 | 529 | ||
3.75% 1/1/34 (g) | 491 | 496 | ||
3.906% 5/1/34 (g) | 3,868 | 3,893 | ||
3.916% 5/1/34 (g) | 5,174 | 5,213 | ||
3.98% 9/1/33 (g) | 5,135 | 5,164 | ||
3.988% 10/1/18 (g) | 329 | 332 | ||
4% 9/1/13 to 6/1/20 | 22,747 | 21,844 | ||
4.085% 6/1/33 (g) | 364 | 363 | ||
4.174% 1/1/35 (g) | 1,222 | 1,231 | ||
4.235% 1/1/34 (g) | 1,642 | 1,659 | ||
4.25% 2/1/35 (g) | 626 | 632 | ||
4.251% 8/1/33 (g) | 794 | 797 | ||
4.259% 10/1/33 (g) | 251 | 253 | ||
4.284% 3/1/33 (g) | 228 | 230 | ||
4.301% 3/1/33 (g) | 303 | 306 | ||
4.306% 5/1/33 (g) | 148 | 149 | ||
4.328% 1/1/35 (g) | 709 | 714 | ||
4.341% 10/1/19 (g) | 995 | 1,001 | ||
4.366% 2/1/34 (g) | 972 | 983 | ||
4.388% 2/1/35 (g) | 981 | 991 | ||
4.41% 10/1/34 (g) | 3,273 | 3,299 | ||
4.418% 5/1/35 (g) | 390 | 392 | ||
U.S. Government Agency - Mortgage Securities - continued | ||||
| Principal Amount (000s) | Value | ||
Fannie Mae - continued | ||||
4.42% 6/1/35 (g) | $ 2,238 | $ 2,253 | ||
4.425% 8/1/34 (g) | 1,549 | 1,565 | ||
4.427% 1/1/35 (g) | 606 | 608 | ||
4.431% 5/1/33 (g) | 4,876 | 4,902 | ||
4.435% 3/1/35 (g) | 936 | 943 | ||
4.473% 7/1/35 (g) | 1,977 | 1,977 | ||
4.483% 11/1/33 (g) | 1,247 | 1,258 | ||
4.485% 12/1/34 (g) | 452 | 456 | ||
4.492% 1/1/35 (g) | 4,635 | 4,692 | ||
4.5% 2/1/18 to 6/1/23 | 32,084 | 31,093 | ||
4.545% 5/1/35 (g) | 1,526 | 1,536 | ||
4.565% 7/1/35 (g) | 2,267 | 2,265 | ||
4.599% 10/1/35 (g) | 253 | 255 | ||
4.65% 10/1/34 (g) | 2,860 | 2,881 | ||
4.705% 7/1/34 (g) | 1,676 | 1,692 | ||
4.707% 2/1/35 (g) | 5,400 | 5,479 | ||
4.727% 6/1/33 (g) | 191 | 192 | ||
4.765% 12/1/35 (g) | 3,379 | 3,417 | ||
4.774% 12/1/34 (g) | 585 | 592 | ||
4.776% 4/1/35 (g) | 221 | 223 | ||
4.783% 7/1/35 (g) | 4,062 | 4,099 | ||
4.791% 10/1/35 (g) | 1,553 | 1,570 | ||
4.797% 6/1/35 (g) | 2,647 | 2,659 | ||
4.804% 1/1/34 (g) | 55 | 56 | ||
4.812% 11/1/34 (g) | 1,855 | 1,873 | ||
4.835% 1/1/35 (g) | 9,087 | 9,176 | ||
4.85% 7/1/35 (g) | 5,002 | 5,052 | ||
4.852% 7/1/34 (g) | 4,740 | 4,790 | ||
4.859% 10/1/34 (g) | 6,673 | 6,740 | ||
4.873% 8/1/34 (g) | 437 | 440 | ||
4.88% 5/1/35 (g) | 1,612 | 1,629 | ||
4.881% 8/1/34 (g) | 4,181 | 4,224 | ||
4.926% 8/1/34 (g) | 7,237 | 7,302 | ||
4.969% 3/1/35 (g) | 4,312 | 4,372 | ||
4.985% 2/1/35 (g) | 4,719 | 4,774 | ||
4.986% 4/1/33 (g) | 78 | 78 | ||
4.987% 2/1/34 (g) | 6,634 | 6,688 | ||
5% 6/1/14 to 9/1/37 (e) | 376,475 | 367,287 | ||
5% 8/1/38 (d) | 300 | 285 | ||
5% 8/1/38 (d) | 300 | 285 | ||
5% 8/1/38 (d) | 100 | 95 | ||
5% 8/13/38 (d) | 400 | 381 | ||
U.S. Government Agency - Mortgage Securities - continued | ||||
| Principal Amount (000s) | Value | ||
Fannie Mae - continued | ||||
5% 8/13/38 (d) | $ 400 | $ 381 | ||
5% 8/13/38 (d) | 1,000 | 952 | ||
5% 8/13/38 (d) | 500 | 476 | ||
5% 8/13/38 (d) | 400 | 381 | ||
5% 8/13/38 (d) | 1,000 | 952 | ||
5.012% 7/1/34 (g) | 272 | 275 | ||
5.069% 1/1/37 (g) | 5,486 | 5,578 | ||
5.072% 7/1/34 (g) | 1,688 | 1,708 | ||
5.089% 9/1/34 (g) | 602 | 608 | ||
5.099% 10/1/35 (g) | 3,565 | 3,613 | ||
5.127% 8/1/33 (g) | 708 | 713 | ||
5.131% 8/1/34 (g) | 5,074 | 5,148 | ||
5.171% 3/1/36 (g) | 12,324 | 12,512 | ||
5.185% 3/1/35 (g) | 325 | 329 | ||
5.199% 5/1/35 (g) | 397 | 400 | ||
5.224% 5/1/35 (g) | 4,814 | 4,880 | ||
5.245% 7/1/35 (g) | 257 | 259 | ||
5.267% 12/1/36 (g) | 2,409 | 2,453 | ||
5.278% 3/1/35 (g) | 397 | 400 | ||
5.298% 12/1/34 (g) | 798 | 809 | ||
5.304% 3/1/36 (g) | 32,767 | 33,319 | ||
5.326% 4/1/36 (g) | 4,292 | 4,407 | ||
5.336% 7/1/35 (g) | 2,003 | 2,032 | ||
5.349% 2/1/37 (g) | 2,311 | 2,358 | ||
5.357% 2/1/36 (g) | 6,643 | 6,738 | ||
5.392% 2/1/37 (g) | 11,576 | 11,769 | ||
5.409% 3/1/35 (g) | 417 | 418 | ||
5.438% 8/1/36 (g) | 5,627 | 5,740 | ||
5.5% 4/1/09 to 6/1/37 (e) | 525,547 | 522,803 | ||
5.5% 8/1/23 (d) | 1,000 | 1,004 | ||
5.5% 8/18/23 (d) | 10,000 | 10,044 | ||
5.5% 8/18/23 (d) | 15,000 | 15,066 | ||
5.5% 8/18/23 (d) | 200 | 201 | ||
5.5% 8/18/23 (d) | 100 | 100 | ||
5.5% 8/18/23 (d) | 300 | 301 | ||
5.5% 8/18/23 (d) | 300 | 301 | ||
5.5% 8/18/23 (d) | 500 | 502 | ||
5.5% 8/18/23 (d) | 200 | 201 | ||
5.5% 8/18/23 (d) | 300 | 301 | ||
5.5% 8/18/23 (d) | 400 | 402 | ||
5.5% 8/13/38 (d) | 44,000 | 43,144 | ||
5.5% 8/13/38 (d)(e) | 150,000 | 147,083 | ||
U.S. Government Agency - Mortgage Securities - continued | ||||
| Principal Amount (000s) | Value | ||
Fannie Mae - continued | ||||
5.5% 8/13/38 (d) | $ 800 | $ 784 | ||
5.513% 3/1/35 (g) | 159 | 160 | ||
5.632% 2/1/36 (g) | 2,752 | 2,806 | ||
5.641% 4/1/36 (g) | 10,925 | 11,147 | ||
5.665% 6/1/36 (g) | 6,505 | 6,637 | ||
5.693% 1/1/36 (g) | 28,622 | 29,214 | ||
5.789% 5/1/36 (g) | 2,797 | 2,853 | ||
5.793% 3/1/36 (g) | 7,587 | 7,748 | ||
5.801% 1/1/36 (g) | 2,307 | 2,339 | ||
5.816% 5/1/36 (g) | 16,313 | 16,657 | ||
5.843% 3/1/36 (g) | 7,391 | 7,501 | ||
5.863% 6/1/35 (g) | 1,711 | 1,744 | ||
5.871% 3/1/36 (g) | 6,056 | 6,189 | ||
5.896% 12/1/36 (g) | 4,029 | 4,125 | ||
5.917% 5/1/36 (g) | 4,764 | 4,877 | ||
5.951% 5/1/36 (g) | 2,495 | 2,556 | ||
5.955% 2/1/35 (g) | 144 | 145 | ||
6% 4/1/12 to 1/1/38 (e) | 273,058 | 279,665 | ||
6% 8/1/38 (d) | 3,000 | 3,018 | ||
6.009% 4/1/36 (g) | 45,752 | 46,860 | ||
6.025% 12/1/36 (g) | 27,022 | 27,690 | ||
6.028% 9/1/36 (g) | 30,731 | 31,508 | ||
6.062% 4/1/36 (g) | 22,968 | 23,563 | ||
6.095% 3/1/37 (g) | 4,412 | 4,526 | ||
6.102% 3/1/33 (g) | 254 | 256 | ||
6.125% 2/1/33 (g) | 547 | 549 | ||
6.169% 4/1/36 (g) | 4,271 | 4,380 | ||
6.206% 2/1/35 (g) | 153 | 154 | ||
6.226% 3/1/37 (g) | 1,494 | 1,523 | ||
6.229% 5/1/36 (g) | 12,426 | 12,767 | ||
6.234% 2/1/35 (g) | 373 | 375 | ||
6.251% 6/1/36 (g) | 629 | 641 | ||
6.3% 10/1/36 (g) | 20,621 | 21,056 | ||
6.5% 2/1/12 to 4/1/37 | 43,655 | 45,361 | ||
6.5% 8/1/38 (d) | 63,000 | 64,727 | ||
6.547% 9/1/36 (g) | 8,243 | 8,516 | ||
7% 7/1/13 to 7/1/32 | 4,826 | 5,121 | ||
7.5% 8/1/10 to 4/1/29 | 99 | 103 | ||
8.5% 1/1/15 to 7/1/31 | 490 | 526 | ||
9% 11/1/11 to 5/1/14 | 465 | 479 | ||
9.5% 11/15/09 to 10/1/20 | 633 | 692 | ||
11% 8/1/10 | 6 | 6 | ||
U.S. Government Agency - Mortgage Securities - continued | ||||
| Principal Amount (000s) | Value | ||
Fannie Mae - continued | ||||
11.25% 5/1/14 | $ 7 | $ 7 | ||
11.5% 6/15/19 to 1/15/21 | 1,044 | 1,163 | ||
12.5% 8/1/15 to 3/1/16 | 2 | 2 | ||
| 2,101,770 | |||
Freddie Mac - 5.3% | ||||
4% 5/1/19 to 11/1/20 | 23,219 | 22,029 | ||
4.275% 6/1/35 (g) | 888 | 887 | ||
4.307% 12/1/34 (g) | 797 | 803 | ||
4.406% 3/1/35 (g) | 928 | 929 | ||
4.422% 2/1/34 (g) | 546 | 546 | ||
4.429% 3/1/35 (g) | 840 | 846 | ||
4.5% 8/1/33 | 3,577 | 3,305 | ||
4.622% 4/1/35 (g) | 6,756 | 6,786 | ||
4.667% 9/1/36 (g) | 2,923 | 2,944 | ||
4.716% 2/1/34 (g) | 6,855 | 6,871 | ||
4.79% 2/1/36 (g) | 1,142 | 1,149 | ||
4.791% 3/1/35 (g) | 2,425 | 2,442 | ||
4.84% 4/1/35 (g) | 3,414 | 3,435 | ||
5% 1/1/09 to 9/1/35 | 11,842 | 11,433 | ||
5.022% 4/1/35 (g) | 525 | 526 | ||
5.091% 6/1/35 (g) | 2,395 | 2,418 | ||
5.125% 7/1/35 (g) | 4,049 | 4,095 | ||
5.275% 2/1/36 (g) | 287 | 290 | ||
5.376% 3/1/35 (g) | 561 | 564 | ||
5.485% 1/1/36 (g) | 3,921 | 3,981 | ||
5.5% 8/1/14 to 7/1/37 | 191,344 | 193,712 | ||
5.5% 8/1/38 (d) | 8,000 | 7,836 | ||
5.5% 8/1/38 (d) | 600 | 588 | ||
5.5% 8/1/38 (d) | 500 | 490 | ||
5.5% 8/13/38 (d) | 300 | 294 | ||
5.5% 8/13/38 (d) | 1,000 | 979 | ||
5.5% 8/13/38 (d) | 1,600 | 1,567 | ||
5.5% 8/13/38 (d) | 1,000 | 979 | ||
5.5% 8/13/38 (d) | 800 | 784 | ||
5.5% 8/13/38 (d) | 1,200 | 1,175 | ||
5.52% 1/1/36 (g) | 5,452 | 5,531 | ||
5.579% 2/1/35 (g) | 1,119 | 1,127 | ||
5.743% 10/1/35 (g) | 1,157 | 1,177 | ||
5.829% 5/1/37 (g) | 2,978 | 3,026 | ||
6% 7/1/16 to 5/1/38 | 68,336 | 69,567 | ||
6% 8/1/38 (d) | 9,000 | 9,055 | ||
U.S. Government Agency - Mortgage Securities - continued | ||||
| Principal Amount (000s) | Value | ||
Freddie Mac - continued | ||||
6% 8/1/38 (d) | $ 300 | $ 302 | ||
6% 8/13/38 (d) | 300 | 302 | ||
6% 8/13/38 (d) | 100 | 101 | ||
6% 8/13/38 (d) | 400 | 402 | ||
6% 8/13/38 (d) | 400 | 402 | ||
6% 8/13/38 (d) | 1,000 | 1,006 | ||
6% 8/13/38 (d) | 500 | 503 | ||
6% 8/13/38 (d) | 400 | 402 | ||
6% 8/13/38 (d) | 600 | 604 | ||
6.021% 6/1/36 (g) | 3,157 | 3,221 | ||
6.224% 5/1/36 (g) | 2,584 | 2,645 | ||
6.278% 3/1/37 (g) | 8,086 | 8,283 | ||
6.378% 7/1/36 (g) | 3,019 | 3,094 | ||
6.423% 10/1/36 (g) | 8,566 | 8,794 | ||
6.491% 3/1/33 (g) | 163 | 165 | ||
6.5% 11/1/10 to 10/1/36 | 46,850 | 48,674 | ||
6.586% 12/1/36 (g) | 15,432 | 15,770 | ||
6.685% 1/1/37 (g) | 10,780 | 11,095 | ||
6.689% 10/1/36 (g) | 7,783 | 8,008 | ||
6.844% 10/1/36 (g) | 10,819 | 11,085 | ||
7% 4/1/11 | 3 | 3 | ||
7.5% 5/1/11 to 7/1/16 | 1,638 | 1,723 | ||
8.5% 8/1/08 to 9/1/29 | 194 | 209 | ||
9% 8/1/08 to 10/1/20 | 68 | 73 | ||
9.5% 6/1/09 to 8/1/21 | 256 | 282 | ||
9.75% 8/1/14 | 139 | 150 | ||
10% 7/1/09 to 8/1/21 | 22 | 24 | ||
11% 7/1/13 to 5/1/14 | 58 | 64 | ||
12% 8/1/13 to 3/1/15 | 2 | 2 | ||
12.25% 4/1/11 | 0 | 0 | ||
12.5% 2/1/10 to 6/1/19 | 17 | 19 | ||
13% 8/1/10 to 6/1/15 | 6 | 7 | ||
| 501,580 | |||
Government National Mortgage Association - 3.5% | ||||
5% 2/20/33 to 6/20/38 | 73,081 | 70,736 | ||
5.25% 7/20/34 (g) | 737 | 740 | ||
5.5% 12/15/33 to 2/15/34 | 65,387 | 65,264 | ||
5.5% 8/1/38 (d)(e) | 12,000 | 11,911 | ||
5.5% 8/1/38 (d)(e) | 8,000 | 7,941 | ||
5.5% 8/1/38 (d) | 1,000 | 993 | ||
5.5% 8/1/38 (d)(e) | 22,000 | 21,837 | ||
U.S. Government Agency - Mortgage Securities - continued | ||||
| Principal Amount (000s) | Value | ||
Government National Mortgage Association - continued | ||||
5.5% 8/1/38 (d) | $ 1,000 | $ 993 | ||
5.5% 8/1/38 (d)(e) | 5,000 | 4,942 | ||
6% 9/15/08 to 1/15/38 | 121,433 | 123,541 | ||
6.5% 2/15/24 to 10/15/35 | 19,802 | 20,673 | ||
7% 10/15/26 to 8/15/32 | 90 | 95 | ||
7.5% 3/15/28 to 8/15/29 | 112 | 119 | ||
8% 6/15/18 to 12/15/23 | 1,212 | 1,303 | ||
8.5% 1/15/25 | 4 | 4 | ||
9% 12/15/09 | 0 | 0 | ||
9.5% 2/15/25 | 1 | 1 | ||
10.5% 4/15/14 to 1/20/18 | 93 | 106 | ||
13.5% 7/15/11 | 5 | 6 | ||
| 331,205 | |||
TOTAL U.S. GOVERNMENT AGENCY - MORTGAGE SECURITIES (Cost $2,933,057) | 2,934,555 | |||
Asset-Backed Securities - 0.1% | ||||
| ||||
Fannie Mae Grantor Trust Series 2005-T4 Class A1C, 2.6113% 9/25/35 (g) | 4,793 | 4,769 | ||
Collateralized Mortgage Obligations - 8.3% | ||||
| ||||
U.S. Government Agency - 8.3% | ||||
Fannie Mae: | ||||
planned amortization class: | ||||
Series 1992-168 Class KB, 7% 10/25/22 | 1,352 | 1,404 | ||
Series 1993-207 Class H, 6.5% 11/25/23 | 18,360 | 19,064 | ||
Series 1993-240 Class PD, 6.25% 12/25/13 | 4,400 | 4,543 | ||
Series 1994-23: | ||||
Class PG, 6% 4/25/23 | 3,032 | 3,055 | ||
Class PZ, 6% 2/25/24 | 10,676 | 10,961 | ||
Series 1996-28 Class PK, 6.5% 7/25/25 | 3,796 | 3,911 | ||
Series 2003-28 Class KG, 5.5% 4/25/23 | 4,940 | 4,750 | ||
Series 2006-45 Class OP, 6/25/36 (i) | 5,849 | 4,310 | ||
Series 2006-62 Class KP, 4/25/36 (i) | 12,300 | 8,624 | ||
sequential payer: | ||||
Series 1997-41 Class J, 7.5% 6/18/27 | 2,598 | 2,751 | ||
Series 2007-115 Class BE, 4.5% 12/25/22 | 15,400 | 14,430 | ||
Series 2003-22 6% 4/25/33 (h) | 17,992 | 4,307 | ||
Collateralized Mortgage Obligations - continued | ||||
| Principal Amount (000s) | Value | ||
U.S. Government Agency - continued | ||||
Fannie Mae Grantor Trust planned amortization class Series 2005-81 Class PC, 5.5% 9/25/35 | $ 2,150 | $ 2,088 | ||
Fannie Mae subordinate REMIC pass-thru certificates: | ||||
floater: | ||||
Series 2001-38 Class QF, 3.4413% 8/25/31 (g) | 631 | 635 | ||
Series 2002-49 Class FB, 3.0563% 11/18/31 (g) | 1,011 | 991 | ||
Series 2002-60 Class FV, 3.4613% 4/25/32 (g) | 428 | 428 | ||
Series 2002-75 Class FA, 3.4613% 11/25/32 (g) | 877 | 876 | ||
Series 2004-54 Class FE, 3.6113% 2/25/33 (g) | 522 | 509 | ||
planned amortization class: | ||||
Series 2002-11 Class QC, 5.5% 3/25/17 | 12,553 | 12,752 | ||
Series 2002-18 Class PC, 5.5% 4/25/17 | 1,170 | 1,190 | ||
Series 2002-47 Class QE, 5.5% 8/25/17 | 9,085 | 9,208 | ||
Series 2003-113 Class PE, 4% 11/25/18 | 7,545 | 6,958 | ||
Series 2004-21 Class QE, 4.5% 11/25/32 | 1,500 | 1,410 | ||
Series 2005-102 Class CO, 11/25/35 (i) | 6,079 | 4,523 | ||
Series 2006-12 Class BO, 10/25/35 (i) | 27,413 | 20,461 | ||
Series 2006-37 Class OW, 5/25/36 (i) | 6,574 | 5,023 | ||
sequential payer: | ||||
Series 2001-20 Class Z, 6% 5/25/31 | 20,392 | 20,716 | ||
Series 2001-46 Class ZG, 6% 9/25/31 | 7,392 | 7,544 | ||
Series 2002-79 Class Z, 5.5% 11/25/22 | 11,827 | 11,650 | ||
Series 2003-84 Class JK, 4.5% 9/25/18 | 10,000 | 9,493 | ||
Series 2004-3 Class BA, 4% 7/25/17 | 585 | 576 | ||
Series 2004-91 Class AH, 4.5% 5/25/29 | 5,475 | 5,390 | ||
Series 2005-117, Class JN, 4.5% 1/25/36 | 645 | 563 | ||
Series 2006-72 Class CY, 6% 8/25/26 | 10,215 | 10,124 | ||
Series 2004-19 Class AY, 4% 4/25/19 | 37,116 | 33,730 | ||
Series 2007-36: | ||||
Class GO, 4/25/37 (i) | 1,221 | 847 | ||
Class PO, 4/25/37 (i) | 2,728 | 1,874 | ||
Class SB, 4.1388% 4/25/37 (g)(h) | 35,426 | 2,886 | ||
Class SG, 4.1388% 4/25/37 (g)(h) | 15,882 | 1,343 | ||
Series 2007-66 Class SA, 24.8325% 7/25/37 (g) | 4,801 | 5,783 | ||
Freddie Mac: | ||||
planned amortization class: | ||||
Series 2115 Class PE, 6% 1/15/14 | 764 | 785 | ||
Series 3149 Class OD, 5/15/36 (i) | 32,182 | 22,588 | ||
sequential payer Series 2114 Class ZM, 6% 1/15/29 | 2,324 | 2,372 | ||
Collateralized Mortgage Obligations - continued | ||||
| Principal Amount (000s) | Value | ||
U.S. Government Agency - continued | ||||
Freddie Mac Manufactured Housing participation certificates guaranteed: | ||||
floater Series 1686 Class FA, 3.4% 2/15/24 (g) | $ 1,017 | $ 1,023 | ||
planned amortization class Series 1681 Class PJ, 7% 12/15/23 | 6,066 | 6,230 | ||
Freddie Mac Multi-class participation certificates guaranteed: | ||||
floater: | ||||
Series 2389 Class DA, 3.3575% 11/15/30 (g) | 69 | 69 | ||
Series 2530 Class FE, 3.0575% 2/15/32 (g) | 592 | 583 | ||
Series 2630 Class FL, 2.9575% 6/15/18 (g) | 550 | 555 | ||
Series 3008 Class SM, 0% 7/15/35 (g) | 376 | 284 | ||
planned amortization class: | ||||
Series 1141 Class G, 9% 9/15/21 | 372 | 389 | ||
Series 1614 Class L, 6.5% 7/15/23 | 3,624 | 3,700 | ||
Series 1671 Class G, 6.5% 8/15/23 | 1 | 1 | ||
Series 2006-15 Class OP, 3/25/36 (i) | 7,321 | 5,141 | ||
Series 2131 Class BG, 6% 3/15/29 | 48,671 | 49,175 | ||
Series 2356 Class GD, 6% 9/15/16 | 481 | 492 | ||
Series 2376 Class JE, 5.5% 11/15/16 | 3,321 | 3,345 | ||
Series 2378 Class PE, 5.5% 11/15/16 | 9,393 | 9,459 | ||
Series 2381 Class OG, 5.5% 11/15/16 | 2,691 | 2,711 | ||
Series 2390 Class CH, 5.5% 12/15/16 | 8,558 | 8,666 | ||
Series 2628 Class OE, 4.5% 6/15/18 | 6,815 | 6,644 | ||
Series 2640 Class GE, 4.5% 7/15/18 | 7,310 | 7,121 | ||
Series 2660 Class ML, 3.5% 7/15/22 | 225 | 225 | ||
Series 2682 Class LD, 4.5% 10/15/33 | 777 | 673 | ||
Series 2752 Class PW, 4% 4/15/22 | 1,134 | 1,136 | ||
Series 2802 Class OB, 6% 5/15/34 | 10,455 | 10,727 | ||
Series 2810 Class PD, 6% 6/15/33 | 995 | 999 | ||
Series 2937 Class KC, 4.5% 2/15/20 | 19,686 | 18,940 | ||
Series 2962 Class BE, 4.5% 4/15/20 | 15,015 | 14,332 | ||
Series 3077 Class TO, 4/15/35 (i) | 16,048 | 11,535 | ||
Series 3110 Class OP, 9/15/35 (i) | 15,175 | 10,993 | ||
Series 3119 Class PO, 2/15/36 (i) | 18,377 | 13,446 | ||
Series 3121 Class KO, 3/15/36 (i) | 6,321 | 4,847 | ||
Series 3123 Class LO, 3/15/36 (i) | 11,927 | 8,394 | ||
Series 3145 Class GO, 4/15/36 (i) | 10,703 | 7,558 | ||
Series 3151 Class PO, 5/15/36 (i) | 11,593 | 8,092 | ||
sequential payer: | ||||
Series 2388 Class ZA, 6% 12/15/31 | 6,485 | 6,567 | ||
Series 2546 Class MJ, 5.5% 3/15/23 | 2,861 | 2,738 | ||
Collateralized Mortgage Obligations - continued | ||||
| Principal Amount (000s) | Value | ||
U.S. Government Agency - continued | ||||
Freddie Mac Multi-class participation certificates guaranteed: - continued | ||||
sequential payer: | ||||
Series 2570 Class CU, 4.5% 7/15/17 | $ 1,643 | $ 1,633 | ||
Series 2574 Class HP, 5% 2/15/18 | 42,150 | 41,381 | ||
Series 2587 Class AD, 4.71% 3/15/33 | 5,785 | 5,017 | ||
Series 2601 Class TB, 5.5% 4/15/23 | 869 | 832 | ||
Series 2611 Class CH, 4.5% 5/15/18 | 37,220 | 35,824 | ||
Series 2617 Class GW, 3.5% 6/15/16 | 2,184 | 2,181 | ||
Series 2675 Class CB, 4% 5/15/16 | 1,565 | 1,550 | ||
Series 2677 Class BC, 4% 9/15/18 | 20,040 | 18,500 | ||
Series 2683 Class JA, 4% 10/15/16 | 1,678 | 1,659 | ||
Series 2685 Class ND, 4% 10/15/18 | 9,064 | 8,349 | ||
Series 2750 Class ZT, 5% 2/15/34 | 1,072 | 914 | ||
Series 2770 Class TW, 4.5% 3/15/19 | 19,670 | 18,531 | ||
Series 2773 Class HC, 4.5% 4/15/19 | 704 | 660 | ||
Series 2809 Class UA, 4% 12/15/14 | 1,869 | 1,870 | ||
Series 2849 Class AL, 5% 5/15/18 | 7,482 | 7,547 | ||
Series 2860 Class CP, 4% 10/15/17 | 1,845 | 1,825 | ||
Series 2866 Class N, 4.5% 12/15/18 | 6,417 | 6,442 | ||
Series 2874 Class BC, 5% 10/15/19 | 43,000 | 41,778 | ||
Series 2937 Class HJ, 5% 10/15/19 | 7,911 | 7,961 | ||
Series 2998 Class LY, 5.5% 7/15/25 | 2,011 | 1,904 | ||
Series 3007 Class EW, 5.5% 7/15/25 | 8,875 | 8,443 | ||
Series 3013 Class VJ, 5% 1/15/14 | 1,716 | 1,735 | ||
Series 3401 Class EB, 5% 12/15/22 | 7,495 | 7,172 | ||
Series 2769 Class BU, 5% 3/15/34 | 5,712 | 5,090 | ||
Series 2863 Class DB, 4% 9/15/14 | 1,216 | 1,175 | ||
Series 2957 Class SW, 3.5425% 4/15/35 (g)(h) | 25,113 | 1,454 | ||
Series 3002 Class SN, 4.0425% 7/15/35 (g)(h) | 25,256 | 1,945 | ||
target amortization class: | ||||
Series 2156 Class TC, 6.25% 5/15/29 | 8,376 | 8,529 | ||
Series 2877 Class JC, 5% 10/15/34 | 1,293 | 1,284 | ||
Ginnie Mae guaranteed REMIC pass-thru securities planned amortization class: | ||||
Series 1997-8 Class PE, 7.5% 5/16/27 | 4,184 | 4,443 | ||
Series 2003-116 Class JE, 5% 12/20/33 | 13,248 | 12,215 | ||
Series 2004-4 Class MG, 5% 1/16/34 | 10,425 | 9,630 | ||
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $788,317) | 783,689 |
Cash Equivalents - 30.4% | |||
Maturity Amount (000s) | Value | ||
Investments in repurchase agreements in a joint trading account at 2.19%, dated 7/31/08 due 8/1/08: | |||
(Collateralized by U.S. Government Obligations) # | $ 625,554 | $ 625,516 | |
(Collateralized by U.S. Government Obligations) # (a) | 2,261,736 | 2,261,598 | |
TOTAL CASH EQUIVALENTS (Cost $2,887,114) | 2,887,114 | ||
TOTAL INVESTMENT PORTFOLIO - 125.7% (Cost $11,895,203) | 11,924,794 | ||
NET OTHER ASSETS - (25.7)% | (2,441,152) | ||
NET ASSETS - 100% | $ 9,483,642 |
Swap Agreements | |||||
| Expiration Date | Notional Amount (000s) |
| ||
Interest Rate Swaps | |||||
Receive quarterly a floating rate based on 3-month LIBOR and pay semi-annually a fixed rate equal to 4.64% with JPMorgan Chase, Inc. | April 2038 | $ 35,000 | 1,650 | ||
Receive quarterly a floating rate based on 3-month LIBOR and pay semi-annually a fixed rate equal to 4.82% with Citibank | June 2018 | 135,000 | (1,899) | ||
Receive quarterly a floating rate based on 3-month LIBOR and pay semi-annually a fixed rate equal to 5.03% with Credit Suisse First Boston | Oct. 2017 | 72,000 | (3,042) | ||
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 | (7,022) | ||
Receive semi-annually a fixed rate equal to 2.528% and pay quarterly a floating rate based on 3-month LIBOR with Goldman Sachs | March 2010 | 69,000 | (342) | ||
Receive semi-annually a fixed rate equal to 3.1899% and pay quarterly a floating rate based on 3-month LIBOR with Goldman Sachs | April 2010 | 89,050 | 547 | ||
Swap Agreements - continued | |||||
| Expiration Date | Notional Amount (000s) | Value | ||
Interest Rate Swaps - continued | |||||
Receive semi-annually a fixed rate equal to 3.427% and pay quarterly a floating rate based on 3-month LIBOR with Credit Suisse First Boston | March 2013 | $ 88,000 | $ (1,625) | ||
Receive semi-annually a fixed rate equal to 4.42% and pay quarterly a floating rate based on 3-month LIBOR with Credit Suisse First Boston | Oct. 2009 | 300,000 | 8,082 | ||
Receive semi-annually a fixed rate equal to 4.465% and pay quarterly a floating rate based on 3-month LIBOR with Citibank | June 2013 | 160,000 | 2,469 | ||
Receive semi-annually a fixed rate equal to 4.66% and pay quarterly a floating rate based on 3-month LIBOR with Barclays Bank | August 2018 | 141,807 | 0 | ||
Receive semi-annually a fixed rate equal to 4.663% and pay quarterly a floating rate based on 3-month LIBOR with Goldman Sachs | August 2018 | 43,594 | 0 | ||
Receive semi-annually a fixed rate equal to 4.88% and pay quarterly a floating rate based on 3-month LIBOR with Bank of America | Sept. 2010 | 106,700 | 4,692 | ||
Receive semi-annually a fixed rate equal to 5.03% and pay quarterly a floating rate based on 3-month LIBOR with JPMorgan Chase, Inc. | August 2010 | 91,000 | 4,429 | ||
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 | 6,194 | ||
Receive semi-annully a fixed rate equal to 2.8575% and pay quarterly a floating rate based on 3-month LIBOR with JPMorgan Chase, Inc. | April 2011 | 201,000 | (2,856) | ||
| $ 1,707,151 | $ 11,277 |
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 $19,023,000 or 0.2% of net assets. |
(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 $9,384,000. |
(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 |
$625,516,000 due 8/01/08 at 2.19% | |
BNP Paribas Securities Corp. | $ 46,762 |
Banc of America Securities LLC | 72,530 |
Bank of America, NA | 70,196 |
Barclays Capital, Inc. | 305,376 |
Greenwich Capital Markets, Inc. | 11,452 |
ING Financial Markets LLC | 64,895 |
J.P. Morgan Securities, Inc. | 35,219 |
RBC Capital Markets Corp. | 9,543 |
WestLB AG | 9,543 |
| $ 625,516 |
$2,261,598,000 due 8/01/08 at 2.19% | |
Bank of America, NA | $ 2,261,598 |
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, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $2,216,611 and repurchase agreements of $2,887,114) - See accompanying schedule: Unaffiliated issuers (cost $11,895,203) |
| $ 11,924,794 |
Commitment to sell securities on a delayed delivery basis | $ (224,131) | |
Receivable for securities sold on a delayed delivery basis | 225,704 | 1,573 |
Receivable for investments sold, regular delivery | 237,639 | |
Cash | 1 | |
Receivable for fund shares sold | 16,231 | |
Interest receivable | 70,254 | |
Swap agreements, at value | 11,277 | |
Other receivables | 20 | |
Total assets | 12,261,789 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 131,636 | |
Delayed delivery | 366,875 | |
Payable for fund shares redeemed | 13,492 | |
Distributions payable | 701 | |
Accrued management fee | 2,447 | |
Distribution fees payable | 186 | |
Other affiliated payables | 1,122 | |
Other payables and accrued expenses | 90 | |
Collateral on securities loaned, at value | 2,261,598 | |
Total liabilities | 2,778,147 | |
|
|
|
Net Assets | $ 9,483,642 | |
Net Assets consist of: |
| |
Paid in capital | $ 9,356,625 | |
Undistributed net investment income | 6,028 | |
Accumulated undistributed net realized gain (loss) on investments | 78,548 | |
Net unrealized appreciation (depreciation) on investments | 42,441 | |
Net Assets | $ 9,483,642 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Assets and Liabilities - continued
Amounts in thousands (except per-share amounts) | July 31, 2008 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 10.40 | |
|
|
|
Maximum offering price per share (100/96.00 of $10.40) | $ 10.83 | |
Class T: | $ 10.40 | |
|
|
|
Maximum offering price per share (100/96.00 of $10.40) | $ 10.83 | |
Class B: | $ 10.40 | |
|
|
|
Class C: | $ 10.40 | |
|
|
|
Government Income: | $ 10.38 | |
|
|
|
Institutional Class: | $ 10.40 |
A Redemption 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
Statement of Operations
Amounts in thousands | Year ended July 31, 2008 | |
|
|
|
Investment Income |
|
|
Interest |
| $ 376,011 |
|
|
|
Expenses | ||
Management fee | $ 25,333 | |
Transfer agent fees | 8,928 | |
Distribution fees | 2,029 | |
Fund wide operations fee | 2,777 | |
Independent trustees' compensation | 33 | |
Miscellaneous | 18 | |
Total expenses before reductions | 39,118 | |
Expense reductions | (396) | 38,722 |
Net investment income | 337,289 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 204,260 | |
Futures contracts | 259 | |
Swap agreements | (1,299) |
|
Total net realized gain (loss) |
| 203,220 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 47,602 | |
Swap agreements | 10,913 | |
Delayed delivery commitments | 3,090 |
|
Total change in net unrealized appreciation (depreciation) |
| 61,605 |
Net gain (loss) | 264,825 | |
Net increase (decrease) in net assets resulting from operations | $ 602,114 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Changes in Net Assets
Amounts in thousands | Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income | $ 337,289 | $ 296,314 |
Net realized gain (loss) | 203,220 | (39,749) |
Change in net unrealized appreciation (depreciation) | 61,605 | 63,955 |
Net increase (decrease) in net assets resulting | 602,114 | 320,520 |
Distributions to shareholders from net investment income | (333,995) | (303,351) |
Distributions to shareholders from net realized gain | - | (2,616) |
Total distributions | (333,995) | (305,967) |
Share transactions - net increase (decrease) | 1,973,783 | 1,895,812 |
Total increase (decrease) in net assets | 2,241,902 | 1,910,365 |
|
|
|
Net Assets | ||
Beginning of period | 7,241,740 | 5,331,375 |
End of period (including undistributed net investment income of $6,028 and undistributed net investment income of $1,411, respectively) | $ 9,483,642 | $ 7,241,740 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2008 | 2007F |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 10.01 | $ 9.98 |
Income from Investment Operations |
|
|
Net investment incomeE | .402 | .311 |
Net realized and unrealized gain (loss) | .387 | .033 |
Total from investment operations | .789 | .344 |
Distributions from net investment income | (.399) | (.314) |
Net asset value, end of period | $ 10.40 | $ 10.01 |
Total ReturnB, C, D | 7.96% | 3.49% |
Ratios to Average Net AssetsG |
|
|
Expenses before reductions | .81% | .78%A |
Expenses net of fee waivers, if any | .81% | .78%A |
Expenses net of all reductions | .80% | .77%A |
Net investment income | 3.88% | 4.08%A |
Supplemental Data |
|
|
Net assets, end of period (in millions) | $ 232 | $ 145 |
Portfolio turnover rate | 269% | 164%H |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F For the period October 24, 2006 (commencement of sale of shares) to July 31, 2007.
G 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.
H 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 - Class T
Years ended July 31, | 2008 | 2007F |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 10.01 | $ 9.98 |
Income from Investment Operations |
|
|
Net investment incomeE | .404 | .306 |
Net realized and unrealized gain (loss) | .387 | .036 |
Total from investment operations | .791 | .342 |
Distributions from net investment income | (.401) | (.312) |
Net asset value, end of period | $ 10.40 | $ 10.01 |
Total ReturnB, C, D | 7.98% | 3.46% |
Ratios to Average Net AssetsG |
|
|
Expenses before reductions | .78% | .79%A |
Expenses net of fee waivers, if any | .78% | .79%A |
Expenses net of all reductions | .78% | .79%A |
Net investment income | 3.90% | 4.02%A |
Supplemental Data |
|
|
Net assets, end of period (in millions) | $ 236 | $ 181 |
Portfolio turnover rate | 269% | 164%H |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F For the period October 24, 2006 (commencement of sale of shares) to July 31, 2007.
G 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.
H 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 - Class B
Years ended July 31, | 2008 | 2007F |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 10.01 | $ 9.98 |
Income from Investment Operations |
|
|
Net investment incomeE | .329 | .251 |
Net realized and unrealized gain (loss) | .387 | .037 |
Total from investment operations | .716 | .288 |
Distributions from net investment income | (.326) | (.258) |
Net asset value, end of period | $ 10.40 | $ 10.01 |
Total ReturnB, C, D | 7.21% | 2.91% |
Ratios to Average Net AssetsG |
|
|
Expenses before reductions | 1.51% | 1.50%A |
Expenses net of fee waivers, if any | 1.51% | 1.50%A |
Expenses net of all reductions | 1.50% | 1.50%A |
Net investment income | 3.17% | 3.30%A |
Supplemental Data |
|
|
Net assets, end of period (in millions) | $ 41 | $ 43 |
Portfolio turnover rate | 269% | 164%H |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F For the period October 24, 2006 (commencement of sale of shares) to July 31, 2007.
G 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.
H 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 - Class C
Years ended July 31, | 2008 | 2007F |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 10.01 | $ 9.98 |
Income from Investment Operations |
|
|
Net investment incomeE | .326 | .249 |
Net realized and unrealized gain (loss) | .387 | .033 |
Total from investment operations | .713 | .282 |
Distributions from net investment income | (.323) | (.252) |
Net asset value, end of period | $ 10.40 | $ 10.01 |
Total ReturnB, C, D | 7.18% | 2.85% |
Ratios to Average Net AssetsG |
|
|
Expenses before reductions | 1.53% | 1.55%A |
Expenses net of fee waivers, if any | 1.53% | 1.55%A |
Expenses net of all reductions | 1.53% | 1.55%A |
Net investment income | 3.15% | 3.26%A |
Supplemental Data |
|
|
Net assets, end of period (in millions) | $ 71 | $ 39 |
Portfolio turnover rate | 269% | 164%H |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F For the period October 24, 2006 (commencement of sale of shares) to July 31, 2007.
G 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.
H 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 - Government Income
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 10.00 | $ 9.95 | $ 10.20 | $ 10.13 | $ 10.16 |
Income from Investment Operations |
|
|
|
|
|
Net investment incomeB | .438 | .443 | .429 | .329 | .307 |
Net realized and unrealized gain (loss) | .378 | .068 | (.274) | .097 | .124 |
Total from investment operations | .816 | .511 | .155 | .426 | .431 |
Distributions from net investment income | (.436) | (.456) | (.405) | (.321) | (.301) |
Distributions from net realized gain | - | (.005) | - | (.035) | (.160) |
Total distributions | (.436) | (.461) | (.405) | (.356) | (.461) |
Net asset value, end of period | $ 10.38 | $ 10.00 | $ 9.95 | $ 10.20 | $ 10.13 |
Total ReturnA | 8.25% | 5.22% | 1.56% | 4.24% | 4.30% |
Ratios to Average Net AssetsC |
|
|
|
|
|
Expenses before reductions | .45% | .45% | .45% | .58% | .63% |
Expenses net of fee waivers, if any | .45% | .45% | .45% | .58% | .63% |
Expenses net of all reductions | .45% | .44% | .44% | .58% | .63% |
Net investment income | 4.23% | 4.42% | 4.27% | 3.21% | 3.01% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (in millions) | $ 8,154 | $ 6,118 | $ 5,331 | $ 5,127 | $ 4,168 |
Portfolio turnover rate | 269% | 164%D | 108% | 114% | 224% |
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
Years ended July 31, | 2008 | 2007E |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 10.01 | $ 9.98 |
Income from Investment Operations |
|
|
Net investment incomeD | .432 | .329 |
Net realized and unrealized gain (loss) | .388 | .034 |
Total from investment operations | .820 | .363 |
Distributions from net investment income | (.430) | (.333) |
Net asset value, end of period | $ 10.40 | $ 10.01 |
Total ReturnB, C | 8.28% | 3.67% |
Ratios to Average Net AssetsF |
|
|
Expenses before reductions | .51% | .53%A |
Expenses net of fee waivers, if any | .51% | .53%A |
Expenses net of all reductions | .51% | .53%A |
Net investment income | 4.17% | 4.32%A |
Supplemental Data |
|
|
Net assets, end of period (in millions) | $ 750 | $ 715 |
Portfolio turnover rate | 269% | 164%G |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
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.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended July 31, 2008
(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. 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.
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. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments. Debt securities, including restricted securities, 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. Swaps are marked-to-market daily based on dealer-supplied valuations and changes in value are recorded as unrealized appreciation (depreciation). 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. Actual prices received at disposition may differ.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts
Annual Report
2. Significant Accounting Policies - continued
Security Valuation - continued
and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
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 per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and 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.
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.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service.
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. In addition, the Fund will claim a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
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
Capital accounts within the financial statements are adjusted for permanent book-tax differences. Certain adjustments have been made to the accounts relating to prior periods. Collectively, 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, market discount, deferred trustees compensation, futures transactions, 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 | $ 92,078 |
Unrealized depreciation | (69,550) |
Net unrealized appreciation (depreciation) | 22,528 |
Undistributed ordinary income | 35,327 |
Undistributed long-term capital gain | 37,386 |
|
|
Cost for federal income tax purposes | $ 11,902,266 |
The tax character of distributions paid was as follows:
| July 31, 2008 | July 31, 2007 |
Ordinary Income | $ 333,995 | $ 305,967 |
New Accounting Pronouncements. 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 results in expanded disclosures about fair value measurements.
In addition, in March 2008, Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (SFAS 161), was issued and is effective for fiscal years beginning after November 15, 2008. SFAS 161 requires enhanced disclosures to provide information about the reasons the Fund invests in derivative instruments, the accounting treatment and the effect derivatives have on financial performance. Management is currently evaluating the impact the adoption of SFAS 161 will have on the Fund's financial statement disclosures.
Annual Report
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.
Delayed Delivery Transactions and When-Issued Securities. The Fund 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 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. 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. Losses may arise from changes in the value of the underlying instruments or if the counterparties do not perform under the contract's terms.
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except ratios)
3. Operating Policies - continued
Futures Contracts - continued
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.
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. 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). Periodic payments received or made by the Fund are recorded in the accompanying Statement of Operations as realized gains or losses, respectively. 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. The Fund may enter into dollar rolls in which the Fund sells mortgage-backed securities, realizing a gain or loss, and simultaneously agrees to repurchase substantially similar securities at a future date. In addition, the Fund may enter into reverse mortgage dollar rolls in which the Fund purchases and simultaneously agrees to sell substantially similar securities at a future date. During the period between the sale and repurchase in a dollar roll transaction, the 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 that are permissible investments of the Fund. During the period between the purchase and subsequent sale in a reverse dollar roll transaction
Annual Report
3. Operating Policies - continued
Mortgage Dollar Rolls - continued
the Fund is entitled to interest and principal payments on the securities purchased. 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, the Fund's right to repurchase or sell securities may be limited.
4. Fees and Other Transactions with Affiliates.
Management Fee. 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.
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 | Service | Paid to | Retained |
Class A | 0% | .25% | $ 491 | $ 54 |
Class T | 0% | .25% | 549 | 3 |
Class B | .65% | .25% | 400 | 288 |
Class C | .75% | .25% | 589 | 97 |
|
|
| $ 2,029 | $ 442 |
Sales Load. FDC receives a front-end sales charge of up to 4.00% for selling Class A shares and Class T shares, 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 |
Class A | $ 46 |
Class T | 18 |
Class B* | 60 |
Class C* | 11 |
| $ 135 |
* 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. FIIOC receives 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 pays for typesetting, printing and mailing of shareholder reports, except proxy statements. Prior to January 1, 2008, Fidelity Service Company, Inc. (FSC), also an affiliate of FMR, was the transfer agent for Government Income. For the period, each class paid the following transfer agent fees:
| Amount | % of |
Class A | $ 401 | .20 |
Class T | 393 | .18 |
Class B | 113 | .25 |
Class C | 107 | .18 |
Government Income | 6,883 | .10 |
Institutional Class | 1,031 | .16 |
| $ 8,928 |
|
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 $18 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 $8,983.
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 expenses by $15. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent |
Class A | $ 7 |
Government Income | 354 |
Institutional Class | 20 |
| $ 381 |
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.
At the end of the period, Fidelity Freedom 2010 and Fidelity Freedom 2020 were the owners of record of approximately 12% and 14%, respectively of the total outstanding shares of Fidelity Government Income Fund. The Fidelity Advisor Freedom Funds and Fidelity Freedom Funds were the owners of record, in aggregate, of approximately 57% of the total outstanding shares of Fidelity Government Income Fund.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2008 | 2007A |
From net investment income |
|
|
Class A | $ 7,464 | $ 4,138 |
Class T | 8,439 | 5,771 |
Class B | 1,398 | 1,298 |
Class C | 1,798 | 1,042 |
Government Income | 288,379 | 269,231 |
Institutional Class | 26,517 | 21,871 |
Total | $ 333,995 | $ 303,351 |
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.
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended July 31, | 2008 | 2007A | 2008 | 2007A |
Class A |
|
|
|
|
Shares sold | 17,630 | 5,668 | $ 183,928 | $ 56,865 |
Issued in exchange for shares of Fidelity Advisor Government Investment Fund | - | 11,639 | - | 116,974 |
Reinvestment of distributions | 653 | 374 | 6,798 | 3,759 |
Shares redeemed | (10,466) | (3,165) | (108,879) | (31,770) |
Net increase (decrease) | 7,817 | 14,516 | $ 81,847 | $ 145,828 |
Annual Report
10. Share Transactions - continued
| Shares | Dollars | ||
Years ended July 31, | 2008 | 2007A | 2008 | 2007A |
Class T |
|
|
|
|
Shares sold | 15,236 | 3,593 | $ 158,292 | $ 36,101 |
Issued in exchange for shares of Fidelity Advisor Government Investment Fund | - | 19,997 | - | 200,973 |
Reinvestment of distributions | 772 | 549 | 8,030 | 5,508 |
Shares redeemed | (11,375) | (6,079) | (118,003) | (60,985) |
Net increase (decrease) | 4,633 | 18,060 | $ 48,319 | $ 181,597 |
Class B |
|
|
|
|
Shares sold | 2,313 | 524 | $ 24,145 | $ 5,289 |
Issued in exchange for shares of Fidelity Advisor Government Investment Fund | - | 5,890 |
| 59,191 |
Reinvestment of distributions | 108 | 104 | 1,126 | 1,045 |
Shares redeemed | (2,809) | (2,192) | (29,186) | (22,000) |
Net increase (decrease) | (388) | 4,326 | $ (3,915) | $ 43,525 |
Class C |
|
|
|
|
Shares sold | 5,069 | 517 | $ 52,892 | $ 5,201 |
Issued in exchange for shares of Fidelity Advisor Government Investment Fund | - | 4,449 |
| 44,717 |
Reinvestment of distributions | 114 | 64 | 1,185 | 643 |
Shares redeemed | (2,289) | (1,095) | (23,797) | (10,981) |
Net increase (decrease) | 2,894 | 3,935 | $ 30,280 | $ 39,580 |
Government Income |
|
|
|
|
Shares sold | 308,696 | 105,528 | $ 3,217,869 | $ 1,058,863 |
Issued in exchange for shares of Spartan Government Income Fund | - | 71,077 | - | 713,611 |
Reinvestment of distributions | 27,173 | 26,531 | 282,009 | 266,315 |
Shares redeemed | (162,519) | (127,164) | (1,689,834) | (1,271,926) |
Net increase (decrease) | 173,350 | 75,972 | $ 1,810,044 | $ 766,863 |
Institutional Class |
|
|
|
|
Shares sold | 30,491 | 16,978 | $ 316,702 | $ 170,642 |
Issued in exchange for shares of Fidelity Advisor Government Investment Fund | - | 57,200 | - | 574,860 |
Reinvestment of distributions | 2,538 | 2,169 | 26,319 | 21,772 |
Shares redeemed | (32,353) | (4,899) | (335,813) | (48,855) |
Net increase (decrease) | 676 | 71,448 | $ 7,208 | $ 718,419 |
A Share 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)
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.
12. Proposed Reorganization.
On June 19, 2008, the Board of Trustees of the Fund and the Board of Trustees of the Capital One U.S. Government Income Fund ("U.S. Government Income Fund") approved an Agreement and Plan of Reorganization between the Fund and U.S. Government Income Fund. The agreement provides for the transfer of all the assets of U.S. Government Income Fund (other than any deferred, accrued or prepaid expenses or any assets necessary to discharge any liabilities of U.S. Government Income Fund following the merger) in exchange solely for the number of shares of Class A of the Fund with an equal dollar value of the outstanding shares of U.S. Government Income Fund on the day the reorganization is effective.
A meeting of the shareholders of U.S. Government Income Fund is expected to be held in October, 2008 to vote on the reorganization. If approved by shareholders, the reorganization is expected to become effective on or about November 21, 2008. The reorganization is expected to qualify as a tax-free transaction with no gain or loss recognized by the Funds or their shareholders.
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, 2008, 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 periods indicated, 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, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
September 23, 2008
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the 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 Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 159 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 377 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 Member 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 (78) | |
| Year of Election or Appointment: 1984 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; 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 and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). Mr. Edward C. Johnson 3d and Mr. Arthur E. Johnson are not related. |
James C. Curvey (73) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006- present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
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 | |
Albert R. Gamper, Jr. (66) | |
| 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), a member of the Board of Governors, Rutgers University (2004-present), and Chairman of the Board of Saint Barnabas Health Care System. Previously, Mr. Gamper served as Chairman of the Board of Governors, Rutgers University (2004-2007). |
George H. Heilmeier (72) | |
| 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), Compaq, Automatic Data Processing, Inc. (ADP) (technology-based business outsourcing), 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. |
Arthur E. Johnson (61) | |
| Year of Election or Appointment: 2008 Mr. Johnson serves as Senior Vice President of Corporate Strategic Development of Lockheed Martin Corporation (defense contractor). In addition, Mr. Johnson serves as a member of the Board of Directors of AGL Resources, Inc. (holding company), and IKON Office Solutions, Inc. (document management systems and services). Mr. Arthur E. Johnson and Mr. Edward C. Johnson 3d are not related. |
James H. Keyes (67) | |
| 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 Navistar International Corporation (manufacture and sale of trucks, buses, and diesel engines) and Pitney Bowes, Inc. (integrated mail, messaging, and document management solutions). Previously, Mr. Keyes served as a member of the Board of LSI Logic Corporation (semiconductor technologies, 1984-2008). |
Marie L. Knowles (61) | |
| 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 McKesson Corporation (healthcare service). 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. Previously, Ms. Knowles served as a Director of Phelps Dodge Corporation (copper mining and manufacturing, 1994-2007). |
Kenneth L. Wolfe (69) | |
| Year of Election or Appointment: 2005 Mr. Wolfe is Chairman and a Director of Hershey Foods Corporation (2007-present), where prior to his retirement in 2001, he was Chairman and Chief Executive Officer. Mr. Wolfe currently serves as a member of the board of Revlon Inc. (2004-present). Previously, Mr. Wolfe served as a member of the boards of Adelphia Communications Corporation (2003-2006) and Bausch & Lomb, Inc. (1993-2007). |
Advisory Board Member and Executive Officers**:
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 (64) | |
| 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- |
John R. Hebble (50) | |
| Year of Election or Appointment: 2008 President and Treasurer of Government Income. Mr. Hebble also serves as President and Treasurer of Fidelity's Fixed Income and Asset Allocation Funds (2008-present) and is an employee of FMR (2003-present). Before joining Fidelity Investments, Mr. Hebble worked at Deutsche Asset Management where he served as Director of Fund Accounting (2002-2003) and Assistant Treasurer of the Scudder Funds. |
Boyce I. Greer (52) | |
| Year of Election or Appointment: 2006 Vice President of Government Income. Mr. Greer also serves as Vice President of 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). Mr. Greer is President and a Director of Fidelity Investments Money Management, Inc. (2007-present), and an Executive Vice President of FMR and FMR Co., Inc. (2005-present). Previously, Mr. Greer served as a Director and Managing Director of Strategic Advisers, Inc. (2002-2005). |
Dwight D. Churchill (54) | |
| Year of Election or Appointment: 2008 Vice President of Government Income. Mr. Churchill also serves as Vice President of Fidelity's Bond Funds (2008-present). Mr. Churchill is Executive Vice President of FMR (2005-present), FMR Co., Inc. (2005-present) and Fidelity Investments Money Management, Inc. (2008-present). Previously, Mr. Churchill served as Senior Vice President of FMR (1997- 2005) and Senior Vice President of Fidelity Investments Money Management, Inc. (2000-2006). |
Scott C. Goebel (40) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of Government Income. Mr. Goebel also serves as Secretary and CLO of other Fidelity funds (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present); and Deputy General Counsel of FMR LLC. Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007- 2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
Nancy D. Prior (41) | |
| Year of Election or Appointment: 2008 Assistant Secretary of Government Income. Ms. Prior also serves as Assistant Secretary of Fidelity's Fixed Income and Asset Allocation Funds (2008-present) and is an employee of FMR (2002-present). |
Holly C. Laurent (54) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) officer of Government Income. Ms. Laurent also serves as AML officer of other Fidelity funds (2008-present) and is an employee of FMR LLC. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (49) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of Government Income. Ms. Reynolds also serves as Chief Financial Officer of other Fidelity funds (2008-present). Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was an audit partner with PwC's investment management practice. |
Michael H. Whitaker (41) | |
| Year of Election or Appointment: 2008 Chief Compliance Officer of Government Income. Mr. Whitaker also serves as Chief Compliance Officer of Fidelity's Fixed Income and Asset Allocation Funds (2008-present) and is an employee of FMR (2007- present). Prior to joining Fidelity Investments, Mr. Whitaker worked at MFS Investment Management where he served as Senior Vice President and Chief Compliance Officer (2004-2006), and Assistant General Counsel. |
Bryan A. Mehrmann (47) | |
| 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). |
Robert G. Byrnes (41) | |
| 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 Fidelity Pricing Cash Management Services (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 (54) | |
| Year of Election or Appointment: 2004 Assistant Treasurer of Government Income. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004-present) and is an employee of FMR. |
Paul M. Murphy (61) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of Government Income. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (49) | |
| 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 Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Distributions (Unaudited)
The Board of Trustees of Fidelity Government Income Fund voted to pay on September 15, 2008, to shareholders of record at the opening of business on September 12, 2008, a distribution of $.07 per share derived from capital gains realized from sales of portfolio securities.
A total of 9.13% 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 hereby designates as a capital gain dividend with respect to the taxable year ended July 31, 2008, $37,386,227, or, if subsequently determined to be different, the net capital gain of such year.
The fund designates $258,906,779 of distributions paid during the period January 1, 2008 to July 31, 2008 as qualifying to be taxed as interest-related dividends for nonresident alien shareholders.
The fund will notify shareholders in January 2009 of amounts for use in preparing 2008 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 and, acting directly and through its separate committees, requests and receives information concerning, and considers at each of its meetings factors that are relevant to, its annual consideration of the 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 a written charter outlining the structure and purposes of the committee. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts.
At its June 2008 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the fund's Advisory Contracts. 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 fund's management fee and total expenses; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its 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 agreements with foreign sub-advisers Fidelity Management & Research (U.K.) Inc., Fidelity Management & Research (Japan) Inc., and Fidelity Management & Research (Hong Kong) Limited.
In considering 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 and through the exercise of its business judgment, 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. The Board's decision to renew the Advisory Contracts was not based on any single factor noted above, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, 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
Board Approval of Investment Advisory Contracts and
Management Fees - continued
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 fund's investment personnel 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.
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 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 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 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 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.
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.
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 Fidelity has taken a number of actions over the previous year 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 fees on Fidelity's Institutional Money Market Funds and launching Class IV and Institutional Class of certain of these funds; (iii) reducing the transfer agent fees for the Fidelity Select Portfolios and Investor Class of the VIP funds; and (iv) launching Class K of 29 equity funds as a lower-fee class available to certain employer-sponsored retirement plans.
Annual Report
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 each class, as well as the fund's relative investment performance for each 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, 2007, as available, the cumulative total returns of Fidelity Government Income (retail class) and Class C of the fund, 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 returns of Fidelity Government Income (retail class) and Class C show the performance of the highest and lowest performing classes, respectively. 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 numbers noted below each chart correspond to the percentile box and represent the percentage of funds in the peer group whose performance was equal to or lower than that of the class indicated. 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
Board Approval of Investment Advisory Contracts and
Management Fees - continued
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) of the fund was in the first quartile for all the periods shown. The Board also stated that the investment performance of the fund was lower than its benchmark for all the periods shown. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes. The Board discussed with FMR actions that may be taken by FMR to improve the fund's below-benchmark performance and how investment personnel evaluate potential for incremental return against the risks involved in obtaining that incremental return. The Board considered the steps that FMR has taken to strengthen and refine its risk management processes in light of recent credit events that have affected various sectors of the fixed-income markets.
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
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 9% means that 91% 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 2007.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
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 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 2007.
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. 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.
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 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.
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 fund's business.
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.
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. The Board concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
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 certain topics, including (i) fund performance trends and actions to be taken by FMR to improve certain funds' overall performance; (ii) portfolio manager changes that have occurred during the past year; (iii) Fidelity's fund profitability methodology, the profitability of certain fund service providers, and profitability trends for certain funds; (iv) Fidelity's compensation structure for portfolio managers and key personnel, including its effects on fund profitability and the extent to which portfolio manager compensation is linked to fund performance; (v) Fidelity's fee structures; (vi) the funds' sub-advisory arrangements; and (vii) accounts managed by Fidelity other than the Fidelity funds.
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 the 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
For mutual fund and brokerage trading.
For quotes.*
For account balances and holdings.
To review orders and mutual
fund activity.
To change your PIN.
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
2000 Avenue of the Stars
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
16656 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
398 West El Camino Real
Sunnyvale, CA
111 South Westlake Blvd
Thousand Oaks, CA
21701 Hawthorne Boulevard
Torrance, CA
2001 North Main Street
Walnut Creek, CA
6326 Canoga Avenue
Woodland Hills, CA
Colorado
281 East Flatiron Circle
Broomfield, CO
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
175 East Altamonte Drive
Altamonte Springs, FL
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
8880 Tamiami Trail, North
Naples, FL
230 Royal Palm Way
Palm Beach, 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
401 North Michigan Avenue
Chicago, IL
One Skokie Valley Road
Highland Park, IL
1415 West 22nd Street
Oak Brook, IL
15105 S LaGrange Road
Orland Park, IL
1572 East Golf Road
Schaumburg, IL
Indiana
4729 East 82nd Street
Indianapolis, IN
8480 Keystone Crossing
Indianapolis, IN
Kansas
5400 College Boulevard
Overland Park, KS
Maine
Three Canal Plaza
Portland, ME
Maryland
7315 Wisconsin Avenue
Bethesda, MD
610 York Road
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
200 Endicott Street
Danvers, MA
Fidelity Brokerage Services, Inc., 100 Summer St., Boston, MA 02110 Member NYSE/SIPC
Annual Report
405 Cochituate Road
Framingham, MA
551 Boston Turnpike
Shrewsbury, MA
Michigan
500 E. Eisenhower Pkwy.
Ann Arbor, MI
280 Old N. Woodward Ave.
Birmingham, MI
30200 Northwestern Hwy.
Farmington Hills, MI
43420 Grand River Avenue
Novi, MI
Minnesota
7740 France Avenue South
Edina, MN
8342 3rd Street North
Oakdale, MN
Missouri
1524 South Lindbergh Blvd.
St. Louis, MO
Nevada
2225 Village Walk Drive
Henderson, NV
New Jersey
501 Route 73 South
Marlton, NJ
150 Essex Street
Millburn, NJ
35 Morris Street
Morristown, NJ
396 Route 17, North
Paramus, NJ
3518 Route 1 North
Princeton, NJ
530 Broad Street
Shrewsbury, NJ
New Mexico
2261 Q Street NE
Albuquerque, NM
New York
1130 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
1800 Crocker Road
Westlake, 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
10 Memorial Boulevard
Providence, RI
Tennessee
3018 Peoples Street
Johnson City, TN
7628 West Farmington Blvd.
Germantown, TN
2035 Mallory Lane
Franklin, 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
1701 Lake Robbins Drive
The Woodlands, 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
Utah
279 West South Temple
Salt Lake City, UT
Virginia
1861 International Drive
McLean, VA
Washington
10500 NE 8th Street
Bellevue, WA
1518 6th Avenue
Seattle, WA
Washington, DC
1900 K Street, N.W.
Washington, DC
Wisconsin
16020 West Bluemound Road
Brookfield, WI
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
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
Fidelity Research & Analysis Company
Fidelity Management & Research
(U.K.) Inc.
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 Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
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®) 1-800-544-5555
Automated line for quickest service
GVT-UANN-0908 1.789246.105
(Fidelity Investment logo)(registered trademark)
Fidelity Advisor
Government Income
Fund - Class A, Class T, Class B
and Class C
Annual Report
July 31, 2008
Class A, Class T, Class B, and Class C are classes of Fidelity® Government Income Fund
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
Performance | How the fund has done over time. | |
Management's Discussion | The manager's review of fund performance, strategy and outlook. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights. | |
Notes | Notes to the financial statements. | |
Report of Independent Registered Public Accounting Firm |
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Trustees and Officers |
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Distributions |
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Board Approval of Investment Advisory Contracts and Management Fees |
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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.
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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 LLC 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.
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 fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Domestic and international securities markets have struggled thus far in 2008. High-grade fixed-income investments produced modestly positive results, but many stock benchmarks suffered double-digit losses through the first half of this year. Financial markets are always unpredictable, but 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
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, if any) 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, 2008 | Past 1 | Past 5 | Past 10 |
Class A (incl. 4.00% sales charge) A | 3.64% | 3.75% | 4.91% |
Class T (incl. 4.00% sales charge) B | 3.66% | 3.75% | 4.91% |
Class B (incl. contingent deferred sales charge) C | 2.21% | 4.00% | 5.21% |
Class C (incl. contingent deferred sales charge) D | 6.18% | 4.32% | 5.20% |
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.
Annual Report
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Government Income Fund - Class A on July 31, 1998, 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 A took place on October 24, 2006. See the previous page for additional information regarding the performance of Class A.
In prior years, the performance from year to year was represented by the performance of Class T. Going forward, the fund's performance will be represented by Class A for consistency with other fund materials.
Annual Report
Management's Discussion of Fund Performance
Comments from William Irving, Portfolio Manager of Fidelity Advisor Government Income Fund
Bonds with less credit risk generally produced higher returns for investment-grade debt during the 12 months ending July 31, 2008. In that span, the Lehman Brothers® U.S. Aggregate Index - a proxy for high-quality, fixed-rate, taxable bonds - returned 6.15%. Treasuries did the best, buoyed by their reputation as the safest haven in turbulent times, with the Lehman Brothers U.S. Treasury Index up 8.99% during the period. Agency bonds, with their perceived "implicit" government backing, also did well, as the Lehman Brothers U.S. Agency Index rose 7.79%. Mortgage-backed securities ended the period with a gain of 6.96%, according to the Lehman Brothers U.S. Mortgage-Backed Securities Index, while the Lehman Brothers U.S. Credit Index - a measure of high-quality corporate debt - finished with a modest 2.85% increase. The asset-backed sector - home to weak-performing subprime debt - had negative results, as reflected in the 2.69% loss of the Lehman Brothers U.S. Fixed-Rate Asset-Backed Securities Index.
For the 12 months ending July 31, 2008, the fund's Class A, Class T, Class B and Class C shares returned 7.96%, 7.98%, 7.21% and 7.18%, respectively (excluding sales charges). In comparison, the Lehman Brothers 75% U.S. Government/25% U.S. Mortgage-Backed Securities Index returned 8.20%. What we lost by underweighting Treasuries - the index's biggest sector concentration and its best performer during the period - we more than made up for through other Treasury-related decisions. In particular, security lending - whereby we loaned Treasury holdings overnight and invested the proceeds in higher-yielding investments - bolstered the fund's results. We also were successful with tactical trades of Treasury Inflation-Protected Securities (TIPS), which are not part of the index. Advantageous yield-curve positioning also benefited the fund's performance. In the mortgage sector, good picks among 15-year securities and collateralized mortgage obligations (CMOs) - which are made up of pools of pass-through securities whose cash flows are carved out into classes with their own expected maturities and cash-flow patterns - worked in the fund's favor. Likewise, my decision to maintain a larger-than-index exposure to hybrid adjustable-rate mortgage securities (ARMs) - which give homeowners a relatively low fixed-interest rate for an initial period and then convert to an ARM where the interest rate periodically resets - benefited relative performance, as they generally outpaced the index after adjusting for their lower interest-rate sensitivity. With the benefit of 20/20 hindsight, owning more of these types of securities may have been helpful given how well they performed, but I was mindful of the importance of diversification.
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
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, 2008 to July 31, 2008).
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.
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. In addition, if these transactional costs were included, your costs would have been higher.
Annual Report
| Beginning | Ending | Expenses Paid |
Class A |
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Actual | $ 1,000.00 | $ 999.60 | $ 3.98 |
HypotheticalA | $ 1,000.00 | $ 1,020.89 | $ 4.02 |
Class T |
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Actual | $ 1,000.00 | $ 1,000.70 | $ 3.88 |
HypotheticalA | $ 1,000.00 | $ 1,020.98 | $ 3.92 |
Class B |
|
|
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Actual | $ 1,000.00 | $ 996.10 | $ 7.54 |
HypotheticalA | $ 1,000.00 | $ 1,017.30 | $ 7.62 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 996.00 | $ 7.64 |
HypotheticalA | $ 1,000.00 | $ 1,017.21 | $ 7.72 |
Government Income |
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|
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Actual | $ 1,000.00 | $ 1,001.40 | $ 2.24 |
HypotheticalA | $ 1,000.00 | $ 1,022.63 | $ 2.26 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 1,002.10 | $ 2.49 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized |
Class A | .80% |
Class T | .78% |
Class B | 1.52% |
Class C | 1.54% |
Government Income | .45% |
Institutional Class | .50% |
Annual Report
Investment Changes (Unaudited)
Coupon Distribution as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments |
Zero coupon bonds | 1.2 | 1.6 |
Less than 2% | 2.8 | 0.8 |
2 - 2.99% | 5.5 | 1.6 |
3 - 3.99% | 10.1 | 8.7 |
4 - 4.99% | 14.1 | 25.6 |
5 - 5.99% | 27.4 | 24.9 |
6 - 6.99% | 12.7 | 14.7 |
7% and over | 1.9 | 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, 2008 | ||
|
| 6 months ago |
Years | 4.8 | 4.6 |
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, 2008 | ||
|
| 6 months ago |
Years | 5.1 | 4.5 |
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, 2008* | As of January 31, 2008** | ||||||
![]() | Mortgage |
| ![]() | Mortgage |
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![]() | CMOs and Other Mortgage Related Securities 8.3% |
| ![]() | CMOs and Other Mortgage Related Securities 7.7% |
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![]() | U.S. Treasury |
| ![]() | U.S. Treasury |
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![]() | U.S. Government |
| ![]() | U.S. Government |
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![]() | Asset-Backed |
| ![]() | Asset-Backed |
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![]() | Short-Term |
| ![]() | Short-Term |
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* Futures and Swaps | 11.1% |
| ** Futures and Swaps | 5.7% |
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† Short-Term Investments and Net Other Assets are not included in the pie chart. |
Annual Report
Investments July 31, 2008
Showing Percentage of Net Assets
U.S. Government and Government Agency Obligations - 56.0% | ||||
| Principal Amount (000s) | Value | ||
U.S. Government Agency Obligations - 21.7% | ||||
Fannie Mae: | ||||
2.5% 4/9/10 | $ 46,360 | $ 45,939 | ||
3% 7/12/10 | 150,000 | 149,515 | ||
3.25% 8/12/10 (b) | 157,020 | 157,168 | ||
3.375% 5/19/11 | 24,967 | 24,877 | ||
3.625% 2/12/13 (b) | 32,905 | 32,437 | ||
3.875% 7/12/13 (b) | 26,275 | 26,091 | ||
4.75% 11/19/12 | 29,255 | 30,187 | ||
4.875% 4/15/09 | 43,349 | 43,966 | ||
4.875% 5/18/12 | 170,000 | 175,996 | ||
5% 2/16/12 | 31,355 | 32,606 | ||
5.125% 4/15/11 | 188,800 | 196,783 | ||
5.375% 6/12/17 | 49,471 | 52,231 | ||
6% 5/15/11 | 10,130 | 10,790 | ||
6.625% 9/15/09 | 149,585 | 155,586 | ||
Freddie Mac: | ||||
3.25% 7/16/10 | 11,145 | 11,162 | ||
3.5% 5/29/13 (b) | 123,800 | 120,997 | ||
3.75% 6/28/13 | 5,000 | 4,938 | ||
3.875% 6/29/11 | 19,531 | 19,703 | ||
4.75% 3/5/12 | 10,000 | 10,316 | ||
4.875% 2/9/10 | 27,220 | 27,962 | ||
4.875% 6/13/18 (b) | 44,378 | 45,095 | ||
5% 6/11/09 (b) | 100,000 | 101,783 | ||
5% 1/30/14 | 25,000 | 25,973 | ||
5.125% 11/17/17 (b) | 25,000 | 25,911 | ||
5.25% 5/21/09 | 154,235 | 157,143 | ||
5.25% 7/18/11 | 29,530 | 30,918 | ||
5.75% 1/15/12 | 32,906 | 34,934 | ||
Israeli State (guaranteed by U.S. Government through Agency for International Development): | ||||
5.5% 9/18/23 | 110,500 | 118,392 | ||
6.8% 2/15/12 | 30,000 | 31,869 | ||
Overseas Private Investment Corp. U.S. Government guaranteed participation certificates: | ||||
6.77% 11/15/13 | 5,627 | 5,944 | ||
6.99% 5/21/16 | 19,051 | 20,852 | ||
Private Export Funding Corp. secured: | ||||
4.974% 8/15/13 | 22,940 | 23,745 | ||
5.66% 9/15/11 (c) | 18,000 | 19,023 | ||
5.685% 5/15/12 | 24,035 | 25,501 | ||
U.S. Government and Government Agency Obligations - continued | ||||
| Principal Amount (000s) | Value | ||
U.S. Government Agency Obligations - continued | ||||
Private Export Funding Corp. secured: - continued | ||||
6.67% 9/15/09 | $ 3,500 | $ 3,644 | ||
Small Business Administration guaranteed development participation certificates: | ||||
Series 2002-20J Class 1, 4.75% 10/1/22 | 5,675 | 5,494 | ||
Series 2002-20K Class 1, 5.08% 11/1/22 | 12,402 | 12,225 | ||
Series 2003-P10B, Class 1 5.136% 8/10/13 | 8,023 | 8,027 | ||
Series 2004-20H Class 1, 5.17% 8/1/24 | 3,521 | 3,480 | ||
Tennessee Valley Authority 5.375% 4/1/56 | 8,429 | 8,485 | ||
U.S. Department of Housing and Urban Development Government guaranteed participation certificates Series 1999-A, 5.96% 8/1/09 | 18,380 | 18,660 | ||
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS | 2,056,348 | |||
U.S. Treasury Obligations - 34.3% | ||||
U.S. Treasury Bonds: | ||||
4.375% 2/15/38 | 130,700 | 125,952 | ||
4.75% 2/15/37 (f) | 19,000 | 19,398 | ||
5% 5/15/37 (b) | 139,000 | 147,677 | ||
6.125% 8/15/29 | 162,102 | 193,712 | ||
6.25% 8/15/23 | 1,500 | 1,777 | ||
8% 11/15/21 (f) | 146,794 | 198,585 | ||
U.S. Treasury Notes: | ||||
1.75% 3/31/10 (b) | 341,106 | 337,642 | ||
2.125% 1/31/10 (f) | 198,280 | 197,738 | ||
2.5% 3/31/13 | 43,781 | 42,454 | ||
2.75% 2/28/13 | 54,231 | 53,185 | ||
2.875% 6/30/10 (b) | 308,061 | 310,299 | ||
3.125% 11/30/09 | 29,100 | 29,421 | ||
3.375% 11/30/12 (b) | 217,916 | 219,993 | ||
3.375% 6/30/13 (b) | 95,927 | 96,392 | ||
3.375% 7/31/13 | 80,000 | 80,375 | ||
3.5% 5/31/13 | 55,000 | 55,610 | ||
3.5% 2/15/18 (b) | 78,000 | 75,154 | ||
3.625% 12/31/12 (b) | 32,788 | 33,423 | ||
3.875% 5/15/18 (b) | 41,449 | 41,093 | ||
4% 9/30/09 | 3,000 | 3,060 | ||
4% 2/15/14 | 43,031 | 44,487 | ||
4.25% 11/15/14 (b) | 77,185 | 80,845 | ||
4.25% 11/15/17 (b) | 189,000 | 193,238 | ||
4.5% 2/28/11 | 4,190 | 4,374 | ||
U.S. Government and Government Agency Obligations - continued | ||||
| Principal Amount (000s) | Value | ||
U.S. Treasury Obligations - continued | ||||
U.S. Treasury Notes: - continued | ||||
4.625% 8/31/11 | $ 593 | $ 624 | ||
4.625% 7/31/12 | 20 | 21 | ||
4.625% 11/15/16 (b) | 117,000 | 123,645 | ||
4.75% 5/15/14 (b) | 28,328 | 30,426 | ||
4.75% 8/15/17 (b) | 231,000 | 245,131 | ||
5.125% 5/15/16 | 249,330 | 272,588 | ||
TOTAL U.S. TREASURY OBLIGATIONS | 3,258,319 | |||
TOTAL U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS (Cost $5,281,922) | 5,314,667 | |||
U.S. Government Agency - Mortgage Securities - 30.9% | ||||
| ||||
Fannie Mae - 22.1% | ||||
3.695% 10/1/33 (g) | 577 | 581 | ||
3.71% 6/1/33 (g) | 1,871 | 1,867 | ||
3.737% 5/1/33 (g) | 2,933 | 2,940 | ||
3.741% 10/1/33 (g) | 525 | 529 | ||
3.75% 1/1/34 (g) | 491 | 496 | ||
3.906% 5/1/34 (g) | 3,868 | 3,893 | ||
3.916% 5/1/34 (g) | 5,174 | 5,213 | ||
3.98% 9/1/33 (g) | 5,135 | 5,164 | ||
3.988% 10/1/18 (g) | 329 | 332 | ||
4% 9/1/13 to 6/1/20 | 22,747 | 21,844 | ||
4.085% 6/1/33 (g) | 364 | 363 | ||
4.174% 1/1/35 (g) | 1,222 | 1,231 | ||
4.235% 1/1/34 (g) | 1,642 | 1,659 | ||
4.25% 2/1/35 (g) | 626 | 632 | ||
4.251% 8/1/33 (g) | 794 | 797 | ||
4.259% 10/1/33 (g) | 251 | 253 | ||
4.284% 3/1/33 (g) | 228 | 230 | ||
4.301% 3/1/33 (g) | 303 | 306 | ||
4.306% 5/1/33 (g) | 148 | 149 | ||
4.328% 1/1/35 (g) | 709 | 714 | ||
4.341% 10/1/19 (g) | 995 | 1,001 | ||
4.366% 2/1/34 (g) | 972 | 983 | ||
4.388% 2/1/35 (g) | 981 | 991 | ||
4.41% 10/1/34 (g) | 3,273 | 3,299 | ||
4.418% 5/1/35 (g) | 390 | 392 | ||
U.S. Government Agency - Mortgage Securities - continued | ||||
| Principal Amount (000s) | Value | ||
Fannie Mae - continued | ||||
4.42% 6/1/35 (g) | $ 2,238 | $ 2,253 | ||
4.425% 8/1/34 (g) | 1,549 | 1,565 | ||
4.427% 1/1/35 (g) | 606 | 608 | ||
4.431% 5/1/33 (g) | 4,876 | 4,902 | ||
4.435% 3/1/35 (g) | 936 | 943 | ||
4.473% 7/1/35 (g) | 1,977 | 1,977 | ||
4.483% 11/1/33 (g) | 1,247 | 1,258 | ||
4.485% 12/1/34 (g) | 452 | 456 | ||
4.492% 1/1/35 (g) | 4,635 | 4,692 | ||
4.5% 2/1/18 to 6/1/23 | 32,084 | 31,093 | ||
4.545% 5/1/35 (g) | 1,526 | 1,536 | ||
4.565% 7/1/35 (g) | 2,267 | 2,265 | ||
4.599% 10/1/35 (g) | 253 | 255 | ||
4.65% 10/1/34 (g) | 2,860 | 2,881 | ||
4.705% 7/1/34 (g) | 1,676 | 1,692 | ||
4.707% 2/1/35 (g) | 5,400 | 5,479 | ||
4.727% 6/1/33 (g) | 191 | 192 | ||
4.765% 12/1/35 (g) | 3,379 | 3,417 | ||
4.774% 12/1/34 (g) | 585 | 592 | ||
4.776% 4/1/35 (g) | 221 | 223 | ||
4.783% 7/1/35 (g) | 4,062 | 4,099 | ||
4.791% 10/1/35 (g) | 1,553 | 1,570 | ||
4.797% 6/1/35 (g) | 2,647 | 2,659 | ||
4.804% 1/1/34 (g) | 55 | 56 | ||
4.812% 11/1/34 (g) | 1,855 | 1,873 | ||
4.835% 1/1/35 (g) | 9,087 | 9,176 | ||
4.85% 7/1/35 (g) | 5,002 | 5,052 | ||
4.852% 7/1/34 (g) | 4,740 | 4,790 | ||
4.859% 10/1/34 (g) | 6,673 | 6,740 | ||
4.873% 8/1/34 (g) | 437 | 440 | ||
4.88% 5/1/35 (g) | 1,612 | 1,629 | ||
4.881% 8/1/34 (g) | 4,181 | 4,224 | ||
4.926% 8/1/34 (g) | 7,237 | 7,302 | ||
4.969% 3/1/35 (g) | 4,312 | 4,372 | ||
4.985% 2/1/35 (g) | 4,719 | 4,774 | ||
4.986% 4/1/33 (g) | 78 | 78 | ||
4.987% 2/1/34 (g) | 6,634 | 6,688 | ||
5% 6/1/14 to 9/1/37 (e) | 376,475 | 367,287 | ||
5% 8/1/38 (d) | 300 | 285 | ||
5% 8/1/38 (d) | 300 | 285 | ||
5% 8/1/38 (d) | 100 | 95 | ||
5% 8/13/38 (d) | 400 | 381 | ||
U.S. Government Agency - Mortgage Securities - continued | ||||
| Principal Amount (000s) | Value | ||
Fannie Mae - continued | ||||
5% 8/13/38 (d) | $ 400 | $ 381 | ||
5% 8/13/38 (d) | 1,000 | 952 | ||
5% 8/13/38 (d) | 500 | 476 | ||
5% 8/13/38 (d) | 400 | 381 | ||
5% 8/13/38 (d) | 1,000 | 952 | ||
5.012% 7/1/34 (g) | 272 | 275 | ||
5.069% 1/1/37 (g) | 5,486 | 5,578 | ||
5.072% 7/1/34 (g) | 1,688 | 1,708 | ||
5.089% 9/1/34 (g) | 602 | 608 | ||
5.099% 10/1/35 (g) | 3,565 | 3,613 | ||
5.127% 8/1/33 (g) | 708 | 713 | ||
5.131% 8/1/34 (g) | 5,074 | 5,148 | ||
5.171% 3/1/36 (g) | 12,324 | 12,512 | ||
5.185% 3/1/35 (g) | 325 | 329 | ||
5.199% 5/1/35 (g) | 397 | 400 | ||
5.224% 5/1/35 (g) | 4,814 | 4,880 | ||
5.245% 7/1/35 (g) | 257 | 259 | ||
5.267% 12/1/36 (g) | 2,409 | 2,453 | ||
5.278% 3/1/35 (g) | 397 | 400 | ||
5.298% 12/1/34 (g) | 798 | 809 | ||
5.304% 3/1/36 (g) | 32,767 | 33,319 | ||
5.326% 4/1/36 (g) | 4,292 | 4,407 | ||
5.336% 7/1/35 (g) | 2,003 | 2,032 | ||
5.349% 2/1/37 (g) | 2,311 | 2,358 | ||
5.357% 2/1/36 (g) | 6,643 | 6,738 | ||
5.392% 2/1/37 (g) | 11,576 | 11,769 | ||
5.409% 3/1/35 (g) | 417 | 418 | ||
5.438% 8/1/36 (g) | 5,627 | 5,740 | ||
5.5% 4/1/09 to 6/1/37 (e) | 525,547 | 522,803 | ||
5.5% 8/1/23 (d) | 1,000 | 1,004 | ||
5.5% 8/18/23 (d) | 10,000 | 10,044 | ||
5.5% 8/18/23 (d) | 15,000 | 15,066 | ||
5.5% 8/18/23 (d) | 200 | 201 | ||
5.5% 8/18/23 (d) | 100 | 100 | ||
5.5% 8/18/23 (d) | 300 | 301 | ||
5.5% 8/18/23 (d) | 300 | 301 | ||
5.5% 8/18/23 (d) | 500 | 502 | ||
5.5% 8/18/23 (d) | 200 | 201 | ||
5.5% 8/18/23 (d) | 300 | 301 | ||
5.5% 8/18/23 (d) | 400 | 402 | ||
5.5% 8/13/38 (d) | 44,000 | 43,144 | ||
5.5% 8/13/38 (d)(e) | 150,000 | 147,083 | ||
U.S. Government Agency - Mortgage Securities - continued | ||||
| Principal Amount (000s) | Value | ||
Fannie Mae - continued | ||||
5.5% 8/13/38 (d) | $ 800 | $ 784 | ||
5.513% 3/1/35 (g) | 159 | 160 | ||
5.632% 2/1/36 (g) | 2,752 | 2,806 | ||
5.641% 4/1/36 (g) | 10,925 | 11,147 | ||
5.665% 6/1/36 (g) | 6,505 | 6,637 | ||
5.693% 1/1/36 (g) | 28,622 | 29,214 | ||
5.789% 5/1/36 (g) | 2,797 | 2,853 | ||
5.793% 3/1/36 (g) | 7,587 | 7,748 | ||
5.801% 1/1/36 (g) | 2,307 | 2,339 | ||
5.816% 5/1/36 (g) | 16,313 | 16,657 | ||
5.843% 3/1/36 (g) | 7,391 | 7,501 | ||
5.863% 6/1/35 (g) | 1,711 | 1,744 | ||
5.871% 3/1/36 (g) | 6,056 | 6,189 | ||
5.896% 12/1/36 (g) | 4,029 | 4,125 | ||
5.917% 5/1/36 (g) | 4,764 | 4,877 | ||
5.951% 5/1/36 (g) | 2,495 | 2,556 | ||
5.955% 2/1/35 (g) | 144 | 145 | ||
6% 4/1/12 to 1/1/38 (e) | 273,058 | 279,665 | ||
6% 8/1/38 (d) | 3,000 | 3,018 | ||
6.009% 4/1/36 (g) | 45,752 | 46,860 | ||
6.025% 12/1/36 (g) | 27,022 | 27,690 | ||
6.028% 9/1/36 (g) | 30,731 | 31,508 | ||
6.062% 4/1/36 (g) | 22,968 | 23,563 | ||
6.095% 3/1/37 (g) | 4,412 | 4,526 | ||
6.102% 3/1/33 (g) | 254 | 256 | ||
6.125% 2/1/33 (g) | 547 | 549 | ||
6.169% 4/1/36 (g) | 4,271 | 4,380 | ||
6.206% 2/1/35 (g) | 153 | 154 | ||
6.226% 3/1/37 (g) | 1,494 | 1,523 | ||
6.229% 5/1/36 (g) | 12,426 | 12,767 | ||
6.234% 2/1/35 (g) | 373 | 375 | ||
6.251% 6/1/36 (g) | 629 | 641 | ||
6.3% 10/1/36 (g) | 20,621 | 21,056 | ||
6.5% 2/1/12 to 4/1/37 | 43,655 | 45,361 | ||
6.5% 8/1/38 (d) | 63,000 | 64,727 | ||
6.547% 9/1/36 (g) | 8,243 | 8,516 | ||
7% 7/1/13 to 7/1/32 | 4,826 | 5,121 | ||
7.5% 8/1/10 to 4/1/29 | 99 | 103 | ||
8.5% 1/1/15 to 7/1/31 | 490 | 526 | ||
9% 11/1/11 to 5/1/14 | 465 | 479 | ||
9.5% 11/15/09 to 10/1/20 | 633 | 692 | ||
11% 8/1/10 | 6 | 6 | ||
U.S. Government Agency - Mortgage Securities - continued | ||||
| Principal Amount (000s) | Value | ||
Fannie Mae - continued | ||||
11.25% 5/1/14 | $ 7 | $ 7 | ||
11.5% 6/15/19 to 1/15/21 | 1,044 | 1,163 | ||
12.5% 8/1/15 to 3/1/16 | 2 | 2 | ||
| 2,101,770 | |||
Freddie Mac - 5.3% | ||||
4% 5/1/19 to 11/1/20 | 23,219 | 22,029 | ||
4.275% 6/1/35 (g) | 888 | 887 | ||
4.307% 12/1/34 (g) | 797 | 803 | ||
4.406% 3/1/35 (g) | 928 | 929 | ||
4.422% 2/1/34 (g) | 546 | 546 | ||
4.429% 3/1/35 (g) | 840 | 846 | ||
4.5% 8/1/33 | 3,577 | 3,305 | ||
4.622% 4/1/35 (g) | 6,756 | 6,786 | ||
4.667% 9/1/36 (g) | 2,923 | 2,944 | ||
4.716% 2/1/34 (g) | 6,855 | 6,871 | ||
4.79% 2/1/36 (g) | 1,142 | 1,149 | ||
4.791% 3/1/35 (g) | 2,425 | 2,442 | ||
4.84% 4/1/35 (g) | 3,414 | 3,435 | ||
5% 1/1/09 to 9/1/35 | 11,842 | 11,433 | ||
5.022% 4/1/35 (g) | 525 | 526 | ||
5.091% 6/1/35 (g) | 2,395 | 2,418 | ||
5.125% 7/1/35 (g) | 4,049 | 4,095 | ||
5.275% 2/1/36 (g) | 287 | 290 | ||
5.376% 3/1/35 (g) | 561 | 564 | ||
5.485% 1/1/36 (g) | 3,921 | 3,981 | ||
5.5% 8/1/14 to 7/1/37 | 191,344 | 193,712 | ||
5.5% 8/1/38 (d) | 8,000 | 7,836 | ||
5.5% 8/1/38 (d) | 600 | 588 | ||
5.5% 8/1/38 (d) | 500 | 490 | ||
5.5% 8/13/38 (d) | 300 | 294 | ||
5.5% 8/13/38 (d) | 1,000 | 979 | ||
5.5% 8/13/38 (d) | 1,600 | 1,567 | ||
5.5% 8/13/38 (d) | 1,000 | 979 | ||
5.5% 8/13/38 (d) | 800 | 784 | ||
5.5% 8/13/38 (d) | 1,200 | 1,175 | ||
5.52% 1/1/36 (g) | 5,452 | 5,531 | ||
5.579% 2/1/35 (g) | 1,119 | 1,127 | ||
5.743% 10/1/35 (g) | 1,157 | 1,177 | ||
5.829% 5/1/37 (g) | 2,978 | 3,026 | ||
6% 7/1/16 to 5/1/38 | 68,336 | 69,567 | ||
6% 8/1/38 (d) | 9,000 | 9,055 | ||
U.S. Government Agency - Mortgage Securities - continued | ||||
| Principal Amount (000s) | Value | ||
Freddie Mac - continued | ||||
6% 8/1/38 (d) | $ 300 | $ 302 | ||
6% 8/13/38 (d) | 300 | 302 | ||
6% 8/13/38 (d) | 100 | 101 | ||
6% 8/13/38 (d) | 400 | 402 | ||
6% 8/13/38 (d) | 400 | 402 | ||
6% 8/13/38 (d) | 1,000 | 1,006 | ||
6% 8/13/38 (d) | 500 | 503 | ||
6% 8/13/38 (d) | 400 | 402 | ||
6% 8/13/38 (d) | 600 | 604 | ||
6.021% 6/1/36 (g) | 3,157 | 3,221 | ||
6.224% 5/1/36 (g) | 2,584 | 2,645 | ||
6.278% 3/1/37 (g) | 8,086 | 8,283 | ||
6.378% 7/1/36 (g) | 3,019 | 3,094 | ||
6.423% 10/1/36 (g) | 8,566 | 8,794 | ||
6.491% 3/1/33 (g) | 163 | 165 | ||
6.5% 11/1/10 to 10/1/36 | 46,850 | 48,674 | ||
6.586% 12/1/36 (g) | 15,432 | 15,770 | ||
6.685% 1/1/37 (g) | 10,780 | 11,095 | ||
6.689% 10/1/36 (g) | 7,783 | 8,008 | ||
6.844% 10/1/36 (g) | 10,819 | 11,085 | ||
7% 4/1/11 | 3 | 3 | ||
7.5% 5/1/11 to 7/1/16 | 1,638 | 1,723 | ||
8.5% 8/1/08 to 9/1/29 | 194 | 209 | ||
9% 8/1/08 to 10/1/20 | 68 | 73 | ||
9.5% 6/1/09 to 8/1/21 | 256 | 282 | ||
9.75% 8/1/14 | 139 | 150 | ||
10% 7/1/09 to 8/1/21 | 22 | 24 | ||
11% 7/1/13 to 5/1/14 | 58 | 64 | ||
12% 8/1/13 to 3/1/15 | 2 | 2 | ||
12.25% 4/1/11 | 0 | 0 | ||
12.5% 2/1/10 to 6/1/19 | 17 | 19 | ||
13% 8/1/10 to 6/1/15 | 6 | 7 | ||
| 501,580 | |||
Government National Mortgage Association - 3.5% | ||||
5% 2/20/33 to 6/20/38 | 73,081 | 70,736 | ||
5.25% 7/20/34 (g) | 737 | 740 | ||
5.5% 12/15/33 to 2/15/34 | 65,387 | 65,264 | ||
5.5% 8/1/38 (d)(e) | 12,000 | 11,911 | ||
5.5% 8/1/38 (d)(e) | 8,000 | 7,941 | ||
5.5% 8/1/38 (d) | 1,000 | 993 | ||
5.5% 8/1/38 (d)(e) | 22,000 | 21,837 | ||
U.S. Government Agency - Mortgage Securities - continued | ||||
| Principal Amount (000s) | Value | ||
Government National Mortgage Association - continued | ||||
5.5% 8/1/38 (d) | $ 1,000 | $ 993 | ||
5.5% 8/1/38 (d)(e) | 5,000 | 4,942 | ||
6% 9/15/08 to 1/15/38 | 121,433 | 123,541 | ||
6.5% 2/15/24 to 10/15/35 | 19,802 | 20,673 | ||
7% 10/15/26 to 8/15/32 | 90 | 95 | ||
7.5% 3/15/28 to 8/15/29 | 112 | 119 | ||
8% 6/15/18 to 12/15/23 | 1,212 | 1,303 | ||
8.5% 1/15/25 | 4 | 4 | ||
9% 12/15/09 | 0 | 0 | ||
9.5% 2/15/25 | 1 | 1 | ||
10.5% 4/15/14 to 1/20/18 | 93 | 106 | ||
13.5% 7/15/11 | 5 | 6 | ||
| 331,205 | |||
TOTAL U.S. GOVERNMENT AGENCY - MORTGAGE SECURITIES (Cost $2,933,057) | 2,934,555 | |||
Asset-Backed Securities - 0.1% | ||||
| ||||
Fannie Mae Grantor Trust Series 2005-T4 Class A1C, 2.6113% 9/25/35 (g) | 4,793 | 4,769 | ||
Collateralized Mortgage Obligations - 8.3% | ||||
| ||||
U.S. Government Agency - 8.3% | ||||
Fannie Mae: | ||||
planned amortization class: | ||||
Series 1992-168 Class KB, 7% 10/25/22 | 1,352 | 1,404 | ||
Series 1993-207 Class H, 6.5% 11/25/23 | 18,360 | 19,064 | ||
Series 1993-240 Class PD, 6.25% 12/25/13 | 4,400 | 4,543 | ||
Series 1994-23: | ||||
Class PG, 6% 4/25/23 | 3,032 | 3,055 | ||
Class PZ, 6% 2/25/24 | 10,676 | 10,961 | ||
Series 1996-28 Class PK, 6.5% 7/25/25 | 3,796 | 3,911 | ||
Series 2003-28 Class KG, 5.5% 4/25/23 | 4,940 | 4,750 | ||
Series 2006-45 Class OP, 6/25/36 (i) | 5,849 | 4,310 | ||
Series 2006-62 Class KP, 4/25/36 (i) | 12,300 | 8,624 | ||
sequential payer: | ||||
Series 1997-41 Class J, 7.5% 6/18/27 | 2,598 | 2,751 | ||
Series 2007-115 Class BE, 4.5% 12/25/22 | 15,400 | 14,430 | ||
Series 2003-22 6% 4/25/33 (h) | 17,992 | 4,307 | ||
Collateralized Mortgage Obligations - continued | ||||
| Principal Amount (000s) | Value | ||
U.S. Government Agency - continued | ||||
Fannie Mae Grantor Trust planned amortization class Series 2005-81 Class PC, 5.5% 9/25/35 | $ 2,150 | $ 2,088 | ||
Fannie Mae subordinate REMIC pass-thru certificates: | ||||
floater: | ||||
Series 2001-38 Class QF, 3.4413% 8/25/31 (g) | 631 | 635 | ||
Series 2002-49 Class FB, 3.0563% 11/18/31 (g) | 1,011 | 991 | ||
Series 2002-60 Class FV, 3.4613% 4/25/32 (g) | 428 | 428 | ||
Series 2002-75 Class FA, 3.4613% 11/25/32 (g) | 877 | 876 | ||
Series 2004-54 Class FE, 3.6113% 2/25/33 (g) | 522 | 509 | ||
planned amortization class: | ||||
Series 2002-11 Class QC, 5.5% 3/25/17 | 12,553 | 12,752 | ||
Series 2002-18 Class PC, 5.5% 4/25/17 | 1,170 | 1,190 | ||
Series 2002-47 Class QE, 5.5% 8/25/17 | 9,085 | 9,208 | ||
Series 2003-113 Class PE, 4% 11/25/18 | 7,545 | 6,958 | ||
Series 2004-21 Class QE, 4.5% 11/25/32 | 1,500 | 1,410 | ||
Series 2005-102 Class CO, 11/25/35 (i) | 6,079 | 4,523 | ||
Series 2006-12 Class BO, 10/25/35 (i) | 27,413 | 20,461 | ||
Series 2006-37 Class OW, 5/25/36 (i) | 6,574 | 5,023 | ||
sequential payer: | ||||
Series 2001-20 Class Z, 6% 5/25/31 | 20,392 | 20,716 | ||
Series 2001-46 Class ZG, 6% 9/25/31 | 7,392 | 7,544 | ||
Series 2002-79 Class Z, 5.5% 11/25/22 | 11,827 | 11,650 | ||
Series 2003-84 Class JK, 4.5% 9/25/18 | 10,000 | 9,493 | ||
Series 2004-3 Class BA, 4% 7/25/17 | 585 | 576 | ||
Series 2004-91 Class AH, 4.5% 5/25/29 | 5,475 | 5,390 | ||
Series 2005-117, Class JN, 4.5% 1/25/36 | 645 | 563 | ||
Series 2006-72 Class CY, 6% 8/25/26 | 10,215 | 10,124 | ||
Series 2004-19 Class AY, 4% 4/25/19 | 37,116 | 33,730 | ||
Series 2007-36: | ||||
Class GO, 4/25/37 (i) | 1,221 | 847 | ||
Class PO, 4/25/37 (i) | 2,728 | 1,874 | ||
Class SB, 4.1388% 4/25/37 (g)(h) | 35,426 | 2,886 | ||
Class SG, 4.1388% 4/25/37 (g)(h) | 15,882 | 1,343 | ||
Series 2007-66 Class SA, 24.8325% 7/25/37 (g) | 4,801 | 5,783 | ||
Freddie Mac: | ||||
planned amortization class: | ||||
Series 2115 Class PE, 6% 1/15/14 | 764 | 785 | ||
Series 3149 Class OD, 5/15/36 (i) | 32,182 | 22,588 | ||
sequential payer Series 2114 Class ZM, 6% 1/15/29 | 2,324 | 2,372 | ||
Collateralized Mortgage Obligations - continued | ||||
| Principal Amount (000s) | Value | ||
U.S. Government Agency - continued | ||||
Freddie Mac Manufactured Housing participation certificates guaranteed: | ||||
floater Series 1686 Class FA, 3.4% 2/15/24 (g) | $ 1,017 | $ 1,023 | ||
planned amortization class Series 1681 Class PJ, 7% 12/15/23 | 6,066 | 6,230 | ||
Freddie Mac Multi-class participation certificates guaranteed: | ||||
floater: | ||||
Series 2389 Class DA, 3.3575% 11/15/30 (g) | 69 | 69 | ||
Series 2530 Class FE, 3.0575% 2/15/32 (g) | 592 | 583 | ||
Series 2630 Class FL, 2.9575% 6/15/18 (g) | 550 | 555 | ||
Series 3008 Class SM, 0% 7/15/35 (g) | 376 | 284 | ||
planned amortization class: | ||||
Series 1141 Class G, 9% 9/15/21 | 372 | 389 | ||
Series 1614 Class L, 6.5% 7/15/23 | 3,624 | 3,700 | ||
Series 1671 Class G, 6.5% 8/15/23 | 1 | 1 | ||
Series 2006-15 Class OP, 3/25/36 (i) | 7,321 | 5,141 | ||
Series 2131 Class BG, 6% 3/15/29 | 48,671 | 49,175 | ||
Series 2356 Class GD, 6% 9/15/16 | 481 | 492 | ||
Series 2376 Class JE, 5.5% 11/15/16 | 3,321 | 3,345 | ||
Series 2378 Class PE, 5.5% 11/15/16 | 9,393 | 9,459 | ||
Series 2381 Class OG, 5.5% 11/15/16 | 2,691 | 2,711 | ||
Series 2390 Class CH, 5.5% 12/15/16 | 8,558 | 8,666 | ||
Series 2628 Class OE, 4.5% 6/15/18 | 6,815 | 6,644 | ||
Series 2640 Class GE, 4.5% 7/15/18 | 7,310 | 7,121 | ||
Series 2660 Class ML, 3.5% 7/15/22 | 225 | 225 | ||
Series 2682 Class LD, 4.5% 10/15/33 | 777 | 673 | ||
Series 2752 Class PW, 4% 4/15/22 | 1,134 | 1,136 | ||
Series 2802 Class OB, 6% 5/15/34 | 10,455 | 10,727 | ||
Series 2810 Class PD, 6% 6/15/33 | 995 | 999 | ||
Series 2937 Class KC, 4.5% 2/15/20 | 19,686 | 18,940 | ||
Series 2962 Class BE, 4.5% 4/15/20 | 15,015 | 14,332 | ||
Series 3077 Class TO, 4/15/35 (i) | 16,048 | 11,535 | ||
Series 3110 Class OP, 9/15/35 (i) | 15,175 | 10,993 | ||
Series 3119 Class PO, 2/15/36 (i) | 18,377 | 13,446 | ||
Series 3121 Class KO, 3/15/36 (i) | 6,321 | 4,847 | ||
Series 3123 Class LO, 3/15/36 (i) | 11,927 | 8,394 | ||
Series 3145 Class GO, 4/15/36 (i) | 10,703 | 7,558 | ||
Series 3151 Class PO, 5/15/36 (i) | 11,593 | 8,092 | ||
sequential payer: | ||||
Series 2388 Class ZA, 6% 12/15/31 | 6,485 | 6,567 | ||
Series 2546 Class MJ, 5.5% 3/15/23 | 2,861 | 2,738 | ||
Collateralized Mortgage Obligations - continued | ||||
| Principal Amount (000s) | Value | ||
U.S. Government Agency - continued | ||||
Freddie Mac Multi-class participation certificates guaranteed: - continued | ||||
sequential payer: | ||||
Series 2570 Class CU, 4.5% 7/15/17 | $ 1,643 | $ 1,633 | ||
Series 2574 Class HP, 5% 2/15/18 | 42,150 | 41,381 | ||
Series 2587 Class AD, 4.71% 3/15/33 | 5,785 | 5,017 | ||
Series 2601 Class TB, 5.5% 4/15/23 | 869 | 832 | ||
Series 2611 Class CH, 4.5% 5/15/18 | 37,220 | 35,824 | ||
Series 2617 Class GW, 3.5% 6/15/16 | 2,184 | 2,181 | ||
Series 2675 Class CB, 4% 5/15/16 | 1,565 | 1,550 | ||
Series 2677 Class BC, 4% 9/15/18 | 20,040 | 18,500 | ||
Series 2683 Class JA, 4% 10/15/16 | 1,678 | 1,659 | ||
Series 2685 Class ND, 4% 10/15/18 | 9,064 | 8,349 | ||
Series 2750 Class ZT, 5% 2/15/34 | 1,072 | 914 | ||
Series 2770 Class TW, 4.5% 3/15/19 | 19,670 | 18,531 | ||
Series 2773 Class HC, 4.5% 4/15/19 | 704 | 660 | ||
Series 2809 Class UA, 4% 12/15/14 | 1,869 | 1,870 | ||
Series 2849 Class AL, 5% 5/15/18 | 7,482 | 7,547 | ||
Series 2860 Class CP, 4% 10/15/17 | 1,845 | 1,825 | ||
Series 2866 Class N, 4.5% 12/15/18 | 6,417 | 6,442 | ||
Series 2874 Class BC, 5% 10/15/19 | 43,000 | 41,778 | ||
Series 2937 Class HJ, 5% 10/15/19 | 7,911 | 7,961 | ||
Series 2998 Class LY, 5.5% 7/15/25 | 2,011 | 1,904 | ||
Series 3007 Class EW, 5.5% 7/15/25 | 8,875 | 8,443 | ||
Series 3013 Class VJ, 5% 1/15/14 | 1,716 | 1,735 | ||
Series 3401 Class EB, 5% 12/15/22 | 7,495 | 7,172 | ||
Series 2769 Class BU, 5% 3/15/34 | 5,712 | 5,090 | ||
Series 2863 Class DB, 4% 9/15/14 | 1,216 | 1,175 | ||
Series 2957 Class SW, 3.5425% 4/15/35 (g)(h) | 25,113 | 1,454 | ||
Series 3002 Class SN, 4.0425% 7/15/35 (g)(h) | 25,256 | 1,945 | ||
target amortization class: | ||||
Series 2156 Class TC, 6.25% 5/15/29 | 8,376 | 8,529 | ||
Series 2877 Class JC, 5% 10/15/34 | 1,293 | 1,284 | ||
Ginnie Mae guaranteed REMIC pass-thru securities planned amortization class: | ||||
Series 1997-8 Class PE, 7.5% 5/16/27 | 4,184 | 4,443 | ||
Series 2003-116 Class JE, 5% 12/20/33 | 13,248 | 12,215 | ||
Series 2004-4 Class MG, 5% 1/16/34 | 10,425 | 9,630 | ||
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $788,317) | 783,689 |
Cash Equivalents - 30.4% | |||
Maturity Amount (000s) | Value | ||
Investments in repurchase agreements in a joint trading account at 2.19%, dated 7/31/08 due 8/1/08: | |||
(Collateralized by U.S. Government Obligations) # | $ 625,554 | $ 625,516 | |
(Collateralized by U.S. Government Obligations) # (a) | 2,261,736 | 2,261,598 | |
TOTAL CASH EQUIVALENTS (Cost $2,887,114) | 2,887,114 | ||
TOTAL INVESTMENT PORTFOLIO - 125.7% (Cost $11,895,203) | 11,924,794 | ||
NET OTHER ASSETS - (25.7)% | (2,441,152) | ||
NET ASSETS - 100% | $ 9,483,642 |
Swap Agreements | |||||
| Expiration Date | Notional Amount (000s) |
| ||
Interest Rate Swaps | |||||
Receive quarterly a floating rate based on 3-month LIBOR and pay semi-annually a fixed rate equal to 4.64% with JPMorgan Chase, Inc. | April 2038 | $ 35,000 | 1,650 | ||
Receive quarterly a floating rate based on 3-month LIBOR and pay semi-annually a fixed rate equal to 4.82% with Citibank | June 2018 | 135,000 | (1,899) | ||
Receive quarterly a floating rate based on 3-month LIBOR and pay semi-annually a fixed rate equal to 5.03% with Credit Suisse First Boston | Oct. 2017 | 72,000 | (3,042) | ||
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 | (7,022) | ||
Receive semi-annually a fixed rate equal to 2.528% and pay quarterly a floating rate based on 3-month LIBOR with Goldman Sachs | March 2010 | 69,000 | (342) | ||
Receive semi-annually a fixed rate equal to 3.1899% and pay quarterly a floating rate based on 3-month LIBOR with Goldman Sachs | April 2010 | 89,050 | 547 | ||
Swap Agreements - continued | |||||
| Expiration Date | Notional Amount (000s) | Value | ||
Interest Rate Swaps - continued | |||||
Receive semi-annually a fixed rate equal to 3.427% and pay quarterly a floating rate based on 3-month LIBOR with Credit Suisse First Boston | March 2013 | $ 88,000 | $ (1,625) | ||
Receive semi-annually a fixed rate equal to 4.42% and pay quarterly a floating rate based on 3-month LIBOR with Credit Suisse First Boston | Oct. 2009 | 300,000 | 8,082 | ||
Receive semi-annually a fixed rate equal to 4.465% and pay quarterly a floating rate based on 3-month LIBOR with Citibank | June 2013 | 160,000 | 2,469 | ||
Receive semi-annually a fixed rate equal to 4.66% and pay quarterly a floating rate based on 3-month LIBOR with Barclays Bank | August 2018 | 141,807 | 0 | ||
Receive semi-annually a fixed rate equal to 4.663% and pay quarterly a floating rate based on 3-month LIBOR with Goldman Sachs | August 2018 | 43,594 | 0 | ||
Receive semi-annually a fixed rate equal to 4.88% and pay quarterly a floating rate based on 3-month LIBOR with Bank of America | Sept. 2010 | 106,700 | 4,692 | ||
Receive semi-annually a fixed rate equal to 5.03% and pay quarterly a floating rate based on 3-month LIBOR with JPMorgan Chase, Inc. | August 2010 | 91,000 | 4,429 | ||
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 | 6,194 | ||
Receive semi-annully a fixed rate equal to 2.8575% and pay quarterly a floating rate based on 3-month LIBOR with JPMorgan Chase, Inc. | April 2011 | 201,000 | (2,856) | ||
| $ 1,707,151 | $ 11,277 |
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 $19,023,000 or 0.2% of net assets. |
(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 $9,384,000. |
(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 |
$625,516,000 due 8/01/08 at 2.19% | |
BNP Paribas Securities Corp. | $ 46,762 |
Banc of America Securities LLC | 72,530 |
Bank of America, NA | 70,196 |
Barclays Capital, Inc. | 305,376 |
Greenwich Capital Markets, Inc. | 11,452 |
ING Financial Markets LLC | 64,895 |
J.P. Morgan Securities, Inc. | 35,219 |
RBC Capital Markets Corp. | 9,543 |
WestLB AG | 9,543 |
| $ 625,516 |
$2,261,598,000 due 8/01/08 at 2.19% | |
Bank of America, NA | $ 2,261,598 |
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, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $2,216,611 and repurchase agreements of $2,887,114) - See accompanying schedule: Unaffiliated issuers (cost $11,895,203) |
| $ 11,924,794 |
Commitment to sell securities on a delayed delivery basis | $ (224,131) | |
Receivable for securities sold on a delayed delivery basis | 225,704 | 1,573 |
Receivable for investments sold, regular delivery | 237,639 | |
Cash | 1 | |
Receivable for fund shares sold | 16,231 | |
Interest receivable | 70,254 | |
Swap agreements, at value | 11,277 | |
Other receivables | 20 | |
Total assets | 12,261,789 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 131,636 | |
Delayed delivery | 366,875 | |
Payable for fund shares redeemed | 13,492 | |
Distributions payable | 701 | |
Accrued management fee | 2,447 | |
Distribution fees payable | 186 | |
Other affiliated payables | 1,122 | |
Other payables and accrued expenses | 90 | |
Collateral on securities loaned, at value | 2,261,598 | |
Total liabilities | 2,778,147 | |
|
|
|
Net Assets | $ 9,483,642 | |
Net Assets consist of: |
| |
Paid in capital | $ 9,356,625 | |
Undistributed net investment income | 6,028 | |
Accumulated undistributed net realized gain (loss) on investments | 78,548 | |
Net unrealized appreciation (depreciation) on investments | 42,441 | |
Net Assets | $ 9,483,642 |
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, 2008 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 10.40 | |
|
|
|
Maximum offering price per share (100/96.00 of $10.40) | $ 10.83 | |
Class T: | $ 10.40 | |
|
|
|
Maximum offering price per share (100/96.00 of $10.40) | $ 10.83 | |
Class B: | $ 10.40 | |
|
|
|
Class C: | $ 10.40 | |
|
|
|
Government Income: | $ 10.38 | |
|
|
|
Institutional Class: | $ 10.40 |
A Redemption 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, 2008 | |
|
|
|
Investment Income |
|
|
Interest |
| $ 376,011 |
|
|
|
Expenses | ||
Management fee | $ 25,333 | |
Transfer agent fees | 8,928 | |
Distribution fees | 2,029 | |
Fund wide operations fee | 2,777 | |
Independent trustees' compensation | 33 | |
Miscellaneous | 18 | |
Total expenses before reductions | 39,118 | |
Expense reductions | (396) | 38,722 |
Net investment income | 337,289 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 204,260 | |
Futures contracts | 259 | |
Swap agreements | (1,299) |
|
Total net realized gain (loss) |
| 203,220 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 47,602 | |
Swap agreements | 10,913 | |
Delayed delivery commitments | 3,090 |
|
Total change in net unrealized appreciation (depreciation) |
| 61,605 |
Net gain (loss) | 264,825 | |
Net increase (decrease) in net assets resulting from operations | $ 602,114 |
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 | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income | $ 337,289 | $ 296,314 |
Net realized gain (loss) | 203,220 | (39,749) |
Change in net unrealized appreciation (depreciation) | 61,605 | 63,955 |
Net increase (decrease) in net assets resulting | 602,114 | 320,520 |
Distributions to shareholders from net investment income | (333,995) | (303,351) |
Distributions to shareholders from net realized gain | - | (2,616) |
Total distributions | (333,995) | (305,967) |
Share transactions - net increase (decrease) | 1,973,783 | 1,895,812 |
Total increase (decrease) in net assets | 2,241,902 | 1,910,365 |
|
|
|
Net Assets | ||
Beginning of period | 7,241,740 | 5,331,375 |
End of period (including undistributed net investment income of $6,028 and undistributed net investment income of $1,411, respectively) | $ 9,483,642 | $ 7,241,740 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2008 | 2007F |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 10.01 | $ 9.98 |
Income from Investment Operations |
|
|
Net investment incomeE | .402 | .311 |
Net realized and unrealized gain (loss) | .387 | .033 |
Total from investment operations | .789 | .344 |
Distributions from net investment income | (.399) | (.314) |
Net asset value, end of period | $ 10.40 | $ 10.01 |
Total ReturnB, C, D | 7.96% | 3.49% |
Ratios to Average Net AssetsG |
|
|
Expenses before reductions | .81% | .78%A |
Expenses net of fee waivers, if any | .81% | .78%A |
Expenses net of all reductions | .80% | .77%A |
Net investment income | 3.88% | 4.08%A |
Supplemental Data |
|
|
Net assets, end of period (in millions) | $ 232 | $ 145 |
Portfolio turnover rate | 269% | 164%H |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F For the period October 24, 2006 (commencement of sale of shares) to July 31, 2007.
G 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.
H 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 - Class T
Years ended July 31, | 2008 | 2007F |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 10.01 | $ 9.98 |
Income from Investment Operations |
|
|
Net investment incomeE | .404 | .306 |
Net realized and unrealized gain (loss) | .387 | .036 |
Total from investment operations | .791 | .342 |
Distributions from net investment income | (.401) | (.312) |
Net asset value, end of period | $ 10.40 | $ 10.01 |
Total ReturnB, C, D | 7.98% | 3.46% |
Ratios to Average Net AssetsG |
|
|
Expenses before reductions | .78% | .79%A |
Expenses net of fee waivers, if any | .78% | .79%A |
Expenses net of all reductions | .78% | .79%A |
Net investment income | 3.90% | 4.02%A |
Supplemental Data |
|
|
Net assets, end of period (in millions) | $ 236 | $ 181 |
Portfolio turnover rate | 269% | 164%H |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F For the period October 24, 2006 (commencement of sale of shares) to July 31, 2007.
G 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.
H 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 - Class B
Years ended July 31, | 2008 | 2007F |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 10.01 | $ 9.98 |
Income from Investment Operations |
|
|
Net investment incomeE | .329 | .251 |
Net realized and unrealized gain (loss) | .387 | .037 |
Total from investment operations | .716 | .288 |
Distributions from net investment income | (.326) | (.258) |
Net asset value, end of period | $ 10.40 | $ 10.01 |
Total ReturnB, C, D | 7.21% | 2.91% |
Ratios to Average Net AssetsG |
|
|
Expenses before reductions | 1.51% | 1.50%A |
Expenses net of fee waivers, if any | 1.51% | 1.50%A |
Expenses net of all reductions | 1.50% | 1.50%A |
Net investment income | 3.17% | 3.30%A |
Supplemental Data |
|
|
Net assets, end of period (in millions) | $ 41 | $ 43 |
Portfolio turnover rate | 269% | 164%H |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F For the period October 24, 2006 (commencement of sale of shares) to July 31, 2007.
G 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.
H 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 - Class C
Years ended July 31, | 2008 | 2007F |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 10.01 | $ 9.98 |
Income from Investment Operations |
|
|
Net investment incomeE | .326 | .249 |
Net realized and unrealized gain (loss) | .387 | .033 |
Total from investment operations | .713 | .282 |
Distributions from net investment income | (.323) | (.252) |
Net asset value, end of period | $ 10.40 | $ 10.01 |
Total ReturnB, C, D | 7.18% | 2.85% |
Ratios to Average Net AssetsG |
|
|
Expenses before reductions | 1.53% | 1.55%A |
Expenses net of fee waivers, if any | 1.53% | 1.55%A |
Expenses net of all reductions | 1.53% | 1.55%A |
Net investment income | 3.15% | 3.26%A |
Supplemental Data |
|
|
Net assets, end of period (in millions) | $ 71 | $ 39 |
Portfolio turnover rate | 269% | 164%H |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F For the period October 24, 2006 (commencement of sale of shares) to July 31, 2007.
G 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.
H 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 - Government Income
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 10.00 | $ 9.95 | $ 10.20 | $ 10.13 | $ 10.16 |
Income from Investment Operations |
|
|
|
|
|
Net investment incomeB | .438 | .443 | .429 | .329 | .307 |
Net realized and unrealized gain (loss) | .378 | .068 | (.274) | .097 | .124 |
Total from investment operations | .816 | .511 | .155 | .426 | .431 |
Distributions from net investment income | (.436) | (.456) | (.405) | (.321) | (.301) |
Distributions from net realized gain | - | (.005) | - | (.035) | (.160) |
Total distributions | (.436) | (.461) | (.405) | (.356) | (.461) |
Net asset value, end of period | $ 10.38 | $ 10.00 | $ 9.95 | $ 10.20 | $ 10.13 |
Total ReturnA | 8.25% | 5.22% | 1.56% | 4.24% | 4.30% |
Ratios to Average Net AssetsC |
|
|
|
|
|
Expenses before reductions | .45% | .45% | .45% | .58% | .63% |
Expenses net of fee waivers, if any | .45% | .45% | .45% | .58% | .63% |
Expenses net of all reductions | .45% | .44% | .44% | .58% | .63% |
Net investment income | 4.23% | 4.42% | 4.27% | 3.21% | 3.01% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (in millions) | $ 8,154 | $ 6,118 | $ 5,331 | $ 5,127 | $ 4,168 |
Portfolio turnover rate | 269% | 164%D | 108% | 114% | 224% |
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
Years ended July 31, | 2008 | 2007E |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 10.01 | $ 9.98 |
Income from Investment Operations |
|
|
Net investment incomeD | .432 | .329 |
Net realized and unrealized gain (loss) | .388 | .034 |
Total from investment operations | .820 | .363 |
Distributions from net investment income | (.430) | (.333) |
Net asset value, end of period | $ 10.40 | $ 10.01 |
Total ReturnB, C | 8.28% | 3.67% |
Ratios to Average Net AssetsF |
|
|
Expenses before reductions | .51% | .53%A |
Expenses net of fee waivers, if any | .51% | .53%A |
Expenses net of all reductions | .51% | .53%A |
Net investment income | 4.17% | 4.32%A |
Supplemental Data |
|
|
Net assets, end of period (in millions) | $ 750 | $ 715 |
Portfolio turnover rate | 269% | 164%G |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
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.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended July 31, 2008
(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. 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.
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. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments. Debt securities, including restricted securities, 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. Swaps are marked-to-market daily based on dealer-supplied valuations and changes in value are recorded as unrealized appreciation (depreciation). 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. Actual prices received at disposition may differ.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts
Annual Report
2. Significant Accounting Policies - continued
Security Valuation - continued
and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
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 per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and 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.
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.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service.
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. In addition, the Fund will claim a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
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
Capital accounts within the financial statements are adjusted for permanent book-tax differences. Certain adjustments have been made to the accounts relating to prior periods. Collectively, 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, market discount, deferred trustees compensation, futures transactions, 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 | $ 92,078 |
Unrealized depreciation | (69,550) |
Net unrealized appreciation (depreciation) | 22,528 |
Undistributed ordinary income | 35,327 |
Undistributed long-term capital gain | 37,386 |
|
|
Cost for federal income tax purposes | $ 11,902,266 |
The tax character of distributions paid was as follows:
| July 31, 2008 | July 31, 2007 |
Ordinary Income | $ 333,995 | $ 305,967 |
New Accounting Pronouncements. 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 results in expanded disclosures about fair value measurements.
In addition, in March 2008, Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (SFAS 161), was issued and is effective for fiscal years beginning after November 15, 2008. SFAS 161 requires enhanced disclosures to provide information about the reasons the Fund invests in derivative instruments, the accounting treatment and the effect derivatives have on financial performance. Management is currently evaluating the impact the adoption of SFAS 161 will have on the Fund's financial statement disclosures.
Annual Report
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.
Delayed Delivery Transactions and When-Issued Securities. The Fund 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 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. 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. Losses may arise from changes in the value of the underlying instruments or if the counterparties do not perform under the contract's terms.
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except ratios)
3. Operating Policies - continued
Futures Contracts - continued
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.
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. 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). Periodic payments received or made by the Fund are recorded in the accompanying Statement of Operations as realized gains or losses, respectively. 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. The Fund may enter into dollar rolls in which the Fund sells mortgage-backed securities, realizing a gain or loss, and simultaneously agrees to repurchase substantially similar securities at a future date. In addition, the Fund may enter into reverse mortgage dollar rolls in which the Fund purchases and simultaneously agrees to sell substantially similar securities at a future date. During the period between the sale and repurchase in a dollar roll transaction, the 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 that are permissible investments of the Fund. During the period between the purchase and subsequent sale in a reverse dollar roll transaction
Annual Report
3. Operating Policies - continued
Mortgage Dollar Rolls - continued
the Fund is entitled to interest and principal payments on the securities purchased. 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, the Fund's right to repurchase or sell securities may be limited.
4. Fees and Other Transactions with Affiliates.
Management Fee. 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.
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 | Service | Paid to | Retained |
Class A | 0% | .25% | $ 491 | $ 54 |
Class T | 0% | .25% | 549 | 3 |
Class B | .65% | .25% | 400 | 288 |
Class C | .75% | .25% | 589 | 97 |
|
|
| $ 2,029 | $ 442 |
Sales Load. FDC receives a front-end sales charge of up to 4.00% for selling Class A shares and Class T shares, 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 |
Class A | $ 46 |
Class T | 18 |
Class B* | 60 |
Class C* | 11 |
| $ 135 |
* 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. FIIOC receives 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 pays for typesetting, printing and mailing of shareholder reports, except proxy statements. Prior to January 1, 2008, Fidelity Service Company, Inc. (FSC), also an affiliate of FMR, was the transfer agent for Government Income. For the period, each class paid the following transfer agent fees:
| Amount | % of |
Class A | $ 401 | .20 |
Class T | 393 | .18 |
Class B | 113 | .25 |
Class C | 107 | .18 |
Government Income | 6,883 | .10 |
Institutional Class | 1,031 | .16 |
| $ 8,928 |
|
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 $18 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 $8,983.
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 expenses by $15. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent |
Class A | $ 7 |
Government Income | 354 |
Institutional Class | 20 |
| $ 381 |
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.
At the end of the period, Fidelity Freedom 2010 and Fidelity Freedom 2020 were the owners of record of approximately 12% and 14%, respectively of the total outstanding shares of Fidelity Government Income Fund. The Fidelity Advisor Freedom Funds and Fidelity Freedom Funds were the owners of record, in aggregate, of approximately 57% of the total outstanding shares of Fidelity Government Income Fund.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2008 | 2007A |
From net investment income |
|
|
Class A | $ 7,464 | $ 4,138 |
Class T | 8,439 | 5,771 |
Class B | 1,398 | 1,298 |
Class C | 1,798 | 1,042 |
Government Income | 288,379 | 269,231 |
Institutional Class | 26,517 | 21,871 |
Total | $ 333,995 | $ 303,351 |
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.
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended July 31, | 2008 | 2007A | 2008 | 2007A |
Class A |
|
|
|
|
Shares sold | 17,630 | 5,668 | $ 183,928 | $ 56,865 |
Issued in exchange for shares of Fidelity Advisor Government Investment Fund | - | 11,639 | - | 116,974 |
Reinvestment of distributions | 653 | 374 | 6,798 | 3,759 |
Shares redeemed | (10,466) | (3,165) | (108,879) | (31,770) |
Net increase (decrease) | 7,817 | 14,516 | $ 81,847 | $ 145,828 |
Annual Report
10. Share Transactions - continued
| Shares | Dollars | ||
Years ended July 31, | 2008 | 2007A | 2008 | 2007A |
Class T |
|
|
|
|
Shares sold | 15,236 | 3,593 | $ 158,292 | $ 36,101 |
Issued in exchange for shares of Fidelity Advisor Government Investment Fund | - | 19,997 | - | 200,973 |
Reinvestment of distributions | 772 | 549 | 8,030 | 5,508 |
Shares redeemed | (11,375) | (6,079) | (118,003) | (60,985) |
Net increase (decrease) | 4,633 | 18,060 | $ 48,319 | $ 181,597 |
Class B |
|
|
|
|
Shares sold | 2,313 | 524 | $ 24,145 | $ 5,289 |
Issued in exchange for shares of Fidelity Advisor Government Investment Fund | - | 5,890 |
| 59,191 |
Reinvestment of distributions | 108 | 104 | 1,126 | 1,045 |
Shares redeemed | (2,809) | (2,192) | (29,186) | (22,000) |
Net increase (decrease) | (388) | 4,326 | $ (3,915) | $ 43,525 |
Class C |
|
|
|
|
Shares sold | 5,069 | 517 | $ 52,892 | $ 5,201 |
Issued in exchange for shares of Fidelity Advisor Government Investment Fund | - | 4,449 |
| 44,717 |
Reinvestment of distributions | 114 | 64 | 1,185 | 643 |
Shares redeemed | (2,289) | (1,095) | (23,797) | (10,981) |
Net increase (decrease) | 2,894 | 3,935 | $ 30,280 | $ 39,580 |
Government Income |
|
|
|
|
Shares sold | 308,696 | 105,528 | $ 3,217,869 | $ 1,058,863 |
Issued in exchange for shares of Spartan Government Income Fund | - | 71,077 | - | 713,611 |
Reinvestment of distributions | 27,173 | 26,531 | 282,009 | 266,315 |
Shares redeemed | (162,519) | (127,164) | (1,689,834) | (1,271,926) |
Net increase (decrease) | 173,350 | 75,972 | $ 1,810,044 | $ 766,863 |
Institutional Class |
|
|
|
|
Shares sold | 30,491 | 16,978 | $ 316,702 | $ 170,642 |
Issued in exchange for shares of Fidelity Advisor Government Investment Fund | - | 57,200 | - | 574,860 |
Reinvestment of distributions | 2,538 | 2,169 | 26,319 | 21,772 |
Shares redeemed | (32,353) | (4,899) | (335,813) | (48,855) |
Net increase (decrease) | 676 | 71,448 | $ 7,208 | $ 718,419 |
A Share 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)
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.
12. Proposed Reorganization.
On June 19, 2008, the Board of Trustees of the Fund and the Board of Trustees of the Capital One U.S. Government Income Fund ("U.S. Government Income Fund") approved an Agreement and Plan of Reorganization between the Fund and U.S. Government Income Fund. The agreement provides for the transfer of all the assets of U.S. Government Income Fund (other than any deferred, accrued or prepaid expenses or any assets necessary to discharge any liabilities of U.S. Government Income Fund following the merger) in exchange solely for the number of shares of Class A of the Fund with an equal dollar value of the outstanding shares of U.S. Government Income Fund on the day the reorganization is effective.
A meeting of the shareholders of U.S. Government Income Fund is expected to be held in October, 2008 to vote on the reorganization. If approved by shareholders, the reorganization is expected to become effective on or about November 21, 2008. The reorganization is expected to qualify as a tax-free transaction with no gain or loss recognized by the Funds or their shareholders.
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, 2008, 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 periods indicated, 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, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
September 23, 2008
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the 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 Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 159 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 377 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 Member 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 1-877-208-0098.
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 (78) | |
| Year of Election or Appointment: 1984 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; 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 and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). Mr. Edward C. Johnson 3d and Mr. Arthur E. Johnson are not related. |
James C. Curvey (73) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006- |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
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 | |
Albert R. Gamper, Jr. (66) | |
| 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), a member of the Board of Governors, Rutgers University (2004-present), and Chairman of the Board of Saint Barnabas Health Care System. Previously, Mr. Gamper served as Chairman of the Board of Governors, Rutgers University (2004-2007). |
George H. Heilmeier (72) | |
| 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), Compaq, Automatic Data Processing, Inc. (ADP) (technology-based business outsourcing), INET Technologies Inc. (telecommunications network surveillance, 2001- |
Arthur E. Johnson (61) | |
| Year of Election or Appointment: 2008 Mr. Johnson serves as Senior Vice President of Corporate Strategic Development of Lockheed Martin Corporation (defense contractor). In addition, Mr. Johnson serves as a member of the Board of Directors of AGL Resources, Inc. (holding company), and IKON Office Solutions, Inc. (document management systems and services). Mr. Arthur E. Johnson and Mr. Edward C. Johnson 3d are not related. |
James H. Keyes (67) | |
| 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 Navistar International Corporation (manufacture and sale of trucks, buses, and diesel engines) and Pitney Bowes, Inc. (integrated mail, messaging, and document management solutions). Previously, Mr. Keyes served as a member of the Board of LSI Logic Corporation (semiconductor technologies, 1984-2008). |
Marie L. Knowles (61) | |
| 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 McKesson Corporation (healthcare service). 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. Previously, Ms. Knowles served as a Director of Phelps Dodge Corporation (copper mining and manufacturing, 1994-2007). |
Kenneth L. Wolfe (69) | |
| Year of Election or Appointment: 2005 Mr. Wolfe is Chairman and a Director of Hershey Foods Corporation (2007-present), where prior to his retirement in 2001, he was Chairman and Chief Executive Officer. Mr. Wolfe currently serves as a member of the board of Revlon Inc. (2004-present). Previously, Mr. Wolfe served as a member of the boards of Adelphia Communications Corporation (2003-2006) and Bausch & Lomb, Inc. (1993-2007). |
Advisory Board Member and Executive Officers**:
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 (64) | |
| 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- |
John R. Hebble (50) | |
| Year of Election or Appointment: 2008 President and Treasurer of the fund. Mr. Hebble also serves as President and Treasurer of Fidelity's Fixed Income and Asset Allocation Funds (2008-present) and is an employee of FMR (2003-present). Before joining Fidelity Investments, Mr. Hebble worked at Deutsche Asset Management where he served as Director of Fund Accounting (2002-2003) and Assistant Treasurer of the Scudder Funds. |
Boyce I. Greer (52) | |
| Year of Election or Appointment: 2005 Vice President of the fund. Mr. Greer also serves as Vice President of Asset Allocation Funds (2005-present), Fixed-Income Funds (2006- |
Dwight D. Churchill (54) | |
| Year of Election or Appointment: 2008 Vice President of the fund. Mr. Churchill also serves as Vice President of Fidelity's Bond Funds (2008-present). Mr. Churchill is Executive Vice President of FMR (2005-present), FMR Co., Inc. (2005-present) and Fidelity Investments Money Management, Inc. (2008-present). Previously, Mr. Churchill served as Senior Vice President of FMR (1997-2005) and Senior Vice President of Fidelity Investments Money Management, Inc. (2000-2006). |
Scott C. Goebel (40) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the fund. Mr. Goebel also serves as Secretary and CLO of other Fidelity funds (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present); and Deputy General Counsel of FMR LLC. Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
Nancy D. Prior (41) | |
| Year of Election or Appointment: 2008 Assistant Secretary of the fund. Ms. Prior also serves as Assistant Secretary of Fidelity's Fixed Income and Asset Allocation Funds (2008- |
Holly C. Laurent (54) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) officer of the fund. Ms. Laurent also serves as AML officer of other Fidelity funds (2008-present) and is an employee of FMR LLC. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006- |
Christine Reynolds (49) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the fund. Ms. Reynolds also serves as Chief Financial Officer of other Fidelity funds (2008-present). Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980- |
Michael H. Whitaker (41) | |
| Year of Election or Appointment: 2008 Chief Compliance Officer of the fund. Mr. Whitaker also serves as Chief Compliance Officer of Fidelity's Fixed Income and Asset Allocation Funds (2008-present) and is an employee of FMR (2007-present). Prior to joining Fidelity Investments, Mr. Whitaker worked at MFS Investment Management where he served as Senior Vice President and Chief Compliance Officer (2004-2006), and Assistant General Counsel. |
Bryan A. Mehrmann (47) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the fund. 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). |
Robert G. Byrnes (41) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the fund. 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 Fidelity Pricing and Cash Management Services (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 (54) | |
| Year of Election or Appointment: 2004 Assistant Treasurer of the fund. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004-present) and is an employee of FMR. |
Paul M. Murphy (61) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of the fund. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (49) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the fund. 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 Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Distributions (Unaudited)
The Board of Trustees of Fidelity Government Income Fund voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities:
| Pay Date | Record Date | Capital Gains |
Fidelity Advisor Government Income Fund: Class A | 9/15/2008 | 9/12/2008 | $.07 |
Fidelity Advisor Government Income Fund: Class T | 9/15/2008 | 9/12/2008 | $.07 |
Fidelity Advisor Government Income Fund: Class B | 9/15/2008 | 9/12/2008 | $.07 |
Fidelity Advisor Government Income Fund: Class C | 9/15/2008 | 9/12/2008 | $.07 |
A total of 9.13% 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 hereby designates as a capital gain dividend with respect to the taxable year ended July 31, 2008, $37,386,227, or, if subsequently determined to be different, the net capital gain of such year.
The fund designates $258,906,779 of distributions paid during the period January 1, 2008 to July 31, 2008 as qualifying to be taxed as interest-related dividends for nonresident alien shareholders.
The fund will notify shareholders in January 2009 of amounts for use in preparing 2008 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 and, acting directly and through its separate committees, requests and receives information concerning, and considers at each of its meetings factors that are relevant to, its annual consideration of the 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 a written charter outlining the structure and purposes of the committee. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts.
At its June 2008 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the fund's Advisory Contracts. 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 fund's management fee and total expenses; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its 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 agreements with foreign sub-advisers Fidelity Management & Research (U.K.) Inc., Fidelity Management & Research (Japan) Inc., and Fidelity Management & Research (Hong Kong) Limited.
In considering 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 and through the exercise of its business judgment, 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. The Board's decision to renew the Advisory Contracts was not based on any single factor noted above, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, 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 backgrounds of the fund's investment personnel 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.
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 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 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 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 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.
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.
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 Fidelity has taken a number of actions over the previous year 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 fees on Fidelity's Institutional Money Market Funds and launching Class IV and Institutional Class of certain of these funds; (iii) reducing the transfer agent fees for the Fidelity Select Portfolios and Investor Class of the VIP funds; and (iv) launching Class K of 29 equity funds as a lower-fee class available to certain employer-sponsored retirement plans.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
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 each class, as well as the fund's relative investment performance for each 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, 2007, as available, the cumulative total returns of Fidelity Government Income (retail class) and Class C of the fund, 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 returns of Fidelity Government Income (retail class) and Class C show the performance of the highest and lowest performing classes, respectively. 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 numbers noted below each chart correspond to the percentile box and represent the percentage of funds in the peer group whose performance was equal to or lower than that of the class indicated. 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) of the fund was in the first quartile for all the periods shown. The Board also stated that the investment performance of the fund was lower than its benchmark for all the periods shown. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes. The Board discussed with FMR actions that may be taken by FMR to improve the fund's below-benchmark performance and how investment personnel evaluate potential for incremental return against the risks involved in obtaining that incremental return. The Board considered the steps that FMR has taken to strengthen and refine its risk management processes in light of recent credit events that have affected various sectors of the fixed-income markets.
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 9% means that 91% 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 2007.
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 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 2007.
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. 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.
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
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.
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 fund's business.
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.
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. The Board concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Annual Report
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 certain topics, including (i) fund performance trends and actions to be taken by FMR to improve certain funds' overall performance; (ii) portfolio manager changes that have occurred during the past year; (iii) Fidelity's fund profitability methodology, the profitability of certain fund service providers, and profitability trends for certain funds; (iv) Fidelity's compensation structure for portfolio managers and key personnel, including its effects on fund profitability and the extent to which portfolio manager compensation is linked to fund performance; (v) Fidelity's fee structures; (vi) the funds' sub-advisory arrangements; and (vii) accounts managed by Fidelity other than the Fidelity funds.
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 the fund's Advisory Contracts should be renewed.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
Fidelity Investments Money
Management, Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Research & Analysis Company
Fidelity International
Investment Advisors
Fidelity International
Investment Advisors (U.K.) Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
The Bank of New York
New York, NY
AGVT-UANN-0908 1.834241.101
(Fidelity Investment logo)(registered trademark)
Fidelity Advisor
Government Income
Fund - Institutional Class
Annual Report
July 31, 2008
Institutional Class is a class of
Fidelity® Government Income Fund
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
Performance | How the fund has done over time. | |
Management's Discussion | The manager's review of fund performance, strategy and outlook. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights. | |
Notes | Notes to the financial statements. | |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Board Approval of Investment Advisory Contracts and Management Fees |
|
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 LLC 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.
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 fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Domestic and international securities markets have struggled thus far in 2008. High-grade fixed-income investments produced modestly positive results, but many stock benchmarks suffered double-digit losses through the first half of this year. Financial markets are always unpredictable, but 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
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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, 2008 | Past 1 | Past 5 | Past 10 |
Institutional Class A | 8.28% | 4.70% | 5.39% |
A The initial offering of Institutional Class 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.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Government Income Fund - Institutional Class on July 31, 1998. 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 Institutional Class took place on October 24, 2006. See above for additional information regarding the performance of Institutional Class.
Annual Report
Management's Discussion of Fund Performance
Comments from William Irving, Portfolio Manager of Fidelity Advisor Government Income Fund
Bonds with less credit risk generally produced higher returns for investment-grade debt during the 12 months ending July 31, 2008. In that span, the Lehman Brothers® U.S. Aggregate Index - a proxy for high-quality, fixed-rate, taxable bonds - returned 6.15%. Treasuries did the best, buoyed by their reputation as the safest haven in turbulent times, with the Lehman Brothers U.S. Treasury Index up 8.99% during the period. Agency bonds, with their perceived "implicit" government backing, also did well, as the Lehman Brothers U.S. Agency Index rose 7.79%. Mortgage-backed securities ended the period with a gain of 6.96%, according to the Lehman Brothers U.S. Mortgage-Backed Securities Index, while the Lehman Brothers U.S. Credit Index - a measure of high-quality corporate debt - finished with a modest 2.85% increase. The asset-backed sector - home to weak-performing subprime debt - had negative results, as reflected in the 2.69% loss of the Lehman Brothers U.S. Fixed-Rate Asset-Backed Securities Index.
For the 12 months ending July 31, 2008, the fund's Institutional Class shares returned 8.28%. In comparison, the Lehman Brothers 75% U.S. Government/25% U.S. Mortgage-Backed Securities Index returned 8.20%. What we lost by underweighting Treasuries - the index's biggest sector concentration and its best performer during the period - we more than made up for through other Treasury-related decisions. In particular, security lending - whereby we loaned Treasury holdings overnight and invested the proceeds in higher-yielding investments - bolstered the fund's results. We also were successful with tactical trades of Treasury Inflation-Protected Securities (TIPS), which are not part of the index. Advantageous yield-curve positioning also benefited the fund's performance. In the mortgage sector, good picks among 15-year securities and collateralized mortgage obligations (CMOs) - which are made up of pools of pass-through securities whose cash flows are carved out into classes with their own expected maturities and cash-flow patterns - worked in the fund's favor. Likewise, my decision to maintain a larger-than-index exposure to hybrid adjustable-rate mortgage securities (ARMs) - which give homeowners a relatively low fixed-interest rate for an initial period and then convert to an ARM where the interest rate periodically resets - benefited relative performance, as they generally outpaced the index after adjusting for their lower interest-rate sensitivity. With the benefit of 20/20 hindsight, owning more of these types of securities may have been helpful given how well they performed, but I was mindful of the importance of diversification.
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
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, 2008 to July 31, 2008).
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.
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. In addition, if these transactional costs were included, your costs would have been higher.
Annual Report
Shareholder Expense Example - continued
| Beginning | Ending | Expenses Paid |
Class A |
|
|
|
Actual | $ 1,000.00 | $ 999.60 | $ 3.98 |
HypotheticalA | $ 1,000.00 | $ 1,020.89 | $ 4.02 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 1,000.70 | $ 3.88 |
HypotheticalA | $ 1,000.00 | $ 1,020.98 | $ 3.92 |
Class B |
|
|
|
Actual | $ 1,000.00 | $ 996.10 | $ 7.54 |
HypotheticalA | $ 1,000.00 | $ 1,017.30 | $ 7.62 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 996.00 | $ 7.64 |
HypotheticalA | $ 1,000.00 | $ 1,017.21 | $ 7.72 |
Government Income |
|
|
|
Actual | $ 1,000.00 | $ 1,001.40 | $ 2.24 |
HypotheticalA | $ 1,000.00 | $ 1,022.63 | $ 2.26 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 1,002.10 | $ 2.49 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized |
Class A | .80% |
Class T | .78% |
Class B | 1.52% |
Class C | 1.54% |
Government Income | .45% |
Institutional Class | .50% |
Annual Report
Investment Changes (Unaudited)
Coupon Distribution as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments |
Zero coupon bonds | 1.2 | 1.6 |
Less than 2% | 2.8 | 0.8 |
2 - 2.99% | 5.5 | 1.6 |
3 - 3.99% | 10.1 | 8.7 |
4 - 4.99% | 14.1 | 25.6 |
5 - 5.99% | 27.4 | 24.9 |
6 - 6.99% | 12.7 | 14.7 |
7% and over | 1.9 | 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, 2008 | ||
|
| 6 months ago |
Years | 4.8 | 4.6 |
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, 2008 | ||
|
| 6 months ago |
Years | 5.1 | 4.5 |
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, 2008* | As of January 31, 2008** | ||||||
![]() | Mortgage |
| ![]() | Mortgage |
| ||
![]() | CMOs and Other Mortgage Related Securities 8.3% |
| ![]() | CMOs and Other Mortgage Related Securities 7.7% |
| ||
![]() | U.S. Treasury |
| ![]() | U.S. Treasury |
| ||
![]() | U.S. Government |
| ![]() | U.S. Government |
| ||
![]() | Asset-Backed |
| ![]() | Asset-Backed |
| ||
![]() | Short-Term |
| ![]() | Short-Term |
| ||
* Futures and Swaps | 11.1% |
| ** Futures and Swaps | 5.7% |
|
† Short-Term Investments and Net Other Assets are not included in the pie chart. |
Annual Report
Investments July 31, 2008
Showing Percentage of Net Assets
U.S. Government and Government Agency Obligations - 56.0% | ||||
| Principal Amount (000s) | Value | ||
U.S. Government Agency Obligations - 21.7% | ||||
Fannie Mae: | ||||
2.5% 4/9/10 | $ 46,360 | $ 45,939 | ||
3% 7/12/10 | 150,000 | 149,515 | ||
3.25% 8/12/10 (b) | 157,020 | 157,168 | ||
3.375% 5/19/11 | 24,967 | 24,877 | ||
3.625% 2/12/13 (b) | 32,905 | 32,437 | ||
3.875% 7/12/13 (b) | 26,275 | 26,091 | ||
4.75% 11/19/12 | 29,255 | 30,187 | ||
4.875% 4/15/09 | 43,349 | 43,966 | ||
4.875% 5/18/12 | 170,000 | 175,996 | ||
5% 2/16/12 | 31,355 | 32,606 | ||
5.125% 4/15/11 | 188,800 | 196,783 | ||
5.375% 6/12/17 | 49,471 | 52,231 | ||
6% 5/15/11 | 10,130 | 10,790 | ||
6.625% 9/15/09 | 149,585 | 155,586 | ||
Freddie Mac: | ||||
3.25% 7/16/10 | 11,145 | 11,162 | ||
3.5% 5/29/13 (b) | 123,800 | 120,997 | ||
3.75% 6/28/13 | 5,000 | 4,938 | ||
3.875% 6/29/11 | 19,531 | 19,703 | ||
4.75% 3/5/12 | 10,000 | 10,316 | ||
4.875% 2/9/10 | 27,220 | 27,962 | ||
4.875% 6/13/18 (b) | 44,378 | 45,095 | ||
5% 6/11/09 (b) | 100,000 | 101,783 | ||
5% 1/30/14 | 25,000 | 25,973 | ||
5.125% 11/17/17 (b) | 25,000 | 25,911 | ||
5.25% 5/21/09 | 154,235 | 157,143 | ||
5.25% 7/18/11 | 29,530 | 30,918 | ||
5.75% 1/15/12 | 32,906 | 34,934 | ||
Israeli State (guaranteed by U.S. Government through Agency for International Development): | ||||
5.5% 9/18/23 | 110,500 | 118,392 | ||
6.8% 2/15/12 | 30,000 | 31,869 | ||
Overseas Private Investment Corp. U.S. Government guaranteed participation certificates: | ||||
6.77% 11/15/13 | 5,627 | 5,944 | ||
6.99% 5/21/16 | 19,051 | 20,852 | ||
Private Export Funding Corp. secured: | ||||
4.974% 8/15/13 | 22,940 | 23,745 | ||
5.66% 9/15/11 (c) | 18,000 | 19,023 | ||
5.685% 5/15/12 | 24,035 | 25,501 | ||
U.S. Government and Government Agency Obligations - continued | ||||
| Principal Amount (000s) | Value | ||
U.S. Government Agency Obligations - continued | ||||
Private Export Funding Corp. secured: - continued | ||||
6.67% 9/15/09 | $ 3,500 | $ 3,644 | ||
Small Business Administration guaranteed development participation certificates: | ||||
Series 2002-20J Class 1, 4.75% 10/1/22 | 5,675 | 5,494 | ||
Series 2002-20K Class 1, 5.08% 11/1/22 | 12,402 | 12,225 | ||
Series 2003-P10B, Class 1 5.136% 8/10/13 | 8,023 | 8,027 | ||
Series 2004-20H Class 1, 5.17% 8/1/24 | 3,521 | 3,480 | ||
Tennessee Valley Authority 5.375% 4/1/56 | 8,429 | 8,485 | ||
U.S. Department of Housing and Urban Development Government guaranteed participation certificates Series 1999-A, 5.96% 8/1/09 | 18,380 | 18,660 | ||
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS | 2,056,348 | |||
U.S. Treasury Obligations - 34.3% | ||||
U.S. Treasury Bonds: | ||||
4.375% 2/15/38 | 130,700 | 125,952 | ||
4.75% 2/15/37 (f) | 19,000 | 19,398 | ||
5% 5/15/37 (b) | 139,000 | 147,677 | ||
6.125% 8/15/29 | 162,102 | 193,712 | ||
6.25% 8/15/23 | 1,500 | 1,777 | ||
8% 11/15/21 (f) | 146,794 | 198,585 | ||
U.S. Treasury Notes: | ||||
1.75% 3/31/10 (b) | 341,106 | 337,642 | ||
2.125% 1/31/10 (f) | 198,280 | 197,738 | ||
2.5% 3/31/13 | 43,781 | 42,454 | ||
2.75% 2/28/13 | 54,231 | 53,185 | ||
2.875% 6/30/10 (b) | 308,061 | 310,299 | ||
3.125% 11/30/09 | 29,100 | 29,421 | ||
3.375% 11/30/12 (b) | 217,916 | 219,993 | ||
3.375% 6/30/13 (b) | 95,927 | 96,392 | ||
3.375% 7/31/13 | 80,000 | 80,375 | ||
3.5% 5/31/13 | 55,000 | 55,610 | ||
3.5% 2/15/18 (b) | 78,000 | 75,154 | ||
3.625% 12/31/12 (b) | 32,788 | 33,423 | ||
3.875% 5/15/18 (b) | 41,449 | 41,093 | ||
4% 9/30/09 | 3,000 | 3,060 | ||
4% 2/15/14 | 43,031 | 44,487 | ||
4.25% 11/15/14 (b) | 77,185 | 80,845 | ||
4.25% 11/15/17 (b) | 189,000 | 193,238 | ||
4.5% 2/28/11 | 4,190 | 4,374 | ||
U.S. Government and Government Agency Obligations - continued | ||||
| Principal Amount (000s) | Value | ||
U.S. Treasury Obligations - continued | ||||
U.S. Treasury Notes: - continued | ||||
4.625% 8/31/11 | $ 593 | $ 624 | ||
4.625% 7/31/12 | 20 | 21 | ||
4.625% 11/15/16 (b) | 117,000 | 123,645 | ||
4.75% 5/15/14 (b) | 28,328 | 30,426 | ||
4.75% 8/15/17 (b) | 231,000 | 245,131 | ||
5.125% 5/15/16 | 249,330 | 272,588 | ||
TOTAL U.S. TREASURY OBLIGATIONS | 3,258,319 | |||
TOTAL U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS (Cost $5,281,922) | 5,314,667 | |||
U.S. Government Agency - Mortgage Securities - 30.9% | ||||
| ||||
Fannie Mae - 22.1% | ||||
3.695% 10/1/33 (g) | 577 | 581 | ||
3.71% 6/1/33 (g) | 1,871 | 1,867 | ||
3.737% 5/1/33 (g) | 2,933 | 2,940 | ||
3.741% 10/1/33 (g) | 525 | 529 | ||
3.75% 1/1/34 (g) | 491 | 496 | ||
3.906% 5/1/34 (g) | 3,868 | 3,893 | ||
3.916% 5/1/34 (g) | 5,174 | 5,213 | ||
3.98% 9/1/33 (g) | 5,135 | 5,164 | ||
3.988% 10/1/18 (g) | 329 | 332 | ||
4% 9/1/13 to 6/1/20 | 22,747 | 21,844 | ||
4.085% 6/1/33 (g) | 364 | 363 | ||
4.174% 1/1/35 (g) | 1,222 | 1,231 | ||
4.235% 1/1/34 (g) | 1,642 | 1,659 | ||
4.25% 2/1/35 (g) | 626 | 632 | ||
4.251% 8/1/33 (g) | 794 | 797 | ||
4.259% 10/1/33 (g) | 251 | 253 | ||
4.284% 3/1/33 (g) | 228 | 230 | ||
4.301% 3/1/33 (g) | 303 | 306 | ||
4.306% 5/1/33 (g) | 148 | 149 | ||
4.328% 1/1/35 (g) | 709 | 714 | ||
4.341% 10/1/19 (g) | 995 | 1,001 | ||
4.366% 2/1/34 (g) | 972 | 983 | ||
4.388% 2/1/35 (g) | 981 | 991 | ||
4.41% 10/1/34 (g) | 3,273 | 3,299 | ||
4.418% 5/1/35 (g) | 390 | 392 | ||
U.S. Government Agency - Mortgage Securities - continued | ||||
| Principal Amount (000s) | Value | ||
Fannie Mae - continued | ||||
4.42% 6/1/35 (g) | $ 2,238 | $ 2,253 | ||
4.425% 8/1/34 (g) | 1,549 | 1,565 | ||
4.427% 1/1/35 (g) | 606 | 608 | ||
4.431% 5/1/33 (g) | 4,876 | 4,902 | ||
4.435% 3/1/35 (g) | 936 | 943 | ||
4.473% 7/1/35 (g) | 1,977 | 1,977 | ||
4.483% 11/1/33 (g) | 1,247 | 1,258 | ||
4.485% 12/1/34 (g) | 452 | 456 | ||
4.492% 1/1/35 (g) | 4,635 | 4,692 | ||
4.5% 2/1/18 to 6/1/23 | 32,084 | 31,093 | ||
4.545% 5/1/35 (g) | 1,526 | 1,536 | ||
4.565% 7/1/35 (g) | 2,267 | 2,265 | ||
4.599% 10/1/35 (g) | 253 | 255 | ||
4.65% 10/1/34 (g) | 2,860 | 2,881 | ||
4.705% 7/1/34 (g) | 1,676 | 1,692 | ||
4.707% 2/1/35 (g) | 5,400 | 5,479 | ||
4.727% 6/1/33 (g) | 191 | 192 | ||
4.765% 12/1/35 (g) | 3,379 | 3,417 | ||
4.774% 12/1/34 (g) | 585 | 592 | ||
4.776% 4/1/35 (g) | 221 | 223 | ||
4.783% 7/1/35 (g) | 4,062 | 4,099 | ||
4.791% 10/1/35 (g) | 1,553 | 1,570 | ||
4.797% 6/1/35 (g) | 2,647 | 2,659 | ||
4.804% 1/1/34 (g) | 55 | 56 | ||
4.812% 11/1/34 (g) | 1,855 | 1,873 | ||
4.835% 1/1/35 (g) | 9,087 | 9,176 | ||
4.85% 7/1/35 (g) | 5,002 | 5,052 | ||
4.852% 7/1/34 (g) | 4,740 | 4,790 | ||
4.859% 10/1/34 (g) | 6,673 | 6,740 | ||
4.873% 8/1/34 (g) | 437 | 440 | ||
4.88% 5/1/35 (g) | 1,612 | 1,629 | ||
4.881% 8/1/34 (g) | 4,181 | 4,224 | ||
4.926% 8/1/34 (g) | 7,237 | 7,302 | ||
4.969% 3/1/35 (g) | 4,312 | 4,372 | ||
4.985% 2/1/35 (g) | 4,719 | 4,774 | ||
4.986% 4/1/33 (g) | 78 | 78 | ||
4.987% 2/1/34 (g) | 6,634 | 6,688 | ||
5% 6/1/14 to 9/1/37 (e) | 376,475 | 367,287 | ||
5% 8/1/38 (d) | 300 | 285 | ||
5% 8/1/38 (d) | 300 | 285 | ||
5% 8/1/38 (d) | 100 | 95 | ||
5% 8/13/38 (d) | 400 | 381 | ||
U.S. Government Agency - Mortgage Securities - continued | ||||
| Principal Amount (000s) | Value | ||
Fannie Mae - continued | ||||
5% 8/13/38 (d) | $ 400 | $ 381 | ||
5% 8/13/38 (d) | 1,000 | 952 | ||
5% 8/13/38 (d) | 500 | 476 | ||
5% 8/13/38 (d) | 400 | 381 | ||
5% 8/13/38 (d) | 1,000 | 952 | ||
5.012% 7/1/34 (g) | 272 | 275 | ||
5.069% 1/1/37 (g) | 5,486 | 5,578 | ||
5.072% 7/1/34 (g) | 1,688 | 1,708 | ||
5.089% 9/1/34 (g) | 602 | 608 | ||
5.099% 10/1/35 (g) | 3,565 | 3,613 | ||
5.127% 8/1/33 (g) | 708 | 713 | ||
5.131% 8/1/34 (g) | 5,074 | 5,148 | ||
5.171% 3/1/36 (g) | 12,324 | 12,512 | ||
5.185% 3/1/35 (g) | 325 | 329 | ||
5.199% 5/1/35 (g) | 397 | 400 | ||
5.224% 5/1/35 (g) | 4,814 | 4,880 | ||
5.245% 7/1/35 (g) | 257 | 259 | ||
5.267% 12/1/36 (g) | 2,409 | 2,453 | ||
5.278% 3/1/35 (g) | 397 | 400 | ||
5.298% 12/1/34 (g) | 798 | 809 | ||
5.304% 3/1/36 (g) | 32,767 | 33,319 | ||
5.326% 4/1/36 (g) | 4,292 | 4,407 | ||
5.336% 7/1/35 (g) | 2,003 | 2,032 | ||
5.349% 2/1/37 (g) | 2,311 | 2,358 | ||
5.357% 2/1/36 (g) | 6,643 | 6,738 | ||
5.392% 2/1/37 (g) | 11,576 | 11,769 | ||
5.409% 3/1/35 (g) | 417 | 418 | ||
5.438% 8/1/36 (g) | 5,627 | 5,740 | ||
5.5% 4/1/09 to 6/1/37 (e) | 525,547 | 522,803 | ||
5.5% 8/1/23 (d) | 1,000 | 1,004 | ||
5.5% 8/18/23 (d) | 10,000 | 10,044 | ||
5.5% 8/18/23 (d) | 15,000 | 15,066 | ||
5.5% 8/18/23 (d) | 200 | 201 | ||
5.5% 8/18/23 (d) | 100 | 100 | ||
5.5% 8/18/23 (d) | 300 | 301 | ||
5.5% 8/18/23 (d) | 300 | 301 | ||
5.5% 8/18/23 (d) | 500 | 502 | ||
5.5% 8/18/23 (d) | 200 | 201 | ||
5.5% 8/18/23 (d) | 300 | 301 | ||
5.5% 8/18/23 (d) | 400 | 402 | ||
5.5% 8/13/38 (d) | 44,000 | 43,144 | ||
5.5% 8/13/38 (d)(e) | 150,000 | 147,083 | ||
U.S. Government Agency - Mortgage Securities - continued | ||||
| Principal Amount (000s) | Value | ||
Fannie Mae - continued | ||||
5.5% 8/13/38 (d) | $ 800 | $ 784 | ||
5.513% 3/1/35 (g) | 159 | 160 | ||
5.632% 2/1/36 (g) | 2,752 | 2,806 | ||
5.641% 4/1/36 (g) | 10,925 | 11,147 | ||
5.665% 6/1/36 (g) | 6,505 | 6,637 | ||
5.693% 1/1/36 (g) | 28,622 | 29,214 | ||
5.789% 5/1/36 (g) | 2,797 | 2,853 | ||
5.793% 3/1/36 (g) | 7,587 | 7,748 | ||
5.801% 1/1/36 (g) | 2,307 | 2,339 | ||
5.816% 5/1/36 (g) | 16,313 | 16,657 | ||
5.843% 3/1/36 (g) | 7,391 | 7,501 | ||
5.863% 6/1/35 (g) | 1,711 | 1,744 | ||
5.871% 3/1/36 (g) | 6,056 | 6,189 | ||
5.896% 12/1/36 (g) | 4,029 | 4,125 | ||
5.917% 5/1/36 (g) | 4,764 | 4,877 | ||
5.951% 5/1/36 (g) | 2,495 | 2,556 | ||
5.955% 2/1/35 (g) | 144 | 145 | ||
6% 4/1/12 to 1/1/38 (e) | 273,058 | 279,665 | ||
6% 8/1/38 (d) | 3,000 | 3,018 | ||
6.009% 4/1/36 (g) | 45,752 | 46,860 | ||
6.025% 12/1/36 (g) | 27,022 | 27,690 | ||
6.028% 9/1/36 (g) | 30,731 | 31,508 | ||
6.062% 4/1/36 (g) | 22,968 | 23,563 | ||
6.095% 3/1/37 (g) | 4,412 | 4,526 | ||
6.102% 3/1/33 (g) | 254 | 256 | ||
6.125% 2/1/33 (g) | 547 | 549 | ||
6.169% 4/1/36 (g) | 4,271 | 4,380 | ||
6.206% 2/1/35 (g) | 153 | 154 | ||
6.226% 3/1/37 (g) | 1,494 | 1,523 | ||
6.229% 5/1/36 (g) | 12,426 | 12,767 | ||
6.234% 2/1/35 (g) | 373 | 375 | ||
6.251% 6/1/36 (g) | 629 | 641 | ||
6.3% 10/1/36 (g) | 20,621 | 21,056 | ||
6.5% 2/1/12 to 4/1/37 | 43,655 | 45,361 | ||
6.5% 8/1/38 (d) | 63,000 | 64,727 | ||
6.547% 9/1/36 (g) | 8,243 | 8,516 | ||
7% 7/1/13 to 7/1/32 | 4,826 | 5,121 | ||
7.5% 8/1/10 to 4/1/29 | 99 | 103 | ||
8.5% 1/1/15 to 7/1/31 | 490 | 526 | ||
9% 11/1/11 to 5/1/14 | 465 | 479 | ||
9.5% 11/15/09 to 10/1/20 | 633 | 692 | ||
11% 8/1/10 | 6 | 6 | ||
U.S. Government Agency - Mortgage Securities - continued | ||||
| Principal Amount (000s) | Value | ||
Fannie Mae - continued | ||||
11.25% 5/1/14 | $ 7 | $ 7 | ||
11.5% 6/15/19 to 1/15/21 | 1,044 | 1,163 | ||
12.5% 8/1/15 to 3/1/16 | 2 | 2 | ||
| 2,101,770 | |||
Freddie Mac - 5.3% | ||||
4% 5/1/19 to 11/1/20 | 23,219 | 22,029 | ||
4.275% 6/1/35 (g) | 888 | 887 | ||
4.307% 12/1/34 (g) | 797 | 803 | ||
4.406% 3/1/35 (g) | 928 | 929 | ||
4.422% 2/1/34 (g) | 546 | 546 | ||
4.429% 3/1/35 (g) | 840 | 846 | ||
4.5% 8/1/33 | 3,577 | 3,305 | ||
4.622% 4/1/35 (g) | 6,756 | 6,786 | ||
4.667% 9/1/36 (g) | 2,923 | 2,944 | ||
4.716% 2/1/34 (g) | 6,855 | 6,871 | ||
4.79% 2/1/36 (g) | 1,142 | 1,149 | ||
4.791% 3/1/35 (g) | 2,425 | 2,442 | ||
4.84% 4/1/35 (g) | 3,414 | 3,435 | ||
5% 1/1/09 to 9/1/35 | 11,842 | 11,433 | ||
5.022% 4/1/35 (g) | 525 | 526 | ||
5.091% 6/1/35 (g) | 2,395 | 2,418 | ||
5.125% 7/1/35 (g) | 4,049 | 4,095 | ||
5.275% 2/1/36 (g) | 287 | 290 | ||
5.376% 3/1/35 (g) | 561 | 564 | ||
5.485% 1/1/36 (g) | 3,921 | 3,981 | ||
5.5% 8/1/14 to 7/1/37 | 191,344 | 193,712 | ||
5.5% 8/1/38 (d) | 8,000 | 7,836 | ||
5.5% 8/1/38 (d) | 600 | 588 | ||
5.5% 8/1/38 (d) | 500 | 490 | ||
5.5% 8/13/38 (d) | 300 | 294 | ||
5.5% 8/13/38 (d) | 1,000 | 979 | ||
5.5% 8/13/38 (d) | 1,600 | 1,567 | ||
5.5% 8/13/38 (d) | 1,000 | 979 | ||
5.5% 8/13/38 (d) | 800 | 784 | ||
5.5% 8/13/38 (d) | 1,200 | 1,175 | ||
5.52% 1/1/36 (g) | 5,452 | 5,531 | ||
5.579% 2/1/35 (g) | 1,119 | 1,127 | ||
5.743% 10/1/35 (g) | 1,157 | 1,177 | ||
5.829% 5/1/37 (g) | 2,978 | 3,026 | ||
6% 7/1/16 to 5/1/38 | 68,336 | 69,567 | ||
6% 8/1/38 (d) | 9,000 | 9,055 | ||
U.S. Government Agency - Mortgage Securities - continued | ||||
| Principal Amount (000s) | Value | ||
Freddie Mac - continued | ||||
6% 8/1/38 (d) | $ 300 | $ 302 | ||
6% 8/13/38 (d) | 300 | 302 | ||
6% 8/13/38 (d) | 100 | 101 | ||
6% 8/13/38 (d) | 400 | 402 | ||
6% 8/13/38 (d) | 400 | 402 | ||
6% 8/13/38 (d) | 1,000 | 1,006 | ||
6% 8/13/38 (d) | 500 | 503 | ||
6% 8/13/38 (d) | 400 | 402 | ||
6% 8/13/38 (d) | 600 | 604 | ||
6.021% 6/1/36 (g) | 3,157 | 3,221 | ||
6.224% 5/1/36 (g) | 2,584 | 2,645 | ||
6.278% 3/1/37 (g) | 8,086 | 8,283 | ||
6.378% 7/1/36 (g) | 3,019 | 3,094 | ||
6.423% 10/1/36 (g) | 8,566 | 8,794 | ||
6.491% 3/1/33 (g) | 163 | 165 | ||
6.5% 11/1/10 to 10/1/36 | 46,850 | 48,674 | ||
6.586% 12/1/36 (g) | 15,432 | 15,770 | ||
6.685% 1/1/37 (g) | 10,780 | 11,095 | ||
6.689% 10/1/36 (g) | 7,783 | 8,008 | ||
6.844% 10/1/36 (g) | 10,819 | 11,085 | ||
7% 4/1/11 | 3 | 3 | ||
7.5% 5/1/11 to 7/1/16 | 1,638 | 1,723 | ||
8.5% 8/1/08 to 9/1/29 | 194 | 209 | ||
9% 8/1/08 to 10/1/20 | 68 | 73 | ||
9.5% 6/1/09 to 8/1/21 | 256 | 282 | ||
9.75% 8/1/14 | 139 | 150 | ||
10% 7/1/09 to 8/1/21 | 22 | 24 | ||
11% 7/1/13 to 5/1/14 | 58 | 64 | ||
12% 8/1/13 to 3/1/15 | 2 | 2 | ||
12.25% 4/1/11 | 0 | 0 | ||
12.5% 2/1/10 to 6/1/19 | 17 | 19 | ||
13% 8/1/10 to 6/1/15 | 6 | 7 | ||
| 501,580 | |||
Government National Mortgage Association - 3.5% | ||||
5% 2/20/33 to 6/20/38 | 73,081 | 70,736 | ||
5.25% 7/20/34 (g) | 737 | 740 | ||
5.5% 12/15/33 to 2/15/34 | 65,387 | 65,264 | ||
5.5% 8/1/38 (d)(e) | 12,000 | 11,911 | ||
5.5% 8/1/38 (d)(e) | 8,000 | 7,941 | ||
5.5% 8/1/38 (d) | 1,000 | 993 | ||
5.5% 8/1/38 (d)(e) | 22,000 | 21,837 | ||
U.S. Government Agency - Mortgage Securities - continued | ||||
| Principal Amount (000s) | Value | ||
Government National Mortgage Association - continued | ||||
5.5% 8/1/38 (d) | $ 1,000 | $ 993 | ||
5.5% 8/1/38 (d)(e) | 5,000 | 4,942 | ||
6% 9/15/08 to 1/15/38 | 121,433 | 123,541 | ||
6.5% 2/15/24 to 10/15/35 | 19,802 | 20,673 | ||
7% 10/15/26 to 8/15/32 | 90 | 95 | ||
7.5% 3/15/28 to 8/15/29 | 112 | 119 | ||
8% 6/15/18 to 12/15/23 | 1,212 | 1,303 | ||
8.5% 1/15/25 | 4 | 4 | ||
9% 12/15/09 | 0 | 0 | ||
9.5% 2/15/25 | 1 | 1 | ||
10.5% 4/15/14 to 1/20/18 | 93 | 106 | ||
13.5% 7/15/11 | 5 | 6 | ||
| 331,205 | |||
TOTAL U.S. GOVERNMENT AGENCY - MORTGAGE SECURITIES (Cost $2,933,057) | 2,934,555 | |||
Asset-Backed Securities - 0.1% | ||||
| ||||
Fannie Mae Grantor Trust Series 2005-T4 Class A1C, 2.6113% 9/25/35 (g) | 4,793 | 4,769 | ||
Collateralized Mortgage Obligations - 8.3% | ||||
| ||||
U.S. Government Agency - 8.3% | ||||
Fannie Mae: | ||||
planned amortization class: | ||||
Series 1992-168 Class KB, 7% 10/25/22 | 1,352 | 1,404 | ||
Series 1993-207 Class H, 6.5% 11/25/23 | 18,360 | 19,064 | ||
Series 1993-240 Class PD, 6.25% 12/25/13 | 4,400 | 4,543 | ||
Series 1994-23: | ||||
Class PG, 6% 4/25/23 | 3,032 | 3,055 | ||
Class PZ, 6% 2/25/24 | 10,676 | 10,961 | ||
Series 1996-28 Class PK, 6.5% 7/25/25 | 3,796 | 3,911 | ||
Series 2003-28 Class KG, 5.5% 4/25/23 | 4,940 | 4,750 | ||
Series 2006-45 Class OP, 6/25/36 (i) | 5,849 | 4,310 | ||
Series 2006-62 Class KP, 4/25/36 (i) | 12,300 | 8,624 | ||
sequential payer: | ||||
Series 1997-41 Class J, 7.5% 6/18/27 | 2,598 | 2,751 | ||
Series 2007-115 Class BE, 4.5% 12/25/22 | 15,400 | 14,430 | ||
Series 2003-22 6% 4/25/33 (h) | 17,992 | 4,307 | ||
Collateralized Mortgage Obligations - continued | ||||
| Principal Amount (000s) | Value | ||
U.S. Government Agency - continued | ||||
Fannie Mae Grantor Trust planned amortization class Series 2005-81 Class PC, 5.5% 9/25/35 | $ 2,150 | $ 2,088 | ||
Fannie Mae subordinate REMIC pass-thru certificates: | ||||
floater: | ||||
Series 2001-38 Class QF, 3.4413% 8/25/31 (g) | 631 | 635 | ||
Series 2002-49 Class FB, 3.0563% 11/18/31 (g) | 1,011 | 991 | ||
Series 2002-60 Class FV, 3.4613% 4/25/32 (g) | 428 | 428 | ||
Series 2002-75 Class FA, 3.4613% 11/25/32 (g) | 877 | 876 | ||
Series 2004-54 Class FE, 3.6113% 2/25/33 (g) | 522 | 509 | ||
planned amortization class: | ||||
Series 2002-11 Class QC, 5.5% 3/25/17 | 12,553 | 12,752 | ||
Series 2002-18 Class PC, 5.5% 4/25/17 | 1,170 | 1,190 | ||
Series 2002-47 Class QE, 5.5% 8/25/17 | 9,085 | 9,208 | ||
Series 2003-113 Class PE, 4% 11/25/18 | 7,545 | 6,958 | ||
Series 2004-21 Class QE, 4.5% 11/25/32 | 1,500 | 1,410 | ||
Series 2005-102 Class CO, 11/25/35 (i) | 6,079 | 4,523 | ||
Series 2006-12 Class BO, 10/25/35 (i) | 27,413 | 20,461 | ||
Series 2006-37 Class OW, 5/25/36 (i) | 6,574 | 5,023 | ||
sequential payer: | ||||
Series 2001-20 Class Z, 6% 5/25/31 | 20,392 | 20,716 | ||
Series 2001-46 Class ZG, 6% 9/25/31 | 7,392 | 7,544 | ||
Series 2002-79 Class Z, 5.5% 11/25/22 | 11,827 | 11,650 | ||
Series 2003-84 Class JK, 4.5% 9/25/18 | 10,000 | 9,493 | ||
Series 2004-3 Class BA, 4% 7/25/17 | 585 | 576 | ||
Series 2004-91 Class AH, 4.5% 5/25/29 | 5,475 | 5,390 | ||
Series 2005-117, Class JN, 4.5% 1/25/36 | 645 | 563 | ||
Series 2006-72 Class CY, 6% 8/25/26 | 10,215 | 10,124 | ||
Series 2004-19 Class AY, 4% 4/25/19 | 37,116 | 33,730 | ||
Series 2007-36: | ||||
Class GO, 4/25/37 (i) | 1,221 | 847 | ||
Class PO, 4/25/37 (i) | 2,728 | 1,874 | ||
Class SB, 4.1388% 4/25/37 (g)(h) | 35,426 | 2,886 | ||
Class SG, 4.1388% 4/25/37 (g)(h) | 15,882 | 1,343 | ||
Series 2007-66 Class SA, 24.8325% 7/25/37 (g) | 4,801 | 5,783 | ||
Freddie Mac: | ||||
planned amortization class: | ||||
Series 2115 Class PE, 6% 1/15/14 | 764 | 785 | ||
Series 3149 Class OD, 5/15/36 (i) | 32,182 | 22,588 | ||
sequential payer Series 2114 Class ZM, 6% 1/15/29 | 2,324 | 2,372 | ||
Collateralized Mortgage Obligations - continued | ||||
| Principal Amount (000s) | Value | ||
U.S. Government Agency - continued | ||||
Freddie Mac Manufactured Housing participation certificates guaranteed: | ||||
floater Series 1686 Class FA, 3.4% 2/15/24 (g) | $ 1,017 | $ 1,023 | ||
planned amortization class Series 1681 Class PJ, 7% 12/15/23 | 6,066 | 6,230 | ||
Freddie Mac Multi-class participation certificates guaranteed: | ||||
floater: | ||||
Series 2389 Class DA, 3.3575% 11/15/30 (g) | 69 | 69 | ||
Series 2530 Class FE, 3.0575% 2/15/32 (g) | 592 | 583 | ||
Series 2630 Class FL, 2.9575% 6/15/18 (g) | 550 | 555 | ||
Series 3008 Class SM, 0% 7/15/35 (g) | 376 | 284 | ||
planned amortization class: | ||||
Series 1141 Class G, 9% 9/15/21 | 372 | 389 | ||
Series 1614 Class L, 6.5% 7/15/23 | 3,624 | 3,700 | ||
Series 1671 Class G, 6.5% 8/15/23 | 1 | 1 | ||
Series 2006-15 Class OP, 3/25/36 (i) | 7,321 | 5,141 | ||
Series 2131 Class BG, 6% 3/15/29 | 48,671 | 49,175 | ||
Series 2356 Class GD, 6% 9/15/16 | 481 | 492 | ||
Series 2376 Class JE, 5.5% 11/15/16 | 3,321 | 3,345 | ||
Series 2378 Class PE, 5.5% 11/15/16 | 9,393 | 9,459 | ||
Series 2381 Class OG, 5.5% 11/15/16 | 2,691 | 2,711 | ||
Series 2390 Class CH, 5.5% 12/15/16 | 8,558 | 8,666 | ||
Series 2628 Class OE, 4.5% 6/15/18 | 6,815 | 6,644 | ||
Series 2640 Class GE, 4.5% 7/15/18 | 7,310 | 7,121 | ||
Series 2660 Class ML, 3.5% 7/15/22 | 225 | 225 | ||
Series 2682 Class LD, 4.5% 10/15/33 | 777 | 673 | ||
Series 2752 Class PW, 4% 4/15/22 | 1,134 | 1,136 | ||
Series 2802 Class OB, 6% 5/15/34 | 10,455 | 10,727 | ||
Series 2810 Class PD, 6% 6/15/33 | 995 | 999 | ||
Series 2937 Class KC, 4.5% 2/15/20 | 19,686 | 18,940 | ||
Series 2962 Class BE, 4.5% 4/15/20 | 15,015 | 14,332 | ||
Series 3077 Class TO, 4/15/35 (i) | 16,048 | 11,535 | ||
Series 3110 Class OP, 9/15/35 (i) | 15,175 | 10,993 | ||
Series 3119 Class PO, 2/15/36 (i) | 18,377 | 13,446 | ||
Series 3121 Class KO, 3/15/36 (i) | 6,321 | 4,847 | ||
Series 3123 Class LO, 3/15/36 (i) | 11,927 | 8,394 | ||
Series 3145 Class GO, 4/15/36 (i) | 10,703 | 7,558 | ||
Series 3151 Class PO, 5/15/36 (i) | 11,593 | 8,092 | ||
sequential payer: | ||||
Series 2388 Class ZA, 6% 12/15/31 | 6,485 | 6,567 | ||
Series 2546 Class MJ, 5.5% 3/15/23 | 2,861 | 2,738 | ||
Collateralized Mortgage Obligations - continued | ||||
| Principal Amount (000s) | Value | ||
U.S. Government Agency - continued | ||||
Freddie Mac Multi-class participation certificates guaranteed: - continued | ||||
sequential payer: | ||||
Series 2570 Class CU, 4.5% 7/15/17 | $ 1,643 | $ 1,633 | ||
Series 2574 Class HP, 5% 2/15/18 | 42,150 | 41,381 | ||
Series 2587 Class AD, 4.71% 3/15/33 | 5,785 | 5,017 | ||
Series 2601 Class TB, 5.5% 4/15/23 | 869 | 832 | ||
Series 2611 Class CH, 4.5% 5/15/18 | 37,220 | 35,824 | ||
Series 2617 Class GW, 3.5% 6/15/16 | 2,184 | 2,181 | ||
Series 2675 Class CB, 4% 5/15/16 | 1,565 | 1,550 | ||
Series 2677 Class BC, 4% 9/15/18 | 20,040 | 18,500 | ||
Series 2683 Class JA, 4% 10/15/16 | 1,678 | 1,659 | ||
Series 2685 Class ND, 4% 10/15/18 | 9,064 | 8,349 | ||
Series 2750 Class ZT, 5% 2/15/34 | 1,072 | 914 | ||
Series 2770 Class TW, 4.5% 3/15/19 | 19,670 | 18,531 | ||
Series 2773 Class HC, 4.5% 4/15/19 | 704 | 660 | ||
Series 2809 Class UA, 4% 12/15/14 | 1,869 | 1,870 | ||
Series 2849 Class AL, 5% 5/15/18 | 7,482 | 7,547 | ||
Series 2860 Class CP, 4% 10/15/17 | 1,845 | 1,825 | ||
Series 2866 Class N, 4.5% 12/15/18 | 6,417 | 6,442 | ||
Series 2874 Class BC, 5% 10/15/19 | 43,000 | 41,778 | ||
Series 2937 Class HJ, 5% 10/15/19 | 7,911 | 7,961 | ||
Series 2998 Class LY, 5.5% 7/15/25 | 2,011 | 1,904 | ||
Series 3007 Class EW, 5.5% 7/15/25 | 8,875 | 8,443 | ||
Series 3013 Class VJ, 5% 1/15/14 | 1,716 | 1,735 | ||
Series 3401 Class EB, 5% 12/15/22 | 7,495 | 7,172 | ||
Series 2769 Class BU, 5% 3/15/34 | 5,712 | 5,090 | ||
Series 2863 Class DB, 4% 9/15/14 | 1,216 | 1,175 | ||
Series 2957 Class SW, 3.5425% 4/15/35 (g)(h) | 25,113 | 1,454 | ||
Series 3002 Class SN, 4.0425% 7/15/35 (g)(h) | 25,256 | 1,945 | ||
target amortization class: | ||||
Series 2156 Class TC, 6.25% 5/15/29 | 8,376 | 8,529 | ||
Series 2877 Class JC, 5% 10/15/34 | 1,293 | 1,284 | ||
Ginnie Mae guaranteed REMIC pass-thru securities planned amortization class: | ||||
Series 1997-8 Class PE, 7.5% 5/16/27 | 4,184 | 4,443 | ||
Series 2003-116 Class JE, 5% 12/20/33 | 13,248 | 12,215 | ||
Series 2004-4 Class MG, 5% 1/16/34 | 10,425 | 9,630 | ||
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $788,317) | 783,689 |
Cash Equivalents - 30.4% | |||
Maturity Amount (000s) | Value | ||
Investments in repurchase agreements in a joint trading account at 2.19%, dated 7/31/08 due 8/1/08: | |||
(Collateralized by U.S. Government Obligations) # | $ 625,554 | $ 625,516 | |
(Collateralized by U.S. Government Obligations) # (a) | 2,261,736 | 2,261,598 | |
TOTAL CASH EQUIVALENTS (Cost $2,887,114) | 2,887,114 | ||
TOTAL INVESTMENT PORTFOLIO - 125.7% (Cost $11,895,203) | 11,924,794 | ||
NET OTHER ASSETS - (25.7)% | (2,441,152) | ||
NET ASSETS - 100% | $ 9,483,642 |
Swap Agreements | |||||
| Expiration Date | Notional Amount (000s) |
| ||
Interest Rate Swaps | |||||
Receive quarterly a floating rate based on 3-month LIBOR and pay semi-annually a fixed rate equal to 4.64% with JPMorgan Chase, Inc. | April 2038 | $ 35,000 | 1,650 | ||
Receive quarterly a floating rate based on 3-month LIBOR and pay semi-annually a fixed rate equal to 4.82% with Citibank | June 2018 | 135,000 | (1,899) | ||
Receive quarterly a floating rate based on 3-month LIBOR and pay semi-annually a fixed rate equal to 5.03% with Credit Suisse First Boston | Oct. 2017 | 72,000 | (3,042) | ||
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 | (7,022) | ||
Receive semi-annually a fixed rate equal to 2.528% and pay quarterly a floating rate based on 3-month LIBOR with Goldman Sachs | March 2010 | 69,000 | (342) | ||
Receive semi-annually a fixed rate equal to 3.1899% and pay quarterly a floating rate based on 3-month LIBOR with Goldman Sachs | April 2010 | 89,050 | 547 | ||
Swap Agreements - continued | |||||
| Expiration Date | Notional Amount (000s) | Value | ||
Interest Rate Swaps - continued | |||||
Receive semi-annually a fixed rate equal to 3.427% and pay quarterly a floating rate based on 3-month LIBOR with Credit Suisse First Boston | March 2013 | $ 88,000 | $ (1,625) | ||
Receive semi-annually a fixed rate equal to 4.42% and pay quarterly a floating rate based on 3-month LIBOR with Credit Suisse First Boston | Oct. 2009 | 300,000 | 8,082 | ||
Receive semi-annually a fixed rate equal to 4.465% and pay quarterly a floating rate based on 3-month LIBOR with Citibank | June 2013 | 160,000 | 2,469 | ||
Receive semi-annually a fixed rate equal to 4.66% and pay quarterly a floating rate based on 3-month LIBOR with Barclays Bank | August 2018 | 141,807 | 0 | ||
Receive semi-annually a fixed rate equal to 4.663% and pay quarterly a floating rate based on 3-month LIBOR with Goldman Sachs | August 2018 | 43,594 | 0 | ||
Receive semi-annually a fixed rate equal to 4.88% and pay quarterly a floating rate based on 3-month LIBOR with Bank of America | Sept. 2010 | 106,700 | 4,692 | ||
Receive semi-annually a fixed rate equal to 5.03% and pay quarterly a floating rate based on 3-month LIBOR with JPMorgan Chase, Inc. | August 2010 | 91,000 | 4,429 | ||
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 | 6,194 | ||
Receive semi-annully a fixed rate equal to 2.8575% and pay quarterly a floating rate based on 3-month LIBOR with JPMorgan Chase, Inc. | April 2011 | 201,000 | (2,856) | ||
| $ 1,707,151 | $ 11,277 |
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 $19,023,000 or 0.2% of net assets. |
(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 $9,384,000. |
(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 |
$625,516,000 due 8/01/08 at 2.19% | |
BNP Paribas Securities Corp. | $ 46,762 |
Banc of America Securities LLC | 72,530 |
Bank of America, NA | 70,196 |
Barclays Capital, Inc. | 305,376 |
Greenwich Capital Markets, Inc. | 11,452 |
ING Financial Markets LLC | 64,895 |
J.P. Morgan Securities, Inc. | 35,219 |
RBC Capital Markets Corp. | 9,543 |
WestLB AG | 9,543 |
| $ 625,516 |
$2,261,598,000 due 8/01/08 at 2.19% | |
Bank of America, NA | $ 2,261,598 |
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, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $2,216,611 and repurchase agreements of $2,887,114) - See accompanying schedule: Unaffiliated issuers (cost $11,895,203) |
| $ 11,924,794 |
Commitment to sell securities on a delayed delivery basis | $ (224,131) | |
Receivable for securities sold on a delayed delivery basis | 225,704 | 1,573 |
Receivable for investments sold, regular delivery | 237,639 | |
Cash | 1 | |
Receivable for fund shares sold | 16,231 | |
Interest receivable | 70,254 | |
Swap agreements, at value | 11,277 | |
Other receivables | 20 | |
Total assets | 12,261,789 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 131,636 | |
Delayed delivery | 366,875 | |
Payable for fund shares redeemed | 13,492 | |
Distributions payable | 701 | |
Accrued management fee | 2,447 | |
Distribution fees payable | 186 | |
Other affiliated payables | 1,122 | |
Other payables and accrued expenses | 90 | |
Collateral on securities loaned, at value | 2,261,598 | |
Total liabilities | 2,778,147 | |
|
|
|
Net Assets | $ 9,483,642 | |
Net Assets consist of: |
| |
Paid in capital | $ 9,356,625 | |
Undistributed net investment income | 6,028 | |
Accumulated undistributed net realized gain (loss) on investments | 78,548 | |
Net unrealized appreciation (depreciation) on investments | 42,441 | |
Net Assets | $ 9,483,642 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Assets and Liabilities - continued
Amounts in thousands (except per-share amounts) | July 31, 2008 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 10.40 | |
|
|
|
Maximum offering price per share (100/96.00 of $10.40) | $ 10.83 | |
Class T: | $ 10.40 | |
|
|
|
Maximum offering price per share (100/96.00 of $10.40) | $ 10.83 | |
Class B: | $ 10.40 | |
|
|
|
Class C: | $ 10.40 | |
|
|
|
Government Income: | $ 10.38 | |
|
|
|
Institutional Class: | $ 10.40 |
A Redemption 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
Statement of Operations
Amounts in thousands | Year ended July 31, 2008 | |
|
|
|
Investment Income |
|
|
Interest |
| $ 376,011 |
|
|
|
Expenses | ||
Management fee | $ 25,333 | |
Transfer agent fees | 8,928 | |
Distribution fees | 2,029 | |
Fund wide operations fee | 2,777 | |
Independent trustees' compensation | 33 | |
Miscellaneous | 18 | |
Total expenses before reductions | 39,118 | |
Expense reductions | (396) | 38,722 |
Net investment income | 337,289 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 204,260 | |
Futures contracts | 259 | |
Swap agreements | (1,299) |
|
Total net realized gain (loss) |
| 203,220 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 47,602 | |
Swap agreements | 10,913 | |
Delayed delivery commitments | 3,090 |
|
Total change in net unrealized appreciation (depreciation) |
| 61,605 |
Net gain (loss) | 264,825 | |
Net increase (decrease) in net assets resulting from operations | $ 602,114 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Changes in Net Assets
Amounts in thousands | Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income | $ 337,289 | $ 296,314 |
Net realized gain (loss) | 203,220 | (39,749) |
Change in net unrealized appreciation (depreciation) | 61,605 | 63,955 |
Net increase (decrease) in net assets resulting | 602,114 | 320,520 |
Distributions to shareholders from net investment income | (333,995) | (303,351) |
Distributions to shareholders from net realized gain | - | (2,616) |
Total distributions | (333,995) | (305,967) |
Share transactions - net increase (decrease) | 1,973,783 | 1,895,812 |
Total increase (decrease) in net assets | 2,241,902 | 1,910,365 |
|
|
|
Net Assets | ||
Beginning of period | 7,241,740 | 5,331,375 |
End of period (including undistributed net investment income of $6,028 and undistributed net investment income of $1,411, respectively) | $ 9,483,642 | $ 7,241,740 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2008 | 2007F |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 10.01 | $ 9.98 |
Income from Investment Operations |
|
|
Net investment incomeE | .402 | .311 |
Net realized and unrealized gain (loss) | .387 | .033 |
Total from investment operations | .789 | .344 |
Distributions from net investment income | (.399) | (.314) |
Net asset value, end of period | $ 10.40 | $ 10.01 |
Total ReturnB, C, D | 7.96% | 3.49% |
Ratios to Average Net AssetsG |
|
|
Expenses before reductions | .81% | .78%A |
Expenses net of fee waivers, if any | .81% | .78%A |
Expenses net of all reductions | .80% | .77%A |
Net investment income | 3.88% | 4.08%A |
Supplemental Data |
|
|
Net assets, end of period (in millions) | $ 232 | $ 145 |
Portfolio turnover rate | 269% | 164%H |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F For the period October 24, 2006 (commencement of sale of shares) to July 31, 2007.
G 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.
H 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 - Class T
Years ended July 31, | 2008 | 2007F |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 10.01 | $ 9.98 |
Income from Investment Operations |
|
|
Net investment incomeE | .404 | .306 |
Net realized and unrealized gain (loss) | .387 | .036 |
Total from investment operations | .791 | .342 |
Distributions from net investment income | (.401) | (.312) |
Net asset value, end of period | $ 10.40 | $ 10.01 |
Total ReturnB, C, D | 7.98% | 3.46% |
Ratios to Average Net AssetsG |
|
|
Expenses before reductions | .78% | .79%A |
Expenses net of fee waivers, if any | .78% | .79%A |
Expenses net of all reductions | .78% | .79%A |
Net investment income | 3.90% | 4.02%A |
Supplemental Data |
|
|
Net assets, end of period (in millions) | $ 236 | $ 181 |
Portfolio turnover rate | 269% | 164%H |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F For the period October 24, 2006 (commencement of sale of shares) to July 31, 2007.
G 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.
H 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 - Class B
Years ended July 31, | 2008 | 2007F |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 10.01 | $ 9.98 |
Income from Investment Operations |
|
|
Net investment incomeE | .329 | .251 |
Net realized and unrealized gain (loss) | .387 | .037 |
Total from investment operations | .716 | .288 |
Distributions from net investment income | (.326) | (.258) |
Net asset value, end of period | $ 10.40 | $ 10.01 |
Total ReturnB, C, D | 7.21% | 2.91% |
Ratios to Average Net AssetsG |
|
|
Expenses before reductions | 1.51% | 1.50%A |
Expenses net of fee waivers, if any | 1.51% | 1.50%A |
Expenses net of all reductions | 1.50% | 1.50%A |
Net investment income | 3.17% | 3.30%A |
Supplemental Data |
|
|
Net assets, end of period (in millions) | $ 41 | $ 43 |
Portfolio turnover rate | 269% | 164%H |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F For the period October 24, 2006 (commencement of sale of shares) to July 31, 2007.
G 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.
H 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 - Class C
Years ended July 31, | 2008 | 2007F |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 10.01 | $ 9.98 |
Income from Investment Operations |
|
|
Net investment incomeE | .326 | .249 |
Net realized and unrealized gain (loss) | .387 | .033 |
Total from investment operations | .713 | .282 |
Distributions from net investment income | (.323) | (.252) |
Net asset value, end of period | $ 10.40 | $ 10.01 |
Total ReturnB, C, D | 7.18% | 2.85% |
Ratios to Average Net AssetsG |
|
|
Expenses before reductions | 1.53% | 1.55%A |
Expenses net of fee waivers, if any | 1.53% | 1.55%A |
Expenses net of all reductions | 1.53% | 1.55%A |
Net investment income | 3.15% | 3.26%A |
Supplemental Data |
|
|
Net assets, end of period (in millions) | $ 71 | $ 39 |
Portfolio turnover rate | 269% | 164%H |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F For the period October 24, 2006 (commencement of sale of shares) to July 31, 2007.
G 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.
H 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 - Government Income
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 10.00 | $ 9.95 | $ 10.20 | $ 10.13 | $ 10.16 |
Income from Investment Operations |
|
|
|
|
|
Net investment incomeB | .438 | .443 | .429 | .329 | .307 |
Net realized and unrealized gain (loss) | .378 | .068 | (.274) | .097 | .124 |
Total from investment operations | .816 | .511 | .155 | .426 | .431 |
Distributions from net investment income | (.436) | (.456) | (.405) | (.321) | (.301) |
Distributions from net realized gain | - | (.005) | - | (.035) | (.160) |
Total distributions | (.436) | (.461) | (.405) | (.356) | (.461) |
Net asset value, end of period | $ 10.38 | $ 10.00 | $ 9.95 | $ 10.20 | $ 10.13 |
Total ReturnA | 8.25% | 5.22% | 1.56% | 4.24% | 4.30% |
Ratios to Average Net AssetsC |
|
|
|
|
|
Expenses before reductions | .45% | .45% | .45% | .58% | .63% |
Expenses net of fee waivers, if any | .45% | .45% | .45% | .58% | .63% |
Expenses net of all reductions | .45% | .44% | .44% | .58% | .63% |
Net investment income | 4.23% | 4.42% | 4.27% | 3.21% | 3.01% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (in millions) | $ 8,154 | $ 6,118 | $ 5,331 | $ 5,127 | $ 4,168 |
Portfolio turnover rate | 269% | 164%D | 108% | 114% | 224% |
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
Years ended July 31, | 2008 | 2007E |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 10.01 | $ 9.98 |
Income from Investment Operations |
|
|
Net investment incomeD | .432 | .329 |
Net realized and unrealized gain (loss) | .388 | .034 |
Total from investment operations | .820 | .363 |
Distributions from net investment income | (.430) | (.333) |
Net asset value, end of period | $ 10.40 | $ 10.01 |
Total ReturnB, C | 8.28% | 3.67% |
Ratios to Average Net AssetsF |
|
|
Expenses before reductions | .51% | .53%A |
Expenses net of fee waivers, if any | .51% | .53%A |
Expenses net of all reductions | .51% | .53%A |
Net investment income | 4.17% | 4.32%A |
Supplemental Data |
|
|
Net assets, end of period (in millions) | $ 750 | $ 715 |
Portfolio turnover rate | 269% | 164%G |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
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.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended July 31, 2008
(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. 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.
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. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments. Debt securities, including restricted securities, 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. Swaps are marked-to-market daily based on dealer-supplied valuations and changes in value are recorded as unrealized appreciation (depreciation). 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. Actual prices received at disposition may differ.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts
Annual Report
2. Significant Accounting Policies - continued
Security Valuation - continued
and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
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 per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and 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.
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.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service.
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. In addition, the Fund will claim a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
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
Capital accounts within the financial statements are adjusted for permanent book-tax differences. Certain adjustments have been made to the accounts relating to prior periods. Collectively, 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, market discount, deferred trustees compensation, futures transactions, 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 | $ 92,078 |
Unrealized depreciation | (69,550) |
Net unrealized appreciation (depreciation) | 22,528 |
Undistributed ordinary income | 35,327 |
Undistributed long-term capital gain | 37,386 |
|
|
Cost for federal income tax purposes | $ 11,902,266 |
The tax character of distributions paid was as follows:
| July 31, 2008 | July 31, 2007 |
Ordinary Income | $ 333,995 | $ 305,967 |
New Accounting Pronouncements. 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 results in expanded disclosures about fair value measurements.
In addition, in March 2008, Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (SFAS 161), was issued and is effective for fiscal years beginning after November 15, 2008. SFAS 161 requires enhanced disclosures to provide information about the reasons the Fund invests in derivative instruments, the accounting treatment and the effect derivatives have on financial performance. Management is currently evaluating the impact the adoption of SFAS 161 will have on the Fund's financial statement disclosures.
Annual Report
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.
Delayed Delivery Transactions and When-Issued Securities. The Fund 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 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. 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. Losses may arise from changes in the value of the underlying instruments or if the counterparties do not perform under the contract's terms.
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except ratios)
3. Operating Policies - continued
Futures Contracts - continued
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.
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. 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). Periodic payments received or made by the Fund are recorded in the accompanying Statement of Operations as realized gains or losses, respectively. 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. The Fund may enter into dollar rolls in which the Fund sells mortgage-backed securities, realizing a gain or loss, and simultaneously agrees to repurchase substantially similar securities at a future date. In addition, the Fund may enter into reverse mortgage dollar rolls in which the Fund purchases and simultaneously agrees to sell substantially similar securities at a future date. During the period between the sale and repurchase in a dollar roll transaction, the 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 that are permissible investments of the Fund. During the period between the purchase and subsequent sale in a reverse dollar roll transaction
Annual Report
3. Operating Policies - continued
Mortgage Dollar Rolls - continued
the Fund is entitled to interest and principal payments on the securities purchased. 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, the Fund's right to repurchase or sell securities may be limited.
4. Fees and Other Transactions with Affiliates.
Management Fee. 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.
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 | Service | Paid to | Retained |
Class A | 0% | .25% | $ 491 | $ 54 |
Class T | 0% | .25% | 549 | 3 |
Class B | .65% | .25% | 400 | 288 |
Class C | .75% | .25% | 589 | 97 |
|
|
| $ 2,029 | $ 442 |
Sales Load. FDC receives a front-end sales charge of up to 4.00% for selling Class A shares and Class T shares, 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 |
Class A | $ 46 |
Class T | 18 |
Class B* | 60 |
Class C* | 11 |
| $ 135 |
* 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. FIIOC receives 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 pays for typesetting, printing and mailing of shareholder reports, except proxy statements. Prior to January 1, 2008, Fidelity Service Company, Inc. (FSC), also an affiliate of FMR, was the transfer agent for Government Income. For the period, each class paid the following transfer agent fees:
| Amount | % of |
Class A | $ 401 | .20 |
Class T | 393 | .18 |
Class B | 113 | .25 |
Class C | 107 | .18 |
Government Income | 6,883 | .10 |
Institutional Class | 1,031 | .16 |
| $ 8,928 |
|
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 $18 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 $8,983.
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 expenses by $15. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent |
Class A | $ 7 |
Government Income | 354 |
Institutional Class | 20 |
| $ 381 |
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.
At the end of the period, Fidelity Freedom 2010 and Fidelity Freedom 2020 were the owners of record of approximately 12% and 14%, respectively of the total outstanding shares of Fidelity Government Income Fund. The Fidelity Advisor Freedom Funds and Fidelity Freedom Funds were the owners of record, in aggregate, of approximately 57% of the total outstanding shares of Fidelity Government Income Fund.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2008 | 2007A |
From net investment income |
|
|
Class A | $ 7,464 | $ 4,138 |
Class T | 8,439 | 5,771 |
Class B | 1,398 | 1,298 |
Class C | 1,798 | 1,042 |
Government Income | 288,379 | 269,231 |
Institutional Class | 26,517 | 21,871 |
Total | $ 333,995 | $ 303,351 |
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.
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended July 31, | 2008 | 2007A | 2008 | 2007A |
Class A |
|
|
|
|
Shares sold | 17,630 | 5,668 | $ 183,928 | $ 56,865 |
Issued in exchange for shares of Fidelity Advisor Government Investment Fund | - | 11,639 | - | 116,974 |
Reinvestment of distributions | 653 | 374 | 6,798 | 3,759 |
Shares redeemed | (10,466) | (3,165) | (108,879) | (31,770) |
Net increase (decrease) | 7,817 | 14,516 | $ 81,847 | $ 145,828 |
Annual Report
10. Share Transactions - continued
| Shares | Dollars | ||
Years ended July 31, | 2008 | 2007A | 2008 | 2007A |
Class T |
|
|
|
|
Shares sold | 15,236 | 3,593 | $ 158,292 | $ 36,101 |
Issued in exchange for shares of Fidelity Advisor Government Investment Fund | - | 19,997 | - | 200,973 |
Reinvestment of distributions | 772 | 549 | 8,030 | 5,508 |
Shares redeemed | (11,375) | (6,079) | (118,003) | (60,985) |
Net increase (decrease) | 4,633 | 18,060 | $ 48,319 | $ 181,597 |
Class B |
|
|
|
|
Shares sold | 2,313 | 524 | $ 24,145 | $ 5,289 |
Issued in exchange for shares of Fidelity Advisor Government Investment Fund | - | 5,890 |
| 59,191 |
Reinvestment of distributions | 108 | 104 | 1,126 | 1,045 |
Shares redeemed | (2,809) | (2,192) | (29,186) | (22,000) |
Net increase (decrease) | (388) | 4,326 | $ (3,915) | $ 43,525 |
Class C |
|
|
|
|
Shares sold | 5,069 | 517 | $ 52,892 | $ 5,201 |
Issued in exchange for shares of Fidelity Advisor Government Investment Fund | - | 4,449 |
| 44,717 |
Reinvestment of distributions | 114 | 64 | 1,185 | 643 |
Shares redeemed | (2,289) | (1,095) | (23,797) | (10,981) |
Net increase (decrease) | 2,894 | 3,935 | $ 30,280 | $ 39,580 |
Government Income |
|
|
|
|
Shares sold | 308,696 | 105,528 | $ 3,217,869 | $ 1,058,863 |
Issued in exchange for shares of Spartan Government Income Fund | - | 71,077 | - | 713,611 |
Reinvestment of distributions | 27,173 | 26,531 | 282,009 | 266,315 |
Shares redeemed | (162,519) | (127,164) | (1,689,834) | (1,271,926) |
Net increase (decrease) | 173,350 | 75,972 | $ 1,810,044 | $ 766,863 |
Institutional Class |
|
|
|
|
Shares sold | 30,491 | 16,978 | $ 316,702 | $ 170,642 |
Issued in exchange for shares of Fidelity Advisor Government Investment Fund | - | 57,200 | - | 574,860 |
Reinvestment of distributions | 2,538 | 2,169 | 26,319 | 21,772 |
Shares redeemed | (32,353) | (4,899) | (335,813) | (48,855) |
Net increase (decrease) | 676 | 71,448 | $ 7,208 | $ 718,419 |
A Share 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)
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.
12. Proposed Reorganization.
On June 19, 2008, the Board of Trustees of the Fund and the Board of Trustees of the Capital One U.S. Government Income Fund ("U.S. Government Income Fund") approved an Agreement and Plan of Reorganization between the Fund and U.S. Government Income Fund. The agreement provides for the transfer of all the assets of U.S. Government Income Fund (other than any deferred, accrued or prepaid expenses or any assets necessary to discharge any liabilities of U.S. Government Income Fund following the merger) in exchange solely for the number of shares of Class A of the Fund with an equal dollar value of the outstanding shares of U.S. Government Income Fund on the day the reorganization is effective.
A meeting of the shareholders of U.S. Government Income Fund is expected to be held in October, 2008 to vote on the reorganization. If approved by shareholders, the reorganization is expected to become effective on or about November 21, 2008. The reorganization is expected to qualify as a tax-free transaction with no gain or loss recognized by the Funds or their shareholders.
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, 2008, 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 periods indicated, 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, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
September 23, 2008
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the 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 Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 159 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 377 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 Member 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 1-877-208-0098.
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 (78) | |
| Year of Election or Appointment: 1984 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; 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 and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). Mr. Edward C. Johnson 3d and Mr. Arthur E. Johnson are not related. |
James C. Curvey (73) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006- |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
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 | |
Albert R. Gamper, Jr. (66) | |
| 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), a member of the Board of Governors, Rutgers University (2004-present), and Chairman of the Board of Saint Barnabas Health Care System. Previously, Mr. Gamper served as Chairman of the Board of Governors, Rutgers University (2004-2007). |
George H. Heilmeier (72) | |
| 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), Compaq, Automatic Data Processing, Inc. (ADP) (technology-based business outsourcing), INET Technologies Inc. (telecommunications network surveillance, 2001- |
Arthur E. Johnson (61) | |
| Year of Election or Appointment: 2008 Mr. Johnson serves as Senior Vice President of Corporate Strategic Development of Lockheed Martin Corporation (defense contractor). In addition, Mr. Johnson serves as a member of the Board of Directors of AGL Resources, Inc. (holding company), and IKON Office Solutions, Inc. (document management systems and services). Mr. Arthur E. Johnson and Mr. Edward C. Johnson 3d are not related. |
James H. Keyes (67) | |
| 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 Navistar International Corporation (manufacture and sale of trucks, buses, and diesel engines) and Pitney Bowes, Inc. (integrated mail, messaging, and document management solutions). Previously, Mr. Keyes served as a member of the Board of LSI Logic Corporation (semiconductor technologies, 1984-2008). |
Marie L. Knowles (61) | |
| 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 McKesson Corporation (healthcare service). 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. Previously, Ms. Knowles served as a Director of Phelps Dodge Corporation (copper mining and manufacturing, 1994-2007). |
Kenneth L. Wolfe (69) | |
| Year of Election or Appointment: 2005 Mr. Wolfe is Chairman and a Director of Hershey Foods Corporation (2007-present), where prior to his retirement in 2001, he was Chairman and Chief Executive Officer. Mr. Wolfe currently serves as a member of the board of Revlon Inc. (2004-present). Previously, Mr. Wolfe served as a member of the boards of Adelphia Communications Corporation (2003-2006) and Bausch & Lomb, Inc. (1993-2007). |
Advisory Board Member and Executive Officers**:
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 (64) | |
| 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- |
John R. Hebble (50) | |
| Year of Election or Appointment: 2008 President and Treasurer of the fund. Mr. Hebble also serves as President and Treasurer of Fidelity's Fixed Income and Asset Allocation Funds (2008-present) and is an employee of FMR (2003-present). Before joining Fidelity Investments, Mr. Hebble worked at Deutsche Asset Management where he served as Director of Fund Accounting (2002-2003) and Assistant Treasurer of the Scudder Funds. |
Boyce I. Greer (52) | |
| Year of Election or Appointment: 2005 Vice President of the fund. Mr. Greer also serves as Vice President of Asset Allocation Funds (2005-present), Fixed-Income Funds (2006- |
Dwight D. Churchill (54) | |
| Year of Election or Appointment: 2008 Vice President of the fund. Mr. Churchill also serves as Vice President of Fidelity's Bond Funds (2008-present). Mr. Churchill is Executive Vice President of FMR (2005-present), FMR Co., Inc. (2005-present) and Fidelity Investments Money Management, Inc. (2008-present). Previously, Mr. Churchill served as Senior Vice President of FMR (1997-2005) and Senior Vice President of Fidelity Investments Money Management, Inc. (2000-2006). |
Scott C. Goebel (40) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the fund. Mr. Goebel also serves as Secretary and CLO of other Fidelity funds (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present); and Deputy General Counsel of FMR LLC. Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
Nancy D. Prior (41) | |
| Year of Election or Appointment: 2008 Assistant Secretary of the fund. Ms. Prior also serves as Assistant Secretary of Fidelity's Fixed Income and Asset Allocation Funds (2008- |
Holly C. Laurent (54) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) officer of the fund. Ms. Laurent also serves as AML officer of other Fidelity funds (2008-present) and is an employee of FMR LLC. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006- |
Christine Reynolds (49) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the fund. Ms. Reynolds also serves as Chief Financial Officer of other Fidelity funds (2008-present). Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980- |
Michael H. Whitaker (41) | |
| Year of Election or Appointment: 2008 Chief Compliance Officer of the fund. Mr. Whitaker also serves as Chief Compliance Officer of Fidelity's Fixed Income and Asset Allocation Funds (2008-present) and is an employee of FMR (2007-present). Prior to joining Fidelity Investments, Mr. Whitaker worked at MFS Investment Management where he served as Senior Vice President and Chief Compliance Officer (2004-2006), and Assistant General Counsel. |
Bryan A. Mehrmann (47) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the fund. 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). |
Robert G. Byrnes (41) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the fund. 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 Fidelity Pricing and Cash Management Services (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 (54) | |
| Year of Election or Appointment: 2004 Assistant Treasurer of the fund. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004-present) and is an employee of FMR. |
Paul M. Murphy (61) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of the fund. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (49) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the fund. 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 Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Distributions (Unaudited)
The Board of Trustees of Fidelity Advisor Government Income Fund: Institutional Class voted to pay on September 15, 2008, to shareholders of record at the opening of business on September 12, 2008, a distribution of $.07 per share derived from capital gains realized from sales of portfolio securities.
A total of 9.13% 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 hereby designates as a capital gain dividend with respect to the taxable year ended July 31, 2008, $37,386,227, or, if subsequently determined to be different, the net capital gain of such year.
The fund designates $258,906,779 of distributions paid during the period January 1, 2008 to July 31, 2008 as qualifying to be taxed as interest-related dividends for nonresident alien shareholders.
The fund will notify shareholders in January 2009 of amounts for use in preparing 2008 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 and, acting directly and through its separate committees, requests and receives information concerning, and considers at each of its meetings factors that are relevant to, its annual consideration of the 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 a written charter outlining the structure and purposes of the committee. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts.
At its June 2008 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the fund's Advisory Contracts. 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 fund's management fee and total expenses; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its 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 agreements with foreign sub-advisers Fidelity Management & Research (U.K.) Inc., Fidelity Management & Research (Japan) Inc., and Fidelity Management & Research (Hong Kong) Limited.
In considering 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 and through the exercise of its business judgment, 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. The Board's decision to renew the Advisory Contracts was not based on any single factor noted above, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, 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 backgrounds of the fund's investment personnel 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.
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 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 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 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 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.
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.
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 Fidelity has taken a number of actions over the previous year 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 fees on Fidelity's Institutional Money Market Funds and launching Class IV and Institutional Class of certain of these funds; (iii) reducing the transfer agent fees for the Fidelity Select Portfolios and Investor Class of the VIP funds; and (iv) launching Class K of 29 equity funds as a lower-fee class available to certain employer-sponsored retirement plans.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
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 each class, as well as the fund's relative investment performance for each 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, 2007, as available, the cumulative total returns of Fidelity Government Income (retail class) and Class C of the fund, 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 returns of Fidelity Government Income (retail class) and Class C show the performance of the highest and lowest performing classes, respectively. 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 numbers noted below each chart correspond to the percentile box and represent the percentage of funds in the peer group whose performance was equal to or lower than that of the class indicated. 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) of the fund was in the first quartile for all the periods shown. The Board also stated that the investment performance of the fund was lower than its benchmark for all the periods shown. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes. The Board discussed with FMR actions that may be taken by FMR to improve the fund's below-benchmark performance and how investment personnel evaluate potential for incremental return against the risks involved in obtaining that incremental return. The Board considered the steps that FMR has taken to strengthen and refine its risk management processes in light of recent credit events that have affected various sectors of the fixed-income markets.
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 9% means that 91% 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 2007.
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 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 2007.
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. 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.
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
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.
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 fund's business.
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.
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. The Board concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Annual Report
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 certain topics, including (i) fund performance trends and actions to be taken by FMR to improve certain funds' overall performance; (ii) portfolio manager changes that have occurred during the past year; (iii) Fidelity's fund profitability methodology, the profitability of certain fund service providers, and profitability trends for certain funds; (iv) Fidelity's compensation structure for portfolio managers and key personnel, including its effects on fund profitability and the extent to which portfolio manager compensation is linked to fund performance; (v) Fidelity's fee structures; (vi) the funds' sub-advisory arrangements; and (vii) accounts managed by Fidelity other than the Fidelity funds.
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 the fund's Advisory Contracts should be renewed.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
Fidelity Investments Money
Management, Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Research & Analysis Company
Fidelity International
Investment Advisors
Fidelity International
Investment Advisors (U.K.) Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
The Bank of New York
New York, NY
AGVTI-UANN-0908 1.834231.101
Fidelity Income Replacement FundsSM -
2016, 2018, 2020, 2022, 2024, 2026, 2028, 2030, 2032, 2034, 2036, 2038, 2040, 2042
Annual Report
July 31, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
Performance | How the funds have done over time. | |
Management's Discussion | The managers' review of fund performance, strategy and outlook. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Income Replacement 2016 | Investment Changes | |
| Investments | |
| Financial Statements | |
Income Replacement 2018 | Investment Changes | |
| Investments | |
| Financial Statements | |
Income Replacement 2020 | Investment Changes | |
| Investments | |
| Financial Statements | |
Income Replacement 2022 | Investment Changes | |
| Investments | |
| Financial Statements | |
Income Replacement 2024 | Investment Changes | |
| Investments | |
| Financial Statements | |
Income Replacement 2026 | Investment Changes | |
| Investments | |
| Financial Statements | |
Income Replacement 2028 | Investment Changes | |
| Investments | |
| Financial Statements | |
Income Replacement 2030 | Investment Changes | |
| Investments | |
| Financial Statements | |
Income Replacement 2032 | Investment Changes | |
| Investments | |
| Financial Statements | |
Income Replacement 2034 | Investment Changes | |
| Investments | |
| Financial Statements | |
Income Replacement 2036 | Investment Changes | |
| Investments | |
| Financial Statements | |
Income Replacement 2038 | Investment Changes | |
| Investments | |
| Financial Statements | |
Income Replacement 2040 | Investment Changes | |
| Investments | |
| Financial Statements | |
Income Replacement 2042 | Investment Changes | |
| Investments | |
| Financial Statements | |
Notes | Notes to the financial statements. | |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Board Approval of Investment Advisory Contracts and Management Fees |
|
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.
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 LLC or an affiliated company.
Annual Report
Chairman's Message
Dear Shareholder:
Domestic and international securities markets have struggled thus far in 2008. High-grade fixed-income investments produced modestly positive results, but many stock benchmarks suffered double-digit losses through the first half of this year. Financial markets are always unpredictable, but 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
Fidelity Income Replacement 2016 FundSM
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Income Replacement 2016's cumulative total return and show you what would have happened if Income Replacement 2016 shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Income Replacement 2016, a class of the fund, on August 30, 2007, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the Lehman Brothers® U.S. Aggregate Index performed over the same period.
Annual Report
Fidelity Income Replacement 2018 FundSM
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Income Replacement 2018's cumulative total return and show you what would have happened if Income Replacement 2018 shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Income Replacement 2018, a class of the fund, on August 30, 2007, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the Lehman Brothers U.S. Aggregate Index performed over the same period.
Annual Report
Fidelity Income Replacement 2020 FundSM
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Income Replacement 2020's cumulative total return and show you what would have happened if Income Replacement 2020 shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Income Replacement 2020, a class of the fund, on August 30, 2007, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the Lehman Brothers U.S. Aggregate Index performed over the same period.
Annual Report
Fidelity Income Replacement 2022 FundSM
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Income Replacement 2022's cumulative total return and show you what would have happened if Income Replacement 2022 shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Income Replacement 2022, a class of the fund, on August 30, 2007, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the Lehman Brothers U.S. Aggregate Index performed over the same period.
Annual Report
Fidelity Income Replacement 2024 FundSM
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Income Replacement 2024's cumulative total return and show you what would have happened if Income Replacement 2024 shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Income Replacement 2024, a class of the fund, on August 30, 2007, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the Standard & Poor's 500SM Index (S&P 500®) performed over the same period.
Annual Report
Fidelity Income Replacement 2026 FundSM
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Income Replacement 2026's cumulative total return and show you what would have happened if Income Replacement 2026 shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Income Replacement 2026, a class of the fund, on August 30, 2007, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Fidelity Income Replacement 2028 FundSM
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Income Replacement 2028's cumulative total return and show you what would have happened if Income Replacement 2028 shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Income Replacement 2028, a class of the fund, on August 30, 2007, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Fidelity Income Replacement 2030 FundSM
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Income Replacement 2030's cumulative total return and show you what would have happened if Income Replacement 2030 shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Income Replacement 2030, a class of the fund, on August 30, 2007, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Fidelity Income Replacement 2032 FundSM
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Income Replacement 2032's cumulative total return and show you what would have happened if Income Replacement 2032 shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Income Replacement 2032, a class of the fund, on August 30, 2007, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Fidelity Income Replacement 2034 FundSM
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Income Replacement 2034's cumulative total return and show you what would have happened if Income Replacement 2034 shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Income Replacement 2034, a class of the fund, on August 30, 2007, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Fidelity Income Replacement 2036 FundSM
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Income Replacement 2036's cumulative total return and show you what would have happened if Income Replacement 2036 shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Income Replacement 2036, a class of the fund, on August 30, 2007, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Fidelity Income Replacement 2038 FundSM
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Income Replacement 2038's cumulative total return and show you what would have happened if Income Replacement 2038 shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Income Replacement 2038, a class of the fund, on December 31, 2007, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Fidelity Income Replacement 2040 FundSM
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Income Replacement 2040's cumulative total return and show you what would have happened if Income Replacement 2040 shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Income Replacement 2040, a class of the fund, on December 31, 2007, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Fidelity Income Replacement 2042 FundSM
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Income Replacement 2042's cumulative total return and show you what would have happened if Income Replacement 2042 shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Income Replacement 2042, a class of the fund, on December 31, 2007, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Comments from Christopher Sharpe and Jonathan Shelon, Co-Portfolio Managers of Fidelity Income Replacement FundsSM
U.S.-based investment-grade debt outperformed domestic stocks, international equities and U.S. high-yield bonds during the 12-month period ending July 31, 2008. Bonds with less credit risk generally produced higher returns for investment-grade debt during the past year. Risk aversion permeated the credit markets, as investors sought refuge from soaring energy prices, stagnant economic growth and a severe credit crunch - a byproduct of the subprime mortgage crisis. For the 12 months overall, the Lehman Brothers® U.S. Aggregate Index - a measure of high-quality, fixed-rate, taxable bonds - returned 6.15%. In comparison, the Merrill Lynch® U.S. High Yield Master II Constrained Index, a proxy for the domestic high-income market, suffered a modest shortfall of 0.04%. Grim news about the state of the U.S. economy forced most domestic equity benchmarks into negative territory for the year. Oil prices north of $140 per barrel, gasoline prices in excess of $4 per gallon and soaring food costs drove both inflation levels and consumer prices higher. Wall Street, meanwhile, struggled under the weight of massive write-downs in the financials sector, an ongoing credit crisis and bleak housing data. As a result, the Dow Jones Industrial AverageSM slid 11.71% and the Standard & Poor's 500 SM Index dropped 11.09%. The broad international stock market also struggled, as the MSCI® Europe, Australasia, Far East Index fell 12.04%.
Like many multiple-asset-class mutual funds, the Income Replacement Funds also struggled within a volatile and generally less-than-favorable market environment. While the 14 individual Fund portfolios had varying results against this backdrop, they all held up reasonably well, although their returns all landed in negative territory. The portfolios with biennial maturity dates of 2016-2036 were launched on August 30, 2007, and, during the 11 months from that inception date though July 31, 2008, the portfolios posted absolute returns ranging from -1.81% for the short-dated and most conservatively positioned 2016 portfolio to -4.96% for the more equity-heavy 2036 portfolio. The longer-dated 2038, 2040 and 2042 portfolios, launched on December 31, 2007, had somewhat lower absolute returns given their even greater allocations to equities, and their life-of-fund returns through July 31, 2008, all were around -8.65%. (For specific portfolio performance on each of the IRFs, please refer to the performance section of this report.)
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.
Portfolio
Shareholder Expense Example
As a shareholder of a 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 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 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, 2008 to July 31, 2008).
Actual Expenses
The first line of the accompanying table for each class of 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 class of the fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. In addition, each Fund, as a shareholder in underlying Fidelity Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Funds. These fees and expenses are not included in each Fund's annualized expense ratio used to calculate the expense estimates in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of each 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. In addition, each Fund, as a shareholder in underlying Fidelity Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Funds. These fees and expenses are not included in each Fund's annualized expense ratio used to calculate the expense estimates in the table below.
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. In addition, if these transactional costs were included, your costs would have been higher.
| Beginning | Ending | Expenses Paid |
Fidelity Income Replacement 2016 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 974.90 | $ 1.23 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 973.50 | $ 2.45 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 971.00 | $ 4.90 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
Income Replacement 2016 |
|
|
|
Actual | $ 1,000.00 | $ 975.90 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 975.90 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Fidelity Income Replacement 2018 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 971.50 | $ 1.23 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 970.10 | $ 2.45 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 967.60 | $ 4.89 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
| Beginning | Ending | Expenses Paid |
Income Replacement 2018 |
|
|
|
Actual | $ 1,000.00 | $ 972.40 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 972.60 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Fidelity Income Replacement 2020 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 968.60 | $ 1.22 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 967.40 | $ 2.45 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 965.10 | $ 4.89 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
Income Replacement 2020 |
|
|
|
Actual | $ 1,000.00 | $ 969.90 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 969.90 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Fidelity Income Replacement 2022 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 966.90 | $ 1.22 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 965.60 | $ 2.44 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 963.40 | $ 4.88 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
Income Replacement 2022 |
|
|
|
Actual | $ 1,000.00 | $ 968.10 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 968.30 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Fidelity Income Replacement 2024 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 965.70 | $ 1.22 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 964.40 | $ 2.44 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 961.90 | $ 4.88 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
Income Replacement 2024 |
|
|
|
Actual | $ 1,000.00 | $ 966.90 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 966.90 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
| Beginning | Ending | Expenses Paid |
Fidelity Income Replacement 2026 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 964.40 | $ 1.22 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 963.10 | $ 2.44 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 960.80 | $ 4.88 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
Income Replacement 2026 |
|
|
|
Actual | $ 1,000.00 | $ 965.70 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 965.70 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Fidelity Income Replacement 2028 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 963.30 | $ 1.22 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 962.20 | $ 2.44 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 959.60 | $ 4.87 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
Income Replacement 2028 |
|
|
|
Actual | $ 1,000.00 | $ 964.50 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 964.50 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Fidelity Income Replacement 2030 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 962.80 | $ 1.22 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 961.70 | $ 2.44 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 959.20 | $ 4.87 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
Income Replacement 2030 |
|
|
|
Actual | $ 1,000.00 | $ 964.00 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 964.00 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Fidelity Income Replacement 2032 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 961.70 | $ 1.22 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 960.20 | $ 2.44 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 957.90 | $ 4.87 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
| Beginning | Ending | Expenses Paid |
Income Replacement 2032 |
|
|
|
Actual | $ 1,000.00 | $ 962.80 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 962.80 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Fidelity Income Replacement 2034 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 960.10 | $ 1.22 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 959.10 | $ 2.44 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 956.50 | $ 4.86 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
Income Replacement 2034 |
|
|
|
Actual | $ 1,000.00 | $ 961.20 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 961.40 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Fidelity Income Replacement 2036 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 959.10 | $ 1.22 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 957.80 | $ 2.43 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 955.40 | $ 4.86 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
Income Replacement 2036 |
|
|
|
Actual | $ 1,000.00 | $ 960.10 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 960.10 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Fidelity Income Replacement 2038 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 956.90 | $ 1.22 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 955.70 | $ 2.43 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 953.10 | $ 4.86 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
Income Replacement 2038 |
|
|
|
Actual | $ 1,000.00 | $ 958.10 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 957.90 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
| Beginning | Ending | Expenses Paid |
Fidelity Income Replacement 2040 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 956.70 | $ 1.22 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 955.50 | $ 2.43 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 952.90 | $ 4.86 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
Income Replacement 2040 |
|
|
|
Actual | $ 1,000.00 | $ 957.90 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 957.70 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Fidelity Income Replacement 2042 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 956.10 | $ 1.22 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 954.80 | $ 2.43 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 952.60 | $ 4.85 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
Income Replacement 2042 |
|
|
|
Actual | $ 1,000.00 | $ 957.30 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 957.30 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below) ; multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
The fees and expenses of the underlying Fidelity Funds in which the Fund invests are not included in each class' annualized expense ratio.
| Annualized |
Fidelity Income Replacement 2016 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2016 | .00% |
Institutional Class | .00% |
Fidelity Income Replacement 2018 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2018 | .00% |
Institutional Class | .00% |
| Annualized |
Fidelity Income Replacement 2020 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2020 | .00% |
Institutional Class | .00% |
Fidelity Income Replacement 2022 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2022 | .00% |
Institutional Class | .00% |
Fidelity Income Replacement 2024 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2024 | .00% |
Institutional Class | .00% |
Fidelity Income Replacement 2026 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2026 | .00% |
Institutional Class | .00% |
Fidelity Income Replacement 2028 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2028 | .00% |
Institutional Class | .00% |
Fidelity Income Replacement 2030 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2030 | .00% |
Institutional Class | .00% |
Fidelity Income Replacement 2032 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2032 | .00% |
Institutional Class | .00% |
Fidelity Income Replacement 2034 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2034 | .00% |
Institutional Class | .00% |
Fidelity Income Replacement 2036 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2036 | .00% |
Institutional Class | .00% |
Fidelity Income Replacement 2038 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2038 | .00% |
Institutional Class | .00% |
| Annualized |
Fidelity Income Replacement 2040 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2040 | .00% |
Institutional Class | .00% |
Fidelity Income Replacement 2042 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2042 | .00% |
Institutional Class | .00% |
Annual Report
Fidelity Income Replacement 2016 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 4.7 | 4.7 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 3.9 | 3.7 |
Fidelity Broad Market Opportunities Fund | 6.2 | 6.2 |
Fidelity Disciplined Equity Fund | 3.9 | 3.9 |
Fidelity Equity-Income Fund | 3.8 | 3.9 |
Fidelity Large Cap Core Enhanced Index Fund | 6.3 | 6.3 |
Fidelity Small Cap Opportunities Fund | 2.6 | 2.4 |
| 31.4 | 31.1 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 3.3 | 3.3 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 1.2 | 1.2 |
Fidelity Strategic Income Fund | 1.2 | 1.3 |
| 2.4 | 2.5 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 7.6 | 7.8 |
Fidelity Strategic Real Return Fund | 7.6 | 7.7 |
Fidelity Total Bond Fund | 22.7 | 23.0 |
| 37.9 | 38.5 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 12.6 | 12.2 |
Fidelity Short-Term Bond Fund | 12.4 | 12.4 |
| 25.0 | 24.6 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 31.4% |
|
![]() | International Equity Funds | 3.3% |
|
![]() | High Yield Fixed-Income Funds | 2.4% |
|
![]() | Investment Grade Fixed-Income Funds | 37.9% |
|
![]() | Short-Term Funds | 25.0% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 31.1% |
|
![]() | International Equity Funds | 3.3% |
|
![]() | High Yield Fixed-Income Funds | 2.5% |
|
![]() | Investment Grade Fixed-Income Funds | 38.5% |
|
![]() | Short-Term Funds | 24.6% |
|
Expected | |||
![]() | Domestic Equity Funds | 29.7% |
|
![]() | International Equity Funds | 2.9% |
|
![]() | High Yield Fixed-Income Funds | 1.9% |
|
![]() | Investment Grade Fixed-Income Funds | 38.7% |
|
![]() | Short-Term Funds | 26.8% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2016 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 34.7% | |||
Shares | Value | ||
Domestic Equity Funds - 31.4% | |||
Fidelity 100 Index Fund | 48,826 | $ 446,267 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 23,795 | 372,861 | |
Fidelity Broad Market Opportunities Fund | 66,779 | 595,001 | |
Fidelity Disciplined Equity Fund | 14,736 | 374,725 | |
Fidelity Equity-Income Fund | 8,079 | 364,833 | |
Fidelity Large Cap Core Enhanced Index Fund | 68,060 | 604,374 | |
Fidelity Small Cap Opportunities Fund | 30,456 | 242,737 | |
TOTAL DOMESTIC EQUITY FUNDS | 3,000,798 | ||
International Equity Funds - 3.3% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 8,498 | 309,398 | |
TOTAL EQUITY FUNDS (Cost $3,707,023) | 3,310,196 | ||
Fixed-Income Funds - 40.3% | |||
|
|
|
|
High Yield Fixed-Income Funds - 2.4% | |||
Fidelity Capital & Income Fund | 14,128 | 114,297 | |
Fidelity Strategic Income Fund | 11,338 | 115,310 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 229,607 | ||
Investment Grade Fixed-Income Funds - 37.9% | |||
Fidelity Government Income Fund | 70,181 | 728,484 | |
Fidelity Strategic Real Return Fund | 71,751 | 725,402 | |
Fidelity Total Bond Fund | 215,593 | 2,168,866 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 3,622,752 | ||
TOTAL FIXED-INCOME FUNDS (Cost $3,914,273) | 3,852,359 | ||
Short-Term Funds - 25.0% | |||
Shares | Value | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 1,205,852 | $ 1,205,852 | |
Fidelity Short-Term Bond Fund | 141,858 | 1,180,258 | |
TOTAL SHORT-TERM FUNDS (Cost $2,418,827) | 2,386,110 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $10,040,123) | $ 9,548,665 |
Income Tax Information |
At July 31, 2008, the fund had a capital loss carryforward of approximately $827 all of which will expire on July 31, 2016. |
The fund intends to elect to defer to its fiscal year ending July 31, 2009 approximately $3,751 of losses recognized during the period November 1, 2007 to July 31, 2008. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2016 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (cost $10,040,123) - See accompanying schedule | $ 9,548,665 | |
Cash | 10 | |
Receivable for investments sold | 17,767 | |
Total assets | 9,566,442 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | $ 17,762 | |
Distribution fees payable | 2,020 | |
Total liabilities | 19,782 | |
|
|
|
Net Assets | $ 9,546,660 | |
Net Assets consist of: |
| |
Paid in capital | $ 10,037,692 | |
Undistributed net investment income | 4,829 | |
Accumulated undistributed net realized gain (loss) on investments | (4,403) | |
Net unrealized appreciation (depreciation) on investments | (491,458) | |
Net Assets | $ 9,546,660 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 47.76 | |
|
|
|
Maximum offering price per share (100/94.25 of $47.76) | $ 50.67 | |
Class T: | $ 47.75 | |
|
|
|
Maximum offering price per share (100/96.50 of $47.75) | $ 49.48 | |
|
|
|
Class C: | $ 47.73 | |
|
|
|
Income Replacement 2016: | $ 47.77 | |
|
|
|
Institutional Class: | $ 47.77 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period August 30, 2007 | |
|
|
|
Investment Income |
|
|
Income distributions from underlying funds |
| $ 161,337 |
Interest |
| 171 |
Total income |
| 161,508 |
|
|
|
Expenses | ||
Distribution fees | $ 13,234 | |
Independent trustees' compensation | 20 | |
Total expenses before reductions | 13,254 | |
Expense reductions | (20) | 13,234 |
Net investment income (loss) | 148,274 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (41,157) | |
Capital gain distributions from underlying funds | 49,677 | 8,520 |
Change in net unrealized appreciation (depreciation) on underlying funds | (491,458) | |
Net gain (loss) | (482,938) | |
Net increase (decrease) in net assets resulting from operations | $ (334,664) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2016 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 148,274 |
Net realized gain (loss) | 8,520 |
Change in net unrealized appreciation (depreciation) | (491,458) |
Net increase (decrease) in net assets resulting from operations | (334,664) |
Distributions to shareholders from net investment income | (143,445) |
Distributions to shareholders from net realized gain | (12,923) |
Total distributions | (156,368) |
Share transactions - net increase (decrease) | 10,037,692 |
Total increase (decrease) in net assets | 9,546,660 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $4,829) | $ 9,546,660 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | 1.233 |
Net realized and unrealized gain (loss) | (2.204) |
Total from investment operations | (.971) |
Distributions from net investment income | (1.129) |
Distributions from net realized gain | (.140) |
Total distributions | (1.269) |
Net asset value, end of period | $ 47.76 |
Total Return B, C, D | (2.02)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 2.76% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 2,214 |
Portfolio turnover rate | 56% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | 1.128 |
Net realized and unrealized gain (loss) | (2.219) |
Total from investment operations | (1.091) |
Distributions from net investment income | (1.019) |
Distributions from net realized gain | (.140) |
Total distributions | (1.159) |
Net asset value, end of period | $ 47.75 |
Total Return B, C, D | (2.26)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 2.51% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 673 |
Portfolio turnover rate | 56% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .904 |
Net realized and unrealized gain (loss) | (2.227) |
Total from investment operations | (1.323) |
Distributions from net investment income | (.807) |
Distributions from net realized gain | (.140) |
Total distributions | (.947) |
Net asset value, end of period | $ 47.73 |
Total Return B, C, D | (2.71)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | 2.01% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 1,595 |
Portfolio turnover rate | 56% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2016
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.356 |
Net realized and unrealized gain (loss) | (2.217) |
Total from investment operations | (.861) |
Distributions from net investment income | (1.229) |
Distributions from net realized gain | (.140) |
Total distributions | (1.369) |
Net asset value, end of period | $ 47.77 |
Total Return B, C | (1.81)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 3.00% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 4,880 |
Portfolio turnover rate | 56% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.370 |
Net realized and unrealized gain (loss) | (2.231) |
Total from investment operations | (.861) |
Distributions from net investment income | (1.229) |
Distributions from net realized gain | (.140) |
Total distributions | (1.369) |
Net asset value, end of period | $ 47.77 |
Total Return B, C | (1.81)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 3.00% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 184 |
Portfolio turnover rate | 56% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2018 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 5.4 | 5.3 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 4.5 | 4.3 |
Fidelity Broad Market Opportunities Fund | 7.1 | 7.1 |
Fidelity Disciplined Equity Fund | 4.5 | 4.5 |
Fidelity Equity-Income Fund | 4.4 | 4.5 |
Fidelity Large Cap Core Enhanced Index Fund | 7.2 | 7.1 |
Fidelity Small Cap Opportunities Fund | 2.9 | 2.8 |
| 36.0 | 35.6 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 4.1 | 4.2 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 1.6 | 1.6 |
Fidelity Strategic Income Fund | 1.6 | 1.7 |
| 3.2 | 3.3 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 7.2 | 7.3 |
Fidelity Strategic Real Return Fund | 7.1 | 7.2 |
Fidelity Total Bond Fund | 21.3 | 21.5 |
| 35.6 | 36.0 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 10.6 | 10.4 |
Fidelity Short-Term Bond Fund | 10.5 | 10.5 |
| 21.1 | 20.9 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 36.0% |
|
![]() | International Equity Funds | 4.1% |
|
![]() | High Yield Fixed-Income Funds | 3.2% |
|
![]() | Investment Grade Fixed-Income Funds | 35.6% |
|
![]() | Short-Term Funds | 21.1% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 35.6% |
|
![]() | International Equity Funds | 4.2% |
|
![]() | High Yield Fixed-Income Funds | 3.3% |
|
![]() | Investment Grade Fixed-Income Funds | 36.0% |
|
![]() | Short-Term Funds | 20.9% |
|
Expected | |||
![]() | Domestic Equity Funds | 35.0% |
|
![]() | International Equity Funds | 3.9% |
|
![]() | High Yield Fixed-Income Funds | 2.8% |
|
![]() | Investment Grade Fixed-Income Funds | 35.9% |
|
![]() | Short-Term Funds | 22.4% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2018 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 40.1% | |||
Shares | Value | ||
Domestic Equity Funds - 36.0% | |||
Fidelity 100 Index Fund | 41,071 | $ 375,391 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 20,055 | 314,261 | |
Fidelity Broad Market Opportunities Fund | 56,010 | 499,052 | |
Fidelity Disciplined Equity Fund | 12,397 | 315,265 | |
Fidelity Equity-Income Fund | 6,809 | 307,478 | |
Fidelity Large Cap Core Enhanced Index Fund | 57,100 | 507,048 | |
Fidelity Small Cap Opportunities Fund | 25,693 | 204,775 | |
TOTAL DOMESTIC EQUITY FUNDS | 2,523,270 | ||
International Equity Funds - 4.1% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 7,943 | 289,218 | |
TOTAL EQUITY FUNDS (Cost $3,158,031) | 2,812,488 | ||
Fixed-Income Funds - 38.8% | |||
|
|
|
|
High Yield Fixed-Income Funds - 3.2% | |||
Fidelity Capital & Income Fund | 14,023 | 113,450 | |
Fidelity Strategic Income Fund | 11,230 | 114,210 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 227,660 | ||
Investment Grade Fixed-Income Funds - 35.6% | |||
Fidelity Government Income Fund | 48,330 | 501,669 | |
Fidelity Strategic Real Return Fund | 49,359 | 499,015 | |
Fidelity Total Bond Fund | 148,193 | 1,490,823 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 2,491,507 | ||
TOTAL FIXED-INCOME FUNDS (Cost $2,762,356) | 2,719,167 | ||
Short-Term Funds - 21.1% | |||
Shares | Value | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 744,668 | $ 744,668 | |
Fidelity Short-Term Bond Fund | 87,879 | 731,151 | |
TOTAL SHORT-TERM FUNDS (Cost $1,496,564) | 1,475,819 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $7,416,951) | $ 7,007,474 |
Income Tax Information |
At July 31, 2008, the fund had a capital loss carryforward of approximately $62 all of which will expire on July 31, 2016. |
The fund intends to elect to defer to its fiscal year ending July 31, 2009 approximately $633 of losses recognized during the period November 1, 2007 to July 31, 2008. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2018 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (cost $7,416,951) - See accompanying schedule | $ 7,007,474 | |
Cash | 7 | |
Total assets | 7,007,481 | |
|
|
|
Liabilities | ||
Distribution fees payable | 590 | |
|
|
|
Net Assets | $ 7,006,891 | |
Net Assets consist of: |
| |
Paid in capital | $ 7,412,396 | |
Undistributed net investment income | 3,581 | |
Accumulated undistributed net realized gain (loss) on investments | 391 | |
Net unrealized appreciation (depreciation) on investments | (409,477) | |
Net Assets | $ 7,006,891 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 47.46 | |
|
|
|
Maximum offering price per share (100/94.25 of $47.46) | $ 50.36 | |
Class T: | $ 47.46 | |
|
|
|
Maximum offering price per share (100/96.50 of $47.46) | $ 49.18 | |
|
|
|
Class C: | $ 47.41 | |
|
|
|
Income Replacement 2018: | $ 47.46 | |
|
|
|
Institutional Class: | $ 47.47 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period August 30, 2007 | |
|
|
|
Investment Income |
|
|
Income distributions from underlying funds |
| $ 112,825 |
Interest |
| 131 |
Total income |
| 112,956 |
|
|
|
Expenses | ||
Distribution fees | $ 4,098 | |
Independent trustees' compensation | 15 | |
Total expenses before reductions | 4,113 | |
Expense reductions | (15) | 4,098 |
Net investment income (loss) | 108,858 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (28,944) | |
Capital gain distributions from underlying funds | 37,463 | 8,519 |
Change in net unrealized appreciation (depreciation) on underlying funds | (409,477) | |
Net gain (loss) | (400,958) | |
Net increase (decrease) in net assets resulting from operations | $ (292,100) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2018 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 108,858 |
Net realized gain (loss) | 8,519 |
Change in net unrealized appreciation (depreciation) | (409,477) |
Net increase (decrease) in net assets resulting from operations | (292,100) |
Distributions to shareholders from net investment income | (105,276) |
Distributions to shareholders from net realized gain | (8,128) |
Total distributions | (113,404) |
Share transactions - net increase (decrease) | 7,412,395 |
Total increase (decrease) in net assets | 7,006,891 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $3,581) | $ 7,006,891 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | 1.163 |
Net realized and unrealized gain (loss) | (2.454) |
Total from investment operations | (1.291) |
Distributions from net investment income | (1.119) |
Distributions from net realized gain | (.130) |
Total distributions | (1.249) |
Net asset value, end of period | $ 47.46 |
Total Return B, C, D | (2.68)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 2.60% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 1,107 |
Portfolio turnover rate | 46% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | 1.075 |
Net realized and unrealized gain (loss) | (2.483) |
Total from investment operations | (1.408) |
Distributions from net investment income | (1.002) |
Distributions from net realized gain | (.130) |
Total distributions | (1.132) |
Net asset value, end of period | $ 47.46 |
Total ReturnB, C, D | (2.91)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 2.35% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 154 |
Portfolio turnover rate | 46% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .836 |
Net realized and unrealized gain (loss) | (2.476) |
Total from investment operations | (1.640) |
Distributions from net investment income | (.820) |
Distributions from net realized gain | (.130) |
Total distributions | (.950) |
Net asset value, end of period | $ 47.41 |
Total Return B, C, D | (3.36)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | 1.85% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 365 |
Portfolio turnover rate | 46% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2018
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.280 |
Net realized and unrealized gain (loss) | (2.469) |
Total from investment operations | (1.189) |
Distributions from net investment income | (1.221) |
Distributions from net realized gain | (.130) |
Total distributions | (1.351) |
Net asset value, end of period | $ 47.46 |
Total Return B, C | (2.48)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.85% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 5,167 |
Portfolio turnover rate | 46% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.295 |
Net realized and unrealized gain (loss) | (2.474) |
Total from investment operations | (1.179) |
Distributions from net investment income | (1.221) |
Distributions from net realized gain | (.130) |
Total distributions | (1.351) |
Net asset value, end of period | $ 47.47 |
Total Return B, C | (2.46)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.85% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 214 |
Portfolio turnover rate | 46% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2020 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 5.8 | 6.0 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 4.9 | 4.7 |
Fidelity Broad Market Opportunities Fund | 7.8 | 7.9 |
Fidelity Disciplined Equity Fund | 4.9 | 4.9 |
Fidelity Equity-Income Fund | 4.7 | 4.9 |
Fidelity Large Cap Core Enhanced Index Fund | 7.9 | 7.9 |
Fidelity Small Cap Opportunities Fund | 3.2 | 3.1 |
| 39.2 | 39.4 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 5.0 | 5.3 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 1.9 | 1.9 |
Fidelity Strategic Income Fund | 2.0 | 2.0 |
| 3.9 | 3.9 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 6.7 | 6.7 |
Fidelity Strategic Real Return Fund | 6.7 | 6.7 |
Fidelity Total Bond Fund | 20.1 | 20.1 |
| 33.5 | 33.5 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 9.3 | 8.9 |
Fidelity Short-Term Bond Fund | 9.1 | 9.0 |
| 18.4 | 17.9 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 39.2% |
|
![]() | International Equity Funds | 5.0% |
|
![]() | High Yield Fixed-Income Funds | 3.9% |
|
![]() | Investment Grade Fixed-Income Funds | 33.5% |
|
![]() | Short-Term Funds | 18.4% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 39.4% |
|
![]() | International Equity Funds | 5.3% |
|
![]() | High Yield Fixed-Income Funds | 3.9% |
|
![]() | Investment Grade Fixed-Income Funds | 33.5% |
|
![]() | Short-Term Funds | 17.9% |
|
Expected | |||
![]() | Domestic Equity Funds | 38.9% |
|
![]() | International Equity Funds | 4.8% |
|
![]() | High Yield Fixed-Income Funds | 3.6% |
|
![]() | Investment Grade Fixed-Income Funds | 33.7% |
|
![]() | Short-Term Funds | 19.0% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2020 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 44.2% | |||
Shares | Value | ||
Domestic Equity Funds - 39.2% | |||
Fidelity 100 Index Fund | 15,127 | $ 138,259 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 7,369 | 115,465 | |
Fidelity Broad Market Opportunities Fund | 20,626 | 183,778 | |
Fidelity Disciplined Equity Fund | 4,544 | 115,548 | |
Fidelity Equity-Income Fund | 2,465 | 111,314 | |
Fidelity Large Cap Core Enhanced Index Fund | 20,985 | 186,345 | |
Fidelity Small Cap Opportunities Fund | 9,465 | 75,438 | |
TOTAL DOMESTIC EQUITY FUNDS | 926,147 | ||
International Equity Funds - 5.0% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 3,260 | 118,680 | |
TOTAL EQUITY FUNDS (Cost $1,140,394) | 1,044,827 | ||
Fixed-Income Funds - 37.4% | |||
|
|
|
|
High Yield Fixed-Income Funds - 3.9% | |||
Fidelity Capital & Income Fund | 5,618 | 45,447 | |
Fidelity Strategic Income Fund | 4,516 | 45,926 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 91,373 | ||
Investment Grade Fixed-Income Funds - 33.5% | |||
Fidelity Government Income Fund | 15,262 | 158,416 | |
Fidelity Strategic Real Return Fund | 15,654 | 158,262 | |
Fidelity Total Bond Fund | 47,224 | 475,074 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 791,752 | ||
TOTAL FIXED-INCOME FUNDS (Cost $900,088) | 883,125 | ||
Short-Term Funds - 18.4% | |||
|
|
|
|
Fidelity Institutional Money Market Portfolio Institutional Class | 218,263 | 218,263 | |
Fidelity Short-Term Bond Fund | 25,884 | 215,353 | |
TOTAL SHORT-TERM FUNDS (Cost $439,524) | 433,616 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $2,480,006) | $ 2,361,568 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2020 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (cost $2,480,006) - See accompanying schedule | $ 2,361,568 | |
Cash | 72 | |
Receivable for investments sold | 1 | |
Total assets | 2,361,641 | |
|
|
|
Liabilities | ||
Distribution fees payable | 406 | |
|
|
|
Net Assets | $ 2,361,236 | |
Net Assets consist of: |
| |
Paid in capital | $ 2,474,768 | |
Undistributed net investment income | 1,110 | |
Accumulated undistributed net realized gain (loss) on investments | 3,796 | |
Net unrealized appreciation (depreciation) on investments | (118,438) | |
Net Assets | $ 2,361,236 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 47.11 | |
|
|
|
Maximum offering price per share (100/94.25 of $47.11) | $ 49.98 | |
Class T: | $ 47.10 | |
|
|
|
Maximum offering price per share (100/96.50 of $47.10) | $ 48.81 | |
|
|
|
Class C: | $ 47.08 | |
|
|
|
Income Replacement 2020: | $ 47.12 | |
|
|
|
Institutional Class: | $ 47.12 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period August 30, 2007 | |
|
|
|
Investment Income |
|
|
Income distributions from underlying funds |
| $ 33,974 |
Interest |
| 72 |
Total income |
| 34,046 |
|
|
|
Expenses | ||
Distribution fees | $ 2,946 | |
Independent trustees' compensation | 5 | |
Total expenses before reductions | 2,951 | |
Expense reductions | (5) | 2,946 |
Net investment income (loss) | 31,100 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (4,968) | |
Capital gain distributions from underlying funds | 11,246 | 6,278 |
Change in net unrealized appreciation (depreciation) on underlying funds | (118,438) | |
Net gain (loss) | (112,160) | |
Net increase (decrease) in net assets resulting from operations | $ (81,060) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2020 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 31,100 |
Net realized gain (loss) | 6,278 |
Change in net unrealized appreciation (depreciation) | (118,438) |
Net increase (decrease) in net assets resulting from operations | (81,060) |
Distributions to shareholders from net investment income | (29,990) |
Distributions to shareholders from net realized gain | (2,482) |
Total distributions | (32,472) |
Share transactions - net increase (decrease) | 2,474,768 |
Total increase (decrease) in net assets | 2,361,236 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $1,110) | $ 2,361,236 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | 1.085 |
Net realized and unrealized gain (loss) | (2.692) |
Total from investment operations | (1.607) |
Distributions from net investment income | (1.113) |
Distributions from net realized gain | (.170) |
Total distributions | (1.283) |
Net asset value, end of period | $ 47.11 |
Total Return B, C, D | (3.33)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 2.42% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 503 |
Portfolio turnover rate | 21% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .985 |
Net realized and unrealized gain (loss) | (2.707) |
Total from investment operations | (1.722) |
Distributions from net investment income | (1.008) |
Distributions from net realized gain | (.170) |
Total distributions | (1.178) |
Net asset value, end of period | $ 47.10 |
Total Return B, C, D | (3.56)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 2.17% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 187 |
Portfolio turnover rate | 21% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .755 |
Net realized and unrealized gain (loss) | (2.699) |
Total from investment operations | (1.944) |
Distributions from net investment income | (.806) |
Distributions from net realized gain | (.170) |
Total distributions | (.976) |
Net asset value, end of period | $ 47.08 |
Total Return B, C, D | (3.99)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | 1.67% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 275 |
Portfolio turnover rate | 21% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2020
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.190 |
Net realized and unrealized gain (loss) | (2.677) |
Total from investment operations | (1.487) |
Distributions from net investment income | (1.223) |
Distributions from net realized gain | (.170) |
Total distributions | (1.393) |
Net asset value, end of period | $ 47.12 |
Total Return B, C | (3.10)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.67% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 1,233 |
Portfolio turnover rate | 21% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.215 |
Net realized and unrealized gain (loss) | (2.702) |
Total from investment operations | (1.487) |
Distributions from net investment income | (1.223) |
Distributions from net realized gain | (.170) |
Total distributions | (1.393) |
Net asset value, end of period | $ 47.12 |
Total Return B, C | (3.10)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.67% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 163 |
Portfolio turnover rate | 21% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2022 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 6.1 | 6.2 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 5.1 | 4.9 |
Fidelity Broad Market Opportunities Fund | 8.2 | 8.1 |
Fidelity Disciplined Equity Fund | 5.2 | 5.1 |
Fidelity Equity-Income Fund | 5.0 | 5.1 |
Fidelity Large Cap Core Enhanced Index Fund | 8.3 | 8.2 |
Fidelity Small Cap Opportunities Fund | 3.4 | 3.2 |
| 41.3 | 40.8 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 5.7 | 5.8 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 2.1 | 2.1 |
Fidelity Strategic Income Fund | 2.2 | 2.2 |
| 4.3 | 4.3 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 6.5 | 6.6 |
Fidelity Strategic Real Return Fund | 6.4 | 6.4 |
Fidelity Total Bond Fund | 19.1 | 19.5 |
| 32.0 | 32.5 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 8.4 | 8.2 |
Fidelity Short-Term Bond Fund | 8.3 | 8.4 |
| 16.7 | 16.6 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 41.3% |
|
![]() | International Equity Funds | 5.7% |
|
![]() | High Yield Fixed-Income Funds | 4.3% |
|
![]() | Investment Grade Fixed-Income Funds | 32.0% |
|
![]() | Short-Term Funds | 16.7% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 40.8% |
|
![]() | International Equity Funds | 5.8% |
|
![]() | High Yield Fixed-Income Funds | 4.3% |
|
![]() | Investment Grade Fixed-Income Funds | 32.5% |
|
![]() | Short-Term Funds | 16.6% |
|
Expected | |||
![]() | Domestic Equity Funds | 41.3% |
|
![]() | International Equity Funds | 5.6% |
|
![]() | High Yield Fixed-Income Funds | 4.0% |
|
![]() | Investment Grade Fixed-Income Funds | 32.2% |
|
![]() | Short-Term Funds | 16.9% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2022 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 47.0% | |||
Shares | Value | ||
Domestic Equity Funds - 41.3% | |||
Fidelity 100 Index Fund | 37,216 | $ 340,157 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 18,186 | 284,976 | |
Fidelity Broad Market Opportunities Fund | 50,822 | 452,824 | |
Fidelity Disciplined Equity Fund | 11,212 | 285,118 | |
Fidelity Equity-Income Fund | 6,166 | 278,447 | |
Fidelity Large Cap Core Enhanced Index Fund | 51,813 | 460,099 | |
Fidelity Small Cap Opportunities Fund | 23,260 | 185,379 | |
TOTAL DOMESTIC EQUITY FUNDS | 2,287,000 | ||
International Equity Funds - 5.7% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 8,763 | 319,077 | |
TOTAL EQUITY FUNDS (Cost $2,909,918) | 2,606,077 | ||
Fixed-Income Funds - 36.3% | |||
|
|
|
|
High Yield Fixed-Income Funds - 4.3% | |||
Fidelity Capital & Income Fund | 14,698 | 118,903 | |
Fidelity Strategic Income Fund | 11,758 | 119,575 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 238,478 | ||
Investment Grade Fixed-Income Funds - 32.0% | |||
Fidelity Government Income Fund | 34,339 | 356,443 | |
Fidelity Strategic Real Return Fund | 35,139 | 355,260 | |
Fidelity Total Bond Fund | 105,320 | 1,059,516 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 1,771,219 | ||
TOTAL FIXED-INCOME FUNDS (Cost $2,047,458) | 2,009,697 | ||
Short-Term Funds - 16.7% | |||
|
|
|
|
Fidelity Institutional Money Market Portfolio Institutional Class | 466,323 | 466,323 | |
Fidelity Short-Term Bond Fund | 54,920 | 456,931 | |
TOTAL SHORT-TERM FUNDS (Cost $937,144) | 923,254 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $5,894,520) | $ 5,539,028 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2022 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (cost $5,894,520) - See accompanying schedule | $ 5,539,028 | |
Cash | 72 | |
Receivable for investments sold | 252 | |
Total assets | 5,539,352 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | $ 250 | |
Distribution fees payable | 238 | |
Total liabilities | 488 | |
|
|
|
Net Assets | $ 5,538,864 | |
Net Assets consist of: |
| |
Paid in capital | $ 5,882,033 | |
Undistributed net investment income | 2,475 | |
Accumulated undistributed net realized gain (loss) on investments | 9,848 | |
Net unrealized appreciation (depreciation) on investments | (355,492) | |
Net Assets | $ 5,538,864 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 47.05 | |
|
|
|
Maximum offering price per share (100/94.25 of $47.05) | $ 49.92 | |
Class T: | $ 47.04 | |
|
|
|
Maximum offering price per share (100/96.50 of $47.04) | $ 48.75 | |
|
|
|
Class C: | $ 47.04 | |
|
|
|
Income Replacement 2022: | $ 47.06 | |
|
|
|
Institutional Class: | $ 47.06 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period August 30, 2007 | |
|
|
|
Investment Income |
|
|
Income distributions from underlying funds |
| $ 87,382 |
Interest |
| 72 |
Total income |
| 87,454 |
|
|
|
Expenses | ||
Distribution fees | $ 1,974 | |
Independent trustees' compensation | 12 | |
Total expenses before reductions | 1,986 | |
Expense reductions | (12) | 1,974 |
Net investment income (loss) | 85,480 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (23,894) | |
Capital gain distributions from underlying funds | 42,834 | 18,940 |
Change in net unrealized appreciation (depreciation) on underlying funds | (355,492) | |
Net gain (loss) | (336,552) | |
Net increase (decrease) in net assets resulting from operations | $ (251,072) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2022 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 85,480 |
Net realized gain (loss) | 18,940 |
Change in net unrealized appreciation (depreciation) | (355,492) |
Net increase (decrease) in net assets resulting from operations | (251,072) |
Distributions to shareholders from net investment income | (83,005) |
Distributions to shareholders from net realized gain | (9,092) |
Total distributions | (92,097) |
Share transactions - net increase (decrease) | 5,882,033 |
Total increase (decrease) in net assets | 5,538,864 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $2,475) | $ 5,538,864 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | 1.087 |
Net realized and unrealized gain (loss) | (2.853) |
Total from investment operations | (1.766) |
Distributions from net investment income | (1.014) |
Distributions from net realized gain | (.170) |
Total distributions | (1.184) |
Net asset value, end of period | $ 47.05 |
Total Return B, C, D | (3.64)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 2.41% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 289 |
Portfolio turnover rate | 32% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .982 |
Net realized and unrealized gain (loss) | (2.862) |
Total from investment operations | (1.880) |
Distributions from net investment income | (.910) |
Distributions from net realized gain | (.170) |
Total distributions | (1.080) |
Net asset value, end of period | $ 47.04 |
Total Return B, C, D | (3.87)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 2.16% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 187 |
Portfolio turnover rate | 32% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .760 |
Net realized and unrealized gain (loss) | (2.860) |
Total from investment operations | (2.100) |
Distributions from net investment income | (.690) |
Distributions from net realized gain | (.170) |
Total distributions | (.860) |
Net asset value, end of period | $ 47.04 |
Total Return B, C, D | (4.29)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | 1.66% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 120 |
Portfolio turnover rate | 32% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2022
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.190 |
Net realized and unrealized gain (loss) | (2.836) |
Total from investment operations | (1.646) |
Distributions from net investment income | (1.124) |
Distributions from net realized gain | (.170) |
Total distributions | (1.294) |
Net asset value, end of period | $ 47.06 |
Total Return B, C | (3.41)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.66% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 4,666 |
Portfolio turnover rate | 32% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.208 |
Net realized and unrealized gain (loss) | (2.854) |
Total from investment operations | (1.646) |
Distributions from net investment income | (1.124) |
Distributions from net realized gain | (.170) |
Total distributions | (1.294) |
Net asset value, end of period | $ 47.06 |
Total Return B, C | (3.41)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.66% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 277 |
Portfolio turnover rate | 32% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2024 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 6.3 | 6.4 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 5.3 | 5.2 |
Fidelity Broad Market Opportunities Fund | 8.5 | 8.5 |
Fidelity Disciplined Equity Fund | 5.4 | 5.4 |
Fidelity Equity-Income Fund | 5.2 | 5.3 |
Fidelity Large Cap Core Enhanced Index Fund | 8.6 | 8.5 |
Fidelity Small Cap Opportunities Fund | 3.4 | 3.3 |
| 42.7 | 42.6 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 6.5 | 6.7 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 2.3 | 2.3 |
Fidelity Strategic Income Fund | 2.4 | 2.4 |
| 4.7 | 4.7 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 6.2 | 6.3 |
Fidelity Strategic Real Return Fund | 6.2 | 6.3 |
Fidelity Total Bond Fund | 18.4 | 18.4 |
| 30.8 | 31.0 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 7.7 | 7.4 |
Fidelity Short-Term Bond Fund | 7.6 | 7.6 |
| 15.3 | 15.0 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 42.7% |
|
![]() | International Equity Funds | 6.5% |
|
![]() | High Yield Fixed-Income Funds | 4.7% |
|
![]() | Investment Grade Fixed-Income Funds | 30.8% |
|
![]() | Short-Term Funds | 15.3% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 42.6% |
|
![]() | International Equity Funds | 6.7% |
|
![]() | High Yield Fixed-Income Funds | 4.7% |
|
![]() | Investment Grade Fixed-Income Funds | 31.0% |
|
![]() | Short-Term Funds | 15.0% |
|
Expected | |||
![]() | Domestic Equity Funds | 43.0% |
|
![]() | International Equity Funds | 6.4% |
|
![]() | High Yield Fixed-Income Funds | 4.4% |
|
![]() | Investment Grade Fixed-Income Funds | 30.6% |
|
![]() | Short-Term Funds | 15.6% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2024 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 49.2% | |||
Shares | Value | ||
Domestic Equity Funds - 42.7% | |||
Fidelity 100 Index Fund | 9,895 | $ 90,440 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 4,863 | 76,206 | |
Fidelity Broad Market Opportunities Fund | 13,516 | 120,425 | |
Fidelity Disciplined Equity Fund | 2,998 | 76,237 | |
Fidelity Equity-Income Fund | 1,628 | 73,526 | |
Fidelity Large Cap Core Enhanced Index Fund | 13,764 | 122,228 | |
Fidelity Small Cap Opportunities Fund | 6,163 | 49,119 | |
TOTAL DOMESTIC EQUITY FUNDS | 608,181 | ||
International Equity Funds - 6.5% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 2,568 | 93,485 | |
TOTAL EQUITY FUNDS (Cost $779,890) | 701,666 | ||
Fixed-Income Funds - 35.5% | |||
|
|
|
|
High Yield Fixed-Income Funds - 4.7% | |||
Fidelity Capital & Income Fund | 4,101 | 33,177 | |
Fidelity Strategic Income Fund | 3,308 | 33,644 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 66,821 | ||
Investment Grade Fixed-Income Funds - 30.8% | |||
Fidelity Government Income Fund | 8,552 | 88,774 | |
Fidelity Strategic Real Return Fund | 8,774 | 88,701 | |
Fidelity Total Bond Fund | 25,987 | 261,424 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 438,899 | ||
TOTAL FIXED-INCOME FUNDS (Cost $513,281) | 505,720 | ||
Short-Term Funds - 15.3% | |||
|
|
|
|
Fidelity Institutional Money Market Portfolio Institutional Class | 109,794 | 109,794 | |
Fidelity Short-Term Bond Fund | 13,026 | 108,380 | |
TOTAL SHORT-TERM FUNDS (Cost $221,178) | 218,174 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $1,514,349) | $ 1,425,560 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2024 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (cost $1,514,349) - See accompanying schedule | $ 1,425,560 | |
Cash | 72 | |
Total assets | 1,425,632 | |
|
|
|
Liabilities | ||
Distribution fees payable | 242 | |
|
|
|
Net Assets | $ 1,425,390 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,512,902 | |
Undistributed net investment income | 575 | |
Accumulated undistributed net realized gain (loss) on investments | 702 | |
Net unrealized appreciation (depreciation) on investments | (88,789) | |
Net Assets | $ 1,425,390 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 46.97 | |
|
|
|
Maximum offering price per share (100/94.25 of $46.97) | $ 49.84 | |
Class T: | $ 46.97 | |
|
|
|
Maximum offering price per share (100/96.50 of $46.97) | $ 48.67 | |
|
|
|
Class C: | $ 46.93 | |
|
|
|
Income Replacement 2024: | $ 46.98 | |
|
|
|
Institutional Class: | $ 46.98 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period August 30, 2007 | |
|
|
|
Investment Income |
|
|
Income distributions from underlying funds |
| $ 23,762 |
Interest |
| 72 |
Total income |
| 23,834 |
|
|
|
Expenses | ||
Distribution fees | $ 2,058 | |
Independent trustees' compensation | 3 | |
Total expenses before reductions | 2,061 | |
Expense reductions | (3) | 2,058 |
Net investment income (loss) | 21,776 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (8,785) | |
Capital gain distributions from underlying funds | 12,382 | 3,597 |
Change in net unrealized appreciation (depreciation) on underlying funds | (88,789) | |
Net gain (loss) | (85,192) | |
Net increase (decrease) in net assets resulting from operations | $ (63,416) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2024 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 21,776 |
Net realized gain (loss) | 3,597 |
Change in net unrealized appreciation (depreciation) | (88,789) |
Net increase (decrease) in net assets resulting from operations | (63,416) |
Distributions to shareholders from net investment income | (21,201) |
Distributions to shareholders from net realized gain | (2,896) |
Total distributions | (24,097) |
Share transactions - net increase (decrease) | 1,512,903 |
Total increase (decrease) in net assets | 1,425,390 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $575) | $ 1,425,390 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | 1.063 |
Net realized and unrealized gain (loss) | (2.884) |
Total from investment operations | (1.821) |
Distributions from net investment income | (1.039) |
Distributions from net realized gain | (.170) |
Total distributions | (1.209) |
Net asset value, end of period | $ 46.97 |
Total Return B, C, D | (3.77)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 2.35% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 286 |
Portfolio turnover rate | 41% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .966 |
Net realized and unrealized gain (loss) | (2.901) |
Total from investment operations | (1.937) |
Distributions from net investment income | (.923) |
Distributions from net realized gain | (.170) |
Total distributions | (1.093) |
Net asset value, end of period | $ 46.97 |
Total Return B, C, D | (3.99)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 2.11% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 96 |
Portfolio turnover rate | 41% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .728 |
Net realized and unrealized gain (loss) | (2.903) |
Total from investment operations | (2.175) |
Distributions from net investment income | (.725) |
Distributions from net realized gain | (.170) |
Total distributions | (.895) |
Net asset value, end of period | $ 46.93 |
Total Return B, C, D | (4.45)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | 1.61% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 233 |
Portfolio turnover rate | 41% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2024
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.166 |
Net realized and unrealized gain (loss) | (2.868) |
Total from investment operations | (1.702) |
Distributions from net investment income | (1.148) |
Distributions from net realized gain | (.170) |
Total distributions | (1.318) |
Net asset value, end of period | $ 46.98 |
Total Return B, C | (3.53)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.60% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 714 |
Portfolio turnover rate | 41% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.194 |
Net realized and unrealized gain (loss) | (2.896) |
Total from investment operations | (1.702) |
Distributions from net investment income | (1.148) |
Distributions from net realized gain | (.170) |
Total distributions | (1.318) |
Net asset value, end of period | $ 46.98 |
Total Return B, C | (3.53)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.60% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 97 |
Portfolio turnover rate | 41% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2026 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 6.5 | 6.6 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 5.5 | 5.2 |
Fidelity Broad Market Opportunities Fund | 8.7 | 8.6 |
Fidelity Disciplined Equity Fund | 5.5 | 5.5 |
Fidelity Equity-Income Fund | 5.4 | 5.4 |
Fidelity Large Cap Core Enhanced Index Fund | 8.8 | 8.8 |
Fidelity Small Cap Opportunities Fund | 3.6 | 3.3 |
| 44.0 | 43.4 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 7.3 | 7.4 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 2.4 | 2.4 |
Fidelity Strategic Income Fund | 2.5 | 2.5 |
| 4.9 | 4.9 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 6.0 | 6.2 |
Fidelity Strategic Real Return Fund | 6.0 | 6.1 |
Fidelity Total Bond Fund | 18.0 | 18.2 |
| 30.0 | 30.5 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 7.0 | 6.8 |
Fidelity Short-Term Bond Fund | 6.8 | 7.0 |
| 13.8 | 13.8 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 44.0% |
|
![]() | International Equity Funds | 7.3% |
|
![]() | High Yield Fixed-Income Funds | 4.9% |
|
![]() | Investment Grade Fixed-Income Funds | 30.0% |
|
![]() | Short-Term Funds | 13.8% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 43.4% |
|
![]() | International Equity Funds | 7.4% |
|
![]() | High Yield Fixed-Income Funds | 4.9% |
|
![]() | Investment Grade Fixed-Income Funds | 30.5% |
|
![]() | Short-Term Funds | 13.8% |
|
Expected | |||
![]() | Domestic Equity Funds | 44.3% |
|
![]() | International Equity Funds | 7.2% |
|
![]() | High Yield Fixed-Income Funds | 4.7% |
|
![]() | Investment Grade Fixed-Income Funds | 29.6% |
|
![]() | Short-Term Funds | 14.2% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2026 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 51.3% | |||
Shares | Value | ||
Domestic Equity Funds - 44.0% | |||
Fidelity 100 Index Fund | 11,402 | $ 104,219 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 5,555 | 87,048 | |
Fidelity Broad Market Opportunities Fund | 15,575 | 138,773 | |
Fidelity Disciplined Equity Fund | 3,435 | 87,354 | |
Fidelity Equity-Income Fund | 1,886 | 85,165 | |
Fidelity Large Cap Core Enhanced Index Fund | 15,853 | 140,775 | |
Fidelity Small Cap Opportunities Fund | 7,090 | 56,511 | |
TOTAL DOMESTIC EQUITY FUNDS | 699,845 | ||
International Equity Funds - 7.3% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 3,196 | 116,382 | |
TOTAL EQUITY FUNDS (Cost $911,251) | 816,227 | ||
Fixed-Income Funds - 34.9% | |||
|
|
|
|
High Yield Fixed-Income Funds - 4.9% | |||
Fidelity Capital & Income Fund | 4,837 | 39,133 | |
Fidelity Strategic Income Fund | 3,884 | 39,496 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 78,629 | ||
Investment Grade Fixed-Income Funds - 30.0% | |||
Fidelity Government Income Fund | 9,233 | 95,839 | |
Fidelity Strategic Real Return Fund | 9,456 | 95,600 | |
Fidelity Total Bond Fund | 28,418 | 285,882 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 477,321 | ||
TOTAL FIXED-INCOME FUNDS (Cost $564,638) | 555,950 | ||
Short-Term Funds - 13.8% | |||
|
|
|
|
Fidelity Institutional Money Market Portfolio Institutional Class | 110,748 | 110,748 | |
Fidelity Short-Term Bond Fund | 13,100 | 108,992 | |
TOTAL SHORT-TERM FUNDS (Cost $223,127) | 219,740 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $1,699,016) | $ 1,591,917 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2026 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (cost $1,699,016) - See accompanying schedule | $ 1,591,917 | |
Cash | 72 | |
Receivable for investments sold | 2,237 | |
Receivable for fund shares sold | 25,000 | |
Total assets | 1,619,226 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 24,839 | |
Payable for fund shares redeemed | 2,396 | |
Distribution fees payable | 473 | |
Total liabilities | 27,708 | |
|
|
|
Net Assets | $ 1,591,518 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,687,356 | |
Undistributed net investment income | 600 | |
Accumulated undistributed net realized gain (loss) on investments | 10,661 | |
Net unrealized appreciation (depreciation) on investments | (107,099) | |
Net Assets | $ 1,591,518 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 46.76 | |
|
|
|
Maximum offering price per share (100/94.25 of $46.76) | $ 49.61 | |
Class T: | $ 46.76 | |
|
|
|
Maximum offering price per share (100/96.50 of $46.76) | $ 48.46 | |
|
|
|
Class C: | $ 46.72 | |
|
|
|
Income Replacement 2026: | $ 46.77 | |
|
|
|
Institutional Class: | $ 46.77 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period August 30, 2007 | |
|
|
|
Investment Income |
|
|
Income distributions from underlying funds |
| $ 26,580 |
Interest |
| 111 |
Total income |
| 26,691 |
|
|
|
Expenses | ||
Distribution fees | $ 4,039 | |
Independent trustees' compensation | 4 | |
Total expenses before reductions | 4,043 | |
Expense reductions | (4) | 4,039 |
Net investment income (loss) | 22,652 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (2,963) | |
Capital gain distributions from underlying funds | 17,330 | 14,367 |
Change in net unrealized appreciation (depreciation) on underlying funds | (107,099) | |
Net gain (loss) | (92,732) | |
Net increase (decrease) in net assets resulting from operations | $ (70,080) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2026 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 22,652 |
Net realized gain (loss) | 14,367 |
Change in net unrealized appreciation (depreciation) | (107,099) |
Net increase (decrease) in net assets resulting from operations | (70,080) |
Distributions to shareholders from net investment income | (22,051) |
Distributions to shareholders from net realized gain | (3,706) |
Total distributions | (25,757) |
Share transactions - net increase (decrease) | 1,687,355 |
Total increase (decrease) in net assets | 1,591,518 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $600) | $ 1,591,518 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | 1.076 |
Net realized and unrealized gain (loss) | (3.105) |
Total from investment operations | (2.029) |
Distributions from net investment income | (1.031) |
Distributions from net realized gain | (.180) |
Total distributions | (1.211) |
Net asset value, end of period | $ 46.76 |
Total Return B, C, D | (4.19)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 2.36% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 131 |
Portfolio turnover rate | 21% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .966 |
Net realized and unrealized gain (loss) | (3.110) |
Total from investment operations | (2.144) |
Distributions from net investment income | (.916) |
Distributions from net realized gain | (.180) |
Total distributions | (1.096) |
Net asset value, end of period | $ 46.76 |
Total Return B, C, D | (4.41)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 2.11% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 96 |
Portfolio turnover rate | 21% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .723 |
Net realized and unrealized gain (loss) | (3.090) |
Total from investment operations | (2.367) |
Distributions from net investment income | (.733) |
Distributions from net realized gain | (.180) |
Total distributions | (.913) |
Net asset value, end of period | $ 46.72 |
Total Return B, C, D | (4.85)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | 1.61% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 485 |
Portfolio turnover rate | 21% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2026
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.168 |
Net realized and unrealized gain (loss) | (3.079) |
Total from investment operations | (1.911) |
Distributions from net investment income | (1.139) |
Distributions from net realized gain | (.180) |
Total distributions | (1.319) |
Net asset value, end of period | $ 46.77 |
Total Return B, C | (3.96)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.61% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 783 |
Portfolio turnover rate | 21% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.196 |
Net realized and unrealized gain (loss) | (3.107) |
Total from investment operations | (1.911) |
Distributions from net investment income | (1.139) |
Distributions from net realized gain | (.180) |
Total distributions | (1.319) |
Net asset value, end of period | $ 46.77 |
Total Return B, C | (3.96)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.61% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 96 |
Portfolio turnover rate | 21% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2028 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 6.7 | 6.8 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 5.6 | 5.4 |
Fidelity Broad Market Opportunities Fund | 8.8 | 8.9 |
Fidelity Disciplined Equity Fund | 5.6 | 5.6 |
Fidelity Equity-Income Fund | 5.4 | 5.6 |
Fidelity Large Cap Core Enhanced Index Fund | 9.0 | 9.0 |
Fidelity Small Cap Opportunities Fund | 3.7 | 3.6 |
| 44.8 | 44.9 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 8.0 | 8.1 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 2.6 | 2.6 |
Fidelity Strategic Income Fund | 2.6 | 2.6 |
| 5.2 | 5.2 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 5.8 | 5.8 |
Fidelity Strategic Real Return Fund | 5.8 | 5.8 |
Fidelity Total Bond Fund | 17.3 | 17.4 |
| 28.9 | 29.0 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 6.6 | 6.5 |
Fidelity Short-Term Bond Fund | 6.5 | 6.3 |
| 13.1 | 12.8 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 44.8% |
|
![]() | International Equity Funds | 8.0% |
|
![]() | High Yield Fixed-Income Funds | 5.2% |
|
![]() | Investment Grade Fixed-Income Funds | 28.9% |
|
![]() | Short-Term Funds | 13.1% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 44.9% |
|
![]() | International Equity Funds | 8.1% |
|
![]() | High Yield Fixed-Income Funds | 5.2% |
|
![]() | Investment Grade Fixed-Income Funds | 29.0% |
|
![]() | Short-Term Funds | 12.8% |
|
Expected | |||
![]() | Domestic Equity Funds | 45.2% |
|
![]() | International Equity Funds | 8.0% |
|
![]() | High Yield Fixed-Income Funds | 5.0% |
|
![]() | Investment Grade Fixed-Income Funds | 28.5% |
|
![]() | Short-Term Funds | 13.3% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2028 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 52.8% | |||
Shares | Value | ||
Domestic Equity Funds - 44.8% | |||
Fidelity 100 Index Fund | 53,493 | $ 488,923 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 25,935 | 406,404 | |
Fidelity Broad Market Opportunities Fund | 72,248 | 643,732 | |
Fidelity Disciplined Equity Fund | 15,991 | 406,662 | |
Fidelity Equity-Income Fund | 8,792 | 397,034 | |
Fidelity Large Cap Core Enhanced Index Fund | 73,653 | 654,041 | |
Fidelity Small Cap Opportunities Fund | 33,596 | 267,757 | |
TOTAL DOMESTIC EQUITY FUNDS | 3,264,553 | ||
International Equity Funds - 8.0% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 16,052 | 584,466 | |
TOTAL EQUITY FUNDS (Cost $4,200,490) | 3,849,019 | ||
Fixed-Income Funds - 34.1% | |||
|
|
|
|
High Yield Fixed-Income Funds - 5.2% | |||
Fidelity Capital & Income Fund | 23,553 | 190,548 | |
Fidelity Strategic Income Fund | 18,962 | 192,841 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 383,389 | ||
Investment Grade Fixed-Income Funds - 28.9% | |||
Fidelity Government Income Fund | 40,782 | 423,315 | |
Fidelity Strategic Real Return Fund | 41,564 | 420,209 | |
Fidelity Total Bond Fund | 125,459 | 1,262,117 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 2,105,641 | ||
TOTAL FIXED-INCOME FUNDS (Cost $2,535,313) | 2,489,030 | ||
Short-Term Funds - 13.1% | |||
Shares | Value | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 481,175 | $ 481,175 | |
Fidelity Short-Term Bond Fund | 56,698 | 471,731 | |
TOTAL SHORT-TERM FUNDS (Cost $963,481) | 952,906 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $7,699,284) | $ 7,290,955 |
Income Tax Information |
At July 31, 2008, the fund had a capital loss carryforward of approximately $30 all of which will expire on July 31, 2016. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2028 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (cost $7,699,284) - See accompanying schedule | $ 7,290,955 | |
Cash | 73 | |
Receivable for investments sold | 3 | |
Receivable for fund shares sold | 10,000 | |
Total assets | 7,301,031 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 10,003 | |
Distribution fees payable | 455 | |
Total liabilities | 10,458 | |
|
|
|
Net Assets | $ 7,290,573 | |
Net Assets consist of: |
| |
Paid in capital | $ 7,701,790 | |
Undistributed net investment income | 3,156 | |
Accumulated undistributed net realized gain (loss) on investments | (6,044) | |
Net unrealized appreciation (depreciation) on investments | (408,329) | |
Net Assets | $ 7,290,573 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 46.81 | |
|
|
|
Maximum offering price per share (100/94.25 of $46.81) | $ 49.67 | |
Class T: | $ 46.80 | |
|
|
|
Maximum offering price per share (100/96.50 of $46.80) | $ 48.50 | |
|
|
|
Class C: | $ 46.79 | |
|
|
|
Income Replacement 2028: | $ 46.82 | |
|
|
|
Institutional Class: | $ 46.82 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period August 30, 2007 | |
|
|
|
Investment Income |
|
|
Income distributions from underlying funds |
| $ 83,927 |
Interest |
| 120 |
Total income |
| 84,047 |
|
|
|
Expenses | ||
Distribution fees | $ 2,476 | |
Independent trustees' compensation | 13 | |
Total expenses before reductions | 2,489 | |
Expense reductions | (13) | 2,476 |
Net investment income (loss) | 81,571 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (36,623) | |
Capital gain distributions from underlying funds | 39,184 | 2,561 |
Change in net unrealized appreciation (depreciation) on underlying funds | (408,329) | |
Net gain (loss) | (405,768) | |
Net increase (decrease) in net assets resulting from operations | $ (324,197) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2028 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 81,571 |
Net realized gain (loss) | 2,561 |
Change in net unrealized appreciation (depreciation) | (408,329) |
Net increase (decrease) in net assets resulting from operations | (324,197) |
Distributions to shareholders from net investment income | (78,416) |
Distributions to shareholders from net realized gain | (8,604) |
Total distributions | (87,020) |
Share transactions - net increase (decrease) | 7,701,790 |
Total increase (decrease) in net assets | 7,290,573 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $3,156) | $ 7,290,573 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .966 |
Net realized and unrealized gain (loss) | (3.085) |
Total from investment operations | (2.119) |
Distributions from net investment income | (.911) |
Distributions from net realized gain | (.160) |
Total distributions | (1.071) |
Net asset value, end of period | $ 46.81 |
Total Return B, C, D | (4.36)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 2.16% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 371 |
Portfolio turnover rate | 33% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .847 |
Net realized and unrealized gain (loss) | (3.079) |
Total from investment operations | (2.232) |
Distributions from net investment income | (.808) |
Distributions from net realized gain | (.160) |
Total distributions | (.968) |
Net asset value, end of period | $ 46.80 |
Total Return B, C, D | (4.57)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 1.91% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 606 |
Portfolio turnover rate | 33% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .639 |
Net realized and unrealized gain (loss) | (3.104) |
Total from investment operations | (2.465) |
Distributions from net investment income | (.585) |
Distributions from net realized gain | (.160) |
Total distributions | (.745) |
Net asset value, end of period | $ 46.79 |
Total Return B, C, D | (5.02)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | 1.41% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 150 |
Portfolio turnover rate | 33% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2028
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.067 |
Net realized and unrealized gain (loss) | (3.072) |
Total from investment operations | (2.005) |
Distributions from net investment income | (1.015) |
Distributions from net realized gain | (.160) |
Total distributions | (1.175) |
Net asset value, end of period | $ 46.82 |
Total Return B, C | (4.14)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.40% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 6,068 |
Portfolio turnover rate | 33% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.101 |
Net realized and unrealized gain (loss) | (3.106) |
Total from investment operations | (2.005) |
Distributions from net investment income | (1.015) |
Distributions from net realized gain | (.160) |
Total distributions | (1.175) |
Net asset value, end of period | $ 46.82 |
Total Return B, C | (4.14)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.40% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 96 |
Portfolio turnover rate | 33% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2030 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 6.8 | 6.8 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 5.6 | 5.4 |
Fidelity Broad Market Opportunities Fund | 9.0 | 8.9 |
Fidelity Disciplined Equity Fund | 5.7 | 5.7 |
Fidelity Equity-Income Fund | 5.5 | 5.5 |
Fidelity Large Cap Core Enhanced Index Fund | 9.1 | 9.1 |
Fidelity Small Cap Opportunities Fund | 3.7 | 3.4 |
| 45.4 | 44.8 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 8.9 | 9.1 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 2.7 | 2.7 |
Fidelity Strategic Income Fund | 2.8 | 2.8 |
| 5.5 | 5.5 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 5.8 | 5.9 |
Fidelity Strategic Real Return Fund | 5.7 | 5.8 |
Fidelity Total Bond Fund | 17.1 | 17.4 |
| 28.6 | 29.1 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 5.8 | 5.6 |
Fidelity Short-Term Bond Fund | 5.8 | 5.9 |
| 11.6 | 11.5 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 45.4% |
|
![]() | International Equity Funds | 8.9% |
|
![]() | High Yield Fixed-Income Funds | 5.5% |
|
![]() | Investment Grade Fixed-Income Funds | 28.6% |
|
![]() | Short-Term Funds | 11.6% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 44.8% |
|
![]() | International Equity Funds | 9.1% |
|
![]() | High Yield Fixed-Income Funds | 5.5% |
|
![]() | Investment Grade Fixed-Income Funds | 29.1% |
|
![]() | Short-Term Funds | 11.5% |
|
Expected | |||
![]() | Domestic Equity Funds | 46.0% |
|
![]() | International Equity Funds | 8.8% |
|
![]() | High Yield Fixed-Income Funds | 5.2% |
|
![]() | Investment Grade Fixed-Income Funds | 27.9% |
|
![]() | Short-Term Funds | 12.1% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2030 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 54.3% | |||
Shares | Value | ||
Domestic Equity Funds - 45.4% | |||
Fidelity 100 Index Fund | 9,165 | $ 83,768 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 4,472 | 70,069 | |
Fidelity Broad Market Opportunities Fund | 12,491 | 111,297 | |
Fidelity Disciplined Equity Fund | 2,768 | 70,387 | |
Fidelity Equity-Income Fund | 1,501 | 67,802 | |
Fidelity Large Cap Core Enhanced Index Fund | 12,707 | 112,837 | |
Fidelity Small Cap Opportunities Fund | 5,704 | 45,464 | |
TOTAL DOMESTIC EQUITY FUNDS | 561,624 | ||
International Equity Funds - 8.9% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 3,008 | 109,519 | |
TOTAL EQUITY FUNDS (Cost $745,041) | 671,143 | ||
Fixed-Income Funds - 34.1% | |||
|
|
|
|
High Yield Fixed-Income Funds - 5.5% | |||
Fidelity Capital & Income Fund | 4,171 | 33,743 | |
Fidelity Strategic Income Fund | 3,367 | 34,241 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 67,984 | ||
Investment Grade Fixed-Income Funds - 28.6% | |||
Fidelity Government Income Fund | 6,841 | 71,005 | |
Fidelity Strategic Real Return Fund | 6,981 | 70,576 | |
Fidelity Total Bond Fund | 21,067 | 211,932 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 353,513 | ||
TOTAL FIXED-INCOME FUNDS (Cost $427,738) | 421,497 | ||
Short-Term Funds - 11.6% | |||
|
|
|
|
Fidelity Institutional Money Market Portfolio Institutional Class | 72,243 | 72,243 | |
Fidelity Short-Term Bond Fund | 8,646 | 71,934 | |
TOTAL SHORT-TERM FUNDS (Cost $145,873) | 144,177 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $1,318,652) | $ 1,236,817 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2030 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (cost $1,318,652) - See accompanying schedule | $ 1,236,817 | |
Cash | 72 | |
Total assets | 1,236,889 | |
|
|
|
Liabilities | ||
Distribution fees payable | 309 | |
|
|
|
Net Assets | $ 1,236,580 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,309,254 | |
Undistributed net investment income | 545 | |
Accumulated undistributed net realized gain (loss) on investments | 8,616 | |
Net unrealized appreciation (depreciation) on investments | (81,835) | |
Net Assets | $ 1,236,580 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 46.61 | |
|
|
|
Maximum offering price per share (100/94.25 of $46.61) | $ 49.45 | |
Class T: | $ 46.61 | |
|
|
|
Maximum offering price per share (100/96.50 of $46.61) | $ 48.30 | |
|
|
|
Class C: | $ 46.58 | |
|
|
|
Income Replacement 2030: | $ 46.61 | |
|
|
|
Institutional Class: | $ 46.61 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period August 30, 2007 | |
|
|
|
Investment Income |
|
|
Income distributions from underlying funds |
| $ 17,539 |
Interest |
| 112 |
Total income |
| 17,651 |
|
|
|
Expenses | ||
Distribution fees | $ 2,803 | |
Independent trustees' compensation | 2 | |
Total expenses before reductions | 2,805 | |
Expense reductions | (2) | 2,803 |
Net investment income (loss) | 14,848 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (555) | |
Capital gain distributions from underlying funds | 11,821 | 11,266 |
Change in net unrealized appreciation (depreciation) on underlying funds | (81,835) | |
Net gain (loss) | (70,569) | |
Net increase (decrease) in net assets resulting from operations | $ (55,721) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2030 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 14,848 |
Net realized gain (loss) | 11,266 |
Change in net unrealized appreciation (depreciation) | (81,835) |
Net increase (decrease) in net assets resulting from operations | (55,721) |
Distributions to shareholders from net investment income | (14,428) |
Distributions to shareholders from net realized gain | (2,528) |
Total distributions | (16,956) |
Share transactions - net increase (decrease) | 1,309,257 |
Total increase (decrease) in net assets | 1,236,580 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $545) | $ 1,236,580 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | 1.034 |
Net realized and unrealized gain (loss) | (3.239) |
Total from investment operations | (2.205) |
Distributions from net investment income | (.995) |
Distributions from net realized gain | (.190) |
Total distributions | (1.185) |
Net asset value, end of period | $ 46.61 |
Total Return B, C, D | (4.55)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 2.26% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 95 |
Portfolio turnover rate | 12% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .920 |
Net realized and unrealized gain (loss) | (3.234) |
Total from investment operations | (2.314) |
Distributions from net investment income | (.886) |
Distributions from net realized gain | (.190) |
Total distributions | (1.076) |
Net asset value, end of period | $ 46.61 |
Total Return B, C, D | (4.76)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 2.01% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 95 |
Portfolio turnover rate | 12% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .682 |
Net realized and unrealized gain (loss) | (3.227) |
Total from investment operations | (2.545) |
Distributions from net investment income | (.685) |
Distributions from net realized gain | (.190) |
Total distributions | (.875) |
Net asset value, end of period | $ 46.58 |
Total Return B, C, D | (5.21)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | 1.51% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 297 |
Portfolio turnover rate | 12% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2030
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.117 |
Net realized and unrealized gain (loss) | (3.209) |
Total from investment operations | (2.092) |
Distributions from net investment income | (1.108) |
Distributions from net realized gain | (.190) |
Total distributions | (1.298) |
Net asset value, end of period | $ 46.61 |
Total Return B, C | (4.33)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.51% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 653 |
Portfolio turnover rate | 12% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.149 |
Net realized and unrealized gain (loss) | (3.241) |
Total from investment operations | (2.092) |
Distributions from net investment income | (1.108) |
Distributions from net realized gain | (.190) |
Total distributions | (1.298) |
Net asset value, end of period | $ 46.61 |
Total Return B, C | (4.33)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.51% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 96 |
Portfolio turnover rate | 12% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2032 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 6.9 | 6.9 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 5.8 | 5.5 |
Fidelity Broad Market Opportunities Fund | 9.1 | 9.1 |
Fidelity Disciplined Equity Fund | 5.8 | 5.8 |
Fidelity Equity-Income Fund | 5.6 | 5.7 |
Fidelity Large Cap Core Enhanced Index Fund | 9.3 | 9.2 |
Fidelity Small Cap Opportunities Fund | 3.7 | 3.5 |
| 46.2 | 45.7 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 9.6 | 9.7 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 2.9 | 2.8 |
Fidelity Strategic Income Fund | 2.9 | 3.0 |
| 5.8 | 5.8 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 5.6 | 5.8 |
Fidelity Strategic Real Return Fund | 5.6 | 5.7 |
Fidelity Total Bond Fund | 16.7 | 16.9 |
| 27.9 | 28.4 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 5.3 | 5.1 |
Fidelity Short-Term Bond Fund | 5.2 | 5.3 |
| 10.5 | 10.4 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 46.2% |
|
![]() | International Equity Funds | 9.6% |
|
![]() | High Yield Fixed-Income Funds | 5.8% |
|
![]() | Investment Grade Fixed-Income Funds | 27.9% |
|
![]() | Short-Term Funds | 10.5% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 45.7% |
|
![]() | International Equity Funds | 9.7% |
|
![]() | High Yield Fixed-Income Funds | 5.8% |
|
![]() | Investment Grade Fixed-Income Funds | 28.4% |
|
![]() | Short-Term Funds | 10.4% |
|
Expected | |||
![]() | Domestic Equity Funds | 46.9% |
|
![]() | International Equity Funds | 9.6% |
|
![]() | High Yield Fixed-Income Funds | 5.5% |
|
![]() | Investment Grade Fixed-Income Funds | 27.5% |
|
![]() | Short-Term Funds | 10.5% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2032 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 55.8% | |||
Shares | Value | ||
Domestic Equity Funds - 46.2% | |||
Fidelity 100 Index Fund | 10,662 | $ 97,453 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 5,230 | 81,956 | |
Fidelity Broad Market Opportunities Fund | 14,552 | 129,659 | |
Fidelity Disciplined Equity Fund | 3,219 | 81,858 | |
Fidelity Equity-Income Fund | 1,757 | 79,364 | |
Fidelity Large Cap Core Enhanced Index Fund | 14,841 | 131,790 | |
Fidelity Small Cap Opportunities Fund | 6,635 | 52,879 | |
TOTAL DOMESTIC EQUITY FUNDS | 654,959 | ||
International Equity Funds - 9.6% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 3,742 | 136,239 | |
TOTAL EQUITY FUNDS (Cost $914,977) | 791,198 | ||
Fixed-Income Funds - 33.7% | |||
|
|
|
|
High Yield Fixed-Income Funds - 5.8% | |||
Fidelity Capital & Income Fund | 5,026 | 40,662 | |
Fidelity Strategic Income Fund | 4,050 | 41,189 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 81,851 | ||
Investment Grade Fixed-Income Funds - 27.9% | |||
Fidelity Government Income Fund | 7,713 | 80,060 | |
Fidelity Strategic Real Return Fund | 7,908 | 79,952 | |
Fidelity Total Bond Fund | 23,486 | 236,268 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 396,280 | ||
TOTAL FIXED-INCOME FUNDS (Cost $486,692) | 478,131 | ||
Short-Term Funds - 10.5% | |||
|
|
|
|
Fidelity Institutional Money Market Portfolio Institutional Class | 75,042 | 75,042 | |
Fidelity Short-Term Bond Fund | 8,902 | 74,067 | |
TOTAL SHORT-TERM FUNDS (Cost $151,644) | 149,109 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $1,553,313) | $ 1,418,438 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2032 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (cost $1,553,313) - See accompanying schedule | $ 1,418,438 | |
Cash | 72 | |
Other receivables | 102 | |
Total assets | 1,418,612 | |
|
|
|
Liabilities | ||
Distribution fees payable | 202 | |
|
|
|
Net Assets | $ 1,418,410 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,540,219 | |
Undistributed net investment income | 555 | |
Accumulated undistributed net realized gain (loss) on investments | 12,511 | |
Net unrealized appreciation (depreciation) on investments | (134,875) | |
Net Assets | $ 1,418,410 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 46.52 | |
|
|
|
Maximum offering price per share (100/94.25 of $46.52) | $ 49.36 | |
Class T: | $ 46.52 | |
|
|
|
Maximum offering price per share (100/96.50 of $46.52) | $ 48.20 | |
|
|
|
Class C: | $ 46.51 | |
|
|
|
Income Replacement 2032: | $ 46.53 | |
|
|
|
Institutional Class: | $ 46.53 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period August 30, 2007 | |
|
|
|
Investment Income |
|
|
Income distributions from underlying funds |
| $ 25,916 |
Interest |
| 114 |
Total income |
| 26,030 |
|
|
|
Expenses | ||
Distribution fees | $ 2,106 | |
Independent trustees' compensation | 4 | |
Total expenses before reductions | 2,110 | |
Expense reductions | (4) | 2,106 |
Net investment income (loss) | 23,924 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (3,706) | |
Capital gain distributions from underlying funds | 20,637 | 16,931 |
Change in net unrealized appreciation (depreciation) on underlying funds | (134,875) | |
Net gain (loss) | (117,944) | |
Net increase (decrease) in net assets resulting from operations | $ (94,020) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2032 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 23,924 |
Net realized gain (loss) | 16,931 |
Change in net unrealized appreciation (depreciation) | (134,875) |
Net increase (decrease) in net assets resulting from operations | (94,020) |
Distributions to shareholders from net investment income | (23,370) |
Distributions to shareholders from net realized gain | (4,420) |
Total distributions | (27,790) |
Share transactions - net increase (decrease) | 1,540,220 |
Total increase (decrease) in net assets | 1,418,410 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $555) | $ 1,418,410 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | 1.019 |
Net realized and unrealized gain (loss) | (3.322) |
Total from investment operations | (2.303) |
Distributions from net investment income | (.987) |
Distributions from net realized gain | (.190) |
Total distributions | (1.177) |
Net asset value, end of period | $ 46.52 |
Total Return B, C, D | (4.75)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 2.27% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 402 |
Portfolio turnover rate | 23% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .918 |
Net realized and unrealized gain (loss) | (3.339) |
Total from investment operations | (2.421) |
Distributions from net investment income | (.869) |
Distributions from net realized gain | (.190) |
Total distributions | (1.059) |
Net asset value, end of period | $ 46.52 |
Total Return B, C, D | (4.98)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 2.02% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 95 |
Portfolio turnover rate | 23% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .690 |
Net realized and unrealized gain (loss) | (3.342) |
Total from investment operations | (2.652) |
Distributions from net investment income | (.648) |
Distributions from net realized gain | (.190) |
Total distributions | (.838) |
Net asset value, end of period | $ 46.51 |
Total Return B, C, D | (5.42)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | 1.52% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 95 |
Portfolio turnover rate | 23% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2032
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.122 |
Net realized and unrealized gain (loss) | (3.310) |
Total from investment operations | (2.188) |
Distributions from net investment income | (1.092) |
Distributions from net realized gain | (.190) |
Total distributions | (1.282) |
Net asset value, end of period | $ 46.53 |
Total Return B, C | (4.53)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.52% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 731 |
Portfolio turnover rate | 23% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.147 |
Net realized and unrealized gain (loss) | (3.335) |
Total from investment operations | (2.188) |
Distributions from net investment income | (1.092) |
Distributions from net realized gain | (.190) |
Total distributions | (1.282) |
Net asset value, end of period | $ 46.53 |
Total Return B, C | (4.53)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.52% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 96 |
Portfolio turnover rate | 23% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2034 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 7.0 | 7.1 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 6.0 | 5.7 |
Fidelity Broad Market Opportunities Fund | 9.4 | 9.4 |
Fidelity Disciplined Equity Fund | 5.9 | 6.0 |
Fidelity Equity-Income Fund | 5.7 | 5.8 |
Fidelity Large Cap Core Enhanced Index Fund | 9.5 | 9.5 |
Fidelity Small Cap Opportunities Fund | 3.8 | 3.6 |
| 47.3 | 47.1 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 10.7 | 10.9 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 3.0 | 3.0 |
Fidelity Strategic Income Fund | 3.1 | 3.1 |
| 6.1 | 6.1 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 5.5 | 5.6 |
Fidelity Strategic Real Return Fund | 5.6 | 5.6 |
Fidelity Total Bond Fund | 16.3 | 16.5 |
| 27.4 | 27.7 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 4.2 | 3.9 |
Fidelity Short-Term Bond Fund | 4.3 | 4.3 |
| 8.5 | 8.2 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 47.3% |
|
![]() | International Equity Funds | 10.7% |
|
![]() | High Yield Fixed-Income Funds | 6.1% |
|
![]() | Investment Grade Fixed-Income Funds | 27.4% |
|
![]() | Short-Term Funds | 8.5% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 47.1% |
|
![]() | International Equity Funds | 10.9% |
|
![]() | High Yield Fixed-Income Funds | 6.1% |
|
![]() | Investment Grade Fixed-Income Funds | 27.7% |
|
![]() | Short-Term Funds | 8.2% |
|
Expected | |||
![]() | Domestic Equity Funds | 47.8% |
|
![]() | International Equity Funds | 10.5% |
|
![]() | High Yield Fixed-Income Funds | 5.7% |
|
![]() | Investment Grade Fixed-Income Funds | 26.7% |
|
![]() | Short-Term Funds | 9.3% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2034 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 58.0% | |||
Shares | Value | ||
Domestic Equity Funds - 47.3% | |||
Fidelity 100 Index Fund | 7,485 | $ 68,410 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 3,704 | 58,048 | |
Fidelity Broad Market Opportunities Fund | 10,272 | 91,522 | |
Fidelity Disciplined Equity Fund | 2,276 | 57,879 | |
Fidelity Equity-Income Fund | 1,225 | 55,335 | |
Fidelity Large Cap Core Enhanced Index Fund | 10,453 | 92,823 | |
Fidelity Small Cap Opportunities Fund | 4,681 | 37,304 | |
TOTAL DOMESTIC EQUITY FUNDS | 461,321 | ||
International Equity Funds - 10.7% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 2,847 | 103,661 | |
TOTAL EQUITY FUNDS (Cost $634,539) | 564,982 | ||
Fixed-Income Funds - 33.5% | |||
|
|
|
|
High Yield Fixed-Income Funds - 6.1% | |||
Fidelity Capital & Income Fund | 3,681 | 29,782 | |
Fidelity Strategic Income Fund | 2,939 | 29,889 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 59,671 | ||
Investment Grade Fixed-Income Funds - 27.4% | |||
Fidelity Government Income Fund | 5,172 | 53,689 | |
Fidelity Strategic Real Return Fund | 5,344 | 54,032 | |
Fidelity Total Bond Fund | 15,805 | 158,999 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 266,720 | ||
TOTAL FIXED-INCOME FUNDS (Cost $331,878) | 326,391 | ||
Short-Term Funds - 8.5% | |||
|
|
|
|
Fidelity Institutional Money Market Portfolio Institutional Class | 41,521 | 41,521 | |
Fidelity Short-Term Bond Fund | 5,018 | 41,749 | |
TOTAL SHORT-TERM FUNDS (Cost $84,579) | 83,270 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $1,050,996) | $ 974,643 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2034 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (cost $1,050,996) - See accompanying schedule | $ 974,643 | |
Cash | 72 | |
Total assets | 974,715 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 62 | |
Distribution fees payable | 147 | |
Total liabilities | 209 | |
|
|
|
Net Assets | $ 974,506 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,041,054 | |
Undistributed net investment income | 367 | |
Accumulated undistributed net realized gain (loss) on investments | 9,438 | |
Net unrealized appreciation (depreciation) on investments | (76,353) | |
Net Assets | $ 974,506 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 46.40 | |
|
|
|
Maximum offering price per share (100/94.25 of $46.40) | $ 49.21 | |
Class T: | $ 46.40 | |
|
|
|
Maximum offering price per share (100/96.50 of $46.40) | $ 48.08 | |
|
|
|
Class C: | $ 46.39 | |
|
|
|
Income Replacement 2034: | $ 46.40 | |
|
|
|
Institutional Class: | $ 46.41 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period August 30, 2007 | |
|
|
|
Investment Income |
|
|
Income distributions from underlying funds |
| $ 17,494 |
Interest |
| 114 |
Total income |
| 17,608 |
|
|
|
Expenses | ||
Distribution fees | $ 1,665 | |
Independent trustees' compensation | 2 | |
Total expenses before reductions | 1,667 | |
Expense reductions | (2) | 1,665 |
Net investment income (loss) | 15,943 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (1,672) | |
Capital gain distributions from underlying funds | 14,075 | 12,403 |
Change in net unrealized appreciation (depreciation) on underlying funds | (76,353) | |
Net gain (loss) | (63,950) | |
Net increase (decrease) in net assets resulting from operations | $ (48,007) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2034 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 15,943 |
Net realized gain (loss) | 12,403 |
Change in net unrealized appreciation (depreciation) | (76,353) |
Net increase (decrease) in net assets resulting from operations | (48,007) |
Distributions to shareholders from net investment income | (15,577) |
Distributions to shareholders from net realized gain | (2,963) |
Total distributions | (18,540) |
Share transactions - net increase (decrease) | 1,041,053 |
Total increase (decrease) in net assets | 974,506 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $367) | $ 974,506 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .994 |
Net realized and unrealized gain (loss) | (3.438) |
Total from investment operations | (2.444) |
Distributions from net investment income | (.956) |
Distributions from net realized gain | (.200) |
Total distributions | (1.156) |
Net asset value, end of period | $ 46.40 |
Total Return B, C, D | (5.04)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 2.19% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 138 |
Portfolio turnover rate | 12% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the period shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .875 |
Net realized and unrealized gain (loss) | (3.431) |
Total from investment operations | (2.556) |
Distributions from net investment income | (.844) |
Distributions from net realized gain | (.200) |
Total distributions | (1.044) |
Net asset value, end of period | $ 46.40 |
Total Return B, C, D | (5.25)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 1.94% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 95 |
Portfolio turnover rate | 12% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the period shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .658 |
Net realized and unrealized gain (loss) | (3.448) |
Total from investment operations | (2.790) |
Distributions from net investment income | (.620) |
Distributions from net realized gain | (.200) |
Total distributions | (.820) |
Net asset value, end of period | $ 46.39 |
Total Return B, C, D | (5.70)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | 1.44% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 94 |
Portfolio turnover rate | 12% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the period shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2034
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.090 |
Net realized and unrealized gain (loss) | (3.425) |
Total from investment operations | (2.335) |
Distributions from net investment income | (1.065) |
Distributions from net realized gain | (.200) |
Total distributions | (1.265) |
Net asset value, end of period | $ 46.40 |
Total Return B, C | (4.83)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.44% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 552 |
Portfolio turnover rate | 12% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.114 |
Net realized and unrealized gain (loss) | (3.439) |
Total from investment operations | (2.325) |
Distributions from net investment income | (1.065) |
Distributions from net realized gain | (.200) |
Total distributions | (1.265) |
Net asset value, end of period | $ 46.41 |
Total Return B, C | (4.81)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.44% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 95 |
Portfolio turnover rate | 12% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the period shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2036 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 7.2 | 7.3 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 6.1 | 5.8 |
Fidelity Broad Market Opportunities Fund | 9.6 | 9.5 |
Fidelity Disciplined Equity Fund | 6.1 | 6.0 |
Fidelity Equity-Income Fund | 5.9 | 6.0 |
Fidelity Large Cap Core Enhanced Index Fund | 9.7 | 9.6 |
Fidelity Small Cap Opportunities Fund | 3.9 | 3.7 |
| 48.5 | 47.9 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 11.6 | 11.7 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 3.2 | 3.2 |
Fidelity Strategic Income Fund | 3.2 | 3.3 |
| 6.4 | 6.5 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 5.5 | 5.7 |
Fidelity Strategic Real Return Fund | 5.5 | 5.6 |
Fidelity Total Bond Fund | 16.4 | 16.8 |
| 27.4 | 28.1 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 3.1 | 2.8 |
Fidelity Short-Term Bond Fund | 3.0 | 3.0 |
| 6.1 | 5.8 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 48.5% |
|
![]() | International Equity Funds | 11.6% |
|
![]() | High Yield Fixed-Income Funds | 6.4% |
|
![]() | Investment Grade Fixed-Income Funds | 27.4% |
|
![]() | Short-Term Funds | 6.1% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 47.9% |
|
![]() | International Equity Funds | 11.7% |
|
![]() | High Yield Fixed-Income Funds | 6.5% |
|
![]() | Investment Grade Fixed-Income Funds | 28.1% |
|
![]() | Short-Term Funds | 5.8% |
|
Expected | |||
![]() | Domestic Equity Funds | 49.0% |
|
![]() | International Equity Funds | 11.5% |
|
![]() | High Yield Fixed-Income Funds | 6.0% |
|
![]() | Investment Grade Fixed-Income Funds | 26.4% |
|
![]() | Short-Term Funds | 7.1% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2036 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 60.1% | |||
Shares | Value | ||
Domestic Equity Funds - 48.5% | |||
Fidelity 100 Index Fund | 13,281 | $ 121,389 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 6,504 | 101,918 | |
Fidelity Broad Market Opportunities Fund | 18,079 | 161,081 | |
Fidelity Disciplined Equity Fund | 4,003 | 101,787 | |
Fidelity Equity-Income Fund | 2,187 | 98,752 | |
Fidelity Large Cap Core Enhanced Index Fund | 18,453 | 163,859 | |
Fidelity Small Cap Opportunities Fund | 8,243 | 65,699 | |
TOTAL DOMESTIC EQUITY FUNDS | 814,485 | ||
International Equity Funds - 11.6% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 5,327 | 193,971 | |
TOTAL EQUITY FUNDS (Cost $1,143,190) | 1,008,456 | ||
Fixed-Income Funds - 33.8% | |||
|
|
|
|
High Yield Fixed-Income Funds - 6.4% | |||
Fidelity Capital & Income Fund | 6,650 | 53,799 | |
Fidelity Strategic Income Fund | 5,363 | 54,547 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 108,346 | ||
Investment Grade Fixed-Income Funds - 27.4% | |||
Fidelity Government Income Fund | 8,929 | 92,679 | |
Fidelity Strategic Real Return Fund | 9,125 | 92,250 | |
Fidelity Total Bond Fund | 27,313 | 274,767 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 459,696 | ||
TOTAL FIXED-INCOME FUNDS (Cost $577,023) | 568,042 | ||
Short-Term Funds - 6.1% | |||
|
|
|
|
Fidelity Institutional Money Market Portfolio Institutional Class | 51,102 | 51,102 | |
Fidelity Short-Term Bond Fund | 6,101 | 50,762 | |
TOTAL SHORT-TERM FUNDS (Cost $103,562) | 101,864 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $1,823,775) | $ 1,678,362 |
Income Tax Information |
At July 31, 2008, the fund had a capital loss carryforward of approximately $20 all of which will expire on July 31, 2016. |
The fund intends to elect to defer to its fiscal year ending July 31, 2009 approximately $24,292 of losses recognized during the period November 1, 2007 to July 31, 2008. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2036 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (cost $1,823,775) - See accompanying schedule | $ 1,678,362 | |
Cash | 75 | |
Total assets | 1,678,437 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 1 | |
Distribution fees payable | 259 | |
Total liabilities | 260 | |
|
|
|
Net Assets | $ 1,678,177 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,846,905 | |
Undistributed net investment income | 605 | |
Accumulated undistributed net realized gain (loss) on investments | (23,920) | |
Net unrealized appreciation (depreciation) on investments | (145,413) | |
Net Assets | $ 1,678,177 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 46.40 | |
|
|
|
Maximum offering price per share (100/94.25 of $46.40) | $ 49.22 | |
Class T: | $ 46.39 | |
|
|
|
Maximum offering price per share (100/96.50 of $46.39) | $ 48.07 | |
|
|
|
Class C: | $ 46.39 | |
|
|
|
Income Replacement 2036: | $ 46.40 | |
|
|
|
Institutional Class: | $ 46.40 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period August 30, 2007 | |
|
|
|
Investment Income |
|
|
Income distributions from underlying funds |
| $ 29,590 |
Interest |
| 75 |
Total income |
| 29,665 |
|
|
|
Expenses | ||
Distribution fees | $ 2,499 | |
Independent trustees' compensation | 5 | |
Total expenses before reductions | 2,504 | |
Expense reductions | (5) | 2,499 |
Net investment income (loss) | 27,166 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (43,572) | |
Capital gain distributions from underlying funds | 24,643 | (18,929) |
Change in net unrealized appreciation (depreciation) on underlying funds | (145,413) | |
Net gain (loss) | (164,342) | |
Net increase (decrease) in net assets resulting from operations | $ (137,176) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2036 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 27,166 |
Net realized gain (loss) | (18,929) |
Change in net unrealized appreciation (depreciation) | (145,413) |
Net increase (decrease) in net assets resulting from operations | (137,176) |
Distributions to shareholders from net investment income | (26,561) |
Distributions to shareholders from net realized gain | (4,991) |
Total distributions | (31,552) |
Share transactions - net increase (decrease) | 1,846,905 |
Total increase (decrease) in net assets | 1,678,177 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $605) | $ 1,678,177 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .951 |
Net realized and unrealized gain (loss) | (3.464) |
Total from investment operations | (2.513) |
Distributions from net investment income | (.897) |
Distributions from net realized gain | (.190) |
Total distributions | (1.087) |
Net asset value, end of period | $ 46.40 |
Total Return B, C, D | (5.17)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 2.08% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 95 |
Portfolio turnover rate | 44% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .823 |
Net realized and unrealized gain (loss) | (3.449) |
Total from investment operations | (2.626) |
Distributions from net investment income | (.794) |
Distributions from net realized gain | (.190) |
Total distributions | (.984) |
Net asset value, end of period | $ 46.39 |
Total Return B, C, D | (5.39)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 1.83% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 384 |
Portfolio turnover rate | 44% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .609 |
Net realized and unrealized gain (loss) | (3.465) |
Total from investment operations | (2.856) |
Distributions from net investment income | (.564) |
Distributions from net realized gain | (.190) |
Total distributions | (.754) |
Net asset value, end of period | $ 46.39 |
Total Return B, C, D | (5.82)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | 1.33% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 94 |
Portfolio turnover rate | 44% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2036
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.043 |
Net realized and unrealized gain (loss) | (3.445) |
Total from investment operations | (2.402) |
Distributions from net investment income | (1.008) |
Distributions from net realized gain | (.190) |
Total distributions | (1.198) |
Net asset value, end of period | $ 46.40 |
Total Return B, C | (4.96)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.33% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 986 |
Portfolio turnover rate | 44% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.064 |
Net realized and unrealized gain (loss) | (3.466) |
Total from investment operations | (2.402) |
Distributions from net investment income | (1.008) |
Distributions from net realized gain | (.190) |
Total distributions | (1.198) |
Net asset value, end of period | $ 46.40 |
Total Return B, C | (4.96)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.33% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 119 |
Portfolio turnover rate | 44% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2038 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 7.5 | 7.6 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 6.2 | 6.0 |
Fidelity Broad Market Opportunities Fund | 9.9 | 10.1 |
Fidelity Disciplined Equity Fund | 6.3 | 6.3 |
Fidelity Equity-Income Fund | 6.1 | 6.5 |
Fidelity Large Cap Core Enhanced Index Fund | 10.1 | 10.2 |
Fidelity Small Cap Opportunities Fund | 4.1 | 4.1 |
| 50.2 | 50.8 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 12.2 | 12.4 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 3.4 | 3.3 |
Fidelity Strategic Income Fund | 3.4 | 3.3 |
| 6.8 | 6.6 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 5.4 | 5.3 |
Fidelity Strategic Real Return Fund | 5.4 | 5.3 |
Fidelity Total Bond Fund | 16.0 | 15.7 |
| 26.8 | 26.3 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 2.0 | 2.0 |
Fidelity Short-Term Bond Fund | 2.0 | 1.9 |
| 4.0 | 3.9 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 50.2% |
|
![]() | International Equity Funds | 12.2% |
|
![]() | High Yield Fixed-Income Funds | 6.8% |
|
![]() | Investment Grade Fixed-Income Funds | 26.8% |
|
![]() | Short-Term Funds | 4.0% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 50.8% |
|
![]() | International Equity Funds | 12.4% |
|
![]() | High Yield Fixed-Income Funds | 6.6% |
|
![]() | Investment Grade Fixed-Income Funds | 26.3% |
|
![]() | Short-Term Funds | 3.9% |
|
Expected | |||
![]() | Domestic Equity Funds | 50.4% |
|
![]() | International Equity Funds | 12.6% |
|
![]() | High Yield Fixed-Income Funds | 6.5% |
|
![]() | Investment Grade Fixed-Income Funds | 26.0% |
|
![]() | Short-Term Funds | 4.5% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2038 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 62.4% | |||
Shares | Value | ||
Domestic Equity Funds - 50.2% | |||
Fidelity 100 Index Fund | 12,155 | $ 111,093 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 5,931 | 92,946 | |
Fidelity Broad Market Opportunities Fund | 16,553 | 147,484 | |
Fidelity Disciplined Equity Fund | 3,657 | 93,002 | |
Fidelity Equity-Income Fund | 2,009 | 90,711 | |
Fidelity Large Cap Core Enhanced Index Fund | 16,858 | 149,696 | |
Fidelity Small Cap Opportunities Fund | 7,672 | 61,145 | |
TOTAL DOMESTIC EQUITY FUNDS | 746,077 | ||
International Equity Funds - 12.2% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 5,000 | 182,036 | |
TOTAL EQUITY FUNDS (Cost $1,014,447) | 928,113 | ||
Fixed-Income Funds - 33.6% | |||
|
|
|
|
High Yield Fixed-Income Funds - 6.8% | |||
Fidelity Capital & Income Fund | 6,195 | 50,118 | |
Fidelity Strategic Income Fund | 4,952 | 50,362 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 100,480 | ||
Investment Grade Fixed-Income Funds - 26.8% | |||
Fidelity Government Income Fund | 7,729 | 80,225 | |
Fidelity Strategic Real Return Fund | 7,917 | 80,042 | |
Fidelity Total Bond Fund | 23,725 | 238,674 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 398,941 | ||
TOTAL FIXED-INCOME FUNDS (Cost $509,679) | 499,421 | ||
Short-Term Funds - 4.0% | |||
|
|
|
|
Fidelity Institutional Money Market Portfolio Institutional Class | 29,973 | 29,973 | |
Fidelity Short-Term Bond Fund | 3,540 | 29,452 | |
TOTAL SHORT-TERM FUNDS (Cost $60,171) | 59,425 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $1,584,297) | $ 1,486,959 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2038 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
Assets | ||
Investment in securities, at value (cost $1,584,297) - See accompanying schedule | $ 1,486,959 | |
Cash | 39 | |
Total assets | 1,486,998 | |
|
|
|
Liabilities | ||
Distribution fees payable |
| 131 |
|
|
|
Net Assets | $ 1,486,867 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,585,675 | |
Undistributed net investment income | 476 | |
Accumulated undistributed net realized gain (loss) on investments | (1,946) | |
Net unrealized appreciation (depreciation) on investments | (97,338) | |
Net Assets | $ 1,486,867 | |
Calculation of Maximum Offering Price Class A: | $ 45.26 | |
|
|
|
Maximum offering price per share (100/94.25 of $45.26) | $ 48.02 | |
Class T: | $ 45.26 | |
|
|
|
Maximum offering price per share (100/96.50 of $45.26) | $ 46.90 | |
|
|
|
Class C: | $ 45.24 | |
|
|
|
Income Replacement 2038: | $ 45.27 | |
|
|
|
Institutional Class: | $ 45.26 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period December 31, 2007 | |
Investment Income |
|
|
Income distributions from underlying funds |
| $ 12,507 |
Interest |
| 39 |
Total income |
| 12,546 |
|
|
|
Expenses | ||
Distribution fees | $ 973 | |
Independent trustees' compensation | 2 | |
Total expenses before reductions | 975 | |
Expense reductions | (2) | 973 |
Net investment income (loss) | 11,573 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (3,522) | |
Capital gain distributions from underlying funds | 1,576 | (1,946) |
Change in net unrealized appreciation (depreciation) on underlying funds | (97,338) | |
Net gain (loss) | (99,284) | |
Net increase (decrease) in net assets resulting from operations | $ (87,711) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2038 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 11,573 |
Net realized gain (loss) | (1,946) |
Change in net unrealized appreciation (depreciation) | (97,338) |
Net increase (decrease) in net assets resulting from operations | (87,711) |
Distributions to shareholders from net investment income | (11,097) |
Share transactions - net increase (decrease) | 1,585,675 |
Total increase (decrease) in net assets | 1,486,867 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $476) | $ 1,486,867 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .442 |
Net realized and unrealized gain (loss) | (4.811) |
Total from investment operations | (4.369) |
Distributions from net investment income | (.371) |
Net asset value, end of period | $ 45.26 |
Total Return B, C, D | (8.76)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 1.59% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 91 |
Portfolio turnover rate | 13%A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period December 31, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .373 |
Net realized and unrealized gain (loss) | (4.809) |
Total from investment operations | (4.436) |
Distributions from net investment income | (.304) |
Net asset value, end of period | $ 45.26 |
Total Return B, C, D | (8.89)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 1.34% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 91 |
Portfolio turnover rate | 13%A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period December 31, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .233 |
Net realized and unrealized gain (loss) | (4.812) |
Total from investment operations | (4.579) |
Distributions from net investment income | (.181) |
Net asset value, end of period | $ 45.24 |
Total Return B, C, D | (9.17)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | .84% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 91 |
Portfolio turnover rate | 13%A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period December 31, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2038
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | .502 |
Net realized and unrealized gain (loss) | (4.795) |
Total from investment operations | (4.293) |
Distributions from net investment income | (.437) |
Net asset value, end of period | $ 45.27 |
Total Return B, C | (8.61)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 1.84% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 1,122 |
Portfolio turnover rate | 13%A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period December 31, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | .511 |
Net realized and unrealized gain (loss) | (4.814) |
Total from investment operations | (4.303) |
Distributions from net investment income | (.437) |
Net asset value, end of period | $ 45.26 |
Total Return B, C | (8.63)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 1.84% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 91 |
Portfolio turnover rate | 13%A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period December 31, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2040 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 7.6 | 7.7 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 6.3 | 6.0 |
Fidelity Broad Market Opportunities Fund | 10.1 | 10.1 |
Fidelity Disciplined Equity Fund | 6.3 | 6.3 |
Fidelity Equity-Income Fund | 6.2 | 6.5 |
Fidelity Large Cap Core Enhanced Index Fund | 10.2 | 10.1 |
Fidelity Small Cap Opportunities Fund | 4.2 | 4.0 |
| 50.9 | 50.7 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 12.4 | 12.3 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 3.5 | 3.5 |
Fidelity Strategic Income Fund | 3.5 | 3.5 |
| 7.0 | 7.0 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 5.4 | 5.5 |
Fidelity Strategic Real Return Fund | 5.4 | 5.4 |
Fidelity Total Bond Fund | 16.1 | 16.3 |
| 26.9 | 27.2 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 1.4 | 1.4 |
Fidelity Short-Term Bond Fund | 1.4 | 1.4 |
| 2.8 | 2.8 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 50.9% |
|
![]() | International Equity Funds | 12.4% |
|
![]() | High Yield Fixed-Income Funds | 7.0% |
|
![]() | Investment Grade Fixed-Income Funds | 26.9% |
|
![]() | Short-Term Funds | 2.8% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 50.7% |
|
![]() | International Equity Funds | 12.3% |
|
![]() | High Yield Fixed-Income Funds | 7.0% |
|
![]() | Investment Grade Fixed-Income Funds | 27.2% |
|
![]() | Short-Term Funds | 2.8% |
|
Expected | |||
![]() | Domestic Equity Funds | 51.3% |
|
![]() | International Equity Funds | 12.8% |
|
![]() | High Yield Fixed-Income Funds | 6.7% |
|
![]() | Investment Grade Fixed-Income Funds | 26.0% |
|
![]() | Short-Term Funds | 3.2% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2040 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 63.3% | |||
Shares | Value | ||
Domestic Equity Funds - 50.9% | |||
Fidelity 100 Index Fund | 8,324 | $ 76,083 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 4,056 | 63,552 | |
Fidelity Broad Market Opportunities Fund | 11,328 | 100,931 | |
Fidelity Disciplined Equity Fund | 2,497 | 63,486 | |
Fidelity Equity-Income Fund | 1,378 | 62,245 | |
Fidelity Large Cap Core Enhanced Index Fund | 11,543 | 102,505 | |
Fidelity Small Cap Opportunities Fund | 5,211 | 41,535 | |
TOTAL DOMESTIC EQUITY FUNDS | 510,337 | ||
International Equity Funds - 12.4% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 3,419 | 124,493 | |
TOTAL EQUITY FUNDS (Cost $703,741) | 634,830 | ||
Fixed-Income Funds - 33.9% | |||
|
|
|
|
High Yield Fixed-Income Funds - 7.0% | |||
Fidelity Capital & Income Fund | 4,342 | 35,127 | |
Fidelity Strategic Income Fund | 3,475 | 35,344 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 70,471 | ||
Investment Grade Fixed-Income Funds - 26.9% | |||
Fidelity Government Income Fund | 5,233 | 54,318 | |
Fidelity Strategic Real Return Fund | 5,368 | 54,269 | |
Fidelity Total Bond Fund | 16,049 | 161,459 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 270,046 | ||
TOTAL FIXED-INCOME FUNDS (Cost $347,881) | 340,517 | ||
Short-Term Funds - 2.8% | |||
|
|
|
|
Fidelity Institutional Money Market Portfolio Institutional Class | 14,408 | 14,408 | |
Fidelity Short-Term Bond Fund | 1,693 | 14,083 | |
TOTAL SHORT-TERM FUNDS (Cost $28,905) | 28,491 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $1,080,527) | $ 1,003,838 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2040 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
Assets | ||
Investment in securities, at value (cost $1,080,527) - See accompanying schedule | $ 1,003,838 | |
Cash | 39 | |
Total assets | 1,003,877 | |
|
|
|
Liabilities | ||
Distribution fees payable |
| 148 |
|
|
|
Net Assets | $ 1,003,729 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,079,269 | |
Undistributed net investment income | 337 | |
Accumulated undistributed net realized gain (loss) on investments | 812 | |
Net unrealized appreciation (depreciation) on investments | (76,689) | |
Net Assets | $ 1,003,729 | |
Calculation of Maximum Offering Price Class A: | $ 45.23 | |
|
|
|
Maximum offering price per share (100/94.25 of $45.23) | $ 47.99 | |
Class T: | $ 45.23 | |
|
|
|
Maximum offering price per share (100/96.50 of $45.23) | $ 46.87 | |
|
|
|
Class C: | $ 45.22 | |
|
|
|
Income Replacement 2040: | $ 45.23 | |
|
|
|
Institutional Class: | $ 45.23 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period December 31, 2007 | |
Investment Income |
|
|
Income distributions from underlying funds |
| $ 9,280 |
Interest |
| 39 |
Total income |
| 9,319 |
|
|
|
Expenses | ||
Distribution fees | $ 1,003 | |
Independent trustees' compensation | 2 | |
Total expenses before reductions | 1,005 | |
Expense reductions | (2) | 1,003 |
Net investment income (loss) | 8,316 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (493) | |
Capital gain distributions from underlying funds | 1,305 | 812 |
Change in net unrealized appreciation (depreciation) on underlying funds | (76,689) | |
Net gain (loss) | (75,877) | |
Net increase (decrease) in net assets resulting from operations | $ (67,561) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2040 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 8,316 |
Net realized gain (loss) | 812 |
Change in net unrealized appreciation (depreciation) | (76,689) |
Net increase (decrease) in net assets resulting from operations | (67,561) |
Distributions to shareholders from net investment income | (7,979) |
Share transactions - net increase (decrease) | 1,079,269 |
Total increase (decrease) in net assets | 1,003,729 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $337) | $ 1,003,729 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .442 |
Net realized and unrealized gain (loss) | (4.814) |
Total from investment operations | (4.372) |
Distributions from net investment income | (.398) |
Net asset value, end of period | $ 45.23 |
Total Return B, C, D | (8.77)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 1.60% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 91 |
Portfolio turnover rate | 4% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period December 31, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .371 |
Net realized and unrealized gain (loss) | (4.809) |
Total from investment operations | (4.438) |
Distributions from net investment income | (.332) |
Net asset value, end of period | $ 45.23 |
Total Return B, C, D | (8.90)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 1.35% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 132 |
Portfolio turnover rate | 4% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period December 31, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .234 |
Net realized and unrealized gain (loss) | (4.816) |
Total from investment operations | (4.582) |
Distributions from net investment income | (.198) |
Net asset value, end of period | $ 45.22 |
Total Return B, C, D | (9.18)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | .84% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 91 |
Portfolio turnover rate | 4% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period December 31, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2040
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | .504 |
Net realized and unrealized gain (loss) | (4.810) |
Total from investment operations | (4.306) |
Distributions from net investment income | (.464) |
Net asset value, end of period | $ 45.23 |
Total Return B, C | (8.64)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 1.85% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 598 |
Portfolio turnover rate | 4% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period December 31, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | .512 |
Net realized and unrealized gain (loss) | (4.818) |
Total from investment operations | (4.306) |
Distributions from net investment income | (.464) |
Net asset value, end of period | $ 45.23 |
Total Return B, C | (8.64)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 1.85% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 91 |
Portfolio turnover rate | 4% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period December 31, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2042 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 7.6 | 7.8 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 6.4 | 6.1 |
Fidelity Broad Market Opportunities Fund | 10.2 | 10.2 |
Fidelity Disciplined Equity Fund | 6.4 | 6.4 |
Fidelity Equity-Income Fund | 6.2 | 6.6 |
Fidelity Large Cap Core Enhanced Index Fund | 10.3 | 10.3 |
Fidelity Small Cap Opportunities Fund | 4.2 | 4.2 |
| 51.3 | 51.6 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 12.5 | 12.4 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 3.6 | 3.5 |
Fidelity Strategic Income Fund | 3.6 | 3.6 |
| 7.2 | 7.1 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 5.4 | 5.4 |
Fidelity Strategic Real Return Fund | 5.4 | 5.4 |
Fidelity Total Bond Fund | 16.1 | 16.0 |
| 26.9 | 26.8 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 1.1 | 1.1 |
Fidelity Short-Term Bond Fund | 1.0 | 1.0 |
| 2.1 | 2.1 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 51.3% |
|
![]() | International Equity Funds | 12.5% |
|
![]() | High Yield Fixed-Income Funds | 7.2% |
|
![]() | Investment Grade Fixed-Income Funds | 26.9% |
|
![]() | Short-Term Funds | 2.1% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 51.6% |
|
![]() | International Equity Funds | 12.4% |
|
![]() | High Yield Fixed-Income Funds | 7.1% |
|
![]() | Investment Grade Fixed-Income Funds | 26.8% |
|
![]() | Short-Term Funds | 2.1% |
|
Expected | |||
![]() | Domestic Equity Funds | 51.8% |
|
![]() | International Equity Funds | 13.0% |
|
![]() | High Yield Fixed-Income Funds | 6.9% |
|
![]() | Investment Grade Fixed-Income Funds | 26.0% |
|
![]() | Short-Term Funds | 2.3% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2042 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 63.8% | |||
Shares | Value | ||
Domestic Equity Funds - 51.3% | |||
Fidelity 100 Index Fund | 11,136 | $ 101,787 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 5,438 | 85,209 | |
Fidelity Broad Market Opportunities Fund | 15,204 | 135,470 | |
Fidelity Disciplined Equity Fund | 3,348 | 85,151 | |
Fidelity Equity-Income Fund | 1,848 | 83,464 | |
Fidelity Large Cap Core Enhanced Index Fund | 15,459 | 137,276 | |
Fidelity Small Cap Opportunities Fund | 7,033 | 56,053 | |
TOTAL DOMESTIC EQUITY FUNDS | 684,410 | ||
International Equity Funds - 12.5% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 4,567 | 166,273 | |
TOTAL EQUITY FUNDS (Cost $951,224) | 850,683 | ||
Fixed-Income Funds - 34.1% | |||
|
|
|
|
High Yield Fixed-Income Funds - 7.2% | |||
Fidelity Capital & Income Fund | 5,924 | 47,929 | |
Fidelity Strategic Income Fund | 4,744 | 48,245 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 96,174 | ||
Investment Grade Fixed-Income Funds - 26.9% | |||
Fidelity Government Income Fund | 6,941 | 72,046 | |
Fidelity Strategic Real Return Fund | 7,126 | 72,046 | |
Fidelity Total Bond Fund | 21,318 | 214,462 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 358,554 | ||
TOTAL-INCOME FUNDS (Cost $464,810) | 454,728 | ||
Short-Term Funds - 2.1% | |||
|
|
|
|
Fidelity Institutional Money Market Portfolio Institutional Class | 14,175 | 14,175 | |
Fidelity Short-Term Bond Fund | 1,663 | 13,836 | |
TOTAL SHORT-TERM FUNDS (Cost $28,401) | 28,011 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $1,444,435) | $ 1,333,422 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2042 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (cost $1,444,435) - See accompanying schedule | $ 1,333,422 | |
Cash | 39 | |
Total assets | 1,333,461 | |
|
|
|
Liabilities | ||
Distribution fees payable | 133 | |
|
|
|
Net Assets | $ 1,333,328 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,443,784 | |
Undistributed net investment income | 450 | |
Accumulated undistributed net realized gain (loss) on investments | 107 | |
Net unrealized appreciation (depreciation) on investments | (111,013) | |
Net Assets | $ 1,333,328 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 45.20 | |
|
|
|
Maximum offering price per share (100/94.25 of $45.20) | $ 47.96 | |
Class T: | $ 45.19 | |
|
|
|
Maximum offering price per share (100/96.50 of $45.19) | $ 46.83 | |
|
|
|
Class C: | $ 45.19 | |
|
|
|
Income Replacement 2042: | $ 45.20 | |
|
|
|
Institutional Class: | $ 45.20 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period December 31, 2007 | |
|
|
|
Investment Income |
|
|
Income distributions from underlying funds |
| $ 12,163 |
Interest |
| 39 |
Total income |
| 12,202 |
|
|
|
Expenses | ||
Distribution fees | $ 973 | |
Independent trustees' compensation | 3 | |
Total expenses before reductions | 976 | |
Expense reductions | (3) | 973 |
Net investment income (loss) | 11,229 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (1,593) | |
Capital gain distributions from underlying funds | 1,700 | 107 |
Change in net unrealized appreciation (depreciation) on underlying funds | (111,013) | |
Net gain (loss) | (110,906) | |
Net increase (decrease) in net assets resulting from operations | $ (99,677) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2042 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 11,229 |
Net realized gain (loss) | 107 |
Change in net unrealized appreciation (depreciation) | (111,013) |
Net increase (decrease) in net assets resulting from operations | (99,677) |
Distributions to shareholders from net investment income | (10,780) |
Share transactions - net increase (decrease) | 1,443,785 |
Total increase (decrease) in net assets | 1,333,328 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $450) | $ 1,333,328 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .425 |
Net realized and unrealized gain (loss) | (4.836) |
Total from investment operations | (4.411) |
Distributions from net investment income | (.389) |
Net asset value, end of period | $ 45.20 |
Total Return B, C, D | (8.85)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 1.57% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 91 |
Portfolio turnover rate | 8% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period December 31, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .365 |
Net realized and unrealized gain (loss) | (4.852) |
Total from investment operations | (4.487) |
Distributions from net investment income | (.323) |
Net asset value, end of period | $ 45.19 |
Total Return B, C, D | (9.00)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 1.32% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 91 |
Portfolio turnover rate | 8% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period December 31, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .226 |
Net realized and unrealized gain (loss) | (4.846) |
Total from investment operations | (4.620) |
Distributions from net investment income | (.190) |
Net asset value, end of period | $ 45.19 |
Total Return B, C, D | (9.25)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | .82% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 91 |
Portfolio turnover rate | 8% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period December 31, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2042
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | .496 |
Net realized and unrealized gain (loss) | (4.840) |
Total from investment operations | (4.344) |
Distributions from net investment income | (.456) |
Net asset value, end of period | $ 45.20 |
Total Return B, C | (8.72)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 1.82% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 969 |
Portfolio turnover rate | 8% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period December 31, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | .504 |
Net realized and unrealized gain (loss) | (4.848) |
Total from investment operations | (4.344) |
Distributions from net investment income | (.456) |
Net asset value, end of period | $ 45.20 |
Total Return B, C | (8.72)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 1.82% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 91 |
Portfolio turnover rate | 8% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period December 31, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended July 31, 2008
1. Organization.
Fidelity Income Replacement 2016 Fund, Fidelity Income Replacement 2018 Fund, Fidelity Income Replacement 2020 Fund, Fidelity Income Replacement 2022 Fund, Fidelity Income Replacement 2024 Fund, Fidelity Income Replacement 2026 Fund, Fidelity Income Replacement 2028 Fund, Fidelity Income Replacement 2030 Fund, Fidelity Income Replacement 2032 Fund, Fidelity Income Replacement 2034 Fund, Fidelity Income Replacement 2036 Fund, Fidelity Income Replacement 2038 Fund, Fidelity Income Replacement 2040 Fund and Fidelity Income Replacement 2042 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. The Funds invest primarily in a combination of other Fidelity equity, fixed income, and short-term funds (the Underlying Funds) managed by Fidelity Management & Research Company (FMR) and its affiliates.
The Funds are designed for investors who seek to convert accumulated assets into regular payments over a defined period of time. The payment strategy for each Fund is designed to be implemented through a shareholder's voluntary participation in the Smart Payment Program. Participation in the Smart Payment Program will result in the gradual liquidation of the shareholder's entire investment in the Fund by its horizon date. Each Fund's name refers to the year of its horizon date.
Each Fund offers Class A, Class T, Class C, Income Replacement and Institutional Class shares, each of which has equal rights as to assets and voting privileges, except for matters affecting a single class. 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 distribution and service plan fees incurred. Certain expense reductions also differ by class.
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. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Funds:
Security Valuation. Investments in the Underlying Funds are valued at their closing net asset value (NAV) 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 per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 pm Eastern time and 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. Income and capital gain distributions from the Underlying Funds, if any, are recorded on the ex-dividend date. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities.
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. Expenses included in the accompanying financial statements reflect the expenses of the Fund and do not include any expenses associated with the Underlying Funds. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. Each Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. There are no unrecognized tax benefits in the accompanying financial statements in connection with the tax positions expected to be taken in the initial filing of each Fund's federal tax return. Each of the Funds' federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service.
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. In addition, certain Funds will claim a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
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 short-term gain distributions from the Underlying Funds, capital loss carryforwards, losses deferred due to wash sales and losses deferred due to excise tax regulations.
Annual Report
2. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
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 | Unrealized | Unrealized | Net Unrealized |
Fidelity Income Replacement 2016 Fund | $ 10,040,129 | $ 13,257 | $ (504,721) | $ (491,464) |
Fidelity Income Replacement 2018 Fund | 7,416,956 | 9,245 | (418,727) | (409,482) |
Fidelity Income Replacement 2020 Fund | 2,480,007 | 2,796 | (121,235) | (118,439) |
Fidelity Income Replacement 2022 Fund | 5,894,525 | 6,203 | (361,700) | (355,497) |
Fidelity Income Replacement 2024 Fund | 1,514,429 | 2,901 | (91,770) | (88,869) |
Fidelity Income Replacement 2026 Fund | 1,699,017 | 3,729 | (110,829) | (107,100) |
Fidelity Income Replacement 2028 Fund | 7,699,284 | 9,337 | (417,666) | (408,329) |
Fidelity Income Replacement 2030 Fund | 1,318,650 | 2,390 | (84,223) | (81,833) |
Fidelity Income Replacement 2032 Fund | 1,553,312 | 2,016 | (136,890) | (134,874) |
Fidelity Income Replacement 2034 Fund | 1,050,996 | 1,445 | (77,798) | (76,353) |
Fidelity Income Replacement 2036 Fund | 1,823,776 | 3,217 | (148,631) | (145,414) |
Fidelity Income Replacement 2038 Fund | 1,584,334 | 1,022 | (98,397) | (97,375) |
Fidelity Income Replacement 2040 Fund | 1,080,528 | 900 | (77,590) | (76,690) |
Fidelity Income Replacement 2042 Fund | 1,444,434 | 979 | (111,991) | (111,012) |
| Undistributed | Undistributed | Capital Loss |
Fidelity Income Replacement 2016 Fund | $ 4,829 | $ - | $ (827) |
Fidelity Income Replacement 2018 Fund | 3,581 | - | (62) |
Fidelity Income Replacement 2020 Fund | 1,110 | 3,188 | - |
Fidelity Income Replacement 2022 Fund | 2,475 | 6,495 | - |
Fidelity Income Replacement 2024 Fund | 575 | - | - |
Fidelity Income Replacement 2026 Fund | 600 | 10,150 | - |
Fidelity Income Replacement 2028 Fund | 3,156 | - | (30) |
Fidelity Income Replacement 2030 Fund | 545 | 8,517 | - |
Fidelity Income Replacement 2032 Fund | 555 | 10,977 | - |
Fidelity Income Replacement 2034 Fund | 367 | 9,196 | - |
Fidelity Income Replacement 2036 Fund | 605 | - | (20) |
Fidelity Income Replacement 2038 Fund | 560 | - | - |
Fidelity Income Replacement 2040 Fund | 477 | 654 | - |
Fidelity Income Replacement 2042 Fund | 599 | - | - |
The tax character of distributions paid was as follows:
July 31, 2008 |
|
| Ordinary Income |
Fidelity Income Replacement 2016 Fund | $ 156,368 |
Fidelity Income Replacement 2018 Fund | 113,404 |
Fidelity Income Replacement 2020 Fund | 32,472 |
Fidelity Income Replacement 2022 Fund | 92,097 |
Fidelity Income Replacement 2024 Fund | 24,097 |
Fidelity Income Replacement 2026 Fund | 25,757 |
Fidelity Income Replacement 2028 Fund | 87,020 |
Fidelity Income Replacement 2030 Fund | 16,956 |
Fidelity Income Replacement 2032 Fund | 27,790 |
Fidelity Income Replacement 2034 Fund | 18,540 |
Fidelity Income Replacement 2036 Fund | 31,552 |
Fidelity Income Replacement 2038 Fund | 11,097 |
Fidelity Income Replacement 2040 Fund | 7,979 |
Fidelity Income Replacement 2042 Fund | 10,780 |
Annual Report
Notes to Financial Statements - continued
2. Significant Accounting Policies - continued
New Accounting Pronouncement. 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 results in expanded disclosures about fair value measurements. The Funds will adopt the provisions of SFAS 157 effective for the fiscal year beginning August 1, 2008.
3. Operating Policies.
Repurchase Agreements. 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 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.
4. Purchases and Sales of Investments.
Purchases and redemptions of the Underlying Fund shares are noted in the table below.
| Purchases ($) | Redemptions ($) |
Fidelity Income Replacement 2016 Fund | 13,062,115 | 2,980,893 |
Fidelity Income Replacement 2018 Fund | 9,234,682 | 1,788,822 |
Fidelity Income Replacement 2020 Fund | 2,748,647 | 263,672 |
Fidelity Income Replacement 2022 Fund | 6,976,253 | 1,057,843 |
Fidelity Income Replacement 2024 Fund | 1,898,393 | 375,337 |
Fidelity Income Replacement 2026 Fund | 1,912,729 | 210,749 |
Fidelity Income Replacement 2028 Fund | 8,894,212 | 1,158,306 |
Fidelity Income Replacement 2030 Fund | 1,407,720 | 88,513 |
Fidelity Income Replacement 2032 Fund | 1,795,895 | 238,876 |
Fidelity Income Replacement 2034 Fund | 1,140,831 | 88,159 |
Fidelity Income Replacement 2036 Fund | 2,414,130 | 546,784 |
Fidelity Income Replacement 2038 Fund | 1,677,906 | 90,122 |
Fidelity Income Replacement 2040 Fund | 1,099,795 | 18,777 |
Fidelity Income Replacement 2042 Fund | 1,500,619 | 54,609 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Strategic Advisers, Inc. (Strategic Advisers), an affiliate of FMR, provides the Funds with investment management related services. The Funds do not pay any fees for these services. Under the management contract, Strategic Advisers pays all other fund-level expenses, except the compensation of the independent Trustees and certain other expenses such as interest expense.
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:
Fidelity Income Replacement 2016 Fund | Distribution | Service | Paid to | Retained |
Class A | 0% | .25% | $ 2,297 | $ 188 |
Class T | .25% | .25% | 1,412 | 454 |
Class C | .75% | .25% | 9,525 | 9,495 |
|
|
| $ 13,234 | $ 10,137 |
Fidelity Income Replacement 2018 Fund |
|
|
|
|
Class A | 0% | .25% | $ 1,215 | $ 232 |
Class T | .25% | .25% | 570 | 467 |
Class C | .75% | .25% | 2,313 | 2,312 |
|
|
| $ 4,098 | $ 3,011 |
Annual Report
5. Fees and Other Transactions with Affiliates - continued
Distribution and Service Plan - continued
Fidelity Income Replacement 2020 Fund | Distribution | Service | Paid to | Retained |
Class A | 0% | .25% | $ 663 | $ 230 |
Class T | .25% | .25% | 690 | 462 |
Class C | .75% | .25% | 1,593 | 1,501 |
|
|
| $ 2,946 | $ 2,193 |
Fidelity Income Replacement 2022 Fund |
|
|
|
|
Class A | 0% | .25% | $ 469 | $ 231 |
Class T | .25% | .25% | 550 | 463 |
Class C | .75% | .25% | 955 | 955 |
|
|
| $ 1,974 | $ 1,649 |
Fidelity Income Replacement 2024 Fund |
|
|
|
|
Class A | 0% | .25% | $ 494 | $ 231 |
Class T | .25% | .25% | 466 | 466 |
Class C | .75% | .25% | 1,098 | 1,097 |
|
|
| $ 2,058 | $ 1,794 |
Fidelity Income Replacement 2026 Fund |
|
|
|
|
Class A | 0% | .25% | $ 274 | $ 231 |
Class T | .25% | .25% | 464 | 464 |
Class C | .75% | .25% | 3,301 | 3,297 |
|
|
| $ 4,039 | $ 3,992 |
Fidelity Income Replacement 2028 Fund |
|
|
|
|
Class A | 0% | .25% | $ 360 | $ 225 |
Class T | .25% | .25% | 952 | 454 |
Class C | .75% | .25% | 1,164 | 1,115 |
|
|
| $ 2,476 | $ 1,794 |
Fidelity Income Replacement 2030 Fund |
|
|
|
|
Class A | 0% | .25% | $ 232 | $ 232 |
Class T | .25% | .25% | 462 | 462 |
Class C | .75% | .25% | 2,109 | 2,108 |
|
|
| $ 2,803 | $ 2,802 |
Fidelity Income Replacement 2032 Fund |
|
|
|
|
Class A | 0% | .25% | $ 723 | $ 231 |
Class T | .25% | .25% | 462 | 462 |
Class C | .75% | .25% | 921 | 921 |
|
|
| $ 2,106 | $ 1,614 |
Fidelity Income Replacement 2034 Fund |
|
|
|
|
Class A | 0% | .25% | $ 280 | $ 232 |
Class T | .25% | .25% | 464 | 464 |
Class C | .75% | .25% | 921 | 921 |
|
|
| $ 1,665 | $ 1,617 |
Fidelity Income Replacement 2036 Fund |
|
|
|
|
Class A | 0% | .25% | $ 232 | $ 232 |
Class T | .25% | .25% | 1,346 | 458 |
Class C | .75% | .25% | 921 | 921 |
|
|
| $ 2,499 | $ 1,611 |
Fidelity Income Replacement 2038 Fund |
|
|
|
|
Class A | 0% | .25% | $ 139 | $ 139 |
Class T | .25% | .25% | 278 | 278 |
Class C | .75% | .25% | 556 | 556 |
|
|
| $ 973 | $ 973 |
Annual Report
Notes to Financial Statements - continued
5. Fees and Other Transactions with Affiliates - continued
Distribution and Service Plan - continued
Fidelity Income Replacement 2040 Fund | Distribution | Service | Paid to | Retained |
Class A | 0% | .25% | $ 139 | $ 139 |
Class T | .25% | .25% | 308 | 276 |
Class C | .75% | .25% | 556 | 556 |
|
|
| $ 1,003 | $ 971 |
Fidelity Income Replacement 2042 Fund |
|
|
|
|
Class A | 0% | .25% | $ 139 | $ 139 |
Class T | .25% | .25% | 278 | 278 |
Class C | .75% | .25% | 556 | 556 |
|
|
| $ 973 | $ 973 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, 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, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Fidelity Income Replacement 2016 Fund | Retained |
Class A | $ 17,045 |
Class T | 1,570 |
Class C* | 757 |
| $ 19,372 |
Fidelity Income Replacement 2018 Fund |
|
Class A | $ 7,145 |
Class T | 305 |
Class C* | 11 |
| $ 7,461 |
Fidelity Income Replacement 2020 Fund |
|
Class A | $ 2,668 |
Class T | 237 |
| $ 2,905 |
Fidelity Income Replacement 2022 Fund |
|
Class A | $ 1,600 |
Class T | 235 |
| $ 1,835 |
Fidelity Income Replacement 2024 Fund |
|
Class A | $ 1,638 |
Fidelity Income Replacement 2026 Fund |
|
Class A | $ 188 |
Fidelity Income Replacement 2028 Fund |
|
Class A | $ 1,519 |
Class T | 778 |
| $ 2,297 |
Fidelity Income Replacement 2032 Fund |
|
Class A | $ 1,114 |
Fidelity Income Replacement 2034 Fund |
|
Class A | $ 453 |
Annual Report
5. Fees and Other Transactions with Affiliates - continued
Sales Load - continued
Fidelity Income Replacement 2036 Fund | Retained |
Class T | $ 533 |
Fidelity Income Replacement 2040 Fund |
|
Class T | $ 223 |
* When Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
6. Expense Reductions.
FMR voluntarily agreed to reimburse funds to the extent annual operating expenses exceeded 0.00% of average net assets plus distribution and service fees applicable to each class. Some expenses, for example interest expense, are excluded from this reimbursement.
The following Fund's were in reimbursement during the period:
| Reimbursement |
|
|
| |
Fidelity Income Replacement 2016 Fund | $ 20 |
Fidelity Income Replacement 2018 Fund | 15 |
Fidelity Income Replacement 2020 Fund | 5 |
Fidelity Income Replacement 2022 Fund | 12 |
Fidelity Income Replacement 2024 Fund | 3 |
Fidelity Income Replacement 2026 Fund | 4 |
Fidelity Income Replacement 2028 Fund | 13 |
Fidelity Income Replacement 2030 Fund | 2 |
Fidelity Income Replacement 2032 Fund | 4 |
Fidelity Income Replacement 2034 Fund | 2 |
Fidelity Income Replacement 2036 Fund | 5 |
Fidelity Income Replacement 2038 Fund | 2 |
Fidelity Income Replacement 2040 Fund | 2 |
Fidelity Income Replacement 2042 Fund | 3 |
* Represents total amount reimbursed to the Fund. Each class has received its pro-rata allocation of reimbursement.
7. 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.
The Funds do not invest in the Underlying Funds for the purpose of exercising management or control; however, investments by the Funds within their principal investment strategies may represent a significant portion of the Underlying Fund's net assets. At the end of the period, the following Funds were the owners of record of 10% or more of the total outstanding shares of the Underlying Funds.
Fund | Fidelity Income | Fidelity Income | Fidelity Income | Fidelity Income |
Fidelity Broad Market Opportunities Fund | 14% | 11% | 10% | 15% |
Annual Report
Notes to Financial Statements - continued
7. Other - continued
The Funds, in aggregate, were the owners of record of more than 20% of the total outstanding shares of the following Underlying Funds.
Fund | % of Share held |
Fidelity Broad Market Opportunities Fund | 80% |
In addition, at the end of the period, FMR or its affiliates were owners of record of more than 10% of the outstanding shares of the following funds:
| Affiliated % |
Fidelity Income Replacement 2020 Fund | 16% |
Fidelity Income Replacement 2024 Fund | 27% |
Fidelity Income Replacement 2032 Fund | 27% |
Fidelity Income Replacement 2034 Fund | 39% |
Fidelity Income Replacement 2036 Fund | 24% |
Fidelity Income Replacement 2038 Fund | 25% |
Fidelity Income Replacement 2040 Fund | 36% |
Fidelity Income Replacement 2042 Fund | 27% |
8. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Year ended July 31, | 2008A |
Fidelity Income Replacement 2016 Fund |
|
From net investment income |
|
Class A | $ 24,373 |
Class T | 6,831 |
Class C | 18,135 |
Income Replacement 2016 | 90,325 |
Institutional Class | 3,781 |
Total | $ 143,445 |
From net realized gain |
|
Class A | $ 614 |
Class T | 512 |
Class C | 2,180 |
Income Replacement 2016 | 9,335 |
Institutional Class | 282 |
Total | $ 12,923 |
Fidelity Income Replacement 2018 Fund |
|
From net investment income |
|
Class A | $ 12,180 |
Class T | 2,589 |
Class C | 4,326 |
Income Replacement 2018 | 82,709 |
Institutional Class | 3,472 |
Total | $ 105,276 |
From net realized gain |
|
Class A | $ 262 |
Class T | 323 |
Class C | 389 |
Income Replacement 2018 | 6,892 |
Institutional Class | 262 |
Total | $ 8,128 |
Annual Report
8. Distributions to Shareholders - continued
Year ended July 31, | 2008A |
Fidelity Income Replacement 2020 Fund |
|
From net investment income |
|
Class A | $ 6,115 |
Class T | 3,050 |
Class C | 2,845 |
Income Replacement 2020 | 14,934 |
Institutional Class | 3,046 |
Total | $ 29,990 |
From net realized gain |
|
Class A | $ 342 |
Class T | 498 |
Class C | 510 |
Income Replacement 2020 | 790 |
Institutional Class | 342 |
Total | $ 2,482 |
Fidelity Income Replacement 2022 Fund |
|
From net investment income |
|
Class A | $ 4,024 |
Class T | 2,271 |
Class C | 1,457 |
Income Replacement 2022 | 69,351 |
Institutional Class | 5,902 |
Total | $ 83,005 |
From net realized gain |
|
Class A | $ 341 |
Class T | 341 |
Class C | 341 |
Income Replacement 2022 | 7,075 |
Institutional Class | 994 |
Total | $ 9,092 |
Fidelity Income Replacement 2024 Fund |
|
From net investment income |
|
Class A | $ 4,555 |
Class T | 1,866 |
Class C | 1,852 |
Income Replacement 2024 | 10,602 |
Institutional Class | 2,326 |
Total | $ 21,201 |
From net realized gain |
|
Class A | $ 761 |
Class T | 342 |
Class C | 341 |
Income Replacement 2024 | 1,110 |
Institutional Class | 342 |
Total | $ 2,896 |
Fidelity Income Replacement 2026 Fund |
|
From net investment income |
|
Class A | $ 2,500 |
Class T | 1,852 |
Class C | 5,330 |
Income Replacement 2026 | 10,061 |
Institutional Class | 2,308 |
Total | $ 22,051 |
From net realized gain |
|
Class A | $ 407 |
Class T | 362 |
Class C | 1,176 |
Income Replacement 2026 | 1,399 |
Institutional Class | 362 |
Total | $ 3,706 |
Annual Report
Notes to Financial Statements - continued
8. Distributions to Shareholders - continued
Year ended July 31, | 2008A |
Fidelity Income Replacement 2028 Fund |
|
From net investment income |
|
Class A | $ 3,090 |
Class T | 3,796 |
Class C | 1,482 |
Income Replacement 2028 | 67,994 |
Institutional Class | 2,054 |
Total | $ 78,416 |
From net realized gain |
|
Class A | $ 322 |
Class T | 519 |
Class C | 321 |
Income Replacement 2028 | 7,120 |
Institutional Class | 322 |
Total | $ 8,604 |
Fidelity Income Replacement 2030 Fund |
|
From net investment income |
|
Class A | $ 2,013 |
Class T | 1,791 |
Class C | 3,220 |
Income Replacement 2030 | 5,160 |
Institutional Class | 2,244 |
Total | $ 14,428 |
From net realized gain |
|
Class A | $ 382 |
Class T | 382 |
Class C | 905 |
Income Replacement 2030 | 477 |
Institutional Class | 382 |
Total | $ 2,528 |
Fidelity Income Replacement 2032 Fund |
|
From net investment income |
|
Class A | $ 6,514 |
Class T | 1,757 |
Class C | 1,307 |
Income Replacement 2032 | 11,580 |
Institutional Class | 2,212 |
Total | $ 23,370 |
From net realized gain |
|
Class A | $ 1,345 |
Class T | 382 |
Class C | 381 |
Income Replacement 2032 | 1,930 |
Institutional Class | 382 |
Total | $ 4,420 |
Fidelity Income Replacement 2034 Fund |
|
From net investment income |
|
Class A | $ 2,325 |
Class T | 1,706 |
Class C | 1,250 |
Income Replacement 2034 | 8,139 |
Institutional Class | 2,157 |
Total | $ 15,577 |
From net realized gain |
|
Class A | $ 402 |
Class T | 402 |
Class C | 401 |
Income Replacement 2034 | 1,356 |
Institutional Class | 402 |
Total | $ 2,963 |
Annual Report
8. Distributions to Shareholders - continued
Year ended July 31, | 2008A |
Fidelity Income Replacement 2036 Fund |
|
From net investment income |
|
Class A | $ 1,814 |
Class T | 4,886 |
Class C | 1,137 |
Income Replacement 2036 | 16,179 |
Institutional Class | 2,545 |
Total | $ 26,561 |
From net realized gain |
|
Class A | $ 381 |
Class T | 1,187 |
Class C | 381 |
Income Replacement 2036 | 2,566 |
Institutional Class | 476 |
Total | $ 4,991 |
Fidelity Income Replacement 2038 Fund |
|
From net investment income |
|
Class A | $ 745 |
Class T | 610 |
Class C | 363 |
Income Replacement 2038 | 8,501 |
Institutional Class | 878 |
Total | $ 11,097 |
Fidelity Income Replacement 2040 Fund |
|
From net investment income |
|
Class A | $ 799 |
Class T | 766 |
Class C | 397 |
Income Replacement 2040 | 5,085 |
Institutional Class | 932 |
Total | $ 7,979 |
Fidelity Income Replacement 2042 Fund |
|
From net investment income |
|
Class A | $ 781 |
Class T | 648 |
Class C | 381 |
Income Replacement 2042 | 8,054 |
Institutional Class | 916 |
Total | $ 10,780 |
A For the period August 30, 2007 (commencement of operations) to July 31, 2008 for Fidelity Income Replacement 2016, 2018, 2020, 2022, 2024, 2026, 2028, 2030, 2032, 2034, 2036 Funds and for the period December 31, 2007 (commencement of operations) to July 31, 2008 for Fidelity Income Replacement 2038, 2040, 2042 Funds.
9. Share Transactions.
Transactions for each class of shares were as follows:
Year ended July 31, | Shares | Dollars |
Fidelity Income Replacement 2016 Fund |
|
|
Class A |
|
|
Shares sold | 51,887 | $ 2,562,164 |
Reinvestment of distributions | 481 | 23,577 |
Shares redeemed | (6,012) | (294,658) |
Net increase (decrease) | 46,356 | $ 2,291,083 |
Class T |
|
|
Shares sold | 14,213 | $ 703,303 |
Reinvestment of distributions | 126 | 6,237 |
Shares redeemed | (243) | (11,945) |
Net increase (decrease) | 14,096 | $ 697,595 |
Annual Report
Notes to Financial Statements - continued
9. Share Transactions - continued
Year ended July 31, | Shares | Dollars |
Class C |
|
|
Shares sold | 36,624 | $ 1,842,263 |
Reinvestment of distributions | 396 | 19,625 |
Shares redeemed | (3,603) | (178,499) |
Net increase (decrease) | 33,417 | $ 1,683,389 |
Income Replacement 2016 |
|
|
Shares sold | 128,125 | $ 6,454,165 |
Reinvestment of distributions | 282 | 14,202 |
Shares redeemed | (26,243) | (1,295,692) |
Net increase (decrease) | 102,164 | $ 5,172,675 |
Institutional Class |
|
|
Shares sold | 3,795 | $ 190,050 |
Reinvestment of distributions | 58 | 2,900 |
Net increase (decrease) | 3,853 | $ 192,950 |
Fidelity Income Replacement 2018 Fund |
|
|
Class A |
|
|
Shares sold | 24,773 | $ 1,220,917 |
Reinvestment of distributions | 151 | 7,408 |
Shares redeemed | (1,591) | (78,122) |
Net increase (decrease) | 23,333 | $ 1,150,203 |
Class T |
|
|
Shares sold | 3,187 | $ 158,040 |
Reinvestment of distributions | 49 | 2,418 |
Net increase (decrease) | 3,236 | $ 160,458 |
Class C |
|
|
Shares sold | 11,169 | $ 549,643 |
Reinvestment of distributions | 53 | 2,662 |
Shares redeemed | (3,529) | (172,565) |
Net increase (decrease) | 7,693 | $ 379,740 |
Income Replacement 2018 |
|
|
Shares sold | 122,952 | $ 6,187,553 |
Reinvestment of distributions | 278 | 13,952 |
Shares redeemed | (14,368) | (704,704) |
Net increase (decrease) | 108,862 | $ 5,496,801 |
Institutional Class |
|
|
Shares sold | 4,519 | $ 225,289 |
Reinvestment of distributions | 56 | 2,804 |
Shares redeemed | (60) | (2,900) |
Net increase (decrease) | 4,515 | $ 225,193 |
Fidelity Income Replacement 2020 Fund |
|
|
Class A |
|
|
Shares sold | 10,762 | $ 527,052 |
Reinvestment of distributions | 71 | 3,536 |
Shares redeemed | (160) | (7,749) |
Net increase (decrease) | 10,673 | $ 522,839 |
Class T |
|
|
Shares sold | 4,042 | $ 202,738 |
Reinvestment of distributions | 71 | 3,548 |
Shares redeemed | (139) | (6,586) |
Net increase (decrease) | 3,974 | $ 199,700 |
Class C |
|
|
Shares sold | 5,838 | $ 288,035 |
Reinvestment of distributions | 55 | 2,753 |
Shares redeemed | (50) | (2,417) |
Net increase (decrease) | 5,843 | $ 288,371 |
Income Replacement 2020 |
|
|
Shares sold | 28,174 | $ 1,389,273 |
Reinvestment of distributions | 71 | 3,552 |
Shares redeemed | (2,068) | (99,949) |
Net increase (decrease) | 26,177 | $ 1,292,876 |
Annual Report
9. Share Transactions - continued
Year ended July 31, | Shares | Dollars |
Institutional Class |
|
|
Shares sold | 3,397 | $ 168,160 |
Reinvestment of distributions | 57 | 2,822 |
Net increase (decrease) | 3,454 | $ 170,982 |
Fidelity Income Replacement 2022 Fund |
|
|
Class A |
|
|
Shares sold | 6,185 | $ 306,290 |
Reinvestment of distributions | 48 | 2,394 |
Shares redeemed | (93) | (4,482) |
Net increase (decrease) | 6,140 | $ 304,202 |
Class T |
|
|
Shares sold | 3,924 | $ 195,654 |
Reinvestment of distributions | 53 | 2,613 |
Net increase (decrease) | 3,977 | $ 198,267 |
Class C |
|
|
Shares sold | 2,513 | $ 125,050 |
Reinvestment of distributions | 35 | 1,733 |
Net increase (decrease) | 2,548 | $ 126,783 |
Income Replacement 2022 |
|
|
Shares sold | 114,310 | $ 5,694,740 |
Reinvestment of distributions | 193 | 9,783 |
Shares redeemed | (15,364) | (754,411) |
Net increase (decrease) | 99,139 | $ 4,950,112 |
Institutional Class |
|
|
Shares sold | 5,837 | $ 300,050 |
Reinvestment of distributions | 52 | 2,619 |
Net increase (decrease) | 5,889 | $ 302,669 |
Fidelity Income Replacement 2024 Fund |
|
|
Class A |
|
|
Shares sold | 6,152 | $ 310,133 |
Reinvestment of distributions | 95 | 4,738 |
Shares redeemed | (155) | (7,496) |
Net increase (decrease) | 6,092 | $ 307,375 |
Class T |
|
|
Shares sold | 2,001 | $ 99,021 |
Reinvestment of distributions | 44 | 2,208 |
Net increase (decrease) | 2,045 | $ 101,229 |
Class C |
|
|
Shares sold | 4,943 | $ 242,316 |
Reinvestment of distributions | 40 | 2,004 |
Shares redeemed | (20) | (939) |
Net increase (decrease) | 4,963 | $ 243,381 |
Income Replacement 2024 |
|
|
Shares sold | 18,071 | $ 894,960 |
Reinvestment of distributions | 80 | 3,983 |
Shares redeemed | (2,959) | (140,970) |
Net increase (decrease) | 15,192 | $ 757,973 |
Institutional Class |
|
|
Shares sold | 2,001 | $ 100,277 |
Reinvestment of distributions | 53 | 2,668 |
Net increase (decrease) | 2,054 | $ 102,945 |
Fidelity Income Replacement 2026 Fund |
|
|
Class A |
|
|
Shares sold | 2,750 | $ 136,448 |
Reinvestment of distributions | 58 | 2,907 |
Net increase (decrease) | 2,808 | $ 139,355 |
Annual Report
Notes to Financial Statements - continued
9. Share Transactions - continued
Year ended July 31, | Shares | Dollars |
Class T |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 44 | 2,214 |
Net increase (decrease) | 2,045 | $ 102,264 |
Class C |
|
|
Shares sold | 10,559 | $ 527,050 |
Reinvestment of distributions | 131 | 6,505 |
Shares redeemed | (307) | (14,828) |
Net increase (decrease) | 10,383 | $ 518,727 |
Income Replacement 2026 |
|
|
Shares sold | 17,326 | $ 852,072 |
Reinvestment of distributions | 117 | 5,806 |
Shares redeemed | (693) | (33,589) |
Net increase (decrease) | 16,750 | $ 824,289 |
Institutional Class |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 53 | 2,670 |
Net increase (decrease) | 2,054 | $ 102,720 |
Fidelity Income Replacement 2028 Fund |
|
|
Class A |
|
|
Shares sold | 7,922 | $ 392,531 |
Reinvestment of distributions | 69 | 3,412 |
Shares redeemed | (65) | (3,072) |
Net increase (decrease) | 7,926 | $ 392,871 |
Class T |
|
|
Shares sold | 13,004 | $ 639,428 |
Reinvestment of distributions | 58 | 2,913 |
Shares redeemed | (120) | (5,688) |
Net increase (decrease) | 12,942 | $ 636,653 |
Class C |
|
|
Shares sold | 3,181 | $ 157,488 |
Reinvestment of distributions | 31 | 1,557 |
Net increase (decrease) | 3,212 | $ 159,045 |
Income Replacement 2028 |
|
|
Shares sold | 148,761 | $ 7,341,752 |
Reinvestment of distributions | 196 | 9,925 |
Shares redeemed | (19,359) | (940,882) |
Net increase (decrease) | 129,598 | $ 6,410,795 |
Institutional Class |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 48 | 2,376 |
Net increase (decrease) | 2,049 | $ 102,426 |
Fidelity Income Replacement 2030 Fund |
|
|
Class A |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 48 | 2,395 |
Net increase (decrease) | 2,049 | $ 102,445 |
Class T |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 43 | 2,173 |
Net increase (decrease) | 2,044 | $ 102,223 |
Class C |
|
|
Shares sold | 6,410 | $ 322,141 |
Reinvestment of distributions | 83 | 4,124 |
Shares redeemed | (120) | (5,838) |
Net increase (decrease) | 6,373 | $ 320,427 |
Annual Report
9. Share Transactions - continued
Year ended July 31, | Shares | Dollars |
Income Replacement 2030 |
|
|
Shares sold | 14,029 | $ 682,104 |
Reinvestment of distributions | 72 | 3,547 |
Shares redeemed | (87) | (4,166) |
Net increase (decrease) | 14,014 | $ 681,485 |
Institutional Class |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 53 | 2,627 |
Net increase (decrease) | 2,054 | $ 102,677 |
Fidelity Income Replacement 2032 Fund |
|
|
Class A |
|
|
Shares sold | 8,485 | $ 428,673 |
Reinvestment of distributions | 158 | 7,859 |
Net increase (decrease) | 8,643 | $ 436,532 |
Class T |
|
|
Shares sold | 2,001 | $ 100,059 |
Reinvestment of distributions | 43 | 2,138 |
Net increase (decrease) | 2,044 | $ 102,197 |
Class C |
|
|
Shares sold | 2,001 | $ 100,059 |
Reinvestment of distributions | 34 | 1,688 |
Net increase (decrease) | 2,035 | $ 101,747 |
Income Replacement 2032 |
|
|
Shares sold | 18,568 | $ 934,542 |
Reinvestment of distributions | 96 | 4,859 |
Shares redeemed | (2,950) | (142,310) |
Net increase (decrease) | 15,714 | $ 797,091 |
Institutional Class |
|
|
Shares sold | 2,001 | $ 100,059 |
Reinvestment of distributions | 52 | 2,594 |
Net increase (decrease) | 2,053 | $ 102,653 |
Fidelity Income Replacement 2034 Fund |
|
|
Class A |
|
|
Shares sold | 3,214 | $ 158,381 |
Reinvestment of distributions | 55 | 2,727 |
Shares redeemed | (289) | (14,048) |
Net increase (decrease) | 2,980 | $ 147,060 |
Class T |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 42 | 2,108 |
Net increase (decrease) | 2,043 | $ 102,158 |
Class C |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 33 | 1,652 |
Net increase (decrease) | 2,034 | $ 101,702 |
Income Replacement 2034 |
|
|
Shares sold | 11,938 | $ 589,565 |
Reinvestment of distributions | 100 | 4,987 |
Shares redeemed | (145) | (7,028) |
Net increase (decrease) | 11,893 | $ 587,524 |
Institutional Class |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 51 | 2,559 |
Net increase (decrease) | 2,052 | $ 102,609 |
Annual Report
Notes to Financial Statements - continued
9. Share Transactions - continued
Year ended July 31, | Shares | Dollars |
Fidelity Income Replacement 2036 Fund |
|
|
Class A |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 44 | 2,195 |
Net increase (decrease) | 2,045 | $ 102,245 |
Class T |
|
|
Shares sold | 8,360 | $ 427,487 |
Reinvestment of distributions | 59 | 2,995 |
Shares redeemed | (139) | (6,726) |
Net increase (decrease) | 8,280 | $ 423,756 |
Class C |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 30 | 1,518 |
Net increase (decrease) | 2,031 | $ 101,568 |
Income Replacement 2036 |
|
|
Shares sold | 30,339 | $ 1,531,859 |
Reinvestment of distributions | 136 | 6,842 |
Shares redeemed | (9,217) | (447,459) |
Net increase (decrease) | 21,258 | $ 1,091,242 |
Institutional Class |
|
|
Shares sold | 2,505 | $ 125,551 |
Reinvestment of distributions | 60 | 3,020 |
Shares redeemed | (10) | (477) |
Net increase (decrease) | 2,555 | $ 128,094 |
Fidelity Income Replacement 2038 Fund |
|
|
Class A |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 16 | 745 |
Net increase (decrease) | 2,017 | $ 100,795 |
Class T |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 13 | 610 |
Net increase (decrease) | 2,014 | $ 100,660 |
Class C |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 8 | 363 |
Net increase (decrease) | 2,009 | $ 100,413 |
Income Replacement 2038 |
|
|
Shares sold | 26,117 | $ 1,244,662 |
Reinvestment of distributions | 24 | 1,115 |
Shares redeemed | (1,352) | (62,898) |
Net increase (decrease) | 24,789 | $ 1,182,879 |
Institutional Class |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 19 | 878 |
Net increase (decrease) | 2,020 | $ 100,928 |
Fidelity Income Replacement 2040 Fund |
|
|
Class A |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 17 | 799 |
Net increase (decrease) | 2,018 | $ 100,849 |
Class T |
|
|
Shares sold | 2,913 | $ 143,477 |
Reinvestment of distributions | 16 | 766 |
Net increase (decrease) | 2,929 | $ 144,243 |
Annual Report
9. Share Transactions - continued
Year ended July 31, | Shares | Dollars |
Class C |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 8 | 397 |
Net increase (decrease) | 2,009 | $ 100,447 |
Income Replacement 2040 |
|
|
Shares sold | 13,341 | $ 638,742 |
Reinvestment of distributions | 45 | 2,091 |
Shares redeemed | (172) | (8,085) |
Net increase (decrease) | 13,214 | $ 632,748 |
Institutional Class |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 20 | 932 |
Net increase (decrease) | 2,021 | $ 100,982 |
Fidelity Income Replacement 2042 Fund |
|
|
Class A |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 17 | 781 |
Net increase (decrease) | 2,018 | $ 100,831 |
Class T |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 14 | 648 |
Net increase (decrease) | 2,015 | $ 100,698 |
Class C |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 8 | 381 |
Net increase (decrease) | 2,009 | $ 100,431 |
Income Replacement 2042 |
|
|
Shares sold | 21,824 | $ 1,059,126 |
Reinvestment of distributions | 34 | 1,577 |
Shares redeemed | (420) | (19,844) |
Net increase (decrease) | 21,438 | $ 1,040,859 |
Institutional Class |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 20 | 916 |
Net increase (decrease) | 2,021 | $ 100,966 |
A For the period August 30, 2007 (commencement of operations) to July 31, 2008 for Fidelity Income Replacement 2016, 2018, 2020, 2022, 2024, 2026, 2028, 2030, 2032, 2034, 2036 Funds and for the period December 31, 2007 (commencement of operations) to July 31, 2008 for Fidelity Income Replacement 2038, 2040, 2042 Funds.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Income Fund and the Shareholders of Fidelity Income Replacement 2016 Fund, Fidelity Income Replacement 2018 Fund, Fidelity Income Replacement 2020 Fund, Fidelity Income Replacement 2022 Fund, Fidelity Income Replacement 2024 Fund, Fidelity Income Replacement 2026 Fund, Fidelity Income Replacement 2028 Fund, Fidelity Income Replacement 2030 Fund, Fidelity Income Replacement 2032 Fund, Fidelity Income Replacement 2034 Fund, Fidelity Income Replacement 2036 Fund, Fidelity Income Replacement 2038 Fund, Fidelity Income Replacement 2040 Fund and Fidelity Income Replacement 2042 Fund:
We have audited the accompanying statements of assets and liabilities of Fidelity Income Replacement 2016 Fund, Fidelity Income Replacement 2018 Fund, Fidelity Income Replacement 2020 Fund, Fidelity Income Replacement 2022 Fund, Fidelity Income Replacement 2024 Fund, Fidelity Income Replacement 2026 Fund, Fidelity Income Replacement 2028 Fund, Fidelity Income Replacement 2030 Fund, Fidelity Income Replacement 2032 Fund, Fidelity Income Replacement 2034 Fund, Fidelity Income Replacement 2036 Fund, Fidelity Income Replacement 2038 Fund, Fidelity Income Replacement 2040 Fund and Fidelity Income Replacement 2042 Fund (the Funds), each of which are funds of Fidelity Income Fund (the trust), including the schedules of investments, as of July 31, 2008, and the related statements of operations, the statements of changes in net assets, and the financial highlights for the period from commencement of operations (August 30, 2007 or December 31, 2007) to July 31, 2008. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with 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 and financial highlights are free of material misstatement. The Funds are not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds' internal control over financial reporting. Accordingly, we express no such opinion. An audit also 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, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2008, by correspondence with the custodians and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Fidelity Income Replacement 2016 Fund, Fidelity Income Replacement 2018 Fund, Fidelity Income Replacement 2020 Fund, Fidelity Income Replacement 2022 Fund, Fidelity Income Replacement 2024 Fund, Fidelity Income Replacement 2026 Fund, Fidelity Income Replacement 2028 Fund, Fidelity Income Replacement 2030 Fund, Fidelity Income Replacement 2032 Fund, Fidelity Income Replacement 2034 Fund, Fidelity Income Replacement 2036 Fund, Fidelity Income Replacement 2038 Fund, Fidelity Income Replacement 2040 Fund and Fidelity Income Replacement 2042 Fund as of July 31, 2008, the results of their operations, the changes in their net assets and their financial highlights for the period from commencement of operations (August 30, 2007 or December 31, 2007) to July 31, 2008 in conformity with accounting principles generally accepted in the United States of America.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Boston, Massachusetts
September 19, 2008
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each Income Replacement Fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each Income Replacement Fund's activities, review contractual arrangements with companies that provide services to each Income Replacement Fund, and review each Income Replacement Fund's performance. If the interests of an Income Replacement Fund and an underlying Fidelity fund were to diverge, a conflict of interest could arise and affect how the Trustees and Member of the Advisory Board fulfill their fiduciary duties to the affected funds. Strategic Advisers has structured the Income Replacement Funds to avoid these potential conflicts, although there may be situations where a conflict of interest is unavoidable. In such instances, Strategic Advisers, the Trustees, and Member of the Advisory Board would take reasonable steps to minimize and, if possible, eliminate the conflict. Except for Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 159 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 377 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 Member 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 (78) | |
| Year of Election or Appointment: 1984 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; 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 and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). Mr. Edward C. Johnson 3d and Mr. Arthur E. Johnson are not related. |
James C. Curvey (73) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006- present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
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.
Annual Report
Trustees and Officers - continued
Name, Age; Principal Occupation | |
Albert R. Gamper, Jr. (66) | |
| 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), a member of the Board of Governors, Rutgers University (2004-present), and Chairman of the Board of Saint Barnabas Health Care System. Previously, Mr. Gamper served as Chairman of the Board of Governors, Rutgers University (2004-2007). |
George H. Heilmeier (72) | |
| 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), Compaq, Automatic Data Processing, Inc. (ADP) (technology-based business outsourcing), 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. |
Arthur E. Johnson (61) | |
| Year of Election or Appointment: 2008 Mr. Johnson serves as Senior Vice President of Corporate Strategic Development of Lockheed Martin Corporation (defense contractor). In addition, Mr. Johnson serves as a member of the Board of Directors of AGL Resources, Inc. (holding company), and IKON Office Solutions, Inc. (document management systems and services). Mr. Arthur E. Johnson and Mr. Edward C. Johnson 3d are not related. |
James H. Keyes (67) | |
| 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 Navistar International Corporation (manufacture and sale of trucks, buses, and diesel engines) and Pitney Bowes, Inc. (integrated mail, messaging, and document management solutions). Previously, Mr. Keyes served as a member of the Board of LSI Logic Corporation (semiconductor technologies, 1984-2008). |
Marie L. Knowles (61) | |
| 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 McKesson Corporation (healthcare service). 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. Previously, Ms. Knowles served as a Director of Phelps Dodge Corporation (copper mining and manufacturing, 1994-2007). |
Kenneth L. Wolfe (69) | |
| Year of Election or Appointment: 2005 Mr. Wolfe is Chairman and a Director of Hershey Foods Corporation (2007-present), where prior to his retirement in 2001, he was Chairman and Chief Executive Officer. Mr. Wolfe currently serves as a member of the board of Revlon Inc. (2004-present). Previously, Mr. Wolfe served as a member of the boards of Adelphia Communications Corporation (2003-2006) and Bausch & Lomb, Inc. (1993-2007). |
Advisory Board Member and Executive Officers**:
Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Annual Report
Name, Age; Principal Occupation | |
Peter S. Lynch (64) | |
| 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. |
John R. Hebble (50) | |
| Year of Election or Appointment: 2008 President and Treasurer of each Income Replacement Fund. Mr. Hebble also serves as President and Treasurer of Fidelity's Fixed Income and Asset Allocation Funds (2008-present) and is an employee of FMR (2003-present). Before joining Fidelity Investments, Mr. Hebble worked at Deutsche Asset Management where he served as Director of Fund Accounting (2002-2003) and Assistant Treasurer of the Scudder Funds. |
Ren Y. Cheng (51) | |
| Year of Election or Appointment: 2007 Vice President of each Income Replacement Fund. Mr. Cheng also serves as Vice President of certain Asset Allocation Funds (2007-present) and Group Chief Investment Officer, Asset Allocation of FMR. Previously, Mr. Cheng served as a portfolio manager for the Fidelity Freedom Funds. |
Boyce I. Greer (52) | |
| Year of Election or Appointment: 2007 Vice President of each Income Replacement Fund. Mr. Greer also serves as Vice President of Asset Allocation Funds(2005- |
Scott C. Goebel (40) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of each Income Replacement Fund. Mr. Goebel also serves as Secretary and CLO of other Fidelity funds (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present); and Deputy General Counsel of FMR LLC. Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
Nancy D. Prior (41) | |
| Year of Election or Appointment: 2008 Assistant Secretary of each Income Replacement Fund. Ms. Prior also serves as Assistant Secretary of Fidelity's Fixed Income and Asset Allocation Funds (2008-present) and is an employee of FMR (2002-present). |
Holly C. Laurent (54) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) officer of each Income Replacement Fund. Ms. Laurent also serves as AML officer of other Fidelity funds (2008-present) and is an employee of FMR LLC. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (49) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of each Income Replacement Fund. Ms. Reynolds also serves as Chief Financial Officer of other Fidelity funds (2008- present). Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was an audit partner with PwC's investment management practice. |
Michael H. Whitaker (41) | |
| Year of Election or Appointment: 2008 Chief Compliance Officer of each Income Replacement Fund. Mr. Whitaker also serves as Chief Compliance Officer of Fidelity's Fixed Income and Asset Allocation Funds (2008-present) and is an employee of FMR (2007-present). Prior to joining Fidelity Investments, Mr. Whitaker worked at MFS Investment Management where he served as Senior Vice President and Chief Compliance Officer (2004-2006), and Assistant General Counsel. |
Bryan A. Mehrmann (47) | |
| Year of Election or Appointment: 2007 Deputy Treasurer of each Income Replacement Fund. 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). |
Robert G. Byrnes (41) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of each Income Replacement Fund. 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 Fidelity Pricing and Cash Management Services (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 (54) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of each Income Replacement Fund. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004-present) and is an employee of FMR. |
Paul M. Murphy (61) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of each Income Replacement Fund. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (49) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of each Income Replacement Fund. 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 Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Distributions (Unaudited)
The Board of Trustees of each fund voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities:
Fund | Pay Date | Record Date | Capital Gains |
Income Replacement 2020 | 09/15/08 | 09/12/08 | $.06 |
Income Replacement 2022 | 09/15/08 | 09/12/08 | $.06 |
Income Replacement 2026 | 09/15/08 | 09/12/08 | $.32 |
Income Replacement 2030 | 09/15/08 | 09/12/08 | $.29 |
Income Replacement 2032 | 09/15/08 | 09/12/08 | $.37 |
Income Replacement 2034 | 09/15/08 | 09/12/08 | $.32 |
Income Replacement 2040 | 09/15/08 | 09/12/08 | $.03 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended July 31, 2008, or, if subsequently determined to be different, the net capital gain of such year.
Fund |
|
Income Replacement 2020 | $3,687 |
Income Replacement 2022 | $9,113 |
Income Replacement 2024 | $597 |
Income Replacement 2026 | $10,427 |
Income Replacement 2030 | $8,616 |
Income Replacement 2032 | $12,348 |
Income Replacement 2034 | $9,326 |
Income Replacement 2040 | $654 |
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:
Fund |
|
Income Replacement 2016 | 4.73% |
Income Replacement 2018 | 4.59% |
Income Replacement 2020 | 4.91% |
Income Replacement 2022 | 4.02% |
Income Replacement 2024 | 3.67% |
Income Replacement 2026 | 3.21% |
Income Replacement 2028 | 4.48% |
Income Replacement 2030 | 3.20% |
Income Replacement 2032 | 2.85% |
Income Replacement 2034 | 2.94% |
Income Replacement 2036 | 2.89% |
Income Replacement 2038 | 7.43% |
Income Replacement 2040 | 7.12% |
Income Replacement 2042 | 7.16% |
Annual Report
Distributions - continued
A percentage of the dividends distributed during the fiscal year for the following funds qualifies for the dividends-received deduction for corporate shareholders:
| Retail Class |
Income Replacement 2016 |
|
September 2007 | 8% |
October 2007 | 8% |
November 2007 | 8% |
December 2007 (Ex-Date 12/26/07) | 9% |
December 2007 (Ex-Date 12/28/07) | 9% |
January 2008 | 4% |
February 2008 | 4% |
March 2008 | 4% |
April 2008 | 4% |
May 2008 | 4% |
June 2008 | 4% |
July 2008 | 4% |
| Retail Class |
Income Replacement 2018 |
|
September 2007 | 8% |
October 2007 | 9% |
November 2007 | 9% |
December 2007 (Ex-Date 12/26/07) | 9% |
December 2007 (Ex-Date 12/28/07) | 9% |
January 2008 | 5% |
February 2008 | 5% |
March 2008 | 5% |
April 2008 | 5% |
May 2008 | 5% |
June 2008 | 5% |
July 2008 | 5% |
| Retail Class |
Income Replacement 2020 |
|
September 2007 | 9% |
October 2007 | 10% |
November 2007 | 9% |
December 2007 (Ex-Date 12/26/07) | 11% |
December 2007 (Ex-Date 12/28/07) | 10% |
January 2008 | 5% |
February 2008 | 6% |
March 2008 | 6% |
April 2008 | 6% |
May 2008 | 6% |
June 2008 | 6% |
July 2008 | 6% |
| Retail Class |
Income Replacement 2022 |
|
September 2007 | 10% |
October 2007 | 12% |
November 2007 | 12% |
December 2007 (Ex-Date 12/26/07) | 12% |
December 2007 (Ex-Date 12/28/07) | 12% |
January 2008 | 7% |
February 2008 | 7% |
March 2008 | 7% |
April 2008 | 7% |
May 2008 | 7% |
June 2008 | 7% |
July 2008 | 7% |
| Retail Class |
Income Replacement 2024 |
|
September 2007 | 10% |
October 2007 | 11% |
November 2007 | 10% |
December 2007 (Ex-Date 12/26/07) | 12% |
December 2007 (Ex-Date 12/28/07) | 11% |
January 2008 | 6% |
February 2008 | 6% |
March 2008 | 6% |
April 2008 | 6% |
May 2008 | 6% |
June 2008 | 6% |
July 2008 | 6% |
| Retail Class |
Income Replacement 2026 |
|
September 2007 | 11% |
October 2007 | 12% |
November 2007 | 11% |
December 2007 (Ex-Date 12/26/07) | 13% |
December 2007 (Ex-Date 12/28/07) | 12% |
January 2008 | 7% |
February 2008 | 7% |
March 2008 | 6% |
April 2008 | 7% |
May 2008 | 6% |
June 2008 | 6% |
July 2008 | 7% |
| Retail Class |
Income Replacement 2028 |
|
September 2007 | 11% |
October 2007 | 12% |
November 2007 | 12% |
December 2007 (Ex-Date 12/26/07) | 13% |
December 2007 (Ex-Date 12/28/07) | 13% |
January 2008 | 8% |
February 2008 | 8% |
March 2008 | 8% |
April 2008 | 8% |
May 2008 | 8% |
June 2008 | 8% |
July 2008 | 8% |
| Retail Class |
Income Replacement 2030 |
|
September 2007 | 11% |
October 2007 | 12% |
November 2007 | 10% |
December 2007 (Ex-Date 12/26/07) | 13% |
December 2007 (Ex-Date 12/28/07) | 12% |
January 2008 | 6% |
February 2008 | 6% |
March 2008 | 6% |
April 2008 | 7% |
May 2008 | 6% |
June 2008 | 7% |
July 2008 | 8% |
| Retail Class |
Income Replacement 2032 |
|
September 2007 | 12% |
October 2007 | 13% |
November 2007 | 12% |
December 2007 (Ex-Date 12/26/07) | 15% |
December 2007 (Ex-Date 12/28/07) | 14% |
January 2008 | 8% |
February 2008 | 8% |
March 2008 | 8% |
April 2008 | 8% |
May 2008 | 8% |
June 2008 | 8% |
July 2008 | 8% |
| Retail Class |
Income Replacement 2034 |
|
September 2007 | 11% |
October 2007 | 12% |
November 2007 | 12% |
December 2007 (Ex-Date 12/26/07) | 14% |
December 2007 (Ex-Date 12/28/07) | 13% |
January 2008 | 8% |
February 2008 | 8% |
March 2008 | 8% |
April 2008 | 9% |
May 2008 | 8% |
June 2008 | 8% |
July 2008 | 9% |
| Retail Class |
Income Replacement 2036 |
|
September 2007 | 11% |
October 2007 | 13% |
November 2007 | 12% |
December 2007 (Ex-Date 12/26/07) | 14% |
December 2007 (Ex-Date 12/28/07) | 13% |
January 2008 | 9% |
February 2008 | 9% |
March 2008 | 8% |
April 2008 | 9% |
May 2008 | 8% |
June 2008 | 8% |
July 2008 | 9% |
| Retail Class |
Income Replacement 2038 |
|
January 2008 | 9% |
February 2008 | 10% |
March 2008 | 10% |
April 2008 | 10% |
May 2008 | 10% |
June 2008 | 10% |
July 2008 | 10% |
| Retail Class |
Income Replacement 2040 |
|
January 2008 | 9% |
February 2008 | 10% |
March 2008 | 10% |
April 2008 | 11% |
May 2008 | 10% |
June 2008 | 10% |
July 2008 | 11% |
| Retail Class |
Income Replacement 2042 |
|
January 2008 | 9% |
February 2008 | 10% |
March 2008 | 11% |
April 2008 | 11% |
May 2008 | 10% |
June 2008 | 10% |
July 2008 | 11% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
| Retail Class |
Income Replacement 2016 |
|
September 2007 | 18% |
October 2007 | 19% |
November 2007 | 18% |
December 2007 (Ex-Date 12/26/07) | 21% |
December 2007 (Ex-Date 12/28/07) | 20% |
January 2008 | 5% |
February 2008 | 5% |
March 2008 | 5% |
April 2008 | 5% |
May 2008 | 5% |
June 2008 | 5% |
July 2008 | 5% |
| Retail Class |
Income Replacement 2018 |
|
September 2007 | 18% |
October 2007 | 20% |
November 2007 | 20% |
December 2007 (Ex-Date 12/26/07) | 21% |
December 2007 (Ex-Date 12/28/07) | 20% |
January 2008 | 6% |
February 2008 | 6% |
March 2008 | 6% |
April 2008 | 6% |
May 2008 | 6% |
June 2008 | 6% |
July 2008 | 6% |
| Retail Class |
Income Replacement 2020 |
|
September 2007 | 22% |
October 2007 | 23% |
November 2007 | 22% |
December 2007 (Ex-Date 12/26/07) | 26% |
December 2007 (Ex-Date 12/28/07) | 24% |
January 2008 | 6% |
February 2008 | 6% |
March 2008 | 6% |
April 2008 | 7% |
May 2008 | 6% |
June 2008 | 6% |
July 2008 | 7% |
| Retail Class |
Income Replacement 2022 |
|
September 2007 | 25% |
October 2007 | 28% |
November 2007 | 29% |
December 2007 (Ex-Date 12/26/07) | 30% |
December 2007 (Ex-Date 12/28/07) | 29% |
January 2008 | 7% |
February 2008 | 7% |
March 2008 | 7% |
April 2008 | 7% |
May 2008 | 7% |
June 2008 | 7% |
July 2008 | 7% |
| Retail Class |
Income Replacement 2024 |
|
September 2007 | 23% |
October 2007 | 25% |
November 2007 | 24% |
December 2007 (Ex-Date 12/26/07) | 28% |
December 2007 (Ex-Date 12/28/07) | 26% |
January 2008 | 7% |
February 2008 | 7% |
March 2008 | 7% |
April 2008 | 7% |
May 2008 | 7% |
June 2008 | 7% |
July 2008 | 7% |
| Retail Class |
Income Replacement 2026 |
|
September 2007 | 27% |
October 2007 | 30% |
November 2007 | 28% |
December 2007 (Ex-Date 12/26/07) | 33% |
December 2007 (Ex-Date 12/28/07) | 31% |
January 2008 | 7% |
February 2008 | 8% |
March 2008 | 7% |
April 2008 | 8% |
May 2008 | 7% |
June 2008 | 7% |
July 2008 | 8% |
| Retail Class |
Income Replacement 2028 |
|
September 2007 | 26% |
October 2007 | 30% |
November 2007 | 30% |
December 2007 (Ex-Date 12/26/07) | 32% |
December 2007 (Ex-Date 12/28/07) | 32% |
January 2008 | 8% |
February 2008 | 8% |
March 2008 | 8% |
April 2008 | 8% |
May 2008 | 8% |
June 2008 | 8% |
July 2008 | 8% |
| Retail Class |
Income Replacement 2030 |
|
September 2007 | 27% |
October 2007 | 30% |
November 2007 | 26% |
December 2007 (Ex-Date 12/26/07) | 33% |
December 2007 (Ex-Date 12/28/07) | 30% |
January 2008 | 7% |
February 2008 | 7% |
March 2008 | 8% |
April 2008 | 9% |
May 2008 | 7% |
June 2008 | 8% |
July 2008 | 9% |
| Retail Class |
Income Replacement 2032 |
|
September 2007 | 29% |
October 2007 | 32% |
November 2007 | 30% |
December 2007 (Ex-Date 12/26/07) | 36% |
December 2007 (Ex-Date 12/28/07) | 35% |
January 2008 | 8% |
February 2008 | 8% |
March 2008 | 8% |
April 2008 | 9% |
May 2008 | 8% |
June 2008 | 8% |
July 2008 | 9% |
| Retail Class |
Income Replacement 2034 |
|
September 2007 | 29% |
October 2007 | 32% |
November 2007 | 32% |
December 2007 (Ex-Date 12/26/07) | 37% |
December 2007 (Ex-Date 12/28/07) | 35% |
January 2008 | 9% |
February 2008 | 9% |
March 2008 | 9% |
April 2008 | 10% |
May 2008 | 9% |
June 2008 | 9% |
July 2008 | 10% |
| Retail Class |
Income Replacement 2036 |
|
September 2007 | 30% |
October 2007 | 34% |
November 2007 | 33% |
December 2007 (Ex-Date 12/26/07) | 38% |
December 2007 (Ex-Date 12/28/07) | 36% |
January 2008 | 9% |
February 2008 | 9% |
March 2008 | 9% |
April 2008 | 10% |
May 2008 | 9% |
June 2008 | 9% |
July 2008 | 10% |
| Retail Class |
Income Replacement 2038 |
|
January 2008 | 10% |
February 2008 | 10% |
March 2008 | 11% |
April 2008 | 10% |
May 2008 | 10% |
June 2008 | 10% |
July 2008 | 11% |
| Retail Class |
Income Replacement 2040 |
|
January 2008 | 10% |
February 2008 | 10% |
March 2008 | 11% |
April 2008 | 11% |
May 2008 | 10% |
June 2008 | 10% |
July 2008 | 11% |
| Retail Class |
Income Replacement 2042 |
|
January 2008 | 10% |
February 2008 | 11% |
March 2008 | 11% |
April 2008 | 11% |
May 2008 | 10% |
June 2008 | 11% |
July 2008 | 11% |
The fund will notify shareholders in January 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Income Replacement Funds
Each year, typically in June, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract (the Advisory Contract) 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 and, acting directly and through its separate committees, requests and receives information concerning, and considers at each of its meetings factors that are relevant to, its annual consideration of the renewal of each fund's Advisory Contract, 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 a written charter outlining the structure and purposes of the committee. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of each fund's Advisory Contract.
At its June 2008 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew each fund's Advisory Contract. In reaching its determination, the Board considered all factors it believed relevant and ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of each fund's Advisory Contract and the compensation to be received by Fidelity under the management contracts is consistent with Fidelity's fiduciary duty under applicable law. The Board's decision to renew each fund's Advisory Contract was not based on any single factor noted above, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. In reaching its determination to renew each fund's Advisory Contract, the Board 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.
Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, Strategic Advisers, Inc. (the Investment Adviser), including the backgrounds of the funds' investment personnel 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 Adviser's investment staff, its use of technology, and the Investment Adviser's approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. 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.
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 Adviser and its affiliates under the each fund's Advisory Contract 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 Adviser's 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.
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 Fidelity has taken a number of actions over the previous year 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 fees on Fidelity's Institutional Money Market Funds and launching Class IV and Institutional Class of certain of these funds; (iii) reducing the transfer agent fees for the Fidelity Select Portfolios and Investor Class of the VIP funds; and (iv) launching Class K of 29 equity funds as a lower-fee class available to certain employer-sponsored retirement plans.
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. The Board noted that it is not possible to evaluate performance in any comprehensive fashion because each fund had been in operation for less than one calendar year. Once a fund has been in operation for at least one calendar year, the Board will review the fund's absolute investment performance for each class, as well as the fund's relative investment performance for each class measured against a proprietary custom index and, if a meaningful peer group exists, a peer group of mutual funds.
The Board considered that FMR has taken steps to refocus and strengthen equity research, equity portfolio management, and compliance.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Adviser 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 noted that the funds do not pay the Investment Adviser a management fee for investment advisory services. 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 period of each fund's operations 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." 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 0% means that 100% 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.
Income Replacement 2016 Fund
Annual Report
Income Replacement 2018 Fund
Income Replacement 2020 Fund
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Income Replacement 2022 Fund
Income Replacement 2024 Fund
Annual Report
Income Replacement 2026 Fund
Income Replacement 2028 Fund
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Income Replacement 2030 Fund
Income Replacement 2032 Fund
Annual Report
Income Replacement 2034 Fund
Income Replacement 2036 Fund
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Income Replacement 2038 Fund
Income Replacement 2040 Fund
Annual Report
Income Replacement 2042 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 the period.
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 the total expenses of each class of each fund, the Board noted that each fund invests in Institutional Class of the underlying fund (if that underlying fund offers multiple classes of shares) to avoid charging fund-paid 12b-1 fees at both fund levels. The Board considered that the funds do not pay transfer agent fees. Instead, Institutional Class of each underlying fund (or the underlying fund, if that underlying fund does not offer multiple classes of shares) bears its pro rata portion of each fund's transfer agent fee according to the percentage of each fund's assets invested in that underlying fund. The Board further noted that the Investment Adviser pays all other expenses of each fund, with limited exceptions.
The Board noted that the total expenses of each of Class A, Class C, and Institutional Class of each fund ranked below its competitive median for the period, and each of Class T and the retail class of each fund ranked equal to its competitive median.
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.
Based on its review, the Board concluded that the total expenses of each class of each 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 level of Fidelity's profits in respect of all the Fidelity funds, as well as the profitability of each underlying fund.
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 concluded that the costs of the services provided by and the profits realized by Fidelity in connection with the operation of each fund were not relevant to the renewal of each fund's Advisory Contract because the funds do not pay management fees and FMR pays all other expenses of each fund, with limited exceptions.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Economies of Scale. The Board concluded that the realization of economies of scale was not relevant to the renewal of each fund's Advisory Contract because the funds do not pay management fees and the Investment Adviser pays all other expenses of each fund, with limited exceptions.
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 certain topics, including (i) fund performance trends and actions to be taken by FMR to improve certain funds' overall performance; (ii) portfolio manager changes that have occurred during the past year; (iii) Fidelity's fund profitability methodology, the profitability of certain fund service providers, and profitability trends for certain funds; (iv) Fidelity's compensation structure for portfolio managers and key personnel, including its effects on fund profitability and the extent to which portfolio manager compensation is linked to fund performance; (v) Fidelity's fee structures; (vi) the funds' sub-advisory arrangements; and (vii) accounts managed by Fidelity other than the Fidelity funds.
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 Contract should be renewed.
Annual Report
Investment Adviser
Strategic Advisers, Inc.
Boston, MA
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Mellon Bank
Pittsburgh, PA
RW-UANN-0908 1.848174.100
Fidelity Advisor Income Replacement FundsSM -
2016, 2018, 2020, 2022, 2024, 2026, 2028, 2030, 2032, 2034, 2036, 2038, 2040, 2042 -
Class A, Class T and Class C
Annual Report
July 31, 2008
Each Class A, Class T, and Class C are
classes of Fidelity Income Replacement FundsSM
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
Performance | How the funds have done over time. | |
Management's Discussion | The managers' review of fund performance, strategy and outlook. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Advisor Income Replacement 2016 | Investment Changes | |
| Investments | |
| Financial Statements | |
Advisor Income Replacement 2018 | Investment Changes | |
| Investments | |
| Financial Statements | |
Advisor Income Replacement 2020 | Investment Changes | |
| Investments | |
| Financial Statements | |
Advisor Income Replacement 2022 | Investment Changes | |
| Investments | |
| Financial Statements | |
Advisor Income Replacement 2024 | Investment Changes | |
| Investments | |
| Financial Statements | |
Advisor Income Replacement 2026 | Investment Changes | |
| Investments | |
| Financial Statements | |
Advisor Income Replacement 2028 | Investment Changes | |
| Investments | |
| Financial Statements | |
Advisor Income Replacement 2030 | Investment Changes | |
| Investments | |
| Financial Statements | |
Advisor Income Replacement 2032 | Investment Changes | |
| Investments | |
| Financial Statements | |
Advisor Income Replacement 2034 | Investment Changes | |
| Investments | |
| Financial Statements | |
Advisor Income Replacement 2036 | Investment Changes | |
| Investments | |
| Financial Statements | |
Advisor Income Replacement 2038 | Investment Changes | |
| Investments | |
| Financial Statements | |
Advisor Income Replacement 2040 | Investment Changes | |
| Investments | |
| Financial Statements | |
Advisor Income Replacement 2042 | Investment Changes | |
| Investments | |
| Financial Statements | |
Notes | Notes to the financial statements. | |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Board Approval of Investment Advisory Contracts and Management Fees |
|
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 quarterly holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.advisor.fidelity.com.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
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 LLC or an affiliated company.
Annual Report
Chairman's Message
Dear Shareholder:
Domestic and international securities markets have struggled thus far in 2008. High-grade fixed-income investments produced modestly positive results, but many stock benchmarks suffered double-digit losses through the first half of this year. Financial markets are always unpredictable, but 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
Fidelity Advisor Income Replacement 2016 FundSM - Class A, T, and C
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of each class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Advisor Income Replacement 2016 - Class A's cumulative total return and show you what would have happened if Advisor Income Replacement 2016 - Class A shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Advisor Income Replacement 2016 - Class A on August 30, 2007, when the fund started, and the current 5.75% 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. Aggregate Index performed over the same period.
Annual Report
Fidelity Advisor Income Replacement 2018 FundSM - Class A, T, and C
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of each class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Advisor Income Replacement 2018 - Class A's cumulative total return and show you what would have happened if Advisor Income Replacement 2018 - Class A shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Advisor Income Replacement 2018 - Class A on August 30, 2007, when the fund started, and the current 5.75% 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. Aggregate Index performed over the same period.
Annual Report
Fidelity Advisor Income Replacement 2020 FundSM - Class A, T, and C
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of each class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Advisor Income Replacement 2020 - Class A's cumulative total return and show you what would have happened if Advisor Income Replacement 2020 - Class A shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Advisor Income Replacement 2020 - Class A on August 30, 2007, when the fund started, and the current 5.75% 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. Aggregate Index performed over the same period.
Annual Report
Fidelity Advisor Income Replacement 2022 FundSM - Class A, T, and C
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of each class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Advisor Income Replacement 2022 - Class A's cumulative total return and show you what would have happened if Advisor Income Replacement 2022 - Class A shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Advisor Income Replacement 2022 - Class A on August 30, 2007, when the fund started, and the current 5.75% 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. Aggregate Index performed over the same period.
Annual Report
Fidelity Advisor Income Replacement 2024 FundSM - Class A, T, and C
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of each class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Advisor Income Replacement 2024 - Class A's cumulative total return and show you what would have happened if Advisor Income Replacement 2024 - Class A shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Advisor Income Replacement 2024 - Class A on August 30, 2007, when the fund started, and the current 5.75% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the Standard & Poor's 500SM Index (S&P 500®) performed over the same period.
Annual Report
Fidelity Advisor Income Replacement 2026 FundSM - Class A, T, and C
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of each class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Advisor Income Replacement 2026 - Class A's cumulative total return and show you what would have happened if Advisor Income Replacement 2026 - Class A shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Advisor Income Replacement 2026 - Class A on August 30, 2007, when the fund started, and the current 5.75% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Fidelity Advisor Income Replacement 2028 FundSM - Class A, T, and C
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of each class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Advisor Income Replacement 2028 - Class A's cumulative total return and show you what would have happened if Advisor Income Replacement 2028 - Class A shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Advisor Income Replacement 2028 - Class A on August 30, 2007, when the fund started, and the current 5.75% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Fidelity Advisor Income Replacement 2030 FundSM - Class A, T, and C
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of each class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Advisor Income Replacement 2030 - Class A's cumulative total return and show you what would have happened if Advisor Income Replacement 2030 - Class A shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Advisor Income Replacement 2030 - Class A on August 30, 2007, when the fund started, and the current 5.75% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Fidelity Advisor Income Replacement 2032 FundSM - Class A, T, and C
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of each class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Advisor Income Replacement 2032 - Class A's cumulative total return and show you what would have happened if Advisor Income Replacement 2032 - Class A shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Advisor Income Replacement 2032 - Class A on August 30, 2007, when the fund started, and the current 5.75% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Fidelity Advisor Income Replacement 2034 FundSM - Class A, T, and C
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of each class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Advisor Income Replacement 2034 - Class A's cumulative total return and show you what would have happened if Advisor Income Replacement 2034 - Class A shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Advisor Income Replacement 2034 - Class A on August 30, 2007, when the fund started, and the current 5.75% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Fidelity Advisor Income Replacement 2036 FundSM - Class A, T, and C
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of each class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Advisor Income Replacement 2036 - Class A's cumulative total return and show you what would have happened if Advisor Income Replacement 2036 - Class A shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Advisor Income Replacement 2036 - Class A on August 30, 2007, when the fund started, and the current 5.75% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Fidelity Advisor Income Replacement 2038 FundSM - Class A, T, and C
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of each class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Advisor Income Replacement 2038 - Class A's cumulative total return and show you what would have happened if Advisor Income Replacement 2038 - Class A shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Advisor Income Replacement 2038 - Class A on December 31, 2007, when the fund started, and the current 5.75% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Fidelity Advisor Income Replacement 2040 FundSM - Class A, T, and C
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of each class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Advisor Income Replacement 2040 - Class A's cumulative total return and show you what would have happened if Advisor Income Replacement 2040 - Class A shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Advisor Income Replacement 2040 - Class A on December 31, 2007, when the fund started, and the current 5.75% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Fidelity Advisor Income Replacement 2042 FundSM - Class A, T, and C
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of each class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Advisor Income Replacement 2042 - Class A's cumulative total return and show you what would have happened if Advisor Income Replacement 2042 - Class A shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Advisor Income Replacement 2042 - Class A on December 31, 2007, when the fund started, and the current 5.75% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Comments from Christopher Sharpe and Jonathan Shelon, Co-Portfolio Managers of Fidelity Advisor Income Replacement FundsSM
U.S.-based investment-grade debt outperformed domestic stocks, international equities and U.S. high-yield bonds during the 12-month period ending July 31, 2008. Bonds with less credit risk generally produced higher returns for investment-grade debt during the past year. Risk aversion permeated the credit markets, as investors sought refuge from soaring energy prices, stagnant economic growth and a severe credit crunch - a byproduct of the subprime mortgage crisis. For the 12 months overall, the Lehman Brothers® U.S. Aggregate Index - a measure of high-quality, fixed-rate, taxable bonds - returned 6.15%. In comparison, the Merrill Lynch® U.S. High Yield Master II Constrained Index, a proxy for the domestic high-income market, suffered a modest shortfall of 0.04%. Grim news about the state of the U.S. economy forced most domestic equity benchmarks into negative territory for the year. Oil prices north of $140 per barrel, gasoline prices in excess of $4 per gallon and soaring food costs drove both inflation levels and consumer prices higher. Wall Street, meanwhile, struggled under the weight of massive write-downs in the financials sector, an ongoing credit crisis and bleak housing data. As a result, the Dow Jones Industrial AverageSM slid 11.71% and the Standard & Poor's 500SM Index dropped 11.09%. The broad international stock market also struggled, as the MSCI® Europe, Australasia, Far East Index fell 12.04%.
Like many multiple-asset-class mutual funds, the Advisor Income Replacement Funds also struggled within a volatile and generally less-than-favorable market environment. While the 14 individual Fund portfolios had varying results against this backdrop, they all held up reasonably well, although their returns all landed in negative territory. The portfolios with biennial maturity dates of 2016-2036 were launched on August 30, 2007, and, during the 11 months from that inception date though July 31, 2008, the Class A shares of these portfolios posted absolute returns ranging from -2.02% for the short-dated and most conservatively positioned 2016 portfolio to -5.17% for the more equity-heavy 2036 portfolio. The longer-dated 2038, 2040 and 2042 portfolios, launched on December 31, 2007, had somewhat lower absolute returns given their even greater allocations to equities, and their life-of-fund returns through July 31, 2008, all were around -8.79%. (For specific portfolio performance on each of the IRFs and that of their other share classes, please refer to the performance section of this report.)
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.
Portfolio
Shareholder Expense Example
As a shareholder of a 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 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 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, 2008 to July 31, 2008).
Actual Expenses
The first line of the accompanying table for each class of 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 class of the fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. In addition, each Fund, as a shareholder in underlying Fidelity Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Funds. These fees and expenses are not included in each Fund's annualized expense ratio used to calculate the expense estimates in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of each 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. In addition, each Fund, as a shareholder in underlying Fidelity Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Funds. These fees and expenses are not included in each Fund's annualized expense ratio used to calculate the expense estimates in the table below.
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. In addition, if these transactional costs were included, your costs would have been higher.
| Beginning | Ending | Expenses Paid |
Fidelity Income Replacement 2016 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 974.90 | $ 1.23 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 973.50 | $ 2.45 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 971.00 | $ 4.90 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
Income Replacement 2016 |
|
|
|
Actual | $ 1,000.00 | $ 975.90 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 975.90 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Fidelity Income Replacement 2018 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 971.50 | $ 1.23 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 970.10 | $ 2.45 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 967.60 | $ 4.89 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
| Beginning | Ending | Expenses Paid |
Income Replacement 2018 |
|
|
|
Actual | $ 1,000.00 | $ 972.40 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 972.60 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Fidelity Income Replacement 2020 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 968.60 | $ 1.22 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 967.40 | $ 2.45 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 965.10 | $ 4.89 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
Income Replacement 2020 |
|
|
|
Actual | $ 1,000.00 | $ 969.90 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 969.90 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Fidelity Income Replacement 2022 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 966.90 | $ 1.22 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 965.60 | $ 2.44 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 963.40 | $ 4.88 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
Income Replacement 2022 |
|
|
|
Actual | $ 1,000.00 | $ 968.10 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 968.30 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Fidelity Income Replacement 2024 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 965.70 | $ 1.22 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 964.40 | $ 2.44 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 961.90 | $ 4.88 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
Income Replacement 2024 |
|
|
|
Actual | $ 1,000.00 | $ 966.90 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 966.90 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
| Beginning | Ending | Expenses Paid |
Fidelity Income Replacement 2026 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 964.40 | $ 1.22 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 963.10 | $ 2.44 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 960.80 | $ 4.88 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
Income Replacement 2026 |
|
|
|
Actual | $ 1,000.00 | $ 965.70 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 965.70 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Fidelity Income Replacement 2028 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 963.30 | $ 1.22 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 962.20 | $ 2.44 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 959.60 | $ 4.87 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
Income Replacement 2028 |
|
|
|
Actual | $ 1,000.00 | $ 964.50 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 964.50 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Fidelity Income Replacement 2030 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 962.80 | $ 1.22 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 961.70 | $ 2.44 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 959.20 | $ 4.87 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
Income Replacement 2030 |
|
|
|
Actual | $ 1,000.00 | $ 964.00 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 964.00 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Fidelity Income Replacement 2032 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 961.70 | $ 1.22 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 960.20 | $ 2.44 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 957.90 | $ 4.87 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
| Beginning | Ending | Expenses Paid |
Income Replacement 2032 |
|
|
|
Actual | $ 1,000.00 | $ 962.80 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 962.80 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Fidelity Income Replacement 2034 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 960.10 | $ 1.22 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 959.10 | $ 2.44 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 956.50 | $ 4.86 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
Income Replacement 2034 |
|
|
|
Actual | $ 1,000.00 | $ 961.20 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 961.40 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Fidelity Income Replacement 2036 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 959.10 | $ 1.22 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 957.80 | $ 2.43 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 955.40 | $ 4.86 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
Income Replacement 2036 |
|
|
|
Actual | $ 1,000.00 | $ 960.10 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 960.10 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Fidelity Income Replacement 2038 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 956.90 | $ 1.22 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 955.70 | $ 2.43 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 953.10 | $ 4.86 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
Income Replacement 2038 |
|
|
|
Actual | $ 1,000.00 | $ 958.10 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 957.90 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
| Beginning | Ending | Expenses Paid |
Fidelity Income Replacement 2040 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 956.70 | $ 1.22 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 955.50 | $ 2.43 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 952.90 | $ 4.86 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
Income Replacement 2040 |
|
|
|
Actual | $ 1,000.00 | $ 957.90 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 957.70 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Fidelity Income Replacement 2042 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 956.10 | $ 1.22 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 954.80 | $ 2.43 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 952.60 | $ 4.85 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
Income Replacement 2042 |
|
|
|
Actual | $ 1,000.00 | $ 957.30 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 957.30 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below) ; multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
The fees and expenses of the underlying Fidelity Funds in which the Fund invests are not included in each class' annualized expense ratio.
| Annualized |
Fidelity Income Replacement 2016 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2016 | .00% |
Institutional Class | .00% |
Fidelity Income Replacement 2018 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2018 | .00% |
Institutional Class | .00% |
| Annualized |
Fidelity Income Replacement 2020 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2020 | .00% |
Institutional Class | .00% |
Fidelity Income Replacement 2022 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2022 | .00% |
Institutional Class | .00% |
Fidelity Income Replacement 2024 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2024 | .00% |
Institutional Class | .00% |
Fidelity Income Replacement 2026 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2026 | .00% |
Institutional Class | .00% |
Fidelity Income Replacement 2028 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2028 | .00% |
Institutional Class | .00% |
Fidelity Income Replacement 2030 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2030 | .00% |
Institutional Class | .00% |
Fidelity Income Replacement 2032 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2032 | .00% |
Institutional Class | .00% |
Fidelity Income Replacement 2034 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2034 | .00% |
Institutional Class | .00% |
Fidelity Income Replacement 2036 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2036 | .00% |
Institutional Class | .00% |
Fidelity Income Replacement 2038 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2038 | .00% |
Institutional Class | .00% |
| Annualized |
Fidelity Income Replacement 2040 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2040 | .00% |
Institutional Class | .00% |
Fidelity Income Replacement 2042 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2042 | .00% |
Institutional Class | .00% |
Annual Report
Fidelity Income Replacement 2016 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 4.7 | 4.7 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 3.9 | 3.7 |
Fidelity Broad Market Opportunities Fund | 6.2 | 6.2 |
Fidelity Disciplined Equity Fund | 3.9 | 3.9 |
Fidelity Equity-Income Fund | 3.8 | 3.9 |
Fidelity Large Cap Core Enhanced Index Fund | 6.3 | 6.3 |
Fidelity Small Cap Opportunities Fund | 2.6 | 2.4 |
| 31.4 | 31.1 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 3.3 | 3.3 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 1.2 | 1.2 |
Fidelity Strategic Income Fund | 1.2 | 1.3 |
| 2.4 | 2.5 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 7.6 | 7.8 |
Fidelity Strategic Real Return Fund | 7.6 | 7.7 |
Fidelity Total Bond Fund | 22.7 | 23.0 |
| 37.9 | 38.5 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 12.6 | 12.2 |
Fidelity Short-Term Bond Fund | 12.4 | 12.4 |
| 25.0 | 24.6 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 31.4% |
|
![]() | International Equity Funds | 3.3% |
|
![]() | High Yield Fixed-Income Funds | 2.4% |
|
![]() | Investment Grade Fixed-Income Funds | 37.9% |
|
![]() | Short-Term Funds | 25.0% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 31.1% |
|
![]() | International Equity Funds | 3.3% |
|
![]() | High Yield Fixed-Income Funds | 2.5% |
|
![]() | Investment Grade Fixed-Income Funds | 38.5% |
|
![]() | Short-Term Funds | 24.6% |
|
Expected | |||
![]() | Domestic Equity Funds | 29.7% |
|
![]() | International Equity Funds | 2.9% |
|
![]() | High Yield Fixed-Income Funds | 1.9% |
|
![]() | Investment Grade Fixed-Income Funds | 38.7% |
|
![]() | Short-Term Funds | 26.8% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2016 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 34.7% | |||
Shares | Value | ||
Domestic Equity Funds - 31.4% | |||
Fidelity 100 Index Fund | 48,826 | $ 446,267 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 23,795 | 372,861 | |
Fidelity Broad Market Opportunities Fund | 66,779 | 595,001 | |
Fidelity Disciplined Equity Fund | 14,736 | 374,725 | |
Fidelity Equity-Income Fund | 8,079 | 364,833 | |
Fidelity Large Cap Core Enhanced Index Fund | 68,060 | 604,374 | |
Fidelity Small Cap Opportunities Fund | 30,456 | 242,737 | |
TOTAL DOMESTIC EQUITY FUNDS | 3,000,798 | ||
International Equity Funds - 3.3% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 8,498 | 309,398 | |
TOTAL EQUITY FUNDS (Cost $3,707,023) | 3,310,196 | ||
Fixed-Income Funds - 40.3% | |||
|
|
|
|
High Yield Fixed-Income Funds - 2.4% | |||
Fidelity Capital & Income Fund | 14,128 | 114,297 | |
Fidelity Strategic Income Fund | 11,338 | 115,310 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 229,607 | ||
Investment Grade Fixed-Income Funds - 37.9% | |||
Fidelity Government Income Fund | 70,181 | 728,484 | |
Fidelity Strategic Real Return Fund | 71,751 | 725,402 | |
Fidelity Total Bond Fund | 215,593 | 2,168,866 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 3,622,752 | ||
TOTAL FIXED-INCOME FUNDS (Cost $3,914,273) | 3,852,359 | ||
Short-Term Funds - 25.0% | |||
Shares | Value | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 1,205,852 | $ 1,205,852 | |
Fidelity Short-Term Bond Fund | 141,858 | 1,180,258 | |
TOTAL SHORT-TERM FUNDS (Cost $2,418,827) | 2,386,110 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $10,040,123) | $ 9,548,665 |
Income Tax Information |
At July 31, 2008, the fund had a capital loss carryforward of approximately $827 all of which will expire on July 31, 2016. |
The fund intends to elect to defer to its fiscal year ending July 31, 2009 approximately $3,751 of losses recognized during the period November 1, 2007 to July 31, 2008. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2016 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (cost $10,040,123) - See accompanying schedule | $ 9,548,665 | |
Cash | 10 | |
Receivable for investments sold | 17,767 | |
Total assets | 9,566,442 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | $ 17,762 | |
Distribution fees payable | 2,020 | |
Total liabilities | 19,782 | |
|
|
|
Net Assets | $ 9,546,660 | |
Net Assets consist of: |
| |
Paid in capital | $ 10,037,692 | |
Undistributed net investment income | 4,829 | |
Accumulated undistributed net realized gain (loss) on investments | (4,403) | |
Net unrealized appreciation (depreciation) on investments | (491,458) | |
Net Assets | $ 9,546,660 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 47.76 | |
|
|
|
Maximum offering price per share (100/94.25 of $47.76) | $ 50.67 | |
Class T: | $ 47.75 | |
|
|
|
Maximum offering price per share (100/96.50 of $47.75) | $ 49.48 | |
|
|
|
Class C: | $ 47.73 | |
|
|
|
Income Replacement 2016: | $ 47.77 | |
|
|
|
Institutional Class: | $ 47.77 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period August 30, 2007 | |
|
|
|
Investment Income |
|
|
Income distributions from underlying funds |
| $ 161,337 |
Interest |
| 171 |
Total income |
| 161,508 |
|
|
|
Expenses | ||
Distribution fees | $ 13,234 | |
Independent trustees' compensation | 20 | |
Total expenses before reductions | 13,254 | |
Expense reductions | (20) | 13,234 |
Net investment income (loss) | 148,274 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (41,157) | |
Capital gain distributions from underlying funds | 49,677 | 8,520 |
Change in net unrealized appreciation (depreciation) on underlying funds | (491,458) | |
Net gain (loss) | (482,938) | |
Net increase (decrease) in net assets resulting from operations | $ (334,664) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2016 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 148,274 |
Net realized gain (loss) | 8,520 |
Change in net unrealized appreciation (depreciation) | (491,458) |
Net increase (decrease) in net assets resulting from operations | (334,664) |
Distributions to shareholders from net investment income | (143,445) |
Distributions to shareholders from net realized gain | (12,923) |
Total distributions | (156,368) |
Share transactions - net increase (decrease) | 10,037,692 |
Total increase (decrease) in net assets | 9,546,660 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $4,829) | $ 9,546,660 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | 1.233 |
Net realized and unrealized gain (loss) | (2.204) |
Total from investment operations | (.971) |
Distributions from net investment income | (1.129) |
Distributions from net realized gain | (.140) |
Total distributions | (1.269) |
Net asset value, end of period | $ 47.76 |
Total Return B, C, D | (2.02)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 2.76% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 2,214 |
Portfolio turnover rate | 56% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | 1.128 |
Net realized and unrealized gain (loss) | (2.219) |
Total from investment operations | (1.091) |
Distributions from net investment income | (1.019) |
Distributions from net realized gain | (.140) |
Total distributions | (1.159) |
Net asset value, end of period | $ 47.75 |
Total Return B, C, D | (2.26)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 2.51% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 673 |
Portfolio turnover rate | 56% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .904 |
Net realized and unrealized gain (loss) | (2.227) |
Total from investment operations | (1.323) |
Distributions from net investment income | (.807) |
Distributions from net realized gain | (.140) |
Total distributions | (.947) |
Net asset value, end of period | $ 47.73 |
Total Return B, C, D | (2.71)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | 2.01% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 1,595 |
Portfolio turnover rate | 56% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2016
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.356 |
Net realized and unrealized gain (loss) | (2.217) |
Total from investment operations | (.861) |
Distributions from net investment income | (1.229) |
Distributions from net realized gain | (.140) |
Total distributions | (1.369) |
Net asset value, end of period | $ 47.77 |
Total Return B, C | (1.81)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 3.00% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 4,880 |
Portfolio turnover rate | 56% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.370 |
Net realized and unrealized gain (loss) | (2.231) |
Total from investment operations | (.861) |
Distributions from net investment income | (1.229) |
Distributions from net realized gain | (.140) |
Total distributions | (1.369) |
Net asset value, end of period | $ 47.77 |
Total Return B, C | (1.81)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 3.00% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 184 |
Portfolio turnover rate | 56% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2018 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 5.4 | 5.3 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 4.5 | 4.3 |
Fidelity Broad Market Opportunities Fund | 7.1 | 7.1 |
Fidelity Disciplined Equity Fund | 4.5 | 4.5 |
Fidelity Equity-Income Fund | 4.4 | 4.5 |
Fidelity Large Cap Core Enhanced Index Fund | 7.2 | 7.1 |
Fidelity Small Cap Opportunities Fund | 2.9 | 2.8 |
| 36.0 | 35.6 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 4.1 | 4.2 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 1.6 | 1.6 |
Fidelity Strategic Income Fund | 1.6 | 1.7 |
| 3.2 | 3.3 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 7.2 | 7.3 |
Fidelity Strategic Real Return Fund | 7.1 | 7.2 |
Fidelity Total Bond Fund | 21.3 | 21.5 |
| 35.6 | 36.0 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 10.6 | 10.4 |
Fidelity Short-Term Bond Fund | 10.5 | 10.5 |
| 21.1 | 20.9 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 36.0% |
|
![]() | International Equity Funds | 4.1% |
|
![]() | High Yield Fixed-Income Funds | 3.2% |
|
![]() | Investment Grade Fixed-Income Funds | 35.6% |
|
![]() | Short-Term Funds | 21.1% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 35.6% |
|
![]() | International Equity Funds | 4.2% |
|
![]() | High Yield Fixed-Income Funds | 3.3% |
|
![]() | Investment Grade Fixed-Income Funds | 36.0% |
|
![]() | Short-Term Funds | 20.9% |
|
Expected | |||
![]() | Domestic Equity Funds | 35.0% |
|
![]() | International Equity Funds | 3.9% |
|
![]() | High Yield Fixed-Income Funds | 2.8% |
|
![]() | Investment Grade Fixed-Income Funds | 35.9% |
|
![]() | Short-Term Funds | 22.4% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2018 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 40.1% | |||
Shares | Value | ||
Domestic Equity Funds - 36.0% | |||
Fidelity 100 Index Fund | 41,071 | $ 375,391 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 20,055 | 314,261 | |
Fidelity Broad Market Opportunities Fund | 56,010 | 499,052 | |
Fidelity Disciplined Equity Fund | 12,397 | 315,265 | |
Fidelity Equity-Income Fund | 6,809 | 307,478 | |
Fidelity Large Cap Core Enhanced Index Fund | 57,100 | 507,048 | |
Fidelity Small Cap Opportunities Fund | 25,693 | 204,775 | |
TOTAL DOMESTIC EQUITY FUNDS | 2,523,270 | ||
International Equity Funds - 4.1% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 7,943 | 289,218 | |
TOTAL EQUITY FUNDS (Cost $3,158,031) | 2,812,488 | ||
Fixed-Income Funds - 38.8% | |||
|
|
|
|
High Yield Fixed-Income Funds - 3.2% | |||
Fidelity Capital & Income Fund | 14,023 | 113,450 | |
Fidelity Strategic Income Fund | 11,230 | 114,210 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 227,660 | ||
Investment Grade Fixed-Income Funds - 35.6% | |||
Fidelity Government Income Fund | 48,330 | 501,669 | |
Fidelity Strategic Real Return Fund | 49,359 | 499,015 | |
Fidelity Total Bond Fund | 148,193 | 1,490,823 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 2,491,507 | ||
TOTAL FIXED-INCOME FUNDS (Cost $2,762,356) | 2,719,167 | ||
Short-Term Funds - 21.1% | |||
Shares | Value | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 744,668 | $ 744,668 | |
Fidelity Short-Term Bond Fund | 87,879 | 731,151 | |
TOTAL SHORT-TERM FUNDS (Cost $1,496,564) | 1,475,819 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $7,416,951) | $ 7,007,474 |
Income Tax Information |
At July 31, 2008, the fund had a capital loss carryforward of approximately $62 all of which will expire on July 31, 2016. |
The fund intends to elect to defer to its fiscal year ending July 31, 2009 approximately $633 of losses recognized during the period November 1, 2007 to July 31, 2008. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2018 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (cost $7,416,951) - See accompanying schedule | $ 7,007,474 | |
Cash | 7 | |
Total assets | 7,007,481 | |
|
|
|
Liabilities | ||
Distribution fees payable | 590 | |
|
|
|
Net Assets | $ 7,006,891 | |
Net Assets consist of: |
| |
Paid in capital | $ 7,412,396 | |
Undistributed net investment income | 3,581 | |
Accumulated undistributed net realized gain (loss) on investments | 391 | |
Net unrealized appreciation (depreciation) on investments | (409,477) | |
Net Assets | $ 7,006,891 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 47.46 | |
|
|
|
Maximum offering price per share (100/94.25 of $47.46) | $ 50.36 | |
Class T: | $ 47.46 | |
|
|
|
Maximum offering price per share (100/96.50 of $47.46) | $ 49.18 | |
|
|
|
Class C: | $ 47.41 | |
|
|
|
Income Replacement 2018: | $ 47.46 | |
|
|
|
Institutional Class: | $ 47.47 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period August 30, 2007 | |
|
|
|
Investment Income |
|
|
Income distributions from underlying funds |
| $ 112,825 |
Interest |
| 131 |
Total income |
| 112,956 |
|
|
|
Expenses | ||
Distribution fees | $ 4,098 | |
Independent trustees' compensation | 15 | |
Total expenses before reductions | 4,113 | |
Expense reductions | (15) | 4,098 |
Net investment income (loss) | 108,858 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (28,944) | |
Capital gain distributions from underlying funds | 37,463 | 8,519 |
Change in net unrealized appreciation (depreciation) on underlying funds | (409,477) | |
Net gain (loss) | (400,958) | |
Net increase (decrease) in net assets resulting from operations | $ (292,100) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2018 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 108,858 |
Net realized gain (loss) | 8,519 |
Change in net unrealized appreciation (depreciation) | (409,477) |
Net increase (decrease) in net assets resulting from operations | (292,100) |
Distributions to shareholders from net investment income | (105,276) |
Distributions to shareholders from net realized gain | (8,128) |
Total distributions | (113,404) |
Share transactions - net increase (decrease) | 7,412,395 |
Total increase (decrease) in net assets | 7,006,891 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $3,581) | $ 7,006,891 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | 1.163 |
Net realized and unrealized gain (loss) | (2.454) |
Total from investment operations | (1.291) |
Distributions from net investment income | (1.119) |
Distributions from net realized gain | (.130) |
Total distributions | (1.249) |
Net asset value, end of period | $ 47.46 |
Total Return B, C, D | (2.68)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 2.60% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 1,107 |
Portfolio turnover rate | 46% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | 1.075 |
Net realized and unrealized gain (loss) | (2.483) |
Total from investment operations | (1.408) |
Distributions from net investment income | (1.002) |
Distributions from net realized gain | (.130) |
Total distributions | (1.132) |
Net asset value, end of period | $ 47.46 |
Total ReturnB, C, D | (2.91)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 2.35% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 154 |
Portfolio turnover rate | 46% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .836 |
Net realized and unrealized gain (loss) | (2.476) |
Total from investment operations | (1.640) |
Distributions from net investment income | (.820) |
Distributions from net realized gain | (.130) |
Total distributions | (.950) |
Net asset value, end of period | $ 47.41 |
Total Return B, C, D | (3.36)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | 1.85% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 365 |
Portfolio turnover rate | 46% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2018
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.280 |
Net realized and unrealized gain (loss) | (2.469) |
Total from investment operations | (1.189) |
Distributions from net investment income | (1.221) |
Distributions from net realized gain | (.130) |
Total distributions | (1.351) |
Net asset value, end of period | $ 47.46 |
Total Return B, C | (2.48)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.85% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 5,167 |
Portfolio turnover rate | 46% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.295 |
Net realized and unrealized gain (loss) | (2.474) |
Total from investment operations | (1.179) |
Distributions from net investment income | (1.221) |
Distributions from net realized gain | (.130) |
Total distributions | (1.351) |
Net asset value, end of period | $ 47.47 |
Total Return B, C | (2.46)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.85% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 214 |
Portfolio turnover rate | 46% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2020 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 5.8 | 6.0 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 4.9 | 4.7 |
Fidelity Broad Market Opportunities Fund | 7.8 | 7.9 |
Fidelity Disciplined Equity Fund | 4.9 | 4.9 |
Fidelity Equity-Income Fund | 4.7 | 4.9 |
Fidelity Large Cap Core Enhanced Index Fund | 7.9 | 7.9 |
Fidelity Small Cap Opportunities Fund | 3.2 | 3.1 |
| 39.2 | 39.4 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 5.0 | 5.3 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 1.9 | 1.9 |
Fidelity Strategic Income Fund | 2.0 | 2.0 |
| 3.9 | 3.9 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 6.7 | 6.7 |
Fidelity Strategic Real Return Fund | 6.7 | 6.7 |
Fidelity Total Bond Fund | 20.1 | 20.1 |
| 33.5 | 33.5 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 9.3 | 8.9 |
Fidelity Short-Term Bond Fund | 9.1 | 9.0 |
| 18.4 | 17.9 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 39.2% |
|
![]() | International Equity Funds | 5.0% |
|
![]() | High Yield Fixed-Income Funds | 3.9% |
|
![]() | Investment Grade Fixed-Income Funds | 33.5% |
|
![]() | Short-Term Funds | 18.4% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 39.4% |
|
![]() | International Equity Funds | 5.3% |
|
![]() | High Yield Fixed-Income Funds | 3.9% |
|
![]() | Investment Grade Fixed-Income Funds | 33.5% |
|
![]() | Short-Term Funds | 17.9% |
|
Expected | |||
![]() | Domestic Equity Funds | 38.9% |
|
![]() | International Equity Funds | 4.8% |
|
![]() | High Yield Fixed-Income Funds | 3.6% |
|
![]() | Investment Grade Fixed-Income Funds | 33.7% |
|
![]() | Short-Term Funds | 19.0% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2020 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 44.2% | |||
Shares | Value | ||
Domestic Equity Funds - 39.2% | |||
Fidelity 100 Index Fund | 15,127 | $ 138,259 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 7,369 | 115,465 | |
Fidelity Broad Market Opportunities Fund | 20,626 | 183,778 | |
Fidelity Disciplined Equity Fund | 4,544 | 115,548 | |
Fidelity Equity-Income Fund | 2,465 | 111,314 | |
Fidelity Large Cap Core Enhanced Index Fund | 20,985 | 186,345 | |
Fidelity Small Cap Opportunities Fund | 9,465 | 75,438 | |
TOTAL DOMESTIC EQUITY FUNDS | 926,147 | ||
International Equity Funds - 5.0% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 3,260 | 118,680 | |
TOTAL EQUITY FUNDS (Cost $1,140,394) | 1,044,827 | ||
Fixed-Income Funds - 37.4% | |||
|
|
|
|
High Yield Fixed-Income Funds - 3.9% | |||
Fidelity Capital & Income Fund | 5,618 | 45,447 | |
Fidelity Strategic Income Fund | 4,516 | 45,926 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 91,373 | ||
Investment Grade Fixed-Income Funds - 33.5% | |||
Fidelity Government Income Fund | 15,262 | 158,416 | |
Fidelity Strategic Real Return Fund | 15,654 | 158,262 | |
Fidelity Total Bond Fund | 47,224 | 475,074 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 791,752 | ||
TOTAL FIXED-INCOME FUNDS (Cost $900,088) | 883,125 | ||
Short-Term Funds - 18.4% | |||
|
|
|
|
Fidelity Institutional Money Market Portfolio Institutional Class | 218,263 | 218,263 | |
Fidelity Short-Term Bond Fund | 25,884 | 215,353 | |
TOTAL SHORT-TERM FUNDS (Cost $439,524) | 433,616 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $2,480,006) | $ 2,361,568 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2020 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (cost $2,480,006) - See accompanying schedule | $ 2,361,568 | |
Cash | 72 | |
Receivable for investments sold | 1 | |
Total assets | 2,361,641 | |
|
|
|
Liabilities | ||
Distribution fees payable | 406 | |
|
|
|
Net Assets | $ 2,361,236 | |
Net Assets consist of: |
| |
Paid in capital | $ 2,474,768 | |
Undistributed net investment income | 1,110 | |
Accumulated undistributed net realized gain (loss) on investments | 3,796 | |
Net unrealized appreciation (depreciation) on investments | (118,438) | |
Net Assets | $ 2,361,236 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 47.11 | |
|
|
|
Maximum offering price per share (100/94.25 of $47.11) | $ 49.98 | |
Class T: | $ 47.10 | |
|
|
|
Maximum offering price per share (100/96.50 of $47.10) | $ 48.81 | |
|
|
|
Class C: | $ 47.08 | |
|
|
|
Income Replacement 2020: | $ 47.12 | |
|
|
|
Institutional Class: | $ 47.12 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period August 30, 2007 | |
|
|
|
Investment Income |
|
|
Income distributions from underlying funds |
| $ 33,974 |
Interest |
| 72 |
Total income |
| 34,046 |
|
|
|
Expenses | ||
Distribution fees | $ 2,946 | |
Independent trustees' compensation | 5 | |
Total expenses before reductions | 2,951 | |
Expense reductions | (5) | 2,946 |
Net investment income (loss) | 31,100 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (4,968) | |
Capital gain distributions from underlying funds | 11,246 | 6,278 |
Change in net unrealized appreciation (depreciation) on underlying funds | (118,438) | |
Net gain (loss) | (112,160) | |
Net increase (decrease) in net assets resulting from operations | $ (81,060) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2020 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 31,100 |
Net realized gain (loss) | 6,278 |
Change in net unrealized appreciation (depreciation) | (118,438) |
Net increase (decrease) in net assets resulting from operations | (81,060) |
Distributions to shareholders from net investment income | (29,990) |
Distributions to shareholders from net realized gain | (2,482) |
Total distributions | (32,472) |
Share transactions - net increase (decrease) | 2,474,768 |
Total increase (decrease) in net assets | 2,361,236 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $1,110) | $ 2,361,236 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | 1.085 |
Net realized and unrealized gain (loss) | (2.692) |
Total from investment operations | (1.607) |
Distributions from net investment income | (1.113) |
Distributions from net realized gain | (.170) |
Total distributions | (1.283) |
Net asset value, end of period | $ 47.11 |
Total Return B, C, D | (3.33)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 2.42% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 503 |
Portfolio turnover rate | 21% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .985 |
Net realized and unrealized gain (loss) | (2.707) |
Total from investment operations | (1.722) |
Distributions from net investment income | (1.008) |
Distributions from net realized gain | (.170) |
Total distributions | (1.178) |
Net asset value, end of period | $ 47.10 |
Total Return B, C, D | (3.56)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 2.17% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 187 |
Portfolio turnover rate | 21% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .755 |
Net realized and unrealized gain (loss) | (2.699) |
Total from investment operations | (1.944) |
Distributions from net investment income | (.806) |
Distributions from net realized gain | (.170) |
Total distributions | (.976) |
Net asset value, end of period | $ 47.08 |
Total Return B, C, D | (3.99)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | 1.67% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 275 |
Portfolio turnover rate | 21% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2020
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.190 |
Net realized and unrealized gain (loss) | (2.677) |
Total from investment operations | (1.487) |
Distributions from net investment income | (1.223) |
Distributions from net realized gain | (.170) |
Total distributions | (1.393) |
Net asset value, end of period | $ 47.12 |
Total Return B, C | (3.10)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.67% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 1,233 |
Portfolio turnover rate | 21% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.215 |
Net realized and unrealized gain (loss) | (2.702) |
Total from investment operations | (1.487) |
Distributions from net investment income | (1.223) |
Distributions from net realized gain | (.170) |
Total distributions | (1.393) |
Net asset value, end of period | $ 47.12 |
Total Return B, C | (3.10)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.67% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 163 |
Portfolio turnover rate | 21% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2022 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 6.1 | 6.2 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 5.1 | 4.9 |
Fidelity Broad Market Opportunities Fund | 8.2 | 8.1 |
Fidelity Disciplined Equity Fund | 5.2 | 5.1 |
Fidelity Equity-Income Fund | 5.0 | 5.1 |
Fidelity Large Cap Core Enhanced Index Fund | 8.3 | 8.2 |
Fidelity Small Cap Opportunities Fund | 3.4 | 3.2 |
| 41.3 | 40.8 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 5.7 | 5.8 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 2.1 | 2.1 |
Fidelity Strategic Income Fund | 2.2 | 2.2 |
| 4.3 | 4.3 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 6.5 | 6.6 |
Fidelity Strategic Real Return Fund | 6.4 | 6.4 |
Fidelity Total Bond Fund | 19.1 | 19.5 |
| 32.0 | 32.5 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 8.4 | 8.2 |
Fidelity Short-Term Bond Fund | 8.3 | 8.4 |
| 16.7 | 16.6 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 41.3% |
|
![]() | International Equity Funds | 5.7% |
|
![]() | High Yield Fixed-Income Funds | 4.3% |
|
![]() | Investment Grade Fixed-Income Funds | 32.0% |
|
![]() | Short-Term Funds | 16.7% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 40.8% |
|
![]() | International Equity Funds | 5.8% |
|
![]() | High Yield Fixed-Income Funds | 4.3% |
|
![]() | Investment Grade Fixed-Income Funds | 32.5% |
|
![]() | Short-Term Funds | 16.6% |
|
Expected | |||
![]() | Domestic Equity Funds | 41.3% |
|
![]() | International Equity Funds | 5.6% |
|
![]() | High Yield Fixed-Income Funds | 4.0% |
|
![]() | Investment Grade Fixed-Income Funds | 32.2% |
|
![]() | Short-Term Funds | 16.9% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2022 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 47.0% | |||
Shares | Value | ||
Domestic Equity Funds - 41.3% | |||
Fidelity 100 Index Fund | 37,216 | $ 340,157 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 18,186 | 284,976 | |
Fidelity Broad Market Opportunities Fund | 50,822 | 452,824 | |
Fidelity Disciplined Equity Fund | 11,212 | 285,118 | |
Fidelity Equity-Income Fund | 6,166 | 278,447 | |
Fidelity Large Cap Core Enhanced Index Fund | 51,813 | 460,099 | |
Fidelity Small Cap Opportunities Fund | 23,260 | 185,379 | |
TOTAL DOMESTIC EQUITY FUNDS | 2,287,000 | ||
International Equity Funds - 5.7% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 8,763 | 319,077 | |
TOTAL EQUITY FUNDS (Cost $2,909,918) | 2,606,077 | ||
Fixed-Income Funds - 36.3% | |||
|
|
|
|
High Yield Fixed-Income Funds - 4.3% | |||
Fidelity Capital & Income Fund | 14,698 | 118,903 | |
Fidelity Strategic Income Fund | 11,758 | 119,575 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 238,478 | ||
Investment Grade Fixed-Income Funds - 32.0% | |||
Fidelity Government Income Fund | 34,339 | 356,443 | |
Fidelity Strategic Real Return Fund | 35,139 | 355,260 | |
Fidelity Total Bond Fund | 105,320 | 1,059,516 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 1,771,219 | ||
TOTAL FIXED-INCOME FUNDS (Cost $2,047,458) | 2,009,697 | ||
Short-Term Funds - 16.7% | |||
|
|
|
|
Fidelity Institutional Money Market Portfolio Institutional Class | 466,323 | 466,323 | |
Fidelity Short-Term Bond Fund | 54,920 | 456,931 | |
TOTAL SHORT-TERM FUNDS (Cost $937,144) | 923,254 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $5,894,520) | $ 5,539,028 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2022 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (cost $5,894,520) - See accompanying schedule | $ 5,539,028 | |
Cash | 72 | |
Receivable for investments sold | 252 | |
Total assets | 5,539,352 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | $ 250 | |
Distribution fees payable | 238 | |
Total liabilities | 488 | |
|
|
|
Net Assets | $ 5,538,864 | |
Net Assets consist of: |
| |
Paid in capital | $ 5,882,033 | |
Undistributed net investment income | 2,475 | |
Accumulated undistributed net realized gain (loss) on investments | 9,848 | |
Net unrealized appreciation (depreciation) on investments | (355,492) | |
Net Assets | $ 5,538,864 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 47.05 | |
|
|
|
Maximum offering price per share (100/94.25 of $47.05) | $ 49.92 | |
Class T: | $ 47.04 | |
|
|
|
Maximum offering price per share (100/96.50 of $47.04) | $ 48.75 | |
|
|
|
Class C: | $ 47.04 | |
|
|
|
Income Replacement 2022: | $ 47.06 | |
|
|
|
Institutional Class: | $ 47.06 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period August 30, 2007 | |
|
|
|
Investment Income |
|
|
Income distributions from underlying funds |
| $ 87,382 |
Interest |
| 72 |
Total income |
| 87,454 |
|
|
|
Expenses | ||
Distribution fees | $ 1,974 | |
Independent trustees' compensation | 12 | |
Total expenses before reductions | 1,986 | |
Expense reductions | (12) | 1,974 |
Net investment income (loss) | 85,480 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (23,894) | |
Capital gain distributions from underlying funds | 42,834 | 18,940 |
Change in net unrealized appreciation (depreciation) on underlying funds | (355,492) | |
Net gain (loss) | (336,552) | |
Net increase (decrease) in net assets resulting from operations | $ (251,072) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2022 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 85,480 |
Net realized gain (loss) | 18,940 |
Change in net unrealized appreciation (depreciation) | (355,492) |
Net increase (decrease) in net assets resulting from operations | (251,072) |
Distributions to shareholders from net investment income | (83,005) |
Distributions to shareholders from net realized gain | (9,092) |
Total distributions | (92,097) |
Share transactions - net increase (decrease) | 5,882,033 |
Total increase (decrease) in net assets | 5,538,864 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $2,475) | $ 5,538,864 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | 1.087 |
Net realized and unrealized gain (loss) | (2.853) |
Total from investment operations | (1.766) |
Distributions from net investment income | (1.014) |
Distributions from net realized gain | (.170) |
Total distributions | (1.184) |
Net asset value, end of period | $ 47.05 |
Total Return B, C, D | (3.64)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 2.41% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 289 |
Portfolio turnover rate | 32% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .982 |
Net realized and unrealized gain (loss) | (2.862) |
Total from investment operations | (1.880) |
Distributions from net investment income | (.910) |
Distributions from net realized gain | (.170) |
Total distributions | (1.080) |
Net asset value, end of period | $ 47.04 |
Total Return B, C, D | (3.87)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 2.16% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 187 |
Portfolio turnover rate | 32% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .760 |
Net realized and unrealized gain (loss) | (2.860) |
Total from investment operations | (2.100) |
Distributions from net investment income | (.690) |
Distributions from net realized gain | (.170) |
Total distributions | (.860) |
Net asset value, end of period | $ 47.04 |
Total Return B, C, D | (4.29)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | 1.66% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 120 |
Portfolio turnover rate | 32% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2022
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.190 |
Net realized and unrealized gain (loss) | (2.836) |
Total from investment operations | (1.646) |
Distributions from net investment income | (1.124) |
Distributions from net realized gain | (.170) |
Total distributions | (1.294) |
Net asset value, end of period | $ 47.06 |
Total Return B, C | (3.41)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.66% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 4,666 |
Portfolio turnover rate | 32% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.208 |
Net realized and unrealized gain (loss) | (2.854) |
Total from investment operations | (1.646) |
Distributions from net investment income | (1.124) |
Distributions from net realized gain | (.170) |
Total distributions | (1.294) |
Net asset value, end of period | $ 47.06 |
Total Return B, C | (3.41)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.66% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 277 |
Portfolio turnover rate | 32% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2024 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 6.3 | 6.4 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 5.3 | 5.2 |
Fidelity Broad Market Opportunities Fund | 8.5 | 8.5 |
Fidelity Disciplined Equity Fund | 5.4 | 5.4 |
Fidelity Equity-Income Fund | 5.2 | 5.3 |
Fidelity Large Cap Core Enhanced Index Fund | 8.6 | 8.5 |
Fidelity Small Cap Opportunities Fund | 3.4 | 3.3 |
| 42.7 | 42.6 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 6.5 | 6.7 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 2.3 | 2.3 |
Fidelity Strategic Income Fund | 2.4 | 2.4 |
| 4.7 | 4.7 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 6.2 | 6.3 |
Fidelity Strategic Real Return Fund | 6.2 | 6.3 |
Fidelity Total Bond Fund | 18.4 | 18.4 |
| 30.8 | 31.0 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 7.7 | 7.4 |
Fidelity Short-Term Bond Fund | 7.6 | 7.6 |
| 15.3 | 15.0 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 42.7% |
|
![]() | International Equity Funds | 6.5% |
|
![]() | High Yield Fixed-Income Funds | 4.7% |
|
![]() | Investment Grade Fixed-Income Funds | 30.8% |
|
![]() | Short-Term Funds | 15.3% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 42.6% |
|
![]() | International Equity Funds | 6.7% |
|
![]() | High Yield Fixed-Income Funds | 4.7% |
|
![]() | Investment Grade Fixed-Income Funds | 31.0% |
|
![]() | Short-Term Funds | 15.0% |
|
Expected | |||
![]() | Domestic Equity Funds | 43.0% |
|
![]() | International Equity Funds | 6.4% |
|
![]() | High Yield Fixed-Income Funds | 4.4% |
|
![]() | Investment Grade Fixed-Income Funds | 30.6% |
|
![]() | Short-Term Funds | 15.6% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2024 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 49.2% | |||
Shares | Value | ||
Domestic Equity Funds - 42.7% | |||
Fidelity 100 Index Fund | 9,895 | $ 90,440 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 4,863 | 76,206 | |
Fidelity Broad Market Opportunities Fund | 13,516 | 120,425 | |
Fidelity Disciplined Equity Fund | 2,998 | 76,237 | |
Fidelity Equity-Income Fund | 1,628 | 73,526 | |
Fidelity Large Cap Core Enhanced Index Fund | 13,764 | 122,228 | |
Fidelity Small Cap Opportunities Fund | 6,163 | 49,119 | |
TOTAL DOMESTIC EQUITY FUNDS | 608,181 | ||
International Equity Funds - 6.5% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 2,568 | 93,485 | |
TOTAL EQUITY FUNDS (Cost $779,890) | 701,666 | ||
Fixed-Income Funds - 35.5% | |||
|
|
|
|
High Yield Fixed-Income Funds - 4.7% | |||
Fidelity Capital & Income Fund | 4,101 | 33,177 | |
Fidelity Strategic Income Fund | 3,308 | 33,644 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 66,821 | ||
Investment Grade Fixed-Income Funds - 30.8% | |||
Fidelity Government Income Fund | 8,552 | 88,774 | |
Fidelity Strategic Real Return Fund | 8,774 | 88,701 | |
Fidelity Total Bond Fund | 25,987 | 261,424 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 438,899 | ||
TOTAL FIXED-INCOME FUNDS (Cost $513,281) | 505,720 | ||
Short-Term Funds - 15.3% | |||
|
|
|
|
Fidelity Institutional Money Market Portfolio Institutional Class | 109,794 | 109,794 | |
Fidelity Short-Term Bond Fund | 13,026 | 108,380 | |
TOTAL SHORT-TERM FUNDS (Cost $221,178) | 218,174 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $1,514,349) | $ 1,425,560 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2024 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (cost $1,514,349) - See accompanying schedule | $ 1,425,560 | |
Cash | 72 | |
Total assets | 1,425,632 | |
|
|
|
Liabilities | ||
Distribution fees payable | 242 | |
|
|
|
Net Assets | $ 1,425,390 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,512,902 | |
Undistributed net investment income | 575 | |
Accumulated undistributed net realized gain (loss) on investments | 702 | |
Net unrealized appreciation (depreciation) on investments | (88,789) | |
Net Assets | $ 1,425,390 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 46.97 | |
|
|
|
Maximum offering price per share (100/94.25 of $46.97) | $ 49.84 | |
Class T: | $ 46.97 | |
|
|
|
Maximum offering price per share (100/96.50 of $46.97) | $ 48.67 | |
|
|
|
Class C: | $ 46.93 | |
|
|
|
Income Replacement 2024: | $ 46.98 | |
|
|
|
Institutional Class: | $ 46.98 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period August 30, 2007 | |
|
|
|
Investment Income |
|
|
Income distributions from underlying funds |
| $ 23,762 |
Interest |
| 72 |
Total income |
| 23,834 |
|
|
|
Expenses | ||
Distribution fees | $ 2,058 | |
Independent trustees' compensation | 3 | |
Total expenses before reductions | 2,061 | |
Expense reductions | (3) | 2,058 |
Net investment income (loss) | 21,776 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (8,785) | |
Capital gain distributions from underlying funds | 12,382 | 3,597 |
Change in net unrealized appreciation (depreciation) on underlying funds | (88,789) | |
Net gain (loss) | (85,192) | |
Net increase (decrease) in net assets resulting from operations | $ (63,416) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2024 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 21,776 |
Net realized gain (loss) | 3,597 |
Change in net unrealized appreciation (depreciation) | (88,789) |
Net increase (decrease) in net assets resulting from operations | (63,416) |
Distributions to shareholders from net investment income | (21,201) |
Distributions to shareholders from net realized gain | (2,896) |
Total distributions | (24,097) |
Share transactions - net increase (decrease) | 1,512,903 |
Total increase (decrease) in net assets | 1,425,390 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $575) | $ 1,425,390 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | 1.063 |
Net realized and unrealized gain (loss) | (2.884) |
Total from investment operations | (1.821) |
Distributions from net investment income | (1.039) |
Distributions from net realized gain | (.170) |
Total distributions | (1.209) |
Net asset value, end of period | $ 46.97 |
Total Return B, C, D | (3.77)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 2.35% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 286 |
Portfolio turnover rate | 41% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .966 |
Net realized and unrealized gain (loss) | (2.901) |
Total from investment operations | (1.937) |
Distributions from net investment income | (.923) |
Distributions from net realized gain | (.170) |
Total distributions | (1.093) |
Net asset value, end of period | $ 46.97 |
Total Return B, C, D | (3.99)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 2.11% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 96 |
Portfolio turnover rate | 41% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .728 |
Net realized and unrealized gain (loss) | (2.903) |
Total from investment operations | (2.175) |
Distributions from net investment income | (.725) |
Distributions from net realized gain | (.170) |
Total distributions | (.895) |
Net asset value, end of period | $ 46.93 |
Total Return B, C, D | (4.45)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | 1.61% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 233 |
Portfolio turnover rate | 41% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2024
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.166 |
Net realized and unrealized gain (loss) | (2.868) |
Total from investment operations | (1.702) |
Distributions from net investment income | (1.148) |
Distributions from net realized gain | (.170) |
Total distributions | (1.318) |
Net asset value, end of period | $ 46.98 |
Total Return B, C | (3.53)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.60% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 714 |
Portfolio turnover rate | 41% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.194 |
Net realized and unrealized gain (loss) | (2.896) |
Total from investment operations | (1.702) |
Distributions from net investment income | (1.148) |
Distributions from net realized gain | (.170) |
Total distributions | (1.318) |
Net asset value, end of period | $ 46.98 |
Total Return B, C | (3.53)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.60% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 97 |
Portfolio turnover rate | 41% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2026 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 6.5 | 6.6 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 5.5 | 5.2 |
Fidelity Broad Market Opportunities Fund | 8.7 | 8.6 |
Fidelity Disciplined Equity Fund | 5.5 | 5.5 |
Fidelity Equity-Income Fund | 5.4 | 5.4 |
Fidelity Large Cap Core Enhanced Index Fund | 8.8 | 8.8 |
Fidelity Small Cap Opportunities Fund | 3.6 | 3.3 |
| 44.0 | 43.4 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 7.3 | 7.4 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 2.4 | 2.4 |
Fidelity Strategic Income Fund | 2.5 | 2.5 |
| 4.9 | 4.9 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 6.0 | 6.2 |
Fidelity Strategic Real Return Fund | 6.0 | 6.1 |
Fidelity Total Bond Fund | 18.0 | 18.2 |
| 30.0 | 30.5 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 7.0 | 6.8 |
Fidelity Short-Term Bond Fund | 6.8 | 7.0 |
| 13.8 | 13.8 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 44.0% |
|
![]() | International Equity Funds | 7.3% |
|
![]() | High Yield Fixed-Income Funds | 4.9% |
|
![]() | Investment Grade Fixed-Income Funds | 30.0% |
|
![]() | Short-Term Funds | 13.8% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 43.4% |
|
![]() | International Equity Funds | 7.4% |
|
![]() | High Yield Fixed-Income Funds | 4.9% |
|
![]() | Investment Grade Fixed-Income Funds | 30.5% |
|
![]() | Short-Term Funds | 13.8% |
|
Expected | |||
![]() | Domestic Equity Funds | 44.3% |
|
![]() | International Equity Funds | 7.2% |
|
![]() | High Yield Fixed-Income Funds | 4.7% |
|
![]() | Investment Grade Fixed-Income Funds | 29.6% |
|
![]() | Short-Term Funds | 14.2% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2026 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 51.3% | |||
Shares | Value | ||
Domestic Equity Funds - 44.0% | |||
Fidelity 100 Index Fund | 11,402 | $ 104,219 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 5,555 | 87,048 | |
Fidelity Broad Market Opportunities Fund | 15,575 | 138,773 | |
Fidelity Disciplined Equity Fund | 3,435 | 87,354 | |
Fidelity Equity-Income Fund | 1,886 | 85,165 | |
Fidelity Large Cap Core Enhanced Index Fund | 15,853 | 140,775 | |
Fidelity Small Cap Opportunities Fund | 7,090 | 56,511 | |
TOTAL DOMESTIC EQUITY FUNDS | 699,845 | ||
International Equity Funds - 7.3% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 3,196 | 116,382 | |
TOTAL EQUITY FUNDS (Cost $911,251) | 816,227 | ||
Fixed-Income Funds - 34.9% | |||
|
|
|
|
High Yield Fixed-Income Funds - 4.9% | |||
Fidelity Capital & Income Fund | 4,837 | 39,133 | |
Fidelity Strategic Income Fund | 3,884 | 39,496 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 78,629 | ||
Investment Grade Fixed-Income Funds - 30.0% | |||
Fidelity Government Income Fund | 9,233 | 95,839 | |
Fidelity Strategic Real Return Fund | 9,456 | 95,600 | |
Fidelity Total Bond Fund | 28,418 | 285,882 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 477,321 | ||
TOTAL FIXED-INCOME FUNDS (Cost $564,638) | 555,950 | ||
Short-Term Funds - 13.8% | |||
|
|
|
|
Fidelity Institutional Money Market Portfolio Institutional Class | 110,748 | 110,748 | |
Fidelity Short-Term Bond Fund | 13,100 | 108,992 | |
TOTAL SHORT-TERM FUNDS (Cost $223,127) | 219,740 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $1,699,016) | $ 1,591,917 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2026 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (cost $1,699,016) - See accompanying schedule | $ 1,591,917 | |
Cash | 72 | |
Receivable for investments sold | 2,237 | |
Receivable for fund shares sold | 25,000 | |
Total assets | 1,619,226 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 24,839 | |
Payable for fund shares redeemed | 2,396 | |
Distribution fees payable | 473 | |
Total liabilities | 27,708 | |
|
|
|
Net Assets | $ 1,591,518 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,687,356 | |
Undistributed net investment income | 600 | |
Accumulated undistributed net realized gain (loss) on investments | 10,661 | |
Net unrealized appreciation (depreciation) on investments | (107,099) | |
Net Assets | $ 1,591,518 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 46.76 | |
|
|
|
Maximum offering price per share (100/94.25 of $46.76) | $ 49.61 | |
Class T: | $ 46.76 | |
|
|
|
Maximum offering price per share (100/96.50 of $46.76) | $ 48.46 | |
|
|
|
Class C: | $ 46.72 | |
|
|
|
Income Replacement 2026: | $ 46.77 | |
|
|
|
Institutional Class: | $ 46.77 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period August 30, 2007 | |
|
|
|
Investment Income |
|
|
Income distributions from underlying funds |
| $ 26,580 |
Interest |
| 111 |
Total income |
| 26,691 |
|
|
|
Expenses | ||
Distribution fees | $ 4,039 | |
Independent trustees' compensation | 4 | |
Total expenses before reductions | 4,043 | |
Expense reductions | (4) | 4,039 |
Net investment income (loss) | 22,652 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (2,963) | |
Capital gain distributions from underlying funds | 17,330 | 14,367 |
Change in net unrealized appreciation (depreciation) on underlying funds | (107,099) | |
Net gain (loss) | (92,732) | |
Net increase (decrease) in net assets resulting from operations | $ (70,080) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2026 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 22,652 |
Net realized gain (loss) | 14,367 |
Change in net unrealized appreciation (depreciation) | (107,099) |
Net increase (decrease) in net assets resulting from operations | (70,080) |
Distributions to shareholders from net investment income | (22,051) |
Distributions to shareholders from net realized gain | (3,706) |
Total distributions | (25,757) |
Share transactions - net increase (decrease) | 1,687,355 |
Total increase (decrease) in net assets | 1,591,518 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $600) | $ 1,591,518 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | 1.076 |
Net realized and unrealized gain (loss) | (3.105) |
Total from investment operations | (2.029) |
Distributions from net investment income | (1.031) |
Distributions from net realized gain | (.180) |
Total distributions | (1.211) |
Net asset value, end of period | $ 46.76 |
Total Return B, C, D | (4.19)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 2.36% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 131 |
Portfolio turnover rate | 21% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .966 |
Net realized and unrealized gain (loss) | (3.110) |
Total from investment operations | (2.144) |
Distributions from net investment income | (.916) |
Distributions from net realized gain | (.180) |
Total distributions | (1.096) |
Net asset value, end of period | $ 46.76 |
Total Return B, C, D | (4.41)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 2.11% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 96 |
Portfolio turnover rate | 21% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .723 |
Net realized and unrealized gain (loss) | (3.090) |
Total from investment operations | (2.367) |
Distributions from net investment income | (.733) |
Distributions from net realized gain | (.180) |
Total distributions | (.913) |
Net asset value, end of period | $ 46.72 |
Total Return B, C, D | (4.85)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | 1.61% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 485 |
Portfolio turnover rate | 21% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2026
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.168 |
Net realized and unrealized gain (loss) | (3.079) |
Total from investment operations | (1.911) |
Distributions from net investment income | (1.139) |
Distributions from net realized gain | (.180) |
Total distributions | (1.319) |
Net asset value, end of period | $ 46.77 |
Total Return B, C | (3.96)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.61% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 783 |
Portfolio turnover rate | 21% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.196 |
Net realized and unrealized gain (loss) | (3.107) |
Total from investment operations | (1.911) |
Distributions from net investment income | (1.139) |
Distributions from net realized gain | (.180) |
Total distributions | (1.319) |
Net asset value, end of period | $ 46.77 |
Total Return B, C | (3.96)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.61% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 96 |
Portfolio turnover rate | 21% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2028 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 6.7 | 6.8 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 5.6 | 5.4 |
Fidelity Broad Market Opportunities Fund | 8.8 | 8.9 |
Fidelity Disciplined Equity Fund | 5.6 | 5.6 |
Fidelity Equity-Income Fund | 5.4 | 5.6 |
Fidelity Large Cap Core Enhanced Index Fund | 9.0 | 9.0 |
Fidelity Small Cap Opportunities Fund | 3.7 | 3.6 |
| 44.8 | 44.9 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 8.0 | 8.1 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 2.6 | 2.6 |
Fidelity Strategic Income Fund | 2.6 | 2.6 |
| 5.2 | 5.2 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 5.8 | 5.8 |
Fidelity Strategic Real Return Fund | 5.8 | 5.8 |
Fidelity Total Bond Fund | 17.3 | 17.4 |
| 28.9 | 29.0 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 6.6 | 6.5 |
Fidelity Short-Term Bond Fund | 6.5 | 6.3 |
| 13.1 | 12.8 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 44.8% |
|
![]() | International Equity Funds | 8.0% |
|
![]() | High Yield Fixed-Income Funds | 5.2% |
|
![]() | Investment Grade Fixed-Income Funds | 28.9% |
|
![]() | Short-Term Funds | 13.1% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 44.9% |
|
![]() | International Equity Funds | 8.1% |
|
![]() | High Yield Fixed-Income Funds | 5.2% |
|
![]() | Investment Grade Fixed-Income Funds | 29.0% |
|
![]() | Short-Term Funds | 12.8% |
|
Expected | |||
![]() | Domestic Equity Funds | 45.2% |
|
![]() | International Equity Funds | 8.0% |
|
![]() | High Yield Fixed-Income Funds | 5.0% |
|
![]() | Investment Grade Fixed-Income Funds | 28.5% |
|
![]() | Short-Term Funds | 13.3% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2028 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 52.8% | |||
Shares | Value | ||
Domestic Equity Funds - 44.8% | |||
Fidelity 100 Index Fund | 53,493 | $ 488,923 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 25,935 | 406,404 | |
Fidelity Broad Market Opportunities Fund | 72,248 | 643,732 | |
Fidelity Disciplined Equity Fund | 15,991 | 406,662 | |
Fidelity Equity-Income Fund | 8,792 | 397,034 | |
Fidelity Large Cap Core Enhanced Index Fund | 73,653 | 654,041 | |
Fidelity Small Cap Opportunities Fund | 33,596 | 267,757 | |
TOTAL DOMESTIC EQUITY FUNDS | 3,264,553 | ||
International Equity Funds - 8.0% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 16,052 | 584,466 | |
TOTAL EQUITY FUNDS (Cost $4,200,490) | 3,849,019 | ||
Fixed-Income Funds - 34.1% | |||
|
|
|
|
High Yield Fixed-Income Funds - 5.2% | |||
Fidelity Capital & Income Fund | 23,553 | 190,548 | |
Fidelity Strategic Income Fund | 18,962 | 192,841 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 383,389 | ||
Investment Grade Fixed-Income Funds - 28.9% | |||
Fidelity Government Income Fund | 40,782 | 423,315 | |
Fidelity Strategic Real Return Fund | 41,564 | 420,209 | |
Fidelity Total Bond Fund | 125,459 | 1,262,117 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 2,105,641 | ||
TOTAL FIXED-INCOME FUNDS (Cost $2,535,313) | 2,489,030 | ||
Short-Term Funds - 13.1% | |||
Shares | Value | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 481,175 | $ 481,175 | |
Fidelity Short-Term Bond Fund | 56,698 | 471,731 | |
TOTAL SHORT-TERM FUNDS (Cost $963,481) | 952,906 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $7,699,284) | $ 7,290,955 |
Income Tax Information |
At July 31, 2008, the fund had a capital loss carryforward of approximately $30 all of which will expire on July 31, 2016. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2028 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (cost $7,699,284) - See accompanying schedule | $ 7,290,955 | |
Cash | 73 | |
Receivable for investments sold | 3 | |
Receivable for fund shares sold | 10,000 | |
Total assets | 7,301,031 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 10,003 | |
Distribution fees payable | 455 | |
Total liabilities | 10,458 | |
|
|
|
Net Assets | $ 7,290,573 | |
Net Assets consist of: |
| |
Paid in capital | $ 7,701,790 | |
Undistributed net investment income | 3,156 | |
Accumulated undistributed net realized gain (loss) on investments | (6,044) | |
Net unrealized appreciation (depreciation) on investments | (408,329) | |
Net Assets | $ 7,290,573 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 46.81 | |
|
|
|
Maximum offering price per share (100/94.25 of $46.81) | $ 49.67 | |
Class T: | $ 46.80 | |
|
|
|
Maximum offering price per share (100/96.50 of $46.80) | $ 48.50 | |
|
|
|
Class C: | $ 46.79 | |
|
|
|
Income Replacement 2028: | $ 46.82 | |
|
|
|
Institutional Class: | $ 46.82 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period August 30, 2007 | |
|
|
|
Investment Income |
|
|
Income distributions from underlying funds |
| $ 83,927 |
Interest |
| 120 |
Total income |
| 84,047 |
|
|
|
Expenses | ||
Distribution fees | $ 2,476 | |
Independent trustees' compensation | 13 | |
Total expenses before reductions | 2,489 | |
Expense reductions | (13) | 2,476 |
Net investment income (loss) | 81,571 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (36,623) | |
Capital gain distributions from underlying funds | 39,184 | 2,561 |
Change in net unrealized appreciation (depreciation) on underlying funds | (408,329) | |
Net gain (loss) | (405,768) | |
Net increase (decrease) in net assets resulting from operations | $ (324,197) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2028 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 81,571 |
Net realized gain (loss) | 2,561 |
Change in net unrealized appreciation (depreciation) | (408,329) |
Net increase (decrease) in net assets resulting from operations | (324,197) |
Distributions to shareholders from net investment income | (78,416) |
Distributions to shareholders from net realized gain | (8,604) |
Total distributions | (87,020) |
Share transactions - net increase (decrease) | 7,701,790 |
Total increase (decrease) in net assets | 7,290,573 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $3,156) | $ 7,290,573 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .966 |
Net realized and unrealized gain (loss) | (3.085) |
Total from investment operations | (2.119) |
Distributions from net investment income | (.911) |
Distributions from net realized gain | (.160) |
Total distributions | (1.071) |
Net asset value, end of period | $ 46.81 |
Total Return B, C, D | (4.36)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 2.16% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 371 |
Portfolio turnover rate | 33% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .847 |
Net realized and unrealized gain (loss) | (3.079) |
Total from investment operations | (2.232) |
Distributions from net investment income | (.808) |
Distributions from net realized gain | (.160) |
Total distributions | (.968) |
Net asset value, end of period | $ 46.80 |
Total Return B, C, D | (4.57)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 1.91% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 606 |
Portfolio turnover rate | 33% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .639 |
Net realized and unrealized gain (loss) | (3.104) |
Total from investment operations | (2.465) |
Distributions from net investment income | (.585) |
Distributions from net realized gain | (.160) |
Total distributions | (.745) |
Net asset value, end of period | $ 46.79 |
Total Return B, C, D | (5.02)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | 1.41% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 150 |
Portfolio turnover rate | 33% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2028
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.067 |
Net realized and unrealized gain (loss) | (3.072) |
Total from investment operations | (2.005) |
Distributions from net investment income | (1.015) |
Distributions from net realized gain | (.160) |
Total distributions | (1.175) |
Net asset value, end of period | $ 46.82 |
Total Return B, C | (4.14)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.40% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 6,068 |
Portfolio turnover rate | 33% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.101 |
Net realized and unrealized gain (loss) | (3.106) |
Total from investment operations | (2.005) |
Distributions from net investment income | (1.015) |
Distributions from net realized gain | (.160) |
Total distributions | (1.175) |
Net asset value, end of period | $ 46.82 |
Total Return B, C | (4.14)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.40% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 96 |
Portfolio turnover rate | 33% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2030 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 6.8 | 6.8 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 5.6 | 5.4 |
Fidelity Broad Market Opportunities Fund | 9.0 | 8.9 |
Fidelity Disciplined Equity Fund | 5.7 | 5.7 |
Fidelity Equity-Income Fund | 5.5 | 5.5 |
Fidelity Large Cap Core Enhanced Index Fund | 9.1 | 9.1 |
Fidelity Small Cap Opportunities Fund | 3.7 | 3.4 |
| 45.4 | 44.8 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 8.9 | 9.1 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 2.7 | 2.7 |
Fidelity Strategic Income Fund | 2.8 | 2.8 |
| 5.5 | 5.5 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 5.8 | 5.9 |
Fidelity Strategic Real Return Fund | 5.7 | 5.8 |
Fidelity Total Bond Fund | 17.1 | 17.4 |
| 28.6 | 29.1 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 5.8 | 5.6 |
Fidelity Short-Term Bond Fund | 5.8 | 5.9 |
| 11.6 | 11.5 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 45.4% |
|
![]() | International Equity Funds | 8.9% |
|
![]() | High Yield Fixed-Income Funds | 5.5% |
|
![]() | Investment Grade Fixed-Income Funds | 28.6% |
|
![]() | Short-Term Funds | 11.6% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 44.8% |
|
![]() | International Equity Funds | 9.1% |
|
![]() | High Yield Fixed-Income Funds | 5.5% |
|
![]() | Investment Grade Fixed-Income Funds | 29.1% |
|
![]() | Short-Term Funds | 11.5% |
|
Expected | |||
![]() | Domestic Equity Funds | 46.0% |
|
![]() | International Equity Funds | 8.8% |
|
![]() | High Yield Fixed-Income Funds | 5.2% |
|
![]() | Investment Grade Fixed-Income Funds | 27.9% |
|
![]() | Short-Term Funds | 12.1% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2030 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 54.3% | |||
Shares | Value | ||
Domestic Equity Funds - 45.4% | |||
Fidelity 100 Index Fund | 9,165 | $ 83,768 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 4,472 | 70,069 | |
Fidelity Broad Market Opportunities Fund | 12,491 | 111,297 | |
Fidelity Disciplined Equity Fund | 2,768 | 70,387 | |
Fidelity Equity-Income Fund | 1,501 | 67,802 | |
Fidelity Large Cap Core Enhanced Index Fund | 12,707 | 112,837 | |
Fidelity Small Cap Opportunities Fund | 5,704 | 45,464 | |
TOTAL DOMESTIC EQUITY FUNDS | 561,624 | ||
International Equity Funds - 8.9% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 3,008 | 109,519 | |
TOTAL EQUITY FUNDS (Cost $745,041) | 671,143 | ||
Fixed-Income Funds - 34.1% | |||
|
|
|
|
High Yield Fixed-Income Funds - 5.5% | |||
Fidelity Capital & Income Fund | 4,171 | 33,743 | |
Fidelity Strategic Income Fund | 3,367 | 34,241 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 67,984 | ||
Investment Grade Fixed-Income Funds - 28.6% | |||
Fidelity Government Income Fund | 6,841 | 71,005 | |
Fidelity Strategic Real Return Fund | 6,981 | 70,576 | |
Fidelity Total Bond Fund | 21,067 | 211,932 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 353,513 | ||
TOTAL FIXED-INCOME FUNDS (Cost $427,738) | 421,497 | ||
Short-Term Funds - 11.6% | |||
|
|
|
|
Fidelity Institutional Money Market Portfolio Institutional Class | 72,243 | 72,243 | |
Fidelity Short-Term Bond Fund | 8,646 | 71,934 | |
TOTAL SHORT-TERM FUNDS (Cost $145,873) | 144,177 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $1,318,652) | $ 1,236,817 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2030 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (cost $1,318,652) - See accompanying schedule | $ 1,236,817 | |
Cash | 72 | |
Total assets | 1,236,889 | |
|
|
|
Liabilities | ||
Distribution fees payable | 309 | |
|
|
|
Net Assets | $ 1,236,580 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,309,254 | |
Undistributed net investment income | 545 | |
Accumulated undistributed net realized gain (loss) on investments | 8,616 | |
Net unrealized appreciation (depreciation) on investments | (81,835) | |
Net Assets | $ 1,236,580 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 46.61 | |
|
|
|
Maximum offering price per share (100/94.25 of $46.61) | $ 49.45 | |
Class T: | $ 46.61 | |
|
|
|
Maximum offering price per share (100/96.50 of $46.61) | $ 48.30 | |
|
|
|
Class C: | $ 46.58 | |
|
|
|
Income Replacement 2030: | $ 46.61 | |
|
|
|
Institutional Class: | $ 46.61 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period August 30, 2007 | |
|
|
|
Investment Income |
|
|
Income distributions from underlying funds |
| $ 17,539 |
Interest |
| 112 |
Total income |
| 17,651 |
|
|
|
Expenses | ||
Distribution fees | $ 2,803 | |
Independent trustees' compensation | 2 | |
Total expenses before reductions | 2,805 | |
Expense reductions | (2) | 2,803 |
Net investment income (loss) | 14,848 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (555) | |
Capital gain distributions from underlying funds | 11,821 | 11,266 |
Change in net unrealized appreciation (depreciation) on underlying funds | (81,835) | |
Net gain (loss) | (70,569) | |
Net increase (decrease) in net assets resulting from operations | $ (55,721) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2030 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 14,848 |
Net realized gain (loss) | 11,266 |
Change in net unrealized appreciation (depreciation) | (81,835) |
Net increase (decrease) in net assets resulting from operations | (55,721) |
Distributions to shareholders from net investment income | (14,428) |
Distributions to shareholders from net realized gain | (2,528) |
Total distributions | (16,956) |
Share transactions - net increase (decrease) | 1,309,257 |
Total increase (decrease) in net assets | 1,236,580 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $545) | $ 1,236,580 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | 1.034 |
Net realized and unrealized gain (loss) | (3.239) |
Total from investment operations | (2.205) |
Distributions from net investment income | (.995) |
Distributions from net realized gain | (.190) |
Total distributions | (1.185) |
Net asset value, end of period | $ 46.61 |
Total Return B, C, D | (4.55)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 2.26% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 95 |
Portfolio turnover rate | 12% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .920 |
Net realized and unrealized gain (loss) | (3.234) |
Total from investment operations | (2.314) |
Distributions from net investment income | (.886) |
Distributions from net realized gain | (.190) |
Total distributions | ��(1.076) |
Net asset value, end of period | $ 46.61 |
Total Return B, C, D | (4.76)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 2.01% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 95 |
Portfolio turnover rate | 12% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .682 |
Net realized and unrealized gain (loss) | (3.227) |
Total from investment operations | (2.545) |
Distributions from net investment income | (.685) |
Distributions from net realized gain | (.190) |
Total distributions | (.875) |
Net asset value, end of period | $ 46.58 |
Total Return B, C, D | (5.21)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | 1.51% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 297 |
Portfolio turnover rate | 12% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2030
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.117 |
Net realized and unrealized gain (loss) | (3.209) |
Total from investment operations | (2.092) |
Distributions from net investment income | (1.108) |
Distributions from net realized gain | (.190) |
Total distributions | (1.298) |
Net asset value, end of period | $ 46.61 |
Total Return B, C | (4.33)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.51% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 653 |
Portfolio turnover rate | 12% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.149 |
Net realized and unrealized gain (loss) | (3.241) |
Total from investment operations | (2.092) |
Distributions from net investment income | (1.108) |
Distributions from net realized gain | (.190) |
Total distributions | (1.298) |
Net asset value, end of period | $ 46.61 |
Total Return B, C | (4.33)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.51% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 96 |
Portfolio turnover rate | 12% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2032 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 6.9 | 6.9 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 5.8 | 5.5 |
Fidelity Broad Market Opportunities Fund | 9.1 | 9.1 |
Fidelity Disciplined Equity Fund | 5.8 | 5.8 |
Fidelity Equity-Income Fund | 5.6 | 5.7 |
Fidelity Large Cap Core Enhanced Index Fund | 9.3 | 9.2 |
Fidelity Small Cap Opportunities Fund | 3.7 | 3.5 |
| 46.2 | 45.7 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 9.6 | 9.7 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 2.9 | 2.8 |
Fidelity Strategic Income Fund | 2.9 | 3.0 |
| 5.8 | 5.8 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 5.6 | 5.8 |
Fidelity Strategic Real Return Fund | 5.6 | 5.7 |
Fidelity Total Bond Fund | 16.7 | 16.9 |
| 27.9 | 28.4 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 5.3 | 5.1 |
Fidelity Short-Term Bond Fund | 5.2 | 5.3 |
| 10.5 | 10.4 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 46.2% |
|
![]() | International Equity Funds | 9.6% |
|
![]() | High Yield Fixed-Income Funds | 5.8% |
|
![]() | Investment Grade Fixed-Income Funds | 27.9% |
|
![]() | Short-Term Funds | 10.5% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 45.7% |
|
![]() | International Equity Funds | 9.7% |
|
![]() | High Yield Fixed-Income Funds | 5.8% |
|
![]() | Investment Grade Fixed-Income Funds | 28.4% |
|
![]() | Short-Term Funds | 10.4% |
|
Expected | |||
![]() | Domestic Equity Funds | 46.9% |
|
![]() | International Equity Funds | 9.6% |
|
![]() | High Yield Fixed-Income Funds | 5.5% |
|
![]() | Investment Grade Fixed-Income Funds | 27.5% |
|
![]() | Short-Term Funds | 10.5% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2032 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 55.8% | |||
Shares | Value | ||
Domestic Equity Funds - 46.2% | |||
Fidelity 100 Index Fund | 10,662 | $ 97,453 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 5,230 | 81,956 | |
Fidelity Broad Market Opportunities Fund | 14,552 | 129,659 | |
Fidelity Disciplined Equity Fund | 3,219 | 81,858 | |
Fidelity Equity-Income Fund | 1,757 | 79,364 | |
Fidelity Large Cap Core Enhanced Index Fund | 14,841 | 131,790 | |
Fidelity Small Cap Opportunities Fund | 6,635 | 52,879 | |
TOTAL DOMESTIC EQUITY FUNDS | 654,959 | ||
International Equity Funds - 9.6% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 3,742 | 136,239 | |
TOTAL EQUITY FUNDS (Cost $914,977) | 791,198 | ||
Fixed-Income Funds - 33.7% | |||
|
|
|
|
High Yield Fixed-Income Funds - 5.8% | |||
Fidelity Capital & Income Fund | 5,026 | 40,662 | |
Fidelity Strategic Income Fund | 4,050 | 41,189 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 81,851 | ||
Investment Grade Fixed-Income Funds - 27.9% | |||
Fidelity Government Income Fund | 7,713 | 80,060 | |
Fidelity Strategic Real Return Fund | 7,908 | 79,952 | |
Fidelity Total Bond Fund | 23,486 | 236,268 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 396,280 | ||
TOTAL FIXED-INCOME FUNDS (Cost $486,692) | 478,131 | ||
Short-Term Funds - 10.5% | |||
|
|
|
|
Fidelity Institutional Money Market Portfolio Institutional Class | 75,042 | 75,042 | |
Fidelity Short-Term Bond Fund | 8,902 | 74,067 | |
TOTAL SHORT-TERM FUNDS (Cost $151,644) | 149,109 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $1,553,313) | $ 1,418,438 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2032 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (cost $1,553,313) - See accompanying schedule | $ 1,418,438 | |
Cash | 72 | |
Other receivables | 102 | |
Total assets | 1,418,612 | |
|
|
|
Liabilities | ||
Distribution fees payable | 202 | |
|
|
|
Net Assets | $ 1,418,410 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,540,219 | |
Undistributed net investment income | 555 | |
Accumulated undistributed net realized gain (loss) on investments | 12,511 | |
Net unrealized appreciation (depreciation) on investments | (134,875) | |
Net Assets | $ 1,418,410 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 46.52 | |
|
|
|
Maximum offering price per share (100/94.25 of $46.52) | $ 49.36 | |
Class T: | $ 46.52 | |
|
|
|
Maximum offering price per share (100/96.50 of $46.52) | $ 48.20 | |
|
|
|
Class C: | $ 46.51 | |
|
|
|
Income Replacement 2032: | $ 46.53 | |
|
|
|
Institutional Class: | $ 46.53 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period August 30, 2007 | |
|
|
|
Investment Income |
|
|
Income distributions from underlying funds |
| $ 25,916 |
Interest |
| 114 |
Total income |
| 26,030 |
|
|
|
Expenses | ||
Distribution fees | $ 2,106 | |
Independent trustees' compensation | 4 | |
Total expenses before reductions | 2,110 | |
Expense reductions | (4) | 2,106 |
Net investment income (loss) | 23,924 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (3,706) | |
Capital gain distributions from underlying funds | 20,637 | 16,931 |
Change in net unrealized appreciation (depreciation) on underlying funds | (134,875) | |
Net gain (loss) | (117,944) | |
Net increase (decrease) in net assets resulting from operations | $ (94,020) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2032 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 23,924 |
Net realized gain (loss) | 16,931 |
Change in net unrealized appreciation (depreciation) | (134,875) |
Net increase (decrease) in net assets resulting from operations | (94,020) |
Distributions to shareholders from net investment income | (23,370) |
Distributions to shareholders from net realized gain | (4,420) |
Total distributions | (27,790) |
Share transactions - net increase (decrease) | 1,540,220 |
Total increase (decrease) in net assets | 1,418,410 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $555) | $ 1,418,410 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | 1.019 |
Net realized and unrealized gain (loss) | (3.322) |
Total from investment operations | (2.303) |
Distributions from net investment income | (.987) |
Distributions from net realized gain | (.190) |
Total distributions | (1.177) |
Net asset value, end of period | $ 46.52 |
Total Return B, C, D | (4.75)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 2.27% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 402 |
Portfolio turnover rate | 23% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .918 |
Net realized and unrealized gain (loss) | (3.339) |
Total from investment operations | (2.421) |
Distributions from net investment income | (.869) |
Distributions from net realized gain | (.190) |
Total distributions | (1.059) |
Net asset value, end of period | $ 46.52 |
Total Return B, C, D | (4.98)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 2.02% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 95 |
Portfolio turnover rate | 23% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .690 |
Net realized and unrealized gain (loss) | (3.342) |
Total from investment operations | (2.652) |
Distributions from net investment income | (.648) |
Distributions from net realized gain | (.190) |
Total distributions | (.838) |
Net asset value, end of period | $ 46.51 |
Total Return B, C, D | (5.42)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | 1.52% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 95 |
Portfolio turnover rate | 23% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2032
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.122 |
Net realized and unrealized gain (loss) | (3.310) |
Total from investment operations | (2.188) |
Distributions from net investment income | (1.092) |
Distributions from net realized gain | (.190) |
Total distributions | (1.282) |
Net asset value, end of period | $ 46.53 |
Total Return B, C | (4.53)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.52% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 731 |
Portfolio turnover rate | 23% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.147 |
Net realized and unrealized gain (loss) | (3.335) |
Total from investment operations | (2.188) |
Distributions from net investment income | (1.092) |
Distributions from net realized gain | (.190) |
Total distributions | (1.282) |
Net asset value, end of period | $ 46.53 |
Total Return B, C | (4.53)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.52% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 96 |
Portfolio turnover rate | 23% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2034 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 7.0 | 7.1 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 6.0 | 5.7 |
Fidelity Broad Market Opportunities Fund | 9.4 | 9.4 |
Fidelity Disciplined Equity Fund | 5.9 | 6.0 |
Fidelity Equity-Income Fund | 5.7 | 5.8 |
Fidelity Large Cap Core Enhanced Index Fund | 9.5 | 9.5 |
Fidelity Small Cap Opportunities Fund | 3.8 | 3.6 |
| 47.3 | 47.1 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 10.7 | 10.9 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 3.0 | 3.0 |
Fidelity Strategic Income Fund | 3.1 | 3.1 |
| 6.1 | 6.1 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 5.5 | 5.6 |
Fidelity Strategic Real Return Fund | 5.6 | 5.6 |
Fidelity Total Bond Fund | 16.3 | 16.5 |
| 27.4 | 27.7 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 4.2 | 3.9 |
Fidelity Short-Term Bond Fund | 4.3 | 4.3 |
| 8.5 | 8.2 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 47.3% |
|
![]() | International Equity Funds | 10.7% |
|
![]() | High Yield Fixed-Income Funds | 6.1% |
|
![]() | Investment Grade Fixed-Income Funds | 27.4% |
|
![]() | Short-Term Funds | 8.5% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 47.1% |
|
![]() | International Equity Funds | 10.9% |
|
![]() | High Yield Fixed-Income Funds | 6.1% |
|
![]() | Investment Grade Fixed-Income Funds | 27.7% |
|
![]() | Short-Term Funds | 8.2% |
|
Expected | |||
![]() | Domestic Equity Funds | 47.8% |
|
![]() | International Equity Funds | 10.5% |
|
![]() | High Yield Fixed-Income Funds | 5.7% |
|
![]() | Investment Grade Fixed-Income Funds | 26.7% |
|
![]() | Short-Term Funds | 9.3% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2034 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 58.0% | |||
Shares | Value | ||
Domestic Equity Funds - 47.3% | |||
Fidelity 100 Index Fund | 7,485 | $ 68,410 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 3,704 | 58,048 | |
Fidelity Broad Market Opportunities Fund | 10,272 | 91,522 | |
Fidelity Disciplined Equity Fund | 2,276 | 57,879 | |
Fidelity Equity-Income Fund | 1,225 | 55,335 | |
Fidelity Large Cap Core Enhanced Index Fund | 10,453 | 92,823 | |
Fidelity Small Cap Opportunities Fund | 4,681 | 37,304 | |
TOTAL DOMESTIC EQUITY FUNDS | 461,321 | ||
International Equity Funds - 10.7% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 2,847 | 103,661 | |
TOTAL EQUITY FUNDS (Cost $634,539) | 564,982 | ||
Fixed-Income Funds - 33.5% | |||
|
|
|
|
High Yield Fixed-Income Funds - 6.1% | |||
Fidelity Capital & Income Fund | 3,681 | 29,782 | |
Fidelity Strategic Income Fund | 2,939 | 29,889 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 59,671 | ||
Investment Grade Fixed-Income Funds - 27.4% | |||
Fidelity Government Income Fund | 5,172 | 53,689 | |
Fidelity Strategic Real Return Fund | 5,344 | 54,032 | |
Fidelity Total Bond Fund | 15,805 | 158,999 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 266,720 | ||
TOTAL FIXED-INCOME FUNDS (Cost $331,878) | 326,391 | ||
Short-Term Funds - 8.5% | |||
|
|
|
|
Fidelity Institutional Money Market Portfolio Institutional Class | 41,521 | 41,521 | |
Fidelity Short-Term Bond Fund | 5,018 | 41,749 | |
TOTAL SHORT-TERM FUNDS (Cost $84,579) | 83,270 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $1,050,996) | $ 974,643 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2034 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (cost $1,050,996) - See accompanying schedule | $ 974,643 | |
Cash | 72 | |
Total assets | 974,715 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 62 | |
Distribution fees payable | 147 | |
Total liabilities | 209 | |
|
|
|
Net Assets | $ 974,506 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,041,054 | |
Undistributed net investment income | 367 | |
Accumulated undistributed net realized gain (loss) on investments | 9,438 | |
Net unrealized appreciation (depreciation) on investments | (76,353) | |
Net Assets | $ 974,506 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 46.40 | |
|
|
|
Maximum offering price per share (100/94.25 of $46.40) | $ 49.21 | |
Class T: | $ 46.40 | |
|
|
|
Maximum offering price per share (100/96.50 of $46.40) | $ 48.08 | |
|
|
|
Class C: | $ 46.39 | |
|
|
|
Income Replacement 2034: | $ 46.40 | |
|
|
|
Institutional Class: | $ 46.41 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period August 30, 2007 | |
|
|
|
Investment Income |
|
|
Income distributions from underlying funds |
| $ 17,494 |
Interest |
| 114 |
Total income |
| 17,608 |
|
|
|
Expenses | ||
Distribution fees | $ 1,665 | |
Independent trustees' compensation | 2 | |
Total expenses before reductions | 1,667 | |
Expense reductions | (2) | 1,665 |
Net investment income (loss) | 15,943 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (1,672) | |
Capital gain distributions from underlying funds | 14,075 | 12,403 |
Change in net unrealized appreciation (depreciation) on underlying funds | (76,353) | |
Net gain (loss) | (63,950) | |
Net increase (decrease) in net assets resulting from operations | $ (48,007) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2034 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 15,943 |
Net realized gain (loss) | 12,403 |
Change in net unrealized appreciation (depreciation) | (76,353) |
Net increase (decrease) in net assets resulting from operations | (48,007) |
Distributions to shareholders from net investment income | (15,577) |
Distributions to shareholders from net realized gain | (2,963) |
Total distributions | (18,540) |
Share transactions - net increase (decrease) | 1,041,053 |
Total increase (decrease) in net assets | 974,506 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $367) | $ 974,506 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .994 |
Net realized and unrealized gain (loss) | (3.438) |
Total from investment operations | (2.444) |
Distributions from net investment income | (.956) |
Distributions from net realized gain | (.200) |
Total distributions | (1.156) |
Net asset value, end of period | $ 46.40 |
Total Return B, C, D | (5.04)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 2.19% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 138 |
Portfolio turnover rate | 12% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the period shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .875 |
Net realized and unrealized gain (loss) | (3.431) |
Total from investment operations | (2.556) |
Distributions from net investment income | (.844) |
Distributions from net realized gain | (.200) |
Total distributions | (1.044) |
Net asset value, end of period | $ 46.40 |
Total Return B, C, D | (5.25)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 1.94% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 95 |
Portfolio turnover rate | 12% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the period shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .658 |
Net realized and unrealized gain (loss) | (3.448) |
Total from investment operations | (2.790) |
Distributions from net investment income | (.620) |
Distributions from net realized gain | (.200) |
Total distributions | (.820) |
Net asset value, end of period | $ 46.39 |
Total Return B, C, D | (5.70)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | 1.44% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 94 |
Portfolio turnover rate | 12% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the period shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2034
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.090 |
Net realized and unrealized gain (loss) | (3.425) |
Total from investment operations | (2.335) |
Distributions from net investment income | (1.065) |
Distributions from net realized gain | (.200) |
Total distributions | (1.265) |
Net asset value, end of period | $ 46.40 |
Total Return B, C | (4.83)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.44% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 552 |
Portfolio turnover rate | 12% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.114 |
Net realized and unrealized gain (loss) | (3.439) |
Total from investment operations | (2.325) |
Distributions from net investment income | (1.065) |
Distributions from net realized gain | (.200) |
Total distributions | (1.265) |
Net asset value, end of period | $ 46.41 |
Total Return B, C | (4.81)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.44% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 95 |
Portfolio turnover rate | 12% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the period shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2036 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 7.2 | 7.3 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 6.1 | 5.8 |
Fidelity Broad Market Opportunities Fund | 9.6 | 9.5 |
Fidelity Disciplined Equity Fund | 6.1 | 6.0 |
Fidelity Equity-Income Fund | 5.9 | 6.0 |
Fidelity Large Cap Core Enhanced Index Fund | 9.7 | 9.6 |
Fidelity Small Cap Opportunities Fund | 3.9 | 3.7 |
| 48.5 | 47.9 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 11.6 | 11.7 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 3.2 | 3.2 |
Fidelity Strategic Income Fund | 3.2 | 3.3 |
| 6.4 | 6.5 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 5.5 | 5.7 |
Fidelity Strategic Real Return Fund | 5.5 | 5.6 |
Fidelity Total Bond Fund | 16.4 | 16.8 |
| 27.4 | 28.1 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 3.1 | 2.8 |
Fidelity Short-Term Bond Fund | 3.0 | 3.0 |
| 6.1 | 5.8 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 48.5% |
|
![]() | International Equity Funds | 11.6% |
|
![]() | High Yield Fixed-Income Funds | 6.4% |
|
![]() | Investment Grade Fixed-Income Funds | 27.4% |
|
![]() | Short-Term Funds | 6.1% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 47.9% |
|
![]() | International Equity Funds | 11.7% |
|
![]() | High Yield Fixed-Income Funds | 6.5% |
|
![]() | Investment Grade Fixed-Income Funds | 28.1% |
|
![]() | Short-Term Funds | 5.8% |
|
Expected | |||
![]() | Domestic Equity Funds | 49.0% |
|
![]() | International Equity Funds | 11.5% |
|
![]() | High Yield Fixed-Income Funds | 6.0% |
|
![]() | Investment Grade Fixed-Income Funds | 26.4% |
|
![]() | Short-Term Funds | 7.1% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2036 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 60.1% | |||
Shares | Value | ||
Domestic Equity Funds - 48.5% | |||
Fidelity 100 Index Fund | 13,281 | $ 121,389 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 6,504 | 101,918 | |
Fidelity Broad Market Opportunities Fund | 18,079 | 161,081 | |
Fidelity Disciplined Equity Fund | 4,003 | 101,787 | |
Fidelity Equity-Income Fund | 2,187 | 98,752 | |
Fidelity Large Cap Core Enhanced Index Fund | 18,453 | 163,859 | |
Fidelity Small Cap Opportunities Fund | 8,243 | 65,699 | |
TOTAL DOMESTIC EQUITY FUNDS | 814,485 | ||
International Equity Funds - 11.6% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 5,327 | 193,971 | |
TOTAL EQUITY FUNDS (Cost $1,143,190) | 1,008,456 | ||
Fixed-Income Funds - 33.8% | |||
|
|
|
|
High Yield Fixed-Income Funds - 6.4% | |||
Fidelity Capital & Income Fund | 6,650 | 53,799 | |
Fidelity Strategic Income Fund | 5,363 | 54,547 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 108,346 | ||
Investment Grade Fixed-Income Funds - 27.4% | |||
Fidelity Government Income Fund | 8,929 | 92,679 | |
Fidelity Strategic Real Return Fund | 9,125 | 92,250 | |
Fidelity Total Bond Fund | 27,313 | 274,767 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 459,696 | ||
TOTAL FIXED-INCOME FUNDS (Cost $577,023) | 568,042 | ||
Short-Term Funds - 6.1% | |||
|
|
|
|
Fidelity Institutional Money Market Portfolio Institutional Class | 51,102 | 51,102 | |
Fidelity Short-Term Bond Fund | 6,101 | 50,762 | |
TOTAL SHORT-TERM FUNDS (Cost $103,562) | 101,864 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $1,823,775) | $ 1,678,362 |
Income Tax Information |
At July 31, 2008, the fund had a capital loss carryforward of approximately $20 all of which will expire on July 31, 2016. |
The fund intends to elect to defer to its fiscal year ending July 31, 2009 approximately $24,292 of losses recognized during the period November 1, 2007 to July 31, 2008. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2036 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (cost $1,823,775) - See accompanying schedule | $ 1,678,362 | |
Cash | 75 | |
Total assets | 1,678,437 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 1 | |
Distribution fees payable | 259 | |
Total liabilities | 260 | |
|
|
|
Net Assets | $ 1,678,177 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,846,905 | |
Undistributed net investment income | 605 | |
Accumulated undistributed net realized gain (loss) on investments | (23,920) | |
Net unrealized appreciation (depreciation) on investments | (145,413) | |
Net Assets | $ 1,678,177 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 46.40 | |
|
|
|
Maximum offering price per share (100/94.25 of $46.40) | $ 49.22 | |
Class T: | $ 46.39 | |
|
|
|
Maximum offering price per share (100/96.50 of $46.39) | $ 48.07 | |
|
|
|
Class C: | $ 46.39 | |
|
|
|
Income Replacement 2036: | $ 46.40 | |
|
|
|
Institutional Class: | $ 46.40 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period August 30, 2007 | |
|
|
|
Investment Income |
|
|
Income distributions from underlying funds |
| $ 29,590 |
Interest |
| 75 |
Total income |
| 29,665 |
|
|
|
Expenses | ||
Distribution fees | $ 2,499 | |
Independent trustees' compensation | 5 | |
Total expenses before reductions | 2,504 | |
Expense reductions | (5) | 2,499 |
Net investment income (loss) | 27,166 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (43,572) | |
Capital gain distributions from underlying funds | 24,643 | (18,929) |
Change in net unrealized appreciation (depreciation) on underlying funds | (145,413) | |
Net gain (loss) | (164,342) | |
Net increase (decrease) in net assets resulting from operations | $ (137,176) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2036 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 27,166 |
Net realized gain (loss) | (18,929) |
Change in net unrealized appreciation (depreciation) | (145,413) |
Net increase (decrease) in net assets resulting from operations | (137,176) |
Distributions to shareholders from net investment income | (26,561) |
Distributions to shareholders from net realized gain | (4,991) |
Total distributions | (31,552) |
Share transactions - net increase (decrease) | 1,846,905 |
Total increase (decrease) in net assets | 1,678,177 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $605) | $ 1,678,177 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .951 |
Net realized and unrealized gain (loss) | (3.464) |
Total from investment operations | (2.513) |
Distributions from net investment income | (.897) |
Distributions from net realized gain | (.190) |
Total distributions | (1.087) |
Net asset value, end of period | $ 46.40 |
Total Return B, C, D | (5.17)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 2.08% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 95 |
Portfolio turnover rate | 44% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .823 |
Net realized and unrealized gain (loss) | (3.449) |
Total from investment operations | (2.626) |
Distributions from net investment income | (.794) |
Distributions from net realized gain | (.190) |
Total distributions | (.984) |
Net asset value, end of period | $ 46.39 |
Total Return B, C, D | (5.39)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 1.83% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 384 |
Portfolio turnover rate | 44% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .609 |
Net realized and unrealized gain (loss) | (3.465) |
Total from investment operations | (2.856) |
Distributions from net investment income | (.564) |
Distributions from net realized gain | (.190) |
Total distributions | (.754) |
Net asset value, end of period | $ 46.39 |
Total Return B, C, D | (5.82)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | 1.33% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 94 |
Portfolio turnover rate | 44% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2036
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.043 |
Net realized and unrealized gain (loss) | (3.445) |
Total from investment operations | (2.402) |
Distributions from net investment income | (1.008) |
Distributions from net realized gain | (.190) |
Total distributions | (1.198) |
Net asset value, end of period | $ 46.40 |
Total Return B, C | (4.96)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.33% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 986 |
Portfolio turnover rate | 44% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.064 |
Net realized and unrealized gain (loss) | (3.466) |
Total from investment operations | (2.402) |
Distributions from net investment income | (1.008) |
Distributions from net realized gain | (.190) |
Total distributions | (1.198) |
Net asset value, end of period | $ 46.40 |
Total Return B, C | (4.96)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.33% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 119 |
Portfolio turnover rate | 44% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2038 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 7.5 | 7.6 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 6.2 | 6.0 |
Fidelity Broad Market Opportunities Fund | 9.9 | 10.1 |
Fidelity Disciplined Equity Fund | 6.3 | 6.3 |
Fidelity Equity-Income Fund | 6.1 | 6.5 |
Fidelity Large Cap Core Enhanced Index Fund | 10.1 | 10.2 |
Fidelity Small Cap Opportunities Fund | 4.1 | 4.1 |
| 50.2 | 50.8 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 12.2 | 12.4 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 3.4 | 3.3 |
Fidelity Strategic Income Fund | 3.4 | 3.3 |
| 6.8 | 6.6 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 5.4 | 5.3 |
Fidelity Strategic Real Return Fund | 5.4 | 5.3 |
Fidelity Total Bond Fund | 16.0 | 15.7 |
| 26.8 | 26.3 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 2.0 | 2.0 |
Fidelity Short-Term Bond Fund | 2.0 | 1.9 |
| 4.0 | 3.9 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 50.2% |
|
![]() | International Equity Funds | 12.2% |
|
![]() | High Yield Fixed-Income Funds | 6.8% |
|
![]() | Investment Grade Fixed-Income Funds | 26.8% |
|
![]() | Short-Term Funds | 4.0% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 50.8% |
|
![]() | International Equity Funds | 12.4% |
|
![]() | High Yield Fixed-Income Funds | 6.6% |
|
![]() | Investment Grade Fixed-Income Funds | 26.3% |
|
![]() | Short-Term Funds | 3.9% |
|
Expected | |||
![]() | Domestic Equity Funds | 50.4% |
|
![]() | International Equity Funds | 12.6% |
|
![]() | High Yield Fixed-Income Funds | 6.5% |
|
![]() | Investment Grade Fixed-Income Funds | 26.0% |
|
![]() | Short-Term Funds | 4.5% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2038 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 62.4% | |||
Shares | Value | ||
Domestic Equity Funds - 50.2% | |||
Fidelity 100 Index Fund | 12,155 | $ 111,093 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 5,931 | 92,946 | |
Fidelity Broad Market Opportunities Fund | 16,553 | 147,484 | |
Fidelity Disciplined Equity Fund | 3,657 | 93,002 | |
Fidelity Equity-Income Fund | 2,009 | 90,711 | |
Fidelity Large Cap Core Enhanced Index Fund | 16,858 | 149,696 | |
Fidelity Small Cap Opportunities Fund | 7,672 | 61,145 | |
TOTAL DOMESTIC EQUITY FUNDS | 746,077 | ||
International Equity Funds - 12.2% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 5,000 | 182,036 | |
TOTAL EQUITY FUNDS (Cost $1,014,447) | 928,113 | ||
Fixed-Income Funds - 33.6% | |||
|
|
|
|
High Yield Fixed-Income Funds - 6.8% | |||
Fidelity Capital & Income Fund | 6,195 | 50,118 | |
Fidelity Strategic Income Fund | 4,952 | 50,362 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 100,480 | ||
Investment Grade Fixed-Income Funds - 26.8% | |||
Fidelity Government Income Fund | 7,729 | 80,225 | |
Fidelity Strategic Real Return Fund | 7,917 | 80,042 | |
Fidelity Total Bond Fund | 23,725 | 238,674 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 398,941 | ||
TOTAL FIXED-INCOME FUNDS (Cost $509,679) | 499,421 | ||
Short-Term Funds - 4.0% | |||
|
|
|
|
Fidelity Institutional Money Market Portfolio Institutional Class | 29,973 | 29,973 | |
Fidelity Short-Term Bond Fund | 3,540 | 29,452 | |
TOTAL SHORT-TERM FUNDS (Cost $60,171) | 59,425 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $1,584,297) | $ 1,486,959 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2038 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
Assets | ||
Investment in securities, at value (cost $1,584,297) - See accompanying schedule | $ 1,486,959 | |
Cash | 39 | |
Total assets | 1,486,998 | |
|
|
|
Liabilities | ||
Distribution fees payable |
| 131 |
|
|
|
Net Assets | $ 1,486,867 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,585,675 | |
Undistributed net investment income | 476 | |
Accumulated undistributed net realized gain (loss) on investments | (1,946) | |
Net unrealized appreciation (depreciation) on investments | (97,338) | |
Net Assets | $ 1,486,867 | |
Calculation of Maximum Offering Price Class A: | $ 45.26 | |
|
|
|
Maximum offering price per share (100/94.25 of $45.26) | $ 48.02 | |
Class T: | $ 45.26 | |
|
|
|
Maximum offering price per share (100/96.50 of $45.26) | $ 46.90 | |
|
|
|
Class C: | $ 45.24 | |
|
|
|
Income Replacement 2038: | $ 45.27 | |
|
|
|
Institutional Class: | $ 45.26 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period December 31, 2007 | |
Investment Income |
|
|
Income distributions from underlying funds |
| $ 12,507 |
Interest |
| 39 |
Total income |
| 12,546 |
|
|
|
Expenses | ||
Distribution fees | $ 973 | |
Independent trustees' compensation | 2 | |
Total expenses before reductions | 975 | |
Expense reductions | (2) | 973 |
Net investment income (loss) | 11,573 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (3,522) | |
Capital gain distributions from underlying funds | 1,576 | (1,946) |
Change in net unrealized appreciation (depreciation) on underlying funds | (97,338) | |
Net gain (loss) | (99,284) | |
Net increase (decrease) in net assets resulting from operations | $ (87,711) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2038 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 11,573 |
Net realized gain (loss) | (1,946) |
Change in net unrealized appreciation (depreciation) | (97,338) |
Net increase (decrease) in net assets resulting from operations | (87,711) |
Distributions to shareholders from net investment income | (11,097) |
Share transactions - net increase (decrease) | 1,585,675 |
Total increase (decrease) in net assets | 1,486,867 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $476) | $ 1,486,867 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .442 |
Net realized and unrealized gain (loss) | (4.811) |
Total from investment operations | (4.369) |
Distributions from net investment income | (.371) |
Net asset value, end of period | $ 45.26 |
Total Return B, C, D | (8.76)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 1.59% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 91 |
Portfolio turnover rate | 13%A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period December 31, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .373 |
Net realized and unrealized gain (loss) | (4.809) |
Total from investment operations | (4.436) |
Distributions from net investment income | (.304) |
Net asset value, end of period | $ 45.26 |
Total Return B, C, D | (8.89)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 1.34% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 91 |
Portfolio turnover rate | 13%A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period December 31, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .233 |
Net realized and unrealized gain (loss) | (4.812) |
Total from investment operations | (4.579) |
Distributions from net investment income | (.181) |
Net asset value, end of period | $ 45.24 |
Total Return B, C, D | (9.17)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | .84% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 91 |
Portfolio turnover rate | 13%A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period December 31, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2038
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | .502 |
Net realized and unrealized gain (loss) | (4.795) |
Total from investment operations | (4.293) |
Distributions from net investment income | (.437) |
Net asset value, end of period | $ 45.27 |
Total Return B, C | (8.61)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 1.84% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 1,122 |
Portfolio turnover rate | 13%A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period December 31, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | .511 |
Net realized and unrealized gain (loss) | (4.814) |
Total from investment operations | (4.303) |
Distributions from net investment income | (.437) |
Net asset value, end of period | $ 45.26 |
Total Return B, C | (8.63)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 1.84% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 91 |
Portfolio turnover rate | 13%A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period December 31, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2040 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 7.6 | 7.7 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 6.3 | 6.0 |
Fidelity Broad Market Opportunities Fund | 10.1 | 10.1 |
Fidelity Disciplined Equity Fund | 6.3 | 6.3 |
Fidelity Equity-Income Fund | 6.2 | 6.5 |
Fidelity Large Cap Core Enhanced Index Fund | 10.2 | 10.1 |
Fidelity Small Cap Opportunities Fund | 4.2 | 4.0 |
| 50.9 | 50.7 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 12.4 | 12.3 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 3.5 | 3.5 |
Fidelity Strategic Income Fund | 3.5 | 3.5 |
| 7.0 | 7.0 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 5.4 | 5.5 |
Fidelity Strategic Real Return Fund | 5.4 | 5.4 |
Fidelity Total Bond Fund | 16.1 | 16.3 |
| 26.9 | 27.2 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 1.4 | 1.4 |
Fidelity Short-Term Bond Fund | 1.4 | 1.4 |
| 2.8 | 2.8 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 50.9% |
|
![]() | International Equity Funds | 12.4% |
|
![]() | High Yield Fixed-Income Funds | 7.0% |
|
![]() | Investment Grade Fixed-Income Funds | 26.9% |
|
![]() | Short-Term Funds | 2.8% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 50.7% |
|
![]() | International Equity Funds | 12.3% |
|
![]() | High Yield Fixed-Income Funds | 7.0% |
|
![]() | Investment Grade Fixed-Income Funds | 27.2% |
|
![]() | Short-Term Funds | 2.8% |
|
Expected | |||
![]() | Domestic Equity Funds | 51.3% |
|
![]() | International Equity Funds | 12.8% |
|
![]() | High Yield Fixed-Income Funds | 6.7% |
|
![]() | Investment Grade Fixed-Income Funds | 26.0% |
|
![]() | Short-Term Funds | 3.2% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2040 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 63.3% | |||
Shares | Value | ||
Domestic Equity Funds - 50.9% | |||
Fidelity 100 Index Fund | 8,324 | $ 76,083 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 4,056 | 63,552 | |
Fidelity Broad Market Opportunities Fund | 11,328 | 100,931 | |
Fidelity Disciplined Equity Fund | 2,497 | 63,486 | |
Fidelity Equity-Income Fund | 1,378 | 62,245 | |
Fidelity Large Cap Core Enhanced Index Fund | 11,543 | 102,505 | |
Fidelity Small Cap Opportunities Fund | 5,211 | 41,535 | |
TOTAL DOMESTIC EQUITY FUNDS | 510,337 | ||
International Equity Funds - 12.4% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 3,419 | 124,493 | |
TOTAL EQUITY FUNDS (Cost $703,741) | 634,830 | ||
Fixed-Income Funds - 33.9% | |||
|
|
|
|
High Yield Fixed-Income Funds - 7.0% | |||
Fidelity Capital & Income Fund | 4,342 | 35,127 | |
Fidelity Strategic Income Fund | 3,475 | 35,344 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 70,471 | ||
Investment Grade Fixed-Income Funds - 26.9% | |||
Fidelity Government Income Fund | 5,233 | 54,318 | |
Fidelity Strategic Real Return Fund | 5,368 | 54,269 | |
Fidelity Total Bond Fund | 16,049 | 161,459 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 270,046 | ||
TOTAL FIXED-INCOME FUNDS (Cost $347,881) | 340,517 | ||
Short-Term Funds - 2.8% | |||
|
|
|
|
Fidelity Institutional Money Market Portfolio Institutional Class | 14,408 | 14,408 | |
Fidelity Short-Term Bond Fund | 1,693 | 14,083 | |
TOTAL SHORT-TERM FUNDS (Cost $28,905) | 28,491 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $1,080,527) | $ 1,003,838 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2040 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
Assets | ||
Investment in securities, at value (cost $1,080,527) - See accompanying schedule | $ 1,003,838 | |
Cash | 39 | |
Total assets | 1,003,877 | |
|
|
|
Liabilities | ||
Distribution fees payable |
| 148 |
|
|
|
Net Assets | $ 1,003,729 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,079,269 | |
Undistributed net investment income | 337 | |
Accumulated undistributed net realized gain (loss) on investments | 812 | |
Net unrealized appreciation (depreciation) on investments | (76,689) | |
Net Assets | $ 1,003,729 | |
Calculation of Maximum Offering Price Class A: | $ 45.23 | |
|
|
|
Maximum offering price per share (100/94.25 of $45.23) | $ 47.99 | |
Class T: | $ 45.23 | |
|
|
|
Maximum offering price per share (100/96.50 of $45.23) | $ 46.87 | |
|
|
|
Class C: | $ 45.22 | |
|
|
|
Income Replacement 2040: | $ 45.23 | |
|
|
|
Institutional Class: | $ 45.23 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period December 31, 2007 | |
Investment Income |
|
|
Income distributions from underlying funds |
| $ 9,280 |
Interest |
| 39 |
Total income |
| 9,319 |
|
|
|
Expenses | ||
Distribution fees | $ 1,003 | |
Independent trustees' compensation | 2 | |
Total expenses before reductions | 1,005 | |
Expense reductions | (2) | 1,003 |
Net investment income (loss) | 8,316 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (493) | |
Capital gain distributions from underlying funds | 1,305 | 812 |
Change in net unrealized appreciation (depreciation) on underlying funds | (76,689) | |
Net gain (loss) | (75,877) | |
Net increase (decrease) in net assets resulting from operations | $ (67,561) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2040 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 8,316 |
Net realized gain (loss) | 812 |
Change in net unrealized appreciation (depreciation) | (76,689) |
Net increase (decrease) in net assets resulting from operations | (67,561) |
Distributions to shareholders from net investment income | (7,979) |
Share transactions - net increase (decrease) | 1,079,269 |
Total increase (decrease) in net assets | 1,003,729 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $337) | $ 1,003,729 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .442 |
Net realized and unrealized gain (loss) | (4.814) |
Total from investment operations | (4.372) |
Distributions from net investment income | (.398) |
Net asset value, end of period | $ 45.23 |
Total Return B, C, D | (8.77)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 1.60% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 91 |
Portfolio turnover rate | 4% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period December 31, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .371 |
Net realized and unrealized gain (loss) | (4.809) |
Total from investment operations | (4.438) |
Distributions from net investment income | (.332) |
Net asset value, end of period | $ 45.23 |
Total Return B, C, D | (8.90)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 1.35% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 132 |
Portfolio turnover rate | 4% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period December 31, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .234 |
Net realized and unrealized gain (loss) | (4.816) |
Total from investment operations | (4.582) |
Distributions from net investment income | (.198) |
Net asset value, end of period | $ 45.22 |
Total Return B, C, D | (9.18)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | .84% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 91 |
Portfolio turnover rate | 4% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period December 31, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2040
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | .504 |
Net realized and unrealized gain (loss) | (4.810) |
Total from investment operations | (4.306) |
Distributions from net investment income | (.464) |
Net asset value, end of period | $ 45.23 |
Total Return B, C | (8.64)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 1.85% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 598 |
Portfolio turnover rate | 4% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period December 31, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | .512 |
Net realized and unrealized gain (loss) | (4.818) |
Total from investment operations | (4.306) |
Distributions from net investment income | (.464) |
Net asset value, end of period | $ 45.23 |
Total Return B, C | (8.64)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 1.85% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 91 |
Portfolio turnover rate | 4% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period December 31, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2042 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 7.6 | 7.8 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 6.4 | 6.1 |
Fidelity Broad Market Opportunities Fund | 10.2 | 10.2 |
Fidelity Disciplined Equity Fund | 6.4 | 6.4 |
Fidelity Equity-Income Fund | 6.2 | 6.6 |
Fidelity Large Cap Core Enhanced Index Fund | 10.3 | 10.3 |
Fidelity Small Cap Opportunities Fund | 4.2 | 4.2 |
| 51.3 | 51.6 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 12.5 | 12.4 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 3.6 | 3.5 |
Fidelity Strategic Income Fund | 3.6 | 3.6 |
| 7.2 | 7.1 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 5.4 | 5.4 |
Fidelity Strategic Real Return Fund | 5.4 | 5.4 |
Fidelity Total Bond Fund | 16.1 | 16.0 |
| 26.9 | 26.8 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 1.1 | 1.1 |
Fidelity Short-Term Bond Fund | 1.0 | 1.0 |
| 2.1 | 2.1 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 51.3% |
|
![]() | International Equity Funds | 12.5% |
|
![]() | High Yield Fixed-Income Funds | 7.2% |
|
![]() | Investment Grade Fixed-Income Funds | 26.9% |
|
![]() | Short-Term Funds | 2.1% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 51.6% |
|
![]() | International Equity Funds | 12.4% |
|
![]() | High Yield Fixed-Income Funds | 7.1% |
|
![]() | Investment Grade Fixed-Income Funds | 26.8% |
|
![]() | Short-Term Funds | 2.1% |
|
Expected | |||
![]() | Domestic Equity Funds | 51.8% |
|
![]() | International Equity Funds | 13.0% |
|
![]() | High Yield Fixed-Income Funds | 6.9% |
|
![]() | Investment Grade Fixed-Income Funds | 26.0% |
|
![]() | Short-Term Funds | 2.3% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2042 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 63.8% | |||
Shares | Value | ||
Domestic Equity Funds - 51.3% | |||
Fidelity 100 Index Fund | 11,136 | $ 101,787 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 5,438 | 85,209 | |
Fidelity Broad Market Opportunities Fund | 15,204 | 135,470 | |
Fidelity Disciplined Equity Fund | 3,348 | 85,151 | |
Fidelity Equity-Income Fund | 1,848 | 83,464 | |
Fidelity Large Cap Core Enhanced Index Fund | 15,459 | 137,276 | |
Fidelity Small Cap Opportunities Fund | 7,033 | 56,053 | |
TOTAL DOMESTIC EQUITY FUNDS | 684,410 | ||
International Equity Funds - 12.5% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 4,567 | 166,273 | |
TOTAL EQUITY FUNDS (Cost $951,224) | 850,683 | ||
Fixed-Income Funds - 34.1% | |||
|
|
|
|
High Yield Fixed-Income Funds - 7.2% | |||
Fidelity Capital & Income Fund | 5,924 | 47,929 | |
Fidelity Strategic Income Fund | 4,744 | 48,245 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 96,174 | ||
Investment Grade Fixed-Income Funds - 26.9% | |||
Fidelity Government Income Fund | 6,941 | 72,046 | |
Fidelity Strategic Real Return Fund | 7,126 | 72,046 | |
Fidelity Total Bond Fund | 21,318 | 214,462 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 358,554 | ||
TOTAL-INCOME FUNDS (Cost $464,810) | 454,728 | ||
Short-Term Funds - 2.1% | |||
|
|
|
|
Fidelity Institutional Money Market Portfolio Institutional Class | 14,175 | 14,175 | |
Fidelity Short-Term Bond Fund | 1,663 | 13,836 | |
TOTAL SHORT-TERM FUNDS (Cost $28,401) | 28,011 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $1,444,435) | $ 1,333,422 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2042 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (cost $1,444,435) - See accompanying schedule | $ 1,333,422 | |
Cash | 39 | |
Total assets | 1,333,461 | |
|
|
|
Liabilities | ||
Distribution fees payable | 133 | |
|
|
|
Net Assets | $ 1,333,328 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,443,784 | |
Undistributed net investment income | 450 | |
Accumulated undistributed net realized gain (loss) on investments | 107 | |
Net unrealized appreciation (depreciation) on investments | (111,013) | |
Net Assets | $ 1,333,328 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 45.20 | |
|
|
|
Maximum offering price per share (100/94.25 of $45.20) | $ 47.96 | |
Class T: | $ 45.19 | |
|
|
|
Maximum offering price per share (100/96.50 of $45.19) | $ 46.83 | |
|
|
|
Class C: | $ 45.19 | |
|
|
|
Income Replacement 2042: | $ 45.20 | |
|
|
|
Institutional Class: | $ 45.20 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period December 31, 2007 | |
|
|
|
Investment Income |
|
|
Income distributions from underlying funds |
| $ 12,163 |
Interest |
| 39 |
Total income |
| 12,202 |
|
|
|
Expenses | ||
Distribution fees | $ 973 | |
Independent trustees' compensation | 3 | |
Total expenses before reductions | 976 | |
Expense reductions | (3) | 973 |
Net investment income (loss) | 11,229 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (1,593) | |
Capital gain distributions from underlying funds | 1,700 | 107 |
Change in net unrealized appreciation (depreciation) on underlying funds | (111,013) | |
Net gain (loss) | (110,906) | |
Net increase (decrease) in net assets resulting from operations | $ (99,677) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2042 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 11,229 |
Net realized gain (loss) | 107 |
Change in net unrealized appreciation (depreciation) | (111,013) |
Net increase (decrease) in net assets resulting from operations | (99,677) |
Distributions to shareholders from net investment income | (10,780) |
Share transactions - net increase (decrease) | 1,443,785 |
Total increase (decrease) in net assets | 1,333,328 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $450) | $ 1,333,328 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .425 |
Net realized and unrealized gain (loss) | (4.836) |
Total from investment operations | (4.411) |
Distributions from net investment income | (.389) |
Net asset value, end of period | $ 45.20 |
Total Return B, C, D | (8.85)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 1.57% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 91 |
Portfolio turnover rate | 8% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period December 31, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .365 |
Net realized and unrealized gain (loss) | (4.852) |
Total from investment operations | (4.487) |
Distributions from net investment income | (.323) |
Net asset value, end of period | $ 45.19 |
Total Return B, C, D | (9.00)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 1.32% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 91 |
Portfolio turnover rate | 8% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period December 31, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .226 |
Net realized and unrealized gain (loss) | (4.846) |
Total from investment operations | (4.620) |
Distributions from net investment income | (.190) |
Net asset value, end of period | $ 45.19 |
Total Return B, C, D | (9.25)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | .82% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 91 |
Portfolio turnover rate | 8% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period December 31, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2042
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | .496 |
Net realized and unrealized gain (loss) | (4.840) |
Total from investment operations | (4.344) |
Distributions from net investment income | (.456) |
Net asset value, end of period | $ 45.20 |
Total Return B, C | (8.72)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 1.82% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 969 |
Portfolio turnover rate | 8% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period December 31, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | .504 |
Net realized and unrealized gain (loss) | (4.848) |
Total from investment operations | (4.344) |
Distributions from net investment income | (.456) |
Net asset value, end of period | $ 45.20 |
Total Return B, C | (8.72)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 1.82% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 91 |
Portfolio turnover rate | 8% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period December 31, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended July 31, 2008
1. Organization.
Fidelity Income Replacement 2016 Fund, Fidelity Income Replacement 2018 Fund, Fidelity Income Replacement 2020 Fund, Fidelity Income Replacement 2022 Fund, Fidelity Income Replacement 2024 Fund, Fidelity Income Replacement 2026 Fund, Fidelity Income Replacement 2028 Fund, Fidelity Income Replacement 2030 Fund, Fidelity Income Replacement 2032 Fund, Fidelity Income Replacement 2034 Fund, Fidelity Income Replacement 2036 Fund, Fidelity Income Replacement 2038 Fund, Fidelity Income Replacement 2040 Fund and Fidelity Income Replacement 2042 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. The Funds invest primarily in a combination of other Fidelity equity, fixed income, and short-term funds (the Underlying Funds) managed by Fidelity Management & Research Company (FMR) and its affiliates.
The Funds are designed for investors who seek to convert accumulated assets into regular payments over a defined period of time. The payment strategy for each Fund is designed to be implemented through a shareholder's voluntary participation in the Smart Payment Program. Participation in the Smart Payment Program will result in the gradual liquidation of the shareholder's entire investment in the Fund by its horizon date. Each Fund's name refers to the year of its horizon date.
Each Fund offers Class A, Class T, Class C, Income Replacement and Institutional Class shares, each of which has equal rights as to assets and voting privileges, except for matters affecting a single class. 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 distribution and service plan fees incurred. Certain expense reductions also differ by class.
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. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Funds:
Security Valuation. Investments in the Underlying Funds are valued at their closing net asset value (NAV) 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 per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 pm Eastern time and 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. Income and capital gain distributions from the Underlying Funds, if any, are recorded on the ex-dividend date. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities.
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. Expenses included in the accompanying financial statements reflect the expenses of the Fund and do not include any expenses associated with the Underlying Funds. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. Each Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. There are no unrecognized tax benefits in the accompanying financial statements in connection with the tax positions expected to be taken in the initial filing of each Fund's federal tax return. Each of the Funds' federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service.
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. In addition, certain Funds will claim a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
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 short-term gain distributions from the Underlying Funds, capital loss carryforwards, losses deferred due to wash sales and losses deferred due to excise tax regulations.
Annual Report
2. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
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 | Unrealized | Unrealized | Net Unrealized |
Fidelity Income Replacement 2016 Fund | $ 10,040,129 | $ 13,257 | $ (504,721) | $ (491,464) |
Fidelity Income Replacement 2018 Fund | 7,416,956 | 9,245 | (418,727) | (409,482) |
Fidelity Income Replacement 2020 Fund | 2,480,007 | 2,796 | (121,235) | (118,439) |
Fidelity Income Replacement 2022 Fund | 5,894,525 | 6,203 | (361,700) | (355,497) |
Fidelity Income Replacement 2024 Fund | 1,514,429 | 2,901 | (91,770) | (88,869) |
Fidelity Income Replacement 2026 Fund | 1,699,017 | 3,729 | (110,829) | (107,100) |
Fidelity Income Replacement 2028 Fund | 7,699,284 | 9,337 | (417,666) | (408,329) |
Fidelity Income Replacement 2030 Fund | 1,318,650 | 2,390 | (84,223) | (81,833) |
Fidelity Income Replacement 2032 Fund | 1,553,312 | 2,016 | (136,890) | (134,874) |
Fidelity Income Replacement 2034 Fund | 1,050,996 | 1,445 | (77,798) | (76,353) |
Fidelity Income Replacement 2036 Fund | 1,823,776 | 3,217 | (148,631) | (145,414) |
Fidelity Income Replacement 2038 Fund | 1,584,334 | 1,022 | (98,397) | (97,375) |
Fidelity Income Replacement 2040 Fund | 1,080,528 | 900 | (77,590) | (76,690) |
Fidelity Income Replacement 2042 Fund | 1,444,434 | 979 | (111,991) | (111,012) |
| Undistributed | Undistributed | Capital Loss |
Fidelity Income Replacement 2016 Fund | $ 4,829 | $ - | $ (827) |
Fidelity Income Replacement 2018 Fund | 3,581 | - | (62) |
Fidelity Income Replacement 2020 Fund | 1,110 | 3,188 | - |
Fidelity Income Replacement 2022 Fund | 2,475 | 6,495 | - |
Fidelity Income Replacement 2024 Fund | 575 | - | - |
Fidelity Income Replacement 2026 Fund | 600 | 10,150 | - |
Fidelity Income Replacement 2028 Fund | 3,156 | - | (30) |
Fidelity Income Replacement 2030 Fund | 545 | 8,517 | - |
Fidelity Income Replacement 2032 Fund | 555 | 10,977 | - |
Fidelity Income Replacement 2034 Fund | 367 | 9,196 | - |
Fidelity Income Replacement 2036 Fund | 605 | - | (20) |
Fidelity Income Replacement 2038 Fund | 560 | - | - |
Fidelity Income Replacement 2040 Fund | 477 | 654 | - |
Fidelity Income Replacement 2042 Fund | 599 | - | - |
The tax character of distributions paid was as follows:
July 31, 2008 |
|
| Ordinary Income |
Fidelity Income Replacement 2016 Fund | $ 156,368 |
Fidelity Income Replacement 2018 Fund | 113,404 |
Fidelity Income Replacement 2020 Fund | 32,472 |
Fidelity Income Replacement 2022 Fund | 92,097 |
Fidelity Income Replacement 2024 Fund | 24,097 |
Fidelity Income Replacement 2026 Fund | 25,757 |
Fidelity Income Replacement 2028 Fund | 87,020 |
Fidelity Income Replacement 2030 Fund | 16,956 |
Fidelity Income Replacement 2032 Fund | 27,790 |
Fidelity Income Replacement 2034 Fund | 18,540 |
Fidelity Income Replacement 2036 Fund | 31,552 |
Fidelity Income Replacement 2038 Fund | 11,097 |
Fidelity Income Replacement 2040 Fund | 7,979 |
Fidelity Income Replacement 2042 Fund | 10,780 |
Annual Report
Notes to Financial Statements - continued
2. Significant Accounting Policies - continued
New Accounting Pronouncement. 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 results in expanded disclosures about fair value measurements. The Funds will adopt the provisions of SFAS 157 effective for the fiscal year beginning August 1, 2008.
3. Operating Policies.
Repurchase Agreements. 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 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.
4. Purchases and Sales of Investments.
Purchases and redemptions of the Underlying Fund shares are noted in the table below.
| Purchases ($) | Redemptions ($) |
Fidelity Income Replacement 2016 Fund | 13,062,115 | 2,980,893 |
Fidelity Income Replacement 2018 Fund | 9,234,682 | 1,788,822 |
Fidelity Income Replacement 2020 Fund | 2,748,647 | 263,672 |
Fidelity Income Replacement 2022 Fund | 6,976,253 | 1,057,843 |
Fidelity Income Replacement 2024 Fund | 1,898,393 | 375,337 |
Fidelity Income Replacement 2026 Fund | 1,912,729 | 210,749 |
Fidelity Income Replacement 2028 Fund | 8,894,212 | 1,158,306 |
Fidelity Income Replacement 2030 Fund | 1,407,720 | 88,513 |
Fidelity Income Replacement 2032 Fund | 1,795,895 | 238,876 |
Fidelity Income Replacement 2034 Fund | 1,140,831 | 88,159 |
Fidelity Income Replacement 2036 Fund | 2,414,130 | 546,784 |
Fidelity Income Replacement 2038 Fund | 1,677,906 | 90,122 |
Fidelity Income Replacement 2040 Fund | 1,099,795 | 18,777 |
Fidelity Income Replacement 2042 Fund | 1,500,619 | 54,609 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Strategic Advisers, Inc. (Strategic Advisers), an affiliate of FMR, provides the Funds with investment management related services. The Funds do not pay any fees for these services. Under the management contract, Strategic Advisers pays all other fund-level expenses, except the compensation of the independent Trustees and certain other expenses such as interest expense.
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:
Fidelity Income Replacement 2016 Fund | Distribution | Service | Paid to | Retained |
Class A | 0% | .25% | $ 2,297 | $ 188 |
Class T | .25% | .25% | 1,412 | 454 |
Class C | .75% | .25% | 9,525 | 9,495 |
|
|
| $ 13,234 | $ 10,137 |
Fidelity Income Replacement 2018 Fund |
|
|
|
|
Class A | 0% | .25% | $ 1,215 | $ 232 |
Class T | .25% | .25% | 570 | 467 |
Class C | .75% | .25% | 2,313 | 2,312 |
|
|
| $ 4,098 | $ 3,011 |
Annual Report
5. Fees and Other Transactions with Affiliates - continued
Distribution and Service Plan - continued
Fidelity Income Replacement 2020 Fund | Distribution | Service | Paid to | Retained |
Class A | 0% | .25% | $ 663 | $ 230 |
Class T | .25% | .25% | 690 | 462 |
Class C | .75% | .25% | 1,593 | 1,501 |
|
|
| $ 2,946 | $ 2,193 |
Fidelity Income Replacement 2022 Fund |
|
|
|
|
Class A | 0% | .25% | $ 469 | $ 231 |
Class T | .25% | .25% | 550 | 463 |
Class C | .75% | .25% | 955 | 955 |
|
|
| $ 1,974 | $ 1,649 |
Fidelity Income Replacement 2024 Fund |
|
|
|
|
Class A | 0% | .25% | $ 494 | $ 231 |
Class T | .25% | .25% | 466 | 466 |
Class C | .75% | .25% | 1,098 | 1,097 |
|
|
| $ 2,058 | $ 1,794 |
Fidelity Income Replacement 2026 Fund |
|
|
|
|
Class A | 0% | .25% | $ 274 | $ 231 |
Class T | .25% | .25% | 464 | 464 |
Class C | .75% | .25% | 3,301 | 3,297 |
|
|
| $ 4,039 | $ 3,992 |
Fidelity Income Replacement 2028 Fund |
|
|
|
|
Class A | 0% | .25% | $ 360 | $ 225 |
Class T | .25% | .25% | 952 | 454 |
Class C | .75% | .25% | 1,164 | 1,115 |
|
|
| $ 2,476 | $ 1,794 |
Fidelity Income Replacement 2030 Fund |
|
|
|
|
Class A | 0% | .25% | $ 232 | $ 232 |
Class T | .25% | .25% | 462 | 462 |
Class C | .75% | .25% | 2,109 | 2,108 |
|
|
| $ 2,803 | $ 2,802 |
Fidelity Income Replacement 2032 Fund |
|
|
|
|
Class A | 0% | .25% | $ 723 | $ 231 |
Class T | .25% | .25% | 462 | 462 |
Class C | .75% | .25% | 921 | 921 |
|
|
| $ 2,106 | $ 1,614 |
Fidelity Income Replacement 2034 Fund |
|
|
|
|
Class A | 0% | .25% | $ 280 | $ 232 |
Class T | .25% | .25% | 464 | 464 |
Class C | .75% | .25% | 921 | 921 |
|
|
| $ 1,665 | $ 1,617 |
Fidelity Income Replacement 2036 Fund |
|
|
|
|
Class A | 0% | .25% | $ 232 | $ 232 |
Class T | .25% | .25% | 1,346 | 458 |
Class C | .75% | .25% | 921 | 921 |
|
|
| $ 2,499 | $ 1,611 |
Fidelity Income Replacement 2038 Fund |
|
|
|
|
Class A | 0% | .25% | $ 139 | $ 139 |
Class T | .25% | .25% | 278 | 278 |
Class C | .75% | .25% | 556 | 556 |
|
|
| $ 973 | $ 973 |
Annual Report
Notes to Financial Statements - continued
5. Fees and Other Transactions with Affiliates - continued
Distribution and Service Plan - continued
Fidelity Income Replacement 2040 Fund | Distribution | Service | Paid to | Retained |
Class A | 0% | .25% | $ 139 | $ 139 |
Class T | .25% | .25% | 308 | 276 |
Class C | .75% | .25% | 556 | 556 |
|
|
| $ 1,003 | $ 971 |
Fidelity Income Replacement 2042 Fund |
|
|
|
|
Class A | 0% | .25% | $ 139 | $ 139 |
Class T | .25% | .25% | 278 | 278 |
Class C | .75% | .25% | 556 | 556 |
|
|
| $ 973 | $ 973 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, 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, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Fidelity Income Replacement 2016 Fund | Retained |
Class A | $ 17,045 |
Class T | 1,570 |
Class C* | 757 |
| $ 19,372 |
Fidelity Income Replacement 2018 Fund |
|
Class A | $ 7,145 |
Class T | 305 |
Class C* | 11 |
| $ 7,461 |
Fidelity Income Replacement 2020 Fund |
|
Class A | $ 2,668 |
Class T | 237 |
| $ 2,905 |
Fidelity Income Replacement 2022 Fund |
|
Class A | $ 1,600 |
Class T | 235 |
| $ 1,835 |
Fidelity Income Replacement 2024 Fund |
|
Class A | $ 1,638 |
Fidelity Income Replacement 2026 Fund |
|
Class A | $ 188 |
Fidelity Income Replacement 2028 Fund |
|
Class A | $ 1,519 |
Class T | 778 |
| $ 2,297 |
Fidelity Income Replacement 2032 Fund |
|
Class A | $ 1,114 |
Fidelity Income Replacement 2034 Fund |
|
Class A | $ 453 |
Annual Report
5. Fees and Other Transactions with Affiliates - continued
Sales Load - continued
Fidelity Income Replacement 2036 Fund | Retained |
Class T | $ 533 |
Fidelity Income Replacement 2040 Fund |
|
Class T | $ 223 |
* When Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
6. Expense Reductions.
FMR voluntarily agreed to reimburse funds to the extent annual operating expenses exceeded 0.00% of average net assets plus distribution and service fees applicable to each class. Some expenses, for example interest expense, are excluded from this reimbursement.
The following Fund's were in reimbursement during the period:
| Reimbursement |
|
|
| |
Fidelity Income Replacement 2016 Fund | $ 20 |
Fidelity Income Replacement 2018 Fund | 15 |
Fidelity Income Replacement 2020 Fund | 5 |
Fidelity Income Replacement 2022 Fund | 12 |
Fidelity Income Replacement 2024 Fund | 3 |
Fidelity Income Replacement 2026 Fund | 4 |
Fidelity Income Replacement 2028 Fund | 13 |
Fidelity Income Replacement 2030 Fund | 2 |
Fidelity Income Replacement 2032 Fund | 4 |
Fidelity Income Replacement 2034 Fund | 2 |
Fidelity Income Replacement 2036 Fund | 5 |
Fidelity Income Replacement 2038 Fund | 2 |
Fidelity Income Replacement 2040 Fund | 2 |
Fidelity Income Replacement 2042 Fund | 3 |
* Represents total amount reimbursed to the Fund. Each class has received its pro-rata allocation of reimbursement.
7. 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.
The Funds do not invest in the Underlying Funds for the purpose of exercising management or control; however, investments by the Funds within their principal investment strategies may represent a significant portion of the Underlying Fund's net assets. At the end of the period, the following Funds were the owners of record of 10% or more of the total outstanding shares of the Underlying Funds.
Fund | Fidelity Income | Fidelity Income | Fidelity Income | Fidelity Income |
Fidelity Broad Market Opportunities Fund | 14% | 11% | 10% | 15% |
Annual Report
Notes to Financial Statements - continued
7. Other - continued
The Funds, in aggregate, were the owners of record of more than 20% of the total outstanding shares of the following Underlying Funds.
Fund | % of Share held |
Fidelity Broad Market Opportunities Fund | 80% |
In addition, at the end of the period, FMR or its affiliates were owners of record of more than 10% of the outstanding shares of the following funds:
| Affiliated % |
Fidelity Income Replacement 2020 Fund | 16% |
Fidelity Income Replacement 2024 Fund | 27% |
Fidelity Income Replacement 2032 Fund | 27% |
Fidelity Income Replacement 2034 Fund | 39% |
Fidelity Income Replacement 2036 Fund | 24% |
Fidelity Income Replacement 2038 Fund | 25% |
Fidelity Income Replacement 2040 Fund | 36% |
Fidelity Income Replacement 2042 Fund | 27% |
8. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Year ended July 31, | 2008A |
Fidelity Income Replacement 2016 Fund |
|
From net investment income |
|
Class A | $ 24,373 |
Class T | 6,831 |
Class C | 18,135 |
Income Replacement 2016 | 90,325 |
Institutional Class | 3,781 |
Total | $ 143,445 |
From net realized gain |
|
Class A | $ 614 |
Class T | 512 |
Class C | 2,180 |
Income Replacement 2016 | 9,335 |
Institutional Class | 282 |
Total | $ 12,923 |
Fidelity Income Replacement 2018 Fund |
|
From net investment income |
|
Class A | $ 12,180 |
Class T | 2,589 |
Class C | 4,326 |
Income Replacement 2018 | 82,709 |
Institutional Class | 3,472 |
Total | $ 105,276 |
From net realized gain |
|
Class A | $ 262 |
Class T | 323 |
Class C | 389 |
Income Replacement 2018 | 6,892 |
Institutional Class | 262 |
Total | $ 8,128 |
Annual Report
8. Distributions to Shareholders - continued
Year ended July 31, | 2008A |
Fidelity Income Replacement 2020 Fund |
|
From net investment income |
|
Class A | $ 6,115 |
Class T | 3,050 |
Class C | 2,845 |
Income Replacement 2020 | 14,934 |
Institutional Class | 3,046 |
Total | $ 29,990 |
From net realized gain |
|
Class A | $ 342 |
Class T | 498 |
Class C | 510 |
Income Replacement 2020 | 790 |
Institutional Class | 342 |
Total | $ 2,482 |
Fidelity Income Replacement 2022 Fund |
|
From net investment income |
|
Class A | $ 4,024 |
Class T | 2,271 |
Class C | 1,457 |
Income Replacement 2022 | 69,351 |
Institutional Class | 5,902 |
Total | $ 83,005 |
From net realized gain |
|
Class A | $ 341 |
Class T | 341 |
Class C | 341 |
Income Replacement 2022 | 7,075 |
Institutional Class | 994 |
Total | $ 9,092 |
Fidelity Income Replacement 2024 Fund |
|
From net investment income |
|
Class A | $ 4,555 |
Class T | 1,866 |
Class C | 1,852 |
Income Replacement 2024 | 10,602 |
Institutional Class | 2,326 |
Total | $ 21,201 |
From net realized gain |
|
Class A | $ 761 |
Class T | 342 |
Class C | 341 |
Income Replacement 2024 | 1,110 |
Institutional Class | 342 |
Total | $ 2,896 |
Fidelity Income Replacement 2026 Fund |
|
From net investment income |
|
Class A | $ 2,500 |
Class T | 1,852 |
Class C | 5,330 |
Income Replacement 2026 | 10,061 |
Institutional Class | 2,308 |
Total | $ 22,051 |
From net realized gain |
|
Class A | $ 407 |
Class T | 362 |
Class C | 1,176 |
Income Replacement 2026 | 1,399 |
Institutional Class | 362 |
Total | $ 3,706 |
Annual Report
Notes to Financial Statements - continued
8. Distributions to Shareholders - continued
Year ended July 31, | 2008A |
Fidelity Income Replacement 2028 Fund |
|
From net investment income |
|
Class A | $ 3,090 |
Class T | 3,796 |
Class C | 1,482 |
Income Replacement 2028 | 67,994 |
Institutional Class | 2,054 |
Total | $ 78,416 |
From net realized gain |
|
Class A | $ 322 |
Class T | 519 |
Class C | 321 |
Income Replacement 2028 | 7,120 |
Institutional Class | 322 |
Total | $ 8,604 |
Fidelity Income Replacement 2030 Fund |
|
From net investment income |
|
Class A | $ 2,013 |
Class T | 1,791 |
Class C | 3,220 |
Income Replacement 2030 | 5,160 |
Institutional Class | 2,244 |
Total | $ 14,428 |
From net realized gain |
|
Class A | $ 382 |
Class T | 382 |
Class C | 905 |
Income Replacement 2030 | 477 |
Institutional Class | 382 |
Total | $ 2,528 |
Fidelity Income Replacement 2032 Fund |
|
From net investment income |
|
Class A | $ 6,514 |
Class T | 1,757 |
Class C | 1,307 |
Income Replacement 2032 | 11,580 |
Institutional Class | 2,212 |
Total | $ 23,370 |
From net realized gain |
|
Class A | $ 1,345 |
Class T | 382 |
Class C | 381 |
Income Replacement 2032 | 1,930 |
Institutional Class | 382 |
Total | $ 4,420 |
Fidelity Income Replacement 2034 Fund |
|
From net investment income |
|
Class A | $ 2,325 |
Class T | 1,706 |
Class C | 1,250 |
Income Replacement 2034 | 8,139 |
Institutional Class | 2,157 |
Total | $ 15,577 |
From net realized gain |
|
Class A | $ 402 |
Class T | 402 |
Class C | 401 |
Income Replacement 2034 | 1,356 |
Institutional Class | 402 |
Total | $ 2,963 |
Annual Report
8. Distributions to Shareholders - continued
Year ended July 31, | 2008A |
Fidelity Income Replacement 2036 Fund |
|
From net investment income |
|
Class A | $ 1,814 |
Class T | 4,886 |
Class C | 1,137 |
Income Replacement 2036 | 16,179 |
Institutional Class | 2,545 |
Total | $ 26,561 |
From net realized gain |
|
Class A | $ 381 |
Class T | 1,187 |
Class C | 381 |
Income Replacement 2036 | 2,566 |
Institutional Class | 476 |
Total | $ 4,991 |
Fidelity Income Replacement 2038 Fund |
|
From net investment income |
|
Class A | $ 745 |
Class T | 610 |
Class C | 363 |
Income Replacement 2038 | 8,501 |
Institutional Class | 878 |
Total | $ 11,097 |
Fidelity Income Replacement 2040 Fund |
|
From net investment income |
|
Class A | $ 799 |
Class T | 766 |
Class C | 397 |
Income Replacement 2040 | 5,085 |
Institutional Class | 932 |
Total | $ 7,979 |
Fidelity Income Replacement 2042 Fund |
|
From net investment income |
|
Class A | $ 781 |
Class T | 648 |
Class C | 381 |
Income Replacement 2042 | 8,054 |
Institutional Class | 916 |
Total | $ 10,780 |
A For the period August 30, 2007 (commencement of operations) to July 31, 2008 for Fidelity Income Replacement 2016, 2018, 2020, 2022, 2024, 2026, 2028, 2030, 2032, 2034, 2036 Funds and for the period December 31, 2007 (commencement of operations) to July 31, 2008 for Fidelity Income Replacement 2038, 2040, 2042 Funds.
9. Share Transactions.
Transactions for each class of shares were as follows:
Year ended July 31, | Shares | Dollars |
Fidelity Income Replacement 2016 Fund |
|
|
Class A |
|
|
Shares sold | 51,887 | $ 2,562,164 |
Reinvestment of distributions | 481 | 23,577 |
Shares redeemed | (6,012) | (294,658) |
Net increase (decrease) | 46,356 | $ 2,291,083 |
Class T |
|
|
Shares sold | 14,213 | $ 703,303 |
Reinvestment of distributions | 126 | 6,237 |
Shares redeemed | (243) | (11,945) |
Net increase (decrease) | 14,096 | $ 697,595 |
Annual Report
Notes to Financial Statements - continued
9. Share Transactions - continued
Year ended July 31, | Shares | Dollars |
Class C |
|
|
Shares sold | 36,624 | $ 1,842,263 |
Reinvestment of distributions | 396 | 19,625 |
Shares redeemed | (3,603) | (178,499) |
Net increase (decrease) | 33,417 | $ 1,683,389 |
Income Replacement 2016 |
|
|
Shares sold | 128,125 | $ 6,454,165 |
Reinvestment of distributions | 282 | 14,202 |
Shares redeemed | (26,243) | (1,295,692) |
Net increase (decrease) | 102,164 | $ 5,172,675 |
Institutional Class |
|
|
Shares sold | 3,795 | $ 190,050 |
Reinvestment of distributions | 58 | 2,900 |
Net increase (decrease) | 3,853 | $ 192,950 |
Fidelity Income Replacement 2018 Fund |
|
|
Class A |
|
|
Shares sold | 24,773 | $ 1,220,917 |
Reinvestment of distributions | 151 | 7,408 |
Shares redeemed | (1,591) | (78,122) |
Net increase (decrease) | 23,333 | $ 1,150,203 |
Class T |
|
|
Shares sold | 3,187 | $ 158,040 |
Reinvestment of distributions | 49 | 2,418 |
Net increase (decrease) | 3,236 | $ 160,458 |
Class C |
|
|
Shares sold | 11,169 | $ 549,643 |
Reinvestment of distributions | 53 | 2,662 |
Shares redeemed | (3,529) | (172,565) |
Net increase (decrease) | 7,693 | $ 379,740 |
Income Replacement 2018 |
|
|
Shares sold | 122,952 | $ 6,187,553 |
Reinvestment of distributions | 278 | 13,952 |
Shares redeemed | (14,368) | (704,704) |
Net increase (decrease) | 108,862 | $ 5,496,801 |
Institutional Class |
|
|
Shares sold | 4,519 | $ 225,289 |
Reinvestment of distributions | 56 | 2,804 |
Shares redeemed | (60) | (2,900) |
Net increase (decrease) | 4,515 | $ 225,193 |
Fidelity Income Replacement 2020 Fund |
|
|
Class A |
|
|
Shares sold | 10,762 | $ 527,052 |
Reinvestment of distributions | 71 | 3,536 |
Shares redeemed | (160) | (7,749) |
Net increase (decrease) | 10,673 | $ 522,839 |
Class T |
|
|
Shares sold | 4,042 | $ 202,738 |
Reinvestment of distributions | 71 | 3,548 |
Shares redeemed | (139) | (6,586) |
Net increase (decrease) | 3,974 | $ 199,700 |
Class C |
|
|
Shares sold | 5,838 | $ 288,035 |
Reinvestment of distributions | 55 | 2,753 |
Shares redeemed | (50) | (2,417) |
Net increase (decrease) | 5,843 | $ 288,371 |
Income Replacement 2020 |
|
|
Shares sold | 28,174 | $ 1,389,273 |
Reinvestment of distributions | 71 | 3,552 |
Shares redeemed | (2,068) | (99,949) |
Net increase (decrease) | 26,177 | $ 1,292,876 |
Annual Report
9. Share Transactions - continued
Year ended July 31, | Shares | Dollars |
Institutional Class |
|
|
Shares sold | 3,397 | $ 168,160 |
Reinvestment of distributions | 57 | 2,822 |
Net increase (decrease) | 3,454 | $ 170,982 |
Fidelity Income Replacement 2022 Fund |
|
|
Class A |
|
|
Shares sold | 6,185 | $ 306,290 |
Reinvestment of distributions | 48 | 2,394 |
Shares redeemed | (93) | (4,482) |
Net increase (decrease) | 6,140 | $ 304,202 |
Class T |
|
|
Shares sold | 3,924 | $ 195,654 |
Reinvestment of distributions | 53 | 2,613 |
Net increase (decrease) | 3,977 | $ 198,267 |
Class C |
|
|
Shares sold | 2,513 | $ 125,050 |
Reinvestment of distributions | 35 | 1,733 |
Net increase (decrease) | 2,548 | $ 126,783 |
Income Replacement 2022 |
|
|
Shares sold | 114,310 | $ 5,694,740 |
Reinvestment of distributions | 193 | 9,783 |
Shares redeemed | (15,364) | (754,411) |
Net increase (decrease) | 99,139 | $ 4,950,112 |
Institutional Class |
|
|
Shares sold | 5,837 | $ 300,050 |
Reinvestment of distributions | 52 | 2,619 |
Net increase (decrease) | 5,889 | $ 302,669 |
Fidelity Income Replacement 2024 Fund |
|
|
Class A |
|
|
Shares sold | 6,152 | $ 310,133 |
Reinvestment of distributions | 95 | 4,738 |
Shares redeemed | (155) | (7,496) |
Net increase (decrease) | 6,092 | $ 307,375 |
Class T |
|
|
Shares sold | 2,001 | $ 99,021 |
Reinvestment of distributions | 44 | 2,208 |
Net increase (decrease) | 2,045 | $ 101,229 |
Class C |
|
|
Shares sold | 4,943 | $ 242,316 |
Reinvestment of distributions | 40 | 2,004 |
Shares redeemed | (20) | (939) |
Net increase (decrease) | 4,963 | $ 243,381 |
Income Replacement 2024 |
|
|
Shares sold | 18,071 | $ 894,960 |
Reinvestment of distributions | 80 | 3,983 |
Shares redeemed | (2,959) | (140,970) |
Net increase (decrease) | 15,192 | $ 757,973 |
Institutional Class |
|
|
Shares sold | 2,001 | $ 100,277 |
Reinvestment of distributions | 53 | 2,668 |
Net increase (decrease) | 2,054 | $ 102,945 |
Fidelity Income Replacement 2026 Fund |
|
|
Class A |
|
|
Shares sold | 2,750 | $ 136,448 |
Reinvestment of distributions | 58 | 2,907 |
Net increase (decrease) | 2,808 | $ 139,355 |
Annual Report
Notes to Financial Statements - continued
9. Share Transactions - continued
Year ended July 31, | Shares | Dollars |
Class T |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 44 | 2,214 |
Net increase (decrease) | 2,045 | $ 102,264 |
Class C |
|
|
Shares sold | 10,559 | $ 527,050 |
Reinvestment of distributions | 131 | 6,505 |
Shares redeemed | (307) | (14,828) |
Net increase (decrease) | 10,383 | $ 518,727 |
Income Replacement 2026 |
|
|
Shares sold | 17,326 | $ 852,072 |
Reinvestment of distributions | 117 | 5,806 |
Shares redeemed | (693) | (33,589) |
Net increase (decrease) | 16,750 | $ 824,289 |
Institutional Class |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 53 | 2,670 |
Net increase (decrease) | 2,054 | $ 102,720 |
Fidelity Income Replacement 2028 Fund |
|
|
Class A |
|
|
Shares sold | 7,922 | $ 392,531 |
Reinvestment of distributions | 69 | 3,412 |
Shares redeemed | (65) | (3,072) |
Net increase (decrease) | 7,926 | $ 392,871 |
Class T |
|
|
Shares sold | 13,004 | $ 639,428 |
Reinvestment of distributions | 58 | 2,913 |
Shares redeemed | (120) | (5,688) |
Net increase (decrease) | 12,942 | $ 636,653 |
Class C |
|
|
Shares sold | 3,181 | $ 157,488 |
Reinvestment of distributions | 31 | 1,557 |
Net increase (decrease) | 3,212 | $ 159,045 |
Income Replacement 2028 |
|
|
Shares sold | 148,761 | $ 7,341,752 |
Reinvestment of distributions | 196 | 9,925 |
Shares redeemed | (19,359) | (940,882) |
Net increase (decrease) | 129,598 | $ 6,410,795 |
Institutional Class |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 48 | 2,376 |
Net increase (decrease) | 2,049 | $ 102,426 |
Fidelity Income Replacement 2030 Fund |
|
|
Class A |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 48 | 2,395 |
Net increase (decrease) | 2,049 | $ 102,445 |
Class T |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 43 | 2,173 |
Net increase (decrease) | 2,044 | $ 102,223 |
Class C |
|
|
Shares sold | 6,410 | $ 322,141 |
Reinvestment of distributions | 83 | 4,124 |
Shares redeemed | (120) | (5,838) |
Net increase (decrease) | 6,373 | $ 320,427 |
Annual Report
9. Share Transactions - continued
Year ended July 31, | Shares | Dollars |
Income Replacement 2030 |
|
|
Shares sold | 14,029 | $ 682,104 |
Reinvestment of distributions | 72 | 3,547 |
Shares redeemed | (87) | (4,166) |
Net increase (decrease) | 14,014 | $ 681,485 |
Institutional Class |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 53 | 2,627 |
Net increase (decrease) | 2,054 | $ 102,677 |
Fidelity Income Replacement 2032 Fund |
|
|
Class A |
|
|
Shares sold | 8,485 | $ 428,673 |
Reinvestment of distributions | 158 | 7,859 |
Net increase (decrease) | 8,643 | $ 436,532 |
Class T |
|
|
Shares sold | 2,001 | $ 100,059 |
Reinvestment of distributions | 43 | 2,138 |
Net increase (decrease) | 2,044 | $ 102,197 |
Class C |
|
|
Shares sold | 2,001 | $ 100,059 |
Reinvestment of distributions | 34 | 1,688 |
Net increase (decrease) | 2,035 | $ 101,747 |
Income Replacement 2032 |
|
|
Shares sold | 18,568 | $ 934,542 |
Reinvestment of distributions | 96 | 4,859 |
Shares redeemed | (2,950) | (142,310) |
Net increase (decrease) | 15,714 | $ 797,091 |
Institutional Class |
|
|
Shares sold | 2,001 | $ 100,059 |
Reinvestment of distributions | 52 | 2,594 |
Net increase (decrease) | 2,053 | $ 102,653 |
Fidelity Income Replacement 2034 Fund |
|
|
Class A |
|
|
Shares sold | 3,214 | $ 158,381 |
Reinvestment of distributions | 55 | 2,727 |
Shares redeemed | (289) | (14,048) |
Net increase (decrease) | 2,980 | $ 147,060 |
Class T |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 42 | 2,108 |
Net increase (decrease) | 2,043 | $ 102,158 |
Class C |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 33 | 1,652 |
Net increase (decrease) | 2,034 | $ 101,702 |
Income Replacement 2034 |
|
|
Shares sold | 11,938 | $ 589,565 |
Reinvestment of distributions | 100 | 4,987 |
Shares redeemed | (145) | (7,028) |
Net increase (decrease) | 11,893 | $ 587,524 |
Institutional Class |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 51 | 2,559 |
Net increase (decrease) | 2,052 | $ 102,609 |
Annual Report
Notes to Financial Statements - continued
9. Share Transactions - continued
Year ended July 31, | Shares | Dollars |
Fidelity Income Replacement 2036 Fund |
|
|
Class A |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 44 | 2,195 |
Net increase (decrease) | 2,045 | $ 102,245 |
Class T |
|
|
Shares sold | 8,360 | $ 427,487 |
Reinvestment of distributions | 59 | 2,995 |
Shares redeemed | (139) | (6,726) |
Net increase (decrease) | 8,280 | $ 423,756 |
Class C |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 30 | 1,518 |
Net increase (decrease) | 2,031 | $ 101,568 |
Income Replacement 2036 |
|
|
Shares sold | 30,339 | $ 1,531,859 |
Reinvestment of distributions | 136 | 6,842 |
Shares redeemed | (9,217) | (447,459) |
Net increase (decrease) | 21,258 | $ 1,091,242 |
Institutional Class |
|
|
Shares sold | 2,505 | $ 125,551 |
Reinvestment of distributions | 60 | 3,020 |
Shares redeemed | (10) | (477) |
Net increase (decrease) | 2,555 | $ 128,094 |
Fidelity Income Replacement 2038 Fund |
|
|
Class A |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 16 | 745 |
Net increase (decrease) | 2,017 | $ 100,795 |
Class T |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 13 | 610 |
Net increase (decrease) | 2,014 | $ 100,660 |
Class C |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 8 | 363 |
Net increase (decrease) | 2,009 | $ 100,413 |
Income Replacement 2038 |
|
|
Shares sold | 26,117 | $ 1,244,662 |
Reinvestment of distributions | 24 | 1,115 |
Shares redeemed | (1,352) | (62,898) |
Net increase (decrease) | 24,789 | $ 1,182,879 |
Institutional Class |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 19 | 878 |
Net increase (decrease) | 2,020 | $ 100,928 |
Fidelity Income Replacement 2040 Fund |
|
|
Class A |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 17 | 799 |
Net increase (decrease) | 2,018 | $ 100,849 |
Class T |
|
|
Shares sold | 2,913 | $ 143,477 |
Reinvestment of distributions | 16 | 766 |
Net increase (decrease) | 2,929 | $ 144,243 |
Annual Report
9. Share Transactions - continued
Year ended July 31, | Shares | Dollars |
Class C |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 8 | 397 |
Net increase (decrease) | 2,009 | $ 100,447 |
Income Replacement 2040 |
|
|
Shares sold | 13,341 | $ 638,742 |
Reinvestment of distributions | 45 | 2,091 |
Shares redeemed | (172) | (8,085) |
Net increase (decrease) | 13,214 | $ 632,748 |
Institutional Class |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 20 | 932 |
Net increase (decrease) | 2,021 | $ 100,982 |
Fidelity Income Replacement 2042 Fund |
|
|
Class A |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 17 | 781 |
Net increase (decrease) | 2,018 | $ 100,831 |
Class T |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 14 | 648 |
Net increase (decrease) | 2,015 | $ 100,698 |
Class C |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 8 | 381 |
Net increase (decrease) | 2,009 | $ 100,431 |
Income Replacement 2042 |
|
|
Shares sold | 21,824 | $ 1,059,126 |
Reinvestment of distributions | 34 | 1,577 |
Shares redeemed | (420) | (19,844) |
Net increase (decrease) | 21,438 | $ 1,040,859 |
Institutional Class |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 20 | 916 |
Net increase (decrease) | 2,021 | $ 100,966 |
A For the period August 30, 2007 (commencement of operations) to July 31, 2008 for Fidelity Income Replacement 2016, 2018, 2020, 2022, 2024, 2026, 2028, 2030, 2032, 2034, 2036 Funds and for the period December 31, 2007 (commencement of operations) to July 31, 2008 for Fidelity Income Replacement 2038, 2040, 2042 Funds.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Income Fund and the Shareholders of Fidelity Income Replacement 2016 Fund, Fidelity Income Replacement 2018 Fund, Fidelity Income Replacement 2020 Fund, Fidelity Income Replacement 2022 Fund, Fidelity Income Replacement 2024 Fund, Fidelity Income Replacement 2026 Fund, Fidelity Income Replacement 2028 Fund, Fidelity Income Replacement 2030 Fund, Fidelity Income Replacement 2032 Fund, Fidelity Income Replacement 2034 Fund, Fidelity Income Replacement 2036 Fund, Fidelity Income Replacement 2038 Fund, Fidelity Income Replacement 2040 Fund and Fidelity Income Replacement 2042 Fund:
We have audited the accompanying statements of assets and liabilities of Fidelity Income Replacement 2016 Fund, Fidelity Income Replacement 2018 Fund, Fidelity Income Replacement 2020 Fund, Fidelity Income Replacement 2022 Fund, Fidelity Income Replacement 2024 Fund, Fidelity Income Replacement 2026 Fund, Fidelity Income Replacement 2028 Fund, Fidelity Income Replacement 2030 Fund, Fidelity Income Replacement 2032 Fund, Fidelity Income Replacement 2034 Fund, Fidelity Income Replacement 2036 Fund, Fidelity Income Replacement 2038 Fund, Fidelity Income Replacement 2040 Fund and Fidelity Income Replacement 2042 Fund (the Funds), each of which are funds of Fidelity Income Fund (the trust), including the schedules of investments, as of July 31, 2008, and the related statements of operations, the statements of changes in net assets, and the financial highlights for the period from commencement of operations (August 30, 2007 or December 31, 2007) to July 31, 2008. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with 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 and financial highlights are free of material misstatement. The Funds are not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds' internal control over financial reporting. Accordingly, we express no such opinion. An audit also 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, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2008, by correspondence with the custodians and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Fidelity Income Replacement 2016 Fund, Fidelity Income Replacement 2018 Fund, Fidelity Income Replacement 2020 Fund, Fidelity Income Replacement 2022 Fund, Fidelity Income Replacement 2024 Fund, Fidelity Income Replacement 2026 Fund, Fidelity Income Replacement 2028 Fund, Fidelity Income Replacement 2030 Fund, Fidelity Income Replacement 2032 Fund, Fidelity Income Replacement 2034 Fund, Fidelity Income Replacement 2036 Fund, Fidelity Income Replacement 2038 Fund, Fidelity Income Replacement 2040 Fund and Fidelity Income Replacement 2042 Fund as of July 31, 2008, the results of their operations, the changes in their net assets and their financial highlights for the period from commencement of operations (August 30, 2007 or December 31, 2007) to July 31, 2008 in conformity with accounting principles generally accepted in the United States of America.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Boston, Massachusetts
September 19, 2008
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each Income Replacement Fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each Income Replacement Fund's activities, review contractual arrangements with companies that provide services to each Income Replacement Fund, and review each Income Replacement Fund's performance. If the interests of an Income Replacement Fund and an underlying Fidelity fund were to diverge, a conflict of interest could arise and affect how the Trustees and Member of the Advisory Board fulfill their fiduciary duties to the affected funds. Strategic Advisers has structured the Income Replacement Funds to avoid these potential conflicts, although there may be situations where a conflict of interest is unavoidable. In such instances, Strategic Advisers, the Trustees, and Member of the Advisory Board would take reasonable steps to minimize and, if possible, eliminate the conflict. Except for Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 159 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 377 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 Member 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 1-877-208-0098.
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 (78) | |
| Year of Election or Appointment: 1984 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; 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 and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). Mr. Edward C. Johnson 3d and Mr. Arthur E. Johnson are not related. |
James C. Curvey (73) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
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.
Annual Report
Trustees and Officers - continued
Name, Age; Principal Occupation | |
Albert R. Gamper, Jr. (66) | |
| 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), a member of the Board of Governors, Rutgers University (2004-present), and Chairman of the Board of Saint Barnabas Health Care System. Previously, Mr. Gamper served as Chairman of the Board of Governors, Rutgers University (2004-2007). |
George H. Heilmeier (72) | |
| 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), Compaq, Automatic Data Processing, Inc. (ADP) (technology-based business outsourcing), 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. |
Arthur E. Johnson (61) | |
| Year of Election or Appointment: 2008 Mr. Johnson serves as Senior Vice President of Corporate Strategic Development of Lockheed Martin Corporation (defense contractor). In addition, Mr. Johnson serves as a member of the Board of Directors of AGL Resources, Inc. (holding company), and IKON Office Solutions, Inc. (document management systems and services). Mr. Arthur E. Johnson and Mr. Edward C. Johnson 3d are not related. |
James H. Keyes (67) | |
| 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 Navistar International Corporation (manufacture and sale of trucks, buses, and diesel engines) and Pitney Bowes, Inc. (integrated mail, messaging, and document management solutions). Previously, Mr. Keyes served as a member of the Board of LSI Logic Corporation (semiconductor technologies, 1984-2008). |
Marie L. Knowles (61) | |
| 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 McKesson Corporation (healthcare service). 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. Previously, Ms. Knowles served as a Director of Phelps Dodge Corporation (copper mining and manufacturing, 1994-2007). |
Kenneth L. Wolfe (69) | |
| Year of Election or Appointment: 2005 Mr. Wolfe is Chairman and a Director of Hershey Foods Corporation (2007-present), where prior to his retirement in 2001, he was Chairman and Chief Executive Officer. Mr. Wolfe currently serves as a member of the board of Revlon Inc. (2004-present). Previously, Mr. Wolfe served as a member of the boards of Adelphia Communications Corporation (2003-2006) and Bausch & Lomb, Inc. (1993-2007). |
Advisory Board Member and Executive Officers**:
Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Annual Report
Name, Age; Principal Occupation | |
Peter S. Lynch (64) | |
| 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. |
John R. Hebble (50) | |
| Year of Election or Appointment: 2008 President and Treasurer of each Income Replacement Fund. Mr. Hebble also serves as President and Treasurer of Fidelity's Fixed Income and Asset Allocation Funds (2008-present) and is an employee of FMR (2003-present). Before joining Fidelity Investments, Mr. Hebble worked at Deutsche Asset Management where he served as Director of Fund Accounting (2002-2003) and Assistant Treasurer of the Scudder Funds. |
Ren Y. Cheng (51) | |
| Year of Election or Appointment: 2007 Vice President of each Income Replacement Fund. Mr. Cheng also serves as Vice President of certain Asset Allocation Funds (2007-present) and Group Chief Investment Officer, Asset Allocation of FMR. Previously, Mr. Cheng served as a portfolio manager for the Fidelity Freedom Funds. |
Boyce I. Greer (52) | |
| Year of Election or Appointment: 2007 Vice President of each Income Replacement Fund. Mr. Greer also serves as Vice President of 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). Mr. Greer is President and a Director of Fidelity Investments Money Management, Inc. (2007-present), and an Executive Vice President of FMR and FMR Co., Inc. (2005-present). Previously, Mr. Greer served as a Director and Managing Director of Strategic Advisers, Inc. (2002-2005). |
Scott C. Goebel (40) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of each Income Replacement Fund. Mr. Goebel also serves as Secretary and CLO of other Fidelity funds (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present); and Deputy General Counsel of FMR LLC. Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
Nancy D. Prior (41) | |
| Year of Election or Appointment: 2008 Assistant Secretary of each Income Replacement Fund. Ms. Prior also serves as Assistant Secretary of Fidelity's Fixed Income and Asset Allocation Funds (2008-present) and is an employee of FMR (2002-present). |
Holly C. Laurent (54) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) officer of each Income Replacement Fund. Ms. Laurent also serves as AML officer of other Fidelity funds (2008-present) and is an employee of FMR LLC. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (49) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of each Income Replacement Fund. Ms. Reynolds also serves as Chief Financial Officer of other Fidelity funds (2008-present). Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was an audit partner with PwC's investment management practice. |
Michael H. Whitaker (41) | |
| Year of Election or Appointment: 2008 Chief Compliance Officer of each Income Replacement Fund. Mr. Whitaker also serves as Chief Compliance Officer of Fidelity's Fixed Income and Asset Allocation Funds (2008-present) and is an employee of FMR (2007-present). Prior to joining Fidelity Investments, Mr. Whitaker worked at MFS Investment Management where he served as Senior Vice President and Chief Compliance Officer (2004-2006), and Assistant General Counsel. |
Bryan A. Mehrmann (47) | |
| Year of Election or Appointment: 2007 Deputy Treasurer of each Income Replacement Fund. 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). |
Robert G. Byrnes (41) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of each Income Replacement Fund. 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 Fidelity Pricing and Cash Management Services (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 (54) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of each Income Replacement Fund. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004-present) and is an employee of FMR. |
Paul M. Murphy (61) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of each Income Replacement Fund. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (49) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of each Income Replacement Fund. 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 Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Distributions (Unaudited)
The Board of Trustees of each fund voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities:
Income Replacement 2020 | Pay Date | Record Date | Capital Gains |
Class A | 09/15/08 | 09/12/08 | $.06 |
Class T | 09/15/08 | 09/12/08 | $.06 |
Class C | 09/15/08 | 09/12/08 | $.06 |
Income Replacement 2022 | Pay Date | Record Date | Capital Gains |
Class A | 09/15/08 | 09/12/08 | $.06 |
Class T | 09/15/08 | 09/12/08 | $.06 |
Class C | 09/15/08 | 09/12/08 | $.06 |
Income Replacement 2026 | Pay Date | Record Date | Capital Gains |
Class A | 09/15/08 | 09/12/08 | $.32 |
Class T | 09/15/08 | 09/12/08 | $.32 |
Class C | 09/15/08 | 09/12/08 | $.32 |
Income Replacement 2030 | Pay Date | Record Date | Capital Gains |
Class A | 09/15/08 | 09/12/08 | $.29 |
Class T | 09/15/08 | 09/12/08 | $.29 |
Class C | 09/15/08 | 09/12/08 | $.29 |
Income Replacement 2032 | Pay Date | Record Date | Capital Gains |
Class A | 09/15/08 | 09/12/08 | $.37 |
Class T | 09/15/08 | 09/12/08 | $.37 |
Class C | 09/15/08 | 09/12/08 | $.37 |
Income Replacement 2034 | Pay Date | Record Date | Capital Gains |
Class A | 09/15/08 | 09/12/08 | $.32 |
Class T | 09/15/08 | 09/12/08 | $.32 |
Class C | 09/15/08 | 09/12/08 | $.32 |
Income Replacement 2040 | Pay Date | Record Date | Capital Gains |
Class A | 09/15/08 | 09/12/08 | $.03 |
Class T | 09/15/08 | 09/12/08 | $.03 |
Class C | 09/15/08 | 09/12/08 | $.03 |
Annual Report
Distributions - continued
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended July 31, 2008, or, if subsequently determined to be different, the net capital gain of such year.
Fund |
|
Income Replacement 2020 | $3,687 |
Income Replacement 2022 | $9,113 |
Income Replacement 2024 | $597 |
Income Replacement 2026 | $10,427 |
Income Replacement 2030 | $8,616 |
Income Replacement 2032 | $12,348 |
Income Replacement 2034 | $9,326 |
Income Replacement 2040 | $654 |
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:
Income Replacement 2016 |
|
Class A | 4.73% |
Class T | 4.73% |
Class C | 4.73% |
Income Replacement 2018 |
|
Class A | 4.59% |
Class T | 4.59% |
Class C | 4.59% |
Income Replacement 2020 |
|
Class A | 4.91% |
Class T | 4.91% |
Class C | 4.91% |
Income Replacement 2022 |
|
Class A | 4.02% |
Class T | 4.02% |
Class C | 4.02% |
Income Replacement 2024 |
|
Class A | 3.67% |
Class T | 3.67% |
Class C | 3.67% |
Income Replacement 2026 |
|
Class A | 3.21% |
Class T | 3.21% |
Class C | 3.21% |
Income Replacement 2028 |
|
Class A | 4.48% |
Class T | 4.48% |
Class C | 4.48% |
Income Replacement 2030 |
|
Class A | 3.20% |
Class T | 3.20% |
Class C | 3.20% |
Income Replacement 2032 |
|
Class A | 2.85% |
Class T | 2.85% |
Class C | 2.85% |
Income Replacement 2034 |
|
Class A | 2.94% |
Class T | 2.94% |
Class C | 2.94% |
Income Replacement 2036 |
|
Class A | 2.89% |
Class T | 2.89% |
Class C | 2.89% |
Income Replacement 2038 |
|
Class A | 7.43% |
Class T | 7.43% |
Class C | 7.43% |
Income Replacement 2040 |
|
Class A | 7.12% |
Class T | 7.12% |
Class C | 7.12% |
Income Replacement 2042 |
|
Class A | 7.16% |
Class T | 7.16% |
Class C | 7.16% |
A percentage of the dividends distributed during the fiscal year for the following funds qualifies for the dividends-received deduction for corporate shareholders:
| Class A | Class T | Class C |
Income Replacement 2016 |
|
|
|
September 2007 | 9% | 10% | 13% |
October 2007 | 9% | 10% | 13% |
November 2007 | 10% | 12% | 16% |
December 2007 (Ex-Date 12/26/07) | 9% | 9% | 9% |
December 2007 (Ex-Date 12/28/07) | 9% | 10% | 11% |
January 2008 | 5% | 5% | 6% |
February 2008 | 5% | 5% | 7% |
March 2008 | 5% | 5% | 8% |
April 2008 | 5% | 5% | 6% |
May 2008 | 5% | 5% | 7% |
June 2008 | 5% | 5% | 8% |
July 2008 | 5% | 5% | 6% |
| Class A | Class T | Class C |
Income Replacement 2018 |
|
|
|
September 2007 | 9% | 10% | 14% |
October 2007 | 10% | 11% | 13% |
November 2007 | 10% | 11% | 13% |
December 2007 (Ex-Date 12/26/07) | 9% | 9% | 9% |
December 2007 (Ex-Date 12/28/07) | 10% | 10% | 12% |
January 2008 | 6% | 7% | 7% |
February 2008 | 5% | 7% | 8% |
March 2008 | 6% | 7% | 7% |
April 2008 | 5% | 6% | 7% |
May 2008 | 6% | 7% | 10% |
June 2008 | 6% | 6% | 10% |
July 2008 | 5% | 6% | 7% |
| Class A | Class T | Class C |
Income Replacement 2020 |
|
|
|
September 2007 | 11% | 12% | 17% |
October 2007 | 11% | 12% | 14% |
November 2007 | 11% | 12% | 14% |
December 2007 (Ex-Date 12/26/07) | 11% | 11% | 11% |
December 2007 (Ex-Date 12/28/07) | 11% | 12% | 13% |
January 2008 | 7% | 8% | 15% |
February 2008 | 7% | 8% | 10% |
March 2008 | 6% | 8% | 11% |
April 2008 | 6% | 7% | 9% |
May 2008 | 7% | 7% | 12% |
June 2008 | 7% | 8% | 11% |
July 2008 | 6% | 7% | 8% |
| Class A | Class T | Class C |
Income Replacement 2022 |
|
|
|
September 2007 | 12% | 13% | 19% |
October 2007 | 13% | 15% | 20% |
November 2007 | 17% | 28% | 0% |
December 2007 (Ex-Date 12/26/07) | 12% | 12% | 12% |
December 2007 (Ex-Date 12/28/07) | 13% | 13% | 15% |
January 2008 | 7% | 9% | 13% |
February 2008 | 8% | 9% | 16% |
March 2008 | 8% | 9% | 13% |
April 2008 | 7% | 8% | 10% |
May 2008 | 8% | 8% | 16% |
June 2008 | 8% | 9% | 12% |
July 2008 | 7% | 8% | 10% |
| Class A | Class T | Class C |
Income Replacement 2024 |
|
|
|
September 2007 | 11% | 13% | 19% |
October 2007 | 12% | 13% | 15% |
November 2007 | 11% | 13% | 19% |
December 2007 (Ex-Date 12/26/07) | 12% | 12% | 12% |
December 2007 (Ex-Date 12/28/07) | 12% | 12% | 14% |
January 2008 | 7% | 9% | 15% |
February 2008 | 7% | 8% | 12% |
March 2008 | 7% | 8% | 12% |
April 2008 | 7% | 8% | 9% |
May 2008 | 7% | 9% | 11% |
June 2008 | 7% | 8% | 15% |
July 2008 | 7% | 8% | 8% |
| Class A | Class T | Class C |
Income Replacement 2026 |
|
|
|
September 2007 | 13% | 15% | 22% |
October 2007 | 13% | 14% | 17% |
November 2007 | 14% | 18% | 17% |
December 2007 (Ex-Date 12/26/07) | 13% | 13% | 13% |
December 2007 (Ex-Date 12/28/07) | 13% | 14% | 15% |
January 2008 | 8% | 9% | 15% |
February 2008 | 8% | 10% | 11% |
March 2008 | 7% | 9% | 14% |
April 2008 | 8% | 9% | 10% |
May 2008 | 7% | 9% | 17% |
June 2008 | 8% | 9% | 15% |
July 2008 | 8% | 9% | 11% |
| Class A | Class T | Class C |
Income Replacement 2028 |
|
|
|
September 2007 | 13% | 15% | 23% |
October 2007 | 13% | 14% | 17% |
November 2007 | 16% | 22% | 100% |
December 2007 (Ex-Date 12/26/07) | 13% | 13% | 13% |
December 2007 (Ex-Date 12/28/07) | 14% | 15% | 17% |
January 2008 | 9% | 12% | 24% |
February 2008 | 9% | 11% | 13% |
March 2008 | 9% | 11% | 16% |
April 2008 | 9% | 10% | 12% |
May 2008 | 8% | 12% | 28% |
June 2008 | 9% | 9% | 24% |
July 2008 | 9% | 9% | 12% |
| Class A | Class T | Class C |
Income Replacement 2030 |
|
|
|
September 2007 | 12% | 15% | 23% |
October 2007 | 13% | 14% | 17% |
November 2007 | 12% | 15% | 18% |
December 2007 (Ex-Date 12/26/07) | 13% | 13% | 13% |
December 2007 (Ex-Date 12/28/07) | 13% | 13% | 15% |
January 2008 | 7% | 9% | 14% |
February 2008 | 7% | 9% | 14% |
March 2008 | 8% | 9% | 15% |
April 2008 | 8% | 9% | 10% |
May 2008 | 8% | 10% | 25% |
June 2008 | 8% | 10% | 17% |
July 2008 | 8% | 9% | 12% |
| Class A | Class T | Class C |
Income Replacement 2032 |
|
|
|
September 2007 | 13% | 16% | 27% |
October 2007 | 14% | 15% | 19% |
November 2007 | 13% | 17% | 33% |
December 2007 (Ex-Date 12/26/07) | 14% | 14% | 14% |
December 2007 (Ex-Date 12/28/07) | 14% | 15% | 17% |
January 2008 | 9% | 11% | 21% |
February 2008 | 9% | 11% | 17% |
March 2008 | 9% | 11% | 17% |
April 2008 | 9% | 10% | 12% |
May 2008 | 9% | 11% | 23% |
June 2008 | 9% | 12% | 23% |
July 2008 | 9% | 10% | 12% |
| Class A | Class T | Class C |
Income Replacement 2034 |
|
|
|
September 2007 | 13% | 16% | 26% |
October 2007 | 13% | 15% | 18% |
November 2007 | 14% | 17% | 28% |
December 2007 (Ex-Date 12/26/07) | 14% | 14% | 14% |
December 2007 (Ex-Date 12/28/07) | 14% | 15% | 16% |
January 2008 | 10% | 12% | 22% |
February 2008 | 9% | 11% | 20% |
March 2008 | 9% | 12% | 25% |
April 2008 | 10% | 11% | 13% |
May 2008 | 10% | 12% | 28% |
June 2008 | 10% | 12% | 22% |
July 2008 | 10% | 11% | 13% |
| Class A | Class T | Class C |
Income Replacement 2036 |
|
|
|
September 2007 | 13% | 17% | 33% |
October 2007 | 14% | 17% | 25% |
November 2007 | 15% | 16% | 42% |
December 2007 (Ex-Date 12/26/07) | 14% | 14% | 14% |
December 2007 (Ex-Date 12/28/07) | 14% | 15% | 17% |
January 2008 | 10% | 12% | 23% |
February 2008 | 10% | 12% | 18% |
March 2008 | 10% | 13% | 27% |
April 2008 | 10% | 11% | 14% |
May 2008 | 10% | 12% | 29% |
June 2008 | 10% | 13% | 27% |
July 2008 | 10% | 11% | 14% |
| Class A | Class T | Class C |
Income Replacement 2038 |
|
|
|
January 2008 | 15% | 34% | 0% |
February 2008 | 14% | 23% | 0% |
March 2008 | 11% | 11% | 14% |
April 2008 | 11% | 13% | 17% |
May 2008 | 12% | 16% | 44% |
June 2008 | 12% | 15% | 41% |
July 2008 | 11% | 12% | 16% |
| Class A | Class T | Class C |
Income Replacement 2040 |
|
|
|
January 2008 | 11% | 16% | 57% |
February 2008 | 12% | 16% | 37% |
March 2008 | 12% | 15% | 29% |
April 2008 | 12% | 13% | 16% |
May 2008 | 12% | 16% | 49% |
June 2008 | 12% | 16% | 41% |
July 2008 | 12% | 13% | 17% |
| Class A | Class T | Class C |
Income Replacement 2042 |
|
|
|
January 2008 | 12% | 17% | 84% |
February 2008 | 14% | 25% | 0% |
March 2008 | 11% | 11% | 17% |
April 2008 | 11% | 13% | 15% |
May 2008 | 13% | 18% | 82% |
June 2008 | 12% | 15% | 38% |
July 2008 | 12% | 13% | 17% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
| Class A | Class T | Class C |
Income Replacement 2016 |
|
|
|
September 2007 | 20% | 23% | 29% |
October 2007 | 21% | 23% | 30% |
November 2007 | 22% | 27% | 37% |
December 2007 (Ex-Date 12/26/07) | 21% | 21% | 21% |
December 2007 (Ex-Date 12/28/07) | 21% | 22% | 25% |
January 2008 | 5% | 6% | 7% |
February 2008 | 5% | 6% | 7% |
March 2008 | 5% | 6% | 8% |
April 2008 | 5% | 5% | 6% |
May 2008 | 5% | 6% | 8% |
June 2008 | 5% | 6% | 8% |
July 2008 | 5% | 5% | 6% |
| Class A | Class T | Class C |
Income Replacement 2018 |
|
|
|
September 2007 | 20% | 23% | 30% |
October 2007 | 22% | 24% | 29% |
November 2007 | 22% | 24% | 29% |
December 2007 (Ex-Date 12/26/07) | 21% | 21% | 21% |
December 2007 (Ex-Date 12/28/07) | 22% | 23% | 26% |
January 2008 | 6% | 7% | 8% |
February 2008 | 6% | 7% | 8% |
March 2008 | 6% | 7% | 8% |
April 2008 | 6% | 7% | 8% |
May 2008 | 6% | 7% | 11% |
June 2008 | 6% | 7% | 11% |
July 2008 | 6% | 7% | 8% |
| Class A | Class T | Class C |
Income Replacement 2020 |
|
|
|
September 2007 | 24% | 28% | 39% |
October 2007 | 25% | 27% | 31% |
November 2007 | 25% | 27% | 33% |
December 2007 (Ex-Date 12/26/07) | 26% | 26% | 26% |
December 2007 (Ex-Date 12/28/07) | 25% | 26% | 29% |
January 2008 | 7% | 9% | 16% |
February 2008 | 7% | 8% | 11% |
March 2008 | 7% | 8% | 12% |
April 2008 | 7% | 8% | 9% |
May 2008 | 7% | 8% | 13% |
June 2008 | 7% | 9% | 12% |
July 2008 | 7% | 8% | 9% |
| Class A | Class T | Class C |
Income Replacement 2022 |
|
|
|
September 2007 | 28% | 33% | 46% |
October 2007 | 32% | 35% | 48% |
November 2007 | 40% | 68% | 0% |
December 2007 (Ex-Date 12/26/07) | 30% | 30% | 30% |
December 2007 (Ex-Date 12/28/07) | 31% | 32% | 36% |
January 2008 | 8% | 9% | 13% |
February 2008 | 8% | 10% | 16% |
March 2008 | 8% | 9% | 13% |
April 2008 | 8% | 8% | 10% |
May 2008 | 8% | 8% | 16% |
June 2008 | 8% | 9% | 12% |
July 2008 | 8% | 8% | 10% |
| Class A | Class T | Class C |
Income Replacement 2024 |
|
|
|
September 2007 | 26% | 30% | 44% |
October 2007 | 27% | 29% | 36% |
November 2007 | 27% | 31% | 44% |
December 2007 (Ex-Date 12/26/07) | 28% | 28% | 28% |
December 2007 (Ex-Date 12/28/07) | 27% | 29% | 33% |
January 2008 | 8% | 10% | 17% |
February 2008 | 8% | 9% | 14% |
March 2008 | 8% | 9% | 14% |
April 2008 | 8% | 9% | 10% |
May 2008 | 8% | 10% | 12% |
June 2008 | 8% | 10% | 16% |
July 2008 | 8% | 9% | 10% |
| Class A | Class T | Class C |
Income Replacement 2026 |
|
|
|
September 2007 | 31% | 37% | 55% |
October 2007 | 32% | 35% | 42% |
November 2007 | 35% | 46% | 41% |
December 2007 (Ex-Date 12/26/07) | 33% | 33% | 33% |
December 2007 (Ex-Date 12/28/07) | 32% | 34% | 38% |
January 2008 | 9% | 10% | 16% |
February 2008 | 9% | 11% | 12% |
March 2008 | 8% | 10% | 14% |
April 2008 | 9% | 9% | 11% |
May 2008 | 8% | 10% | 18% |
June 2008 | 8% | 10% | 16% |
July 2008 | 9% | 10% | 12% |
| Class A | Class T | Class C |
Income Replacement 2028 |
|
|
|
September 2007 | 30% | 36% | 55% |
October 2007 | 32% | 35% | 41% |
November 2007 | 39% | 55% | 100% |
December 2007 (Ex-Date 12/26/07) | 32% | 32% | 32% |
December 2007 (Ex-Date 12/28/07) | 34% | 35% | 41% |
January 2008 | 10% | 12% | 24% |
February 2008 | 9% | 11% | 13% |
March 2008 | 9% | 11% | 16% |
April 2008 | 9% | 10% | 12% |
May 2008 | 8% | 12% | 28% |
June 2008 | 9% | 9% | 24% |
July 2008 | 9% | 10% | 12% |
| Class A | Class T | Class C |
Income Replacement 2030 |
|
|
|
September 2007 | 31% | 37% | 58% |
October 2007 | 32% | 35% | 43% |
November 2007 | 31% | 38% | 44% |
December 2007 (Ex-Date 12/26/07) | 33% | 33% | 33% |
December 2007 (Ex-Date 12/28/07) | 32% | 33% | 37% |
January 2008 | 9% | 10% | 16% |
February 2008 | 9% | 10% | 16% |
March 2008 | 9% | 10% | 17% |
April 2008 | 9% | 10% | 12% |
May 2008 | 9% | 12% | 28% |
June 2008 | 9% | 11% | 19% |
July 2008 | 10% | 11% | 13% |
| Class A | Class T | Class C |
Income Replacement 2032 |
|
|
|
September 2007 | 33% | 41% | 69% |
October 2007 | 35% | 38% | 47% |
November 2007 | 33% | 44% | 83% |
December 2007 (Ex-Date 12/26/07) | 36% | 36% | 36% |
December 2007 (Ex-Date 12/28/07) | 36% | 38% | 42% |
January 2008 | 10% | 12% | 22% |
February 2008 | 10% | 11% | 18% |
March 2008 | 10% | 11% | 18% |
April 2008 | 9% | 10% | 13% |
May 2008 | 10% | 12% | 24% |
June 2008 | 10% | 12% | 24% |
July 2008 | 9% | 10% | 13% |
| Class A | Class T | Class C |
Income Replacement 2034 |
|
|
|
September 2007 | 34% | 41% | 69% |
October 2007 | 35% | 38% | 49% |
November 2007 | 37% | 44% | 74% |
December 2007 (Ex-Date 12/26/07) | 37% | 37% | 37% |
December 2007 (Ex-Date 12/28/07) | 37% | 38% | 43% |
January 2008 | 11% | 14% | 25% |
February 2008 | 11% | 13% | 22% |
March 2008 | 10% | 14% | 27% |
April 2008 | 11% | 12% | 15% |
May 2008 | 11% | 14% | 30% |
June 2008 | 11% | 14% | 24% |
July 2008 | 11% | 12% | 15% |
| Class A | Class T | Class C |
Income Replacement 2036 |
|
|
|
September 2007 | 36% | 45% | 87% |
October 2007 | 38% | 45% | 67% |
November 2007 | 40% | 43% | 100% |
December 2007 (Ex-Date 12/26/07) | 38% | 38% | 38% |
December 2007 (Ex-Date 12/28/07) | 38% | 40% | 44% |
January 2008 | 11% | 13% | 24% |
February 2008 | 11% | 12% | 19% |
March 2008 | 11% | 13% | 28% |
April 2008 | 10% | 12% | 14% |
May 2008 | 11% | 13% | 30% |
June 2008 | 11% | 13% | 28% |
July 2008 | 10% | 12% | 15% |
| Class A | Class T | Class C |
Income Replacement 2038 |
|
|
|
January 2008 | 15% | 35% | 0% |
February 2008 | 14% | 23% | 0% |
March 2008 | 11% | 11% | 15% |
April 2008 | 12% | 13% | 18% |
May 2008 | 12% | 16% | 45% |
June 2008 | 12% | 16% | 41% |
July 2008 | 12% | 13% | 16% |
| Class A | Class T | Class C |
Income Replacement 2040 |
|
|
|
January 2008 | 12% | 16% | 58% |
February 2008 | 13% | 16% | 37% |
March 2008 | 12% | 15% | 30% |
April 2008 | 12% | 13% | 17% |
May 2008 | 13% | 17% | 49% |
June 2008 | 13% | 16% | 42% |
July 2008 | 12% | 14% | 18% |
| Class A | Class T | Class C |
Income Replacement 2042 |
|
|
|
January 2008 | 12% | 17% | 84% |
February 2008 | 15% | 26% | 0% |
March 2008 | 12% | 12% | 18% |
April 2008 | 12% | 13% | 16% |
May 2008 | 13% | 18% | 83% |
June 2008 | 13% | 16% | 39% |
July 2008 | 12% | 14% | 18% |
The fund will notify shareholders in January 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Income Replacement Funds
Each year, typically in June, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract (the Advisory Contract) 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 and, acting directly and through its separate committees, requests and receives information concerning, and considers at each of its meetings factors that are relevant to, its annual consideration of the renewal of each fund's Advisory Contract, 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 a written charter outlining the structure and purposes of the committee. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of each fund's Advisory Contract.
At its June 2008 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew each fund's Advisory Contract. In reaching its determination, the Board considered all factors it believed relevant and ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of each fund's Advisory Contract and the compensation to be received by Fidelity under the management contracts is consistent with Fidelity's fiduciary duty under applicable law. The Board's decision to renew each fund's Advisory Contract was not based on any single factor noted above, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. In reaching its determination to renew each fund's Advisory Contract, the Board 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.
Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, Strategic Advisers, Inc. (the Investment Adviser), including the backgrounds of the funds' investment personnel 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 Adviser's investment staff, its use of technology, and the Investment Adviser's approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. 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.
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 Adviser and its affiliates under the each fund's Advisory Contract 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 Adviser's 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.
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 Fidelity has taken a number of actions over the previous year 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 fees on Fidelity's Institutional Money Market Funds and launching Class IV and Institutional Class of certain of these funds; (iii) reducing the transfer agent fees for the Fidelity Select Portfolios and Investor Class of the VIP funds; and (iv) launching Class K of 29 equity funds as a lower-fee class available to certain employer-sponsored retirement plans.
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. The Board noted that it is not possible to evaluate performance in any comprehensive fashion because each fund had been in operation for less than one calendar year. Once a fund has been in operation for at least one calendar year, the Board will review the fund's absolute investment performance for each class, as well as the fund's relative investment performance for each class measured against a proprietary custom index and, if a meaningful peer group exists, a peer group of mutual funds.
The Board considered that FMR has taken steps to refocus and strengthen equity research, equity portfolio management, and compliance.
Annual Report
Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Adviser 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 noted that the funds do not pay the Investment Adviser a management fee for investment advisory services. 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 period of each fund's operations 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." 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 0% means that 100% 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.
Income Replacement 2016 Fund
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Income Replacement 2018 Fund
Income Replacement 2020 Fund
Annual Report
Income Replacement 2022 Fund
Income Replacement 2024 Fund
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Income Replacement 2026 Fund
Income Replacement 2028 Fund
Annual Report
Income Replacement 2030 Fund
Income Replacement 2032 Fund
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Income Replacement 2034 Fund
Income Replacement 2036 Fund
Annual Report
Income Replacement 2038 Fund
Income Replacement 2040 Fund
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Income Replacement 2042 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 the period.
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 the total expenses of each class of each fund, the Board noted that each fund invests in Institutional Class of the underlying fund (if that underlying fund offers multiple classes of shares) to avoid charging fund-paid 12b-1 fees at both fund levels. The Board considered that the funds do not pay transfer agent fees. Instead, Institutional Class of each underlying fund (or the underlying fund, if that underlying fund does not offer multiple classes of shares) bears its pro rata portion of each fund's transfer agent fee according to the percentage of each fund's assets invested in that underlying fund. The Board further noted that the Investment Adviser pays all other expenses of each fund, with limited exceptions.
The Board noted that the total expenses of each of Class A, Class C, and Institutional Class of each fund ranked below its competitive median for the period, and each of Class T and the retail class of each fund ranked equal to its competitive median.
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.
Based on its review, the Board concluded that the total expenses of each class of each 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 level of Fidelity's profits in respect of all the Fidelity funds, as well as the profitability of each underlying fund.
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 concluded that the costs of the services provided by and the profits realized by Fidelity in connection with the operation of each fund were not relevant to the renewal of each fund's Advisory Contract because the funds do not pay management fees and FMR pays all other expenses of each fund, with limited exceptions.
Annual Report
Economies of Scale. The Board concluded that the realization of economies of scale was not relevant to the renewal of each fund's Advisory Contract because the funds do not pay management fees and the Investment Adviser pays all other expenses of each fund, with limited exceptions.
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 certain topics, including (i) fund performance trends and actions to be taken by FMR to improve certain funds' overall performance; (ii) portfolio manager changes that have occurred during the past year; (iii) Fidelity's fund profitability methodology, the profitability of certain fund service providers, and profitability trends for certain funds; (iv) Fidelity's compensation structure for portfolio managers and key personnel, including its effects on fund profitability and the extent to which portfolio manager compensation is linked to fund performance; (v) Fidelity's fee structures; (vi) the funds' sub-advisory arrangements; and (vii) accounts managed by Fidelity other than the Fidelity funds.
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 Contract should be renewed.
Annual Report
Investment Adviser
Strategic Advisers, Inc.
Boston, MA
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Mellon Bank
Pittsburgh, PA
ARW-UANN-0908 1.848191.100
Fidelity Income Replacement Funds SM -
2016, 2018, 2020, 2022, 2024, 2026, 2028, 2030, 2032, 2034, 2036, 2038, 2040, 2042 -
Institutional Class
Annual Report
July 31, 2008
Each Institutional Class is a class of
Fidelity Income Replacement FundsSM
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
Performance | How the funds have done over time. | |
Management's Discussion | The managers' review of fund performance, strategy and outlook. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Advisor Income Replacement 2016 | Investment Changes | |
| Investments | |
| Financial Statements | |
Advisor Income Replacement 2018 | Investment Changes | |
| Investments | |
| Financial Statements | |
Advisor Income Replacement 2020 | Investment Changes | |
| Investments | |
| Financial Statements | |
Advisor Income Replacement 2022 | Investment Changes | |
| Investments | |
| Financial Statements | |
Advisor Income Replacement 2024 | Investment Changes | |
| Investments | |
| Financial Statements | |
Advisor Income Replacement 2026 | Investment Changes | |
| Investments | |
| Financial Statements | |
Advisor Income Replacement 2028 | Investment Changes | |
| Investments | |
| Financial Statements | |
Advisor Income Replacement 2030 | Investment Changes | |
| Investments | |
| Financial Statements | |
Advisor Income Replacement 2032 | Investment Changes | |
| Investments | |
| Financial Statements | |
Advisor Income Replacement 2034 | Investment Changes | |
| Investments | |
| Financial Statements | |
Advisor Income Replacement 2036 | Investment Changes | |
| Investments | |
| Financial Statements | |
Advisor Income Replacement 2038 | Investment Changes | |
| Investments | |
| Financial Statements | |
Advisor Income Replacement 2040 | Investment Changes | |
| Investments | |
| Financial Statements | |
Advisor Income Replacement 2042 | Investment Changes | |
| Investments | |
| Financial Statements | |
Notes | Notes to the financial statements. | |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Board Approval of Investment Advisory Contracts and Management Fees |
|
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.
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 LLC or an affiliated company.
Annual Report
Chairman's Message
Dear Shareholder:
Domestic and international securities markets have struggled thus far in 2008. High-grade fixed-income investments produced modestly positive results, but many stock benchmarks suffered double-digit losses through the first half of this year. Financial markets are always unpredictable, but 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
Fidelity Advisor Income Replacement 2016 FundSM - Institutional Class
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Advisor Income Replacement 2016 - Institutional Class' cumulative total return and show you what would have happened if Advisor Income Replacement 2016 - Institutional Class shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Advisor Income Replacement 2016 - Institutional Class on August 30, 2007, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the Lehman Brothers® U.S. Aggregate Index performed over the same period.
Annual Report
Fidelity Advisor Income Replacement 2018 FundSM - Institutional Class
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Advisor Income Replacement 2018 - Institutional Class' cumulative total return and show you what would have happened if Advisor Income Replacement 2018 - Institutional Class shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Advisor Income Replacement 2018 - Institutional Class on August 30, 2007, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the Lehman Brothers U.S. Aggregate Index performed over the same period.
Annual Report
Fidelity Advisor Income Replacement 2020 FundSM - Institutional Class
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Advisor Income Replacement 2020 - Institutional Class' cumulative total return and show you what would have happened if Advisor Income Replacement 2020 - Institutional Class shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Advisor Income Replacement 2020 - Institutional Class on August 30, 2007, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the Lehman Brothers U.S. Aggregate Index performed over the same period.
Annual Report
Fidelity Advisor Income Replacement 2022 FundSM - Institutional Class
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Advisor Income Replacement 2022 - Institutional Class' cumulative total return and show you what would have happened if Advisor Income Replacement 2022 - Institutional Class shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Advisor Income Replacement 2022 - Institutional Class on August 30, 2007, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the Lehman Brothers U.S. Aggregate Index performed over the same period.
Annual Report
Fidelity Advisor Income Replacement 2024 FundSM - Institutional Class
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Advisor Income Replacement 2024 - Institutional Class' cumulative total return and show you what would have happened if Advisor Income Replacement 2024 - Institutional Class shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Advisor Income Replacement 2024 - Institutional Class on August 30, 2007, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the Standard & Poor's 500SM Index (S&P 500®) performed over the same period.
Annual Report
Fidelity Advisor Income Replacement 2026 FundSM - Institutional Class
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Advisor Income Replacement 2026 - Institutional Class' cumulative total return and show you what would have happened if Advisor Income Replacement 2026 - Institutional Class shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Advisor Income Replacement 2026 - Institutional Class on August 30, 2007, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Fidelity Advisor Income Replacement 2028 FundSM - Institutional Class
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Advisor Income Replacement 2028 - Institutional Class' cumulative total return and show you what would have happened if Advisor Income Replacement 2028 - Institutional Class shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Advisor Income Replacement 2028 - Institutional Class on August 30, 2007, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Fidelity Advisor Income Replacement 2030 FundSM - Institutional Class
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Advisor Income Replacement 2030 - Institutional Class' cumulative total return and show you what would have happened if Advisor Income Replacement 2030 - Institutional Class shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Advisor Income Replacement 2030 - Institutional Class on August 30, 2007, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Fidelity Advisor Income Replacement 2032 FundSM - Institutional Class
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Advisor Income Replacement 2032 - Institutional Class' cumulative total return and show you what would have happened if Advisor Income Replacement 2032 - Institutional Class shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Advisor Income Replacement 2032 - Institutional Class on August 30, 2007, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Fidelity Advisor Income Replacement 2034 FundSM - Institutional Class
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Advisor Income Replacement 2034 - Institutional Class' cumulative total return and show you what would have happened if Advisor Income Replacement 2034 - Institutional Class shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Advisor Income Replacement 2034 - Institutional Class on August 30, 2007, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Fidelity Advisor Income Replacement 2036 FundSM - Institutional Class
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Advisor Income Replacement 2036 - Institutional Class' cumulative total return and show you what would have happened if Advisor Income Replacement 2036 - Institutional Class shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Advisor Income Replacement 2036 - Institutional Class on August 30, 2007, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Fidelity Advisor Income Replacement 2038 FundSM - Institutional Class
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Advisor Income Replacement 2038 - Institutional Class' cumulative total return and show you what would have happened if Advisor Income Replacement 2038 - Institutional Class shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Advisor Income Replacement 2038 - Institutional Class on December 31, 2007, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Fidelity Advisor Income Replacement 2040 FundSM - Institutional Class
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Advisor Income Replacement 2040 - Institutional Class' cumulative total return and show you what would have happened if Advisor Income Replacement 2040 - Institutional Class shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Advisor Income Replacement 2040 - Institutional Class on December 31, 2007, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Fidelity Advisor Income Replacement 2042 FundSM - Institutional Class
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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 take Advisor Income Replacement 2042 - Institutional Class' cumulative total return and show you what would have happened if Advisor Income Replacement 2042 - Institutional Class shares had performed at a constant rate each year. These numbers will be reported once the fund is a year old.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Advisor Income Replacement 2042 - Institutional Class on December 31, 2007, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Comments from Christopher Sharpe and Jonathan Shelon, Co-Portfolio Managers of Fidelity Advisor Income Replacement FundsSM
U.S.-based investment-grade debt outperformed domestic stocks, international equities and U.S. high-yield bonds during the 12-month period ending July 31, 2008. Bonds with less credit risk generally produced higher returns for investment-grade debt during the past year. Risk aversion permeated the credit markets, as investors sought refuge from soaring energy prices, stagnant economic growth and a severe credit crunch - a byproduct of the subprime mortgage crisis. For the 12 months overall, the Lehman Brothers® U.S. Aggregate Index - a measure of high-quality, fixed-rate, taxable bonds - returned 6.15%. In comparison, the Merrill Lynch® U.S. High Yield Master II Constrained Index, a proxy for the domestic high-income market, suffered a modest shortfall of 0.04%. Grim news about the state of the U.S. economy forced most domestic equity benchmarks into negative territory for the year. Oil prices north of $140 per barrel, gasoline prices in excess of $4 per gallon and soaring food costs drove both inflation levels and consumer prices higher. Wall Street, meanwhile, struggled under the weight of massive write-downs in the financials sector, an ongoing credit crisis and bleak housing data. As a result, the Dow Jones Industrial AverageSM slid 11.71% and the Standard & Poor's 500 SM Index dropped 11.09%. The broad international stock market also struggled, as the MSCI® Europe, Australasia, Far East Index fell 12.04%.
Like many multiple-asset-class mutual funds, the Advisor Income Replacement Funds also struggled within a volatile and generally less-than-favorable market environment. While the 14 individual Fund portfolios had varying results against this backdrop, they all held up reasonably well, although their returns all landed in negative territory. The portfolios with biennial maturity dates of 2016-2036 were launched on August 30, 2007, and, during the 11 months from that inception date though July 31, 2008, the Institutional Class shares of these portfolios posted absolute returns ranging from -1.81% for the short-dated and most conservatively positioned 2016 portfolio to -4.96% for the more equity-heavy 2036 portfolio. The longer-dated 2038, 2040 and 2042 portfolios, launched on December 31, 2007, had somewhat lower absolute returns given their even greater allocations to equities, and their life-of-fund returns through July 31, 2008, all were around -8.66%. (For specific portfolio performance on each of the IRFs, please refer to the performance section of this report.)
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.
Portfolio
Shareholder Expense Example
As a shareholder of a 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 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 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, 2008 to July 31, 2008).
Actual Expenses
The first line of the accompanying table for each class of 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 class of the fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. In addition, each Fund, as a shareholder in underlying Fidelity Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Funds. These fees and expenses are not included in each Fund's annualized expense ratio used to calculate the expense estimates in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of each 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. In addition, each Fund, as a shareholder in underlying Fidelity Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Funds. These fees and expenses are not included in each Fund's annualized expense ratio used to calculate the expense estimates in the table below.
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. In addition, if these transactional costs were included, your costs would have been higher.
| Beginning | Ending | Expenses Paid |
Fidelity Income Replacement 2016 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 974.90 | $ 1.23 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 973.50 | $ 2.45 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 971.00 | $ 4.90 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
Income Replacement 2016 |
|
|
|
Actual | $ 1,000.00 | $ 975.90 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 975.90 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Fidelity Income Replacement 2018 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 971.50 | $ 1.23 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 970.10 | $ 2.45 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 967.60 | $ 4.89 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
| Beginning | Ending | Expenses Paid |
Income Replacement 2018 |
|
|
|
Actual | $ 1,000.00 | $ 972.40 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 972.60 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Fidelity Income Replacement 2020 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 968.60 | $ 1.22 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 967.40 | $ 2.45 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 965.10 | $ 4.89 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
Income Replacement 2020 |
|
|
|
Actual | $ 1,000.00 | $ 969.90 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 969.90 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Fidelity Income Replacement 2022 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 966.90 | $ 1.22 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 965.60 | $ 2.44 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 963.40 | $ 4.88 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
Income Replacement 2022 |
|
|
|
Actual | $ 1,000.00 | $ 968.10 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 968.30 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Fidelity Income Replacement 2024 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 965.70 | $ 1.22 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 964.40 | $ 2.44 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 961.90 | $ 4.88 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
Income Replacement 2024 |
|
|
|
Actual | $ 1,000.00 | $ 966.90 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 966.90 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
| Beginning | Ending | Expenses Paid |
Fidelity Income Replacement 2026 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 964.40 | $ 1.22 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 963.10 | $ 2.44 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 960.80 | $ 4.88 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
Income Replacement 2026 |
|
|
|
Actual | $ 1,000.00 | $ 965.70 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 965.70 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Fidelity Income Replacement 2028 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 963.30 | $ 1.22 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 962.20 | $ 2.44 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 959.60 | $ 4.87 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
Income Replacement 2028 |
|
|
|
Actual | $ 1,000.00 | $ 964.50 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 964.50 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Fidelity Income Replacement 2030 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 962.80 | $ 1.22 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 961.70 | $ 2.44 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 959.20 | $ 4.87 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
Income Replacement 2030 |
|
|
|
Actual | $ 1,000.00 | $ 964.00 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 964.00 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Fidelity Income Replacement 2032 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 961.70 | $ 1.22 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 960.20 | $ 2.44 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 957.90 | $ 4.87 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
| Beginning | Ending | Expenses Paid |
Income Replacement 2032 |
|
|
|
Actual | $ 1,000.00 | $ 962.80 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 962.80 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Fidelity Income Replacement 2034 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 960.10 | $ 1.22 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 959.10 | $ 2.44 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 956.50 | $ 4.86 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
Income Replacement 2034 |
|
|
|
Actual | $ 1,000.00 | $ 961.20 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 961.40 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Fidelity Income Replacement 2036 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 959.10 | $ 1.22 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 957.80 | $ 2.43 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 955.40 | $ 4.86 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
Income Replacement 2036 |
|
|
|
Actual | $ 1,000.00 | $ 960.10 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 960.10 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Fidelity Income Replacement 2038 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 956.90 | $ 1.22 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 955.70 | $ 2.43 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 953.10 | $ 4.86 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
Income Replacement 2038 |
|
|
|
Actual | $ 1,000.00 | $ 958.10 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 957.90 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
| Beginning | Ending | Expenses Paid |
Fidelity Income Replacement 2040 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 956.70 | $ 1.22 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 955.50 | $ 2.43 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 952.90 | $ 4.86 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
Income Replacement 2040 |
|
|
|
Actual | $ 1,000.00 | $ 957.90 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 957.70 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Fidelity Income Replacement 2042 Fund |
|
|
|
Class A |
|
|
|
Actual | $ 1,000.00 | $ 956.10 | $ 1.22 |
HypotheticalA | $ 1,000.00 | $ 1,023.62 | $ 1.26 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 954.80 | $ 2.43 |
HypotheticalA | $ 1,000.00 | $ 1,022.38 | $ 2.51 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 952.60 | $ 4.85 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
Income Replacement 2042 |
|
|
|
Actual | $ 1,000.00 | $ 957.30 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 957.30 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.86 | $ .00 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below) ; multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
The fees and expenses of the underlying Fidelity Funds in which the Fund invests are not included in each class' annualized expense ratio.
| Annualized |
Fidelity Income Replacement 2016 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2016 | .00% |
Institutional Class | .00% |
Fidelity Income Replacement 2018 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2018 | .00% |
Institutional Class | .00% |
| Annualized |
Fidelity Income Replacement 2020 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2020 | .00% |
Institutional Class | .00% |
Fidelity Income Replacement 2022 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2022 | .00% |
Institutional Class | .00% |
Fidelity Income Replacement 2024 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2024 | .00% |
Institutional Class | .00% |
Fidelity Income Replacement 2026 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2026 | .00% |
Institutional Class | .00% |
Fidelity Income Replacement 2028 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2028 | .00% |
Institutional Class | .00% |
Fidelity Income Replacement 2030 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2030 | .00% |
Institutional Class | .00% |
Fidelity Income Replacement 2032 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2032 | .00% |
Institutional Class | .00% |
Fidelity Income Replacement 2034 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2034 | .00% |
Institutional Class | .00% |
Fidelity Income Replacement 2036 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2036 | .00% |
Institutional Class | .00% |
Fidelity Income Replacement 2038 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2038 | .00% |
Institutional Class | .00% |
| Annualized |
Fidelity Income Replacement 2040 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2040 | .00% |
Institutional Class | .00% |
Fidelity Income Replacement 2042 Fund |
|
Class A | .25% |
Class T | .50% |
Class C | 1.00% |
Income Replacement 2042 | .00% |
Institutional Class | .00% |
Annual Report
Fidelity Income Replacement 2016 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 4.7 | 4.7 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 3.9 | 3.7 |
Fidelity Broad Market Opportunities Fund | 6.2 | 6.2 |
Fidelity Disciplined Equity Fund | 3.9 | 3.9 |
Fidelity Equity-Income Fund | 3.8 | 3.9 |
Fidelity Large Cap Core Enhanced Index Fund | 6.3 | 6.3 |
Fidelity Small Cap Opportunities Fund | 2.6 | 2.4 |
| 31.4 | 31.1 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 3.3 | 3.3 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 1.2 | 1.2 |
Fidelity Strategic Income Fund | 1.2 | 1.3 |
| 2.4 | 2.5 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 7.6 | 7.8 |
Fidelity Strategic Real Return Fund | 7.6 | 7.7 |
Fidelity Total Bond Fund | 22.7 | 23.0 |
| 37.9 | 38.5 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 12.6 | 12.2 |
Fidelity Short-Term Bond Fund | 12.4 | 12.4 |
| 25.0 | 24.6 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 31.4% |
|
![]() | International Equity Funds | 3.3% |
|
![]() | High Yield Fixed-Income Funds | 2.4% |
|
![]() | Investment Grade Fixed-Income Funds | 37.9% |
|
![]() | Short-Term Funds | 25.0% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 31.1% |
|
![]() | International Equity Funds | 3.3% |
|
![]() | High Yield Fixed-Income Funds | 2.5% |
|
![]() | Investment Grade Fixed-Income Funds | 38.5% |
|
![]() | Short-Term Funds | 24.6% |
|
Expected | |||
![]() | Domestic Equity Funds | 29.7% |
|
![]() | International Equity Funds | 2.9% |
|
![]() | High Yield Fixed-Income Funds | 1.9% |
|
![]() | Investment Grade Fixed-Income Funds | 38.7% |
|
![]() | Short-Term Funds | 26.8% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2016 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 34.7% | |||
Shares | Value | ||
Domestic Equity Funds - 31.4% | |||
Fidelity 100 Index Fund | 48,826 | $ 446,267 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 23,795 | 372,861 | |
Fidelity Broad Market Opportunities Fund | 66,779 | 595,001 | |
Fidelity Disciplined Equity Fund | 14,736 | 374,725 | |
Fidelity Equity-Income Fund | 8,079 | 364,833 | |
Fidelity Large Cap Core Enhanced Index Fund | 68,060 | 604,374 | |
Fidelity Small Cap Opportunities Fund | 30,456 | 242,737 | |
TOTAL DOMESTIC EQUITY FUNDS | 3,000,798 | ||
International Equity Funds - 3.3% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 8,498 | 309,398 | |
TOTAL EQUITY FUNDS (Cost $3,707,023) | 3,310,196 | ||
Fixed-Income Funds - 40.3% | |||
|
|
|
|
High Yield Fixed-Income Funds - 2.4% | |||
Fidelity Capital & Income Fund | 14,128 | 114,297 | |
Fidelity Strategic Income Fund | 11,338 | 115,310 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 229,607 | ||
Investment Grade Fixed-Income Funds - 37.9% | |||
Fidelity Government Income Fund | 70,181 | 728,484 | |
Fidelity Strategic Real Return Fund | 71,751 | 725,402 | |
Fidelity Total Bond Fund | 215,593 | 2,168,866 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 3,622,752 | ||
TOTAL FIXED-INCOME FUNDS (Cost $3,914,273) | 3,852,359 | ||
Short-Term Funds - 25.0% | |||
Shares | Value | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 1,205,852 | $ 1,205,852 | |
Fidelity Short-Term Bond Fund | 141,858 | 1,180,258 | |
TOTAL SHORT-TERM FUNDS (Cost $2,418,827) | 2,386,110 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $10,040,123) | $ 9,548,665 |
Income Tax Information |
At July 31, 2008, the fund had a capital loss carryforward of approximately $827 all of which will expire on July 31, 2016. |
The fund intends to elect to defer to its fiscal year ending July 31, 2009 approximately $3,751 of losses recognized during the period November 1, 2007 to July 31, 2008. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2016 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (cost $10,040,123) - See accompanying schedule | $ 9,548,665 | |
Cash | 10 | |
Receivable for investments sold | 17,767 | |
Total assets | 9,566,442 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | $ 17,762 | |
Distribution fees payable | 2,020 | |
Total liabilities | 19,782 | |
|
|
|
Net Assets | $ 9,546,660 | |
Net Assets consist of: |
| |
Paid in capital | $ 10,037,692 | |
Undistributed net investment income | 4,829 | |
Accumulated undistributed net realized gain (loss) on investments | (4,403) | |
Net unrealized appreciation (depreciation) on investments | (491,458) | |
Net Assets | $ 9,546,660 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 47.76 | |
|
|
|
Maximum offering price per share (100/94.25 of $47.76) | $ 50.67 | |
Class T: | $ 47.75 | |
|
|
|
Maximum offering price per share (100/96.50 of $47.75) | $ 49.48 | |
|
|
|
Class C: | $ 47.73 | |
|
|
|
Income Replacement 2016: | $ 47.77 | |
|
|
|
Institutional Class: | $ 47.77 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period August 30, 2007 | |
|
|
|
Investment Income |
|
|
Income distributions from underlying funds |
| $ 161,337 |
Interest |
| 171 |
Total income |
| 161,508 |
|
|
|
Expenses | ||
Distribution fees | $ 13,234 | |
Independent trustees' compensation | 20 | |
Total expenses before reductions | 13,254 | |
Expense reductions | (20) | 13,234 |
Net investment income (loss) | 148,274 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (41,157) | |
Capital gain distributions from underlying funds | 49,677 | 8,520 |
Change in net unrealized appreciation (depreciation) on underlying funds | (491,458) | |
Net gain (loss) | (482,938) | |
Net increase (decrease) in net assets resulting from operations | $ (334,664) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2016 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 148,274 |
Net realized gain (loss) | 8,520 |
Change in net unrealized appreciation (depreciation) | (491,458) |
Net increase (decrease) in net assets resulting from operations | (334,664) |
Distributions to shareholders from net investment income | (143,445) |
Distributions to shareholders from net realized gain | (12,923) |
Total distributions | (156,368) |
Share transactions - net increase (decrease) | 10,037,692 |
Total increase (decrease) in net assets | 9,546,660 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $4,829) | $ 9,546,660 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | 1.233 |
Net realized and unrealized gain (loss) | (2.204) |
Total from investment operations | (.971) |
Distributions from net investment income | (1.129) |
Distributions from net realized gain | (.140) |
Total distributions | (1.269) |
Net asset value, end of period | $ 47.76 |
Total Return B, C, D | (2.02)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 2.76% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 2,214 |
Portfolio turnover rate | 56% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | 1.128 |
Net realized and unrealized gain (loss) | (2.219) |
Total from investment operations | (1.091) |
Distributions from net investment income | (1.019) |
Distributions from net realized gain | (.140) |
Total distributions | (1.159) |
Net asset value, end of period | $ 47.75 |
Total Return B, C, D | (2.26)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 2.51% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 673 |
Portfolio turnover rate | 56% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .904 |
Net realized and unrealized gain (loss) | (2.227) |
Total from investment operations | (1.323) |
Distributions from net investment income | (.807) |
Distributions from net realized gain | (.140) |
Total distributions | (.947) |
Net asset value, end of period | $ 47.73 |
Total Return B, C, D | (2.71)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | 2.01% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 1,595 |
Portfolio turnover rate | 56% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2016
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.356 |
Net realized and unrealized gain (loss) | (2.217) |
Total from investment operations | (.861) |
Distributions from net investment income | (1.229) |
Distributions from net realized gain | (.140) |
Total distributions | (1.369) |
Net asset value, end of period | $ 47.77 |
Total Return B, C | (1.81)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 3.00% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 4,880 |
Portfolio turnover rate | 56% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.370 |
Net realized and unrealized gain (loss) | (2.231) |
Total from investment operations | (.861) |
Distributions from net investment income | (1.229) |
Distributions from net realized gain | (.140) |
Total distributions | (1.369) |
Net asset value, end of period | $ 47.77 |
Total Return B, C | (1.81)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 3.00% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 184 |
Portfolio turnover rate | 56% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2018 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 5.4 | 5.3 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 4.5 | 4.3 |
Fidelity Broad Market Opportunities Fund | 7.1 | 7.1 |
Fidelity Disciplined Equity Fund | 4.5 | 4.5 |
Fidelity Equity-Income Fund | 4.4 | 4.5 |
Fidelity Large Cap Core Enhanced Index Fund | 7.2 | 7.1 |
Fidelity Small Cap Opportunities Fund | 2.9 | 2.8 |
| 36.0 | 35.6 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 4.1 | 4.2 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 1.6 | 1.6 |
Fidelity Strategic Income Fund | 1.6 | 1.7 |
| 3.2 | 3.3 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 7.2 | 7.3 |
Fidelity Strategic Real Return Fund | 7.1 | 7.2 |
Fidelity Total Bond Fund | 21.3 | 21.5 |
| 35.6 | 36.0 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 10.6 | 10.4 |
Fidelity Short-Term Bond Fund | 10.5 | 10.5 |
| 21.1 | 20.9 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 36.0% |
|
![]() | International Equity Funds | 4.1% |
|
![]() | High Yield Fixed-Income Funds | 3.2% |
|
![]() | Investment Grade Fixed-Income Funds | 35.6% |
|
![]() | Short-Term Funds | 21.1% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 35.6% |
|
![]() | International Equity Funds | 4.2% |
|
![]() | High Yield Fixed-Income Funds | 3.3% |
|
![]() | Investment Grade Fixed-Income Funds | 36.0% |
|
![]() | Short-Term Funds | 20.9% |
|
Expected | |||
![]() | Domestic Equity Funds | 35.0% |
|
![]() | International Equity Funds | 3.9% |
|
![]() | High Yield Fixed-Income Funds | 2.8% |
|
![]() | Investment Grade Fixed-Income Funds | 35.9% |
|
![]() | Short-Term Funds | 22.4% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2018 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 40.1% | |||
Shares | Value | ||
Domestic Equity Funds - 36.0% | |||
Fidelity 100 Index Fund | 41,071 | $ 375,391 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 20,055 | 314,261 | |
Fidelity Broad Market Opportunities Fund | 56,010 | 499,052 | |
Fidelity Disciplined Equity Fund | 12,397 | 315,265 | |
Fidelity Equity-Income Fund | 6,809 | 307,478 | |
Fidelity Large Cap Core Enhanced Index Fund | 57,100 | 507,048 | |
Fidelity Small Cap Opportunities Fund | 25,693 | 204,775 | |
TOTAL DOMESTIC EQUITY FUNDS | 2,523,270 | ||
International Equity Funds - 4.1% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 7,943 | 289,218 | |
TOTAL EQUITY FUNDS (Cost $3,158,031) | 2,812,488 | ||
Fixed-Income Funds - 38.8% | |||
|
|
|
|
High Yield Fixed-Income Funds - 3.2% | |||
Fidelity Capital & Income Fund | 14,023 | 113,450 | |
Fidelity Strategic Income Fund | 11,230 | 114,210 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 227,660 | ||
Investment Grade Fixed-Income Funds - 35.6% | |||
Fidelity Government Income Fund | 48,330 | 501,669 | |
Fidelity Strategic Real Return Fund | 49,359 | 499,015 | |
Fidelity Total Bond Fund | 148,193 | 1,490,823 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 2,491,507 | ||
TOTAL FIXED-INCOME FUNDS (Cost $2,762,356) | 2,719,167 | ||
Short-Term Funds - 21.1% | |||
Shares | Value | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 744,668 | $ 744,668 | |
Fidelity Short-Term Bond Fund | 87,879 | 731,151 | |
TOTAL SHORT-TERM FUNDS (Cost $1,496,564) | 1,475,819 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $7,416,951) | $ 7,007,474 |
Income Tax Information |
At July 31, 2008, the fund had a capital loss carryforward of approximately $62 all of which will expire on July 31, 2016. |
The fund intends to elect to defer to its fiscal year ending July 31, 2009 approximately $633 of losses recognized during the period November 1, 2007 to July 31, 2008. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2018 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (cost $7,416,951) - See accompanying schedule | $ 7,007,474 | |
Cash | 7 | |
Total assets | 7,007,481 | |
|
|
|
Liabilities | ||
Distribution fees payable | 590 | |
|
|
|
Net Assets | $ 7,006,891 | |
Net Assets consist of: |
| |
Paid in capital | $ 7,412,396 | |
Undistributed net investment income | 3,581 | |
Accumulated undistributed net realized gain (loss) on investments | 391 | |
Net unrealized appreciation (depreciation) on investments | (409,477) | |
Net Assets | $ 7,006,891 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 47.46 | |
|
|
|
Maximum offering price per share (100/94.25 of $47.46) | $ 50.36 | |
Class T: | $ 47.46 | |
|
|
|
Maximum offering price per share (100/96.50 of $47.46) | $ 49.18 | |
|
|
|
Class C: | $ 47.41 | |
|
|
|
Income Replacement 2018: | $ 47.46 | |
|
|
|
Institutional Class: | $ 47.47 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period August 30, 2007 | |
|
|
|
Investment Income |
|
|
Income distributions from underlying funds |
| $ 112,825 |
Interest |
| 131 |
Total income |
| 112,956 |
|
|
|
Expenses | ||
Distribution fees | $ 4,098 | |
Independent trustees' compensation | 15 | |
Total expenses before reductions | 4,113 | |
Expense reductions | (15) | 4,098 |
Net investment income (loss) | 108,858 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (28,944) | |
Capital gain distributions from underlying funds | 37,463 | 8,519 |
Change in net unrealized appreciation (depreciation) on underlying funds | (409,477) | |
Net gain (loss) | (400,958) | |
Net increase (decrease) in net assets resulting from operations | $ (292,100) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2018 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 108,858 |
Net realized gain (loss) | 8,519 |
Change in net unrealized appreciation (depreciation) | (409,477) |
Net increase (decrease) in net assets resulting from operations | (292,100) |
Distributions to shareholders from net investment income | (105,276) |
Distributions to shareholders from net realized gain | (8,128) |
Total distributions | (113,404) |
Share transactions - net increase (decrease) | 7,412,395 |
Total increase (decrease) in net assets | 7,006,891 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $3,581) | $ 7,006,891 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | 1.163 |
Net realized and unrealized gain (loss) | (2.454) |
Total from investment operations | (1.291) |
Distributions from net investment income | (1.119) |
Distributions from net realized gain | (.130) |
Total distributions | (1.249) |
Net asset value, end of period | $ 47.46 |
Total Return B, C, D | (2.68)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 2.60% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 1,107 |
Portfolio turnover rate | 46% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | 1.075 |
Net realized and unrealized gain (loss) | (2.483) |
Total from investment operations | (1.408) |
Distributions from net investment income | (1.002) |
Distributions from net realized gain | (.130) |
Total distributions | (1.132) |
Net asset value, end of period | $ 47.46 |
Total ReturnB, C, D | (2.91)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 2.35% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 154 |
Portfolio turnover rate | 46% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .836 |
Net realized and unrealized gain (loss) | (2.476) |
Total from investment operations | (1.640) |
Distributions from net investment income | (.820) |
Distributions from net realized gain | (.130) |
Total distributions | (.950) |
Net asset value, end of period | $ 47.41 |
Total Return B, C, D | (3.36)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | 1.85% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 365 |
Portfolio turnover rate | 46% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2018
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.280 |
Net realized and unrealized gain (loss) | (2.469) |
Total from investment operations | (1.189) |
Distributions from net investment income | (1.221) |
Distributions from net realized gain | (.130) |
Total distributions | (1.351) |
Net asset value, end of period | $ 47.46 |
Total Return B, C | (2.48)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.85% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 5,167 |
Portfolio turnover rate | 46% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.295 |
Net realized and unrealized gain (loss) | (2.474) |
Total from investment operations | (1.179) |
Distributions from net investment income | (1.221) |
Distributions from net realized gain | (.130) |
Total distributions | (1.351) |
Net asset value, end of period | $ 47.47 |
Total Return B, C | (2.46)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.85% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 214 |
Portfolio turnover rate | 46% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2020 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 5.8 | 6.0 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 4.9 | 4.7 |
Fidelity Broad Market Opportunities Fund | 7.8 | 7.9 |
Fidelity Disciplined Equity Fund | 4.9 | 4.9 |
Fidelity Equity-Income Fund | 4.7 | 4.9 |
Fidelity Large Cap Core Enhanced Index Fund | 7.9 | 7.9 |
Fidelity Small Cap Opportunities Fund | 3.2 | 3.1 |
| 39.2 | 39.4 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 5.0 | 5.3 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 1.9 | 1.9 |
Fidelity Strategic Income Fund | 2.0 | 2.0 |
| 3.9 | 3.9 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 6.7 | 6.7 |
Fidelity Strategic Real Return Fund | 6.7 | 6.7 |
Fidelity Total Bond Fund | 20.1 | 20.1 |
| 33.5 | 33.5 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 9.3 | 8.9 |
Fidelity Short-Term Bond Fund | 9.1 | 9.0 |
| 18.4 | 17.9 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 39.2% |
|
![]() | International Equity Funds | 5.0% |
|
![]() | High Yield Fixed-Income Funds | 3.9% |
|
![]() | Investment Grade Fixed-Income Funds | 33.5% |
|
![]() | Short-Term Funds | 18.4% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 39.4% |
|
![]() | International Equity Funds | 5.3% |
|
![]() | High Yield Fixed-Income Funds | 3.9% |
|
![]() | Investment Grade Fixed-Income Funds | 33.5% |
|
![]() | Short-Term Funds | 17.9% |
|
Expected | |||
![]() | Domestic Equity Funds | 38.9% |
|
![]() | International Equity Funds | 4.8% |
|
![]() | High Yield Fixed-Income Funds | 3.6% |
|
![]() | Investment Grade Fixed-Income Funds | 33.7% |
|
![]() | Short-Term Funds | 19.0% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2020 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 44.2% | |||
Shares | Value | ||
Domestic Equity Funds - 39.2% | |||
Fidelity 100 Index Fund | 15,127 | $ 138,259 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 7,369 | 115,465 | |
Fidelity Broad Market Opportunities Fund | 20,626 | 183,778 | |
Fidelity Disciplined Equity Fund | 4,544 | 115,548 | |
Fidelity Equity-Income Fund | 2,465 | 111,314 | |
Fidelity Large Cap Core Enhanced Index Fund | 20,985 | 186,345 | |
Fidelity Small Cap Opportunities Fund | 9,465 | 75,438 | |
TOTAL DOMESTIC EQUITY FUNDS | 926,147 | ||
International Equity Funds - 5.0% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 3,260 | 118,680 | |
TOTAL EQUITY FUNDS (Cost $1,140,394) | 1,044,827 | ||
Fixed-Income Funds - 37.4% | |||
|
|
|
|
High Yield Fixed-Income Funds - 3.9% | |||
Fidelity Capital & Income Fund | 5,618 | 45,447 | |
Fidelity Strategic Income Fund | 4,516 | 45,926 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 91,373 | ||
Investment Grade Fixed-Income Funds - 33.5% | |||
Fidelity Government Income Fund | 15,262 | 158,416 | |
Fidelity Strategic Real Return Fund | 15,654 | 158,262 | |
Fidelity Total Bond Fund | 47,224 | 475,074 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 791,752 | ||
TOTAL FIXED-INCOME FUNDS (Cost $900,088) | 883,125 | ||
Short-Term Funds - 18.4% | |||
|
|
|
|
Fidelity Institutional Money Market Portfolio Institutional Class | 218,263 | 218,263 | |
Fidelity Short-Term Bond Fund | 25,884 | 215,353 | |
TOTAL SHORT-TERM FUNDS (Cost $439,524) | 433,616 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $2,480,006) | $ 2,361,568 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2020 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (cost $2,480,006) - See accompanying schedule | $ 2,361,568 | |
Cash | 72 | |
Receivable for investments sold | 1 | |
Total assets | 2,361,641 | |
|
|
|
Liabilities | ||
Distribution fees payable | 406 | |
|
|
|
Net Assets | $ 2,361,236 | |
Net Assets consist of: |
| |
Paid in capital | $ 2,474,768 | |
Undistributed net investment income | 1,110 | |
Accumulated undistributed net realized gain (loss) on investments | 3,796 | |
Net unrealized appreciation (depreciation) on investments | (118,438) | |
Net Assets | $ 2,361,236 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 47.11 | |
|
|
|
Maximum offering price per share (100/94.25 of $47.11) | $ 49.98 | |
Class T: | $ 47.10 | |
|
|
|
Maximum offering price per share (100/96.50 of $47.10) | $ 48.81 | |
|
|
|
Class C: | $ 47.08 | |
|
|
|
Income Replacement 2020: | $ 47.12 | |
|
|
|
Institutional Class: | $ 47.12 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period August 30, 2007 | |
|
|
|
Investment Income |
|
|
Income distributions from underlying funds |
| $ 33,974 |
Interest |
| 72 |
Total income |
| 34,046 |
|
|
|
Expenses | ||
Distribution fees | $ 2,946 | |
Independent trustees' compensation | 5 | |
Total expenses before reductions | 2,951 | |
Expense reductions | (5) | 2,946 |
Net investment income (loss) | 31,100 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (4,968) | |
Capital gain distributions from underlying funds | 11,246 | 6,278 |
Change in net unrealized appreciation (depreciation) on underlying funds | (118,438) | |
Net gain (loss) | (112,160) | |
Net increase (decrease) in net assets resulting from operations | $ (81,060) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2020 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 31,100 |
Net realized gain (loss) | 6,278 |
Change in net unrealized appreciation (depreciation) | (118,438) |
Net increase (decrease) in net assets resulting from operations | (81,060) |
Distributions to shareholders from net investment income | (29,990) |
Distributions to shareholders from net realized gain | (2,482) |
Total distributions | (32,472) |
Share transactions - net increase (decrease) | 2,474,768 |
Total increase (decrease) in net assets | 2,361,236 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $1,110) | $ 2,361,236 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | 1.085 |
Net realized and unrealized gain (loss) | (2.692) |
Total from investment operations | (1.607) |
Distributions from net investment income | (1.113) |
Distributions from net realized gain | (.170) |
Total distributions | (1.283) |
Net asset value, end of period | $ 47.11 |
Total Return B, C, D | (3.33)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 2.42% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 503 |
Portfolio turnover rate | 21% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .985 |
Net realized and unrealized gain (loss) | (2.707) |
Total from investment operations | (1.722) |
Distributions from net investment income | (1.008) |
Distributions from net realized gain | (.170) |
Total distributions | (1.178) |
Net asset value, end of period | $ 47.10 |
Total Return B, C, D | (3.56)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 2.17% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 187 |
Portfolio turnover rate | 21% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .755 |
Net realized and unrealized gain (loss) | (2.699) |
Total from investment operations | (1.944) |
Distributions from net investment income | (.806) |
Distributions from net realized gain | (.170) |
Total distributions | (.976) |
Net asset value, end of period | $ 47.08 |
Total Return B, C, D | (3.99)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | 1.67% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 275 |
Portfolio turnover rate | 21% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2020
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.190 |
Net realized and unrealized gain (loss) | (2.677) |
Total from investment operations | (1.487) |
Distributions from net investment income | (1.223) |
Distributions from net realized gain | (.170) |
Total distributions | (1.393) |
Net asset value, end of period | $ 47.12 |
Total Return B, C | (3.10)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.67% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 1,233 |
Portfolio turnover rate | 21% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.215 |
Net realized and unrealized gain (loss) | (2.702) |
Total from investment operations | (1.487) |
Distributions from net investment income | (1.223) |
Distributions from net realized gain | (.170) |
Total distributions | (1.393) |
Net asset value, end of period | $ 47.12 |
Total Return B, C | (3.10)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.67% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 163 |
Portfolio turnover rate | 21% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2022 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 6.1 | 6.2 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 5.1 | 4.9 |
Fidelity Broad Market Opportunities Fund | 8.2 | 8.1 |
Fidelity Disciplined Equity Fund | 5.2 | 5.1 |
Fidelity Equity-Income Fund | 5.0 | 5.1 |
Fidelity Large Cap Core Enhanced Index Fund | 8.3 | 8.2 |
Fidelity Small Cap Opportunities Fund | 3.4 | 3.2 |
| 41.3 | 40.8 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 5.7 | 5.8 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 2.1 | 2.1 |
Fidelity Strategic Income Fund | 2.2 | 2.2 |
| 4.3 | 4.3 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 6.5 | 6.6 |
Fidelity Strategic Real Return Fund | 6.4 | 6.4 |
Fidelity Total Bond Fund | 19.1 | 19.5 |
| 32.0 | 32.5 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 8.4 | 8.2 |
Fidelity Short-Term Bond Fund | 8.3 | 8.4 |
| 16.7 | 16.6 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 41.3% |
|
![]() | International Equity Funds | 5.7% |
|
![]() | High Yield Fixed-Income Funds | 4.3% |
|
![]() | Investment Grade Fixed-Income Funds | 32.0% |
|
![]() | Short-Term Funds | 16.7% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 40.8% |
|
![]() | International Equity Funds | 5.8% |
|
![]() | High Yield Fixed-Income Funds | 4.3% |
|
![]() | Investment Grade Fixed-Income Funds | 32.5% |
|
![]() | Short-Term Funds | 16.6% |
|
Expected | |||
![]() | Domestic Equity Funds | 41.3% |
|
![]() | International Equity Funds | 5.6% |
|
![]() | High Yield Fixed-Income Funds | 4.0% |
|
![]() | Investment Grade Fixed-Income Funds | 32.2% |
|
![]() | Short-Term Funds | 16.9% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2022 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 47.0% | |||
Shares | Value | ||
Domestic Equity Funds - 41.3% | |||
Fidelity 100 Index Fund | 37,216 | $ 340,157 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 18,186 | 284,976 | |
Fidelity Broad Market Opportunities Fund | 50,822 | 452,824 | |
Fidelity Disciplined Equity Fund | 11,212 | 285,118 | |
Fidelity Equity-Income Fund | 6,166 | 278,447 | |
Fidelity Large Cap Core Enhanced Index Fund | 51,813 | 460,099 | |
Fidelity Small Cap Opportunities Fund | 23,260 | 185,379 | |
TOTAL DOMESTIC EQUITY FUNDS | 2,287,000 | ||
International Equity Funds - 5.7% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 8,763 | 319,077 | |
TOTAL EQUITY FUNDS (Cost $2,909,918) | 2,606,077 | ||
Fixed-Income Funds - 36.3% | |||
|
|
|
|
High Yield Fixed-Income Funds - 4.3% | |||
Fidelity Capital & Income Fund | 14,698 | 118,903 | |
Fidelity Strategic Income Fund | 11,758 | 119,575 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 238,478 | ||
Investment Grade Fixed-Income Funds - 32.0% | |||
Fidelity Government Income Fund | 34,339 | 356,443 | |
Fidelity Strategic Real Return Fund | 35,139 | 355,260 | |
Fidelity Total Bond Fund | 105,320 | 1,059,516 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 1,771,219 | ||
TOTAL FIXED-INCOME FUNDS (Cost $2,047,458) | 2,009,697 | ||
Short-Term Funds - 16.7% | |||
|
|
|
|
Fidelity Institutional Money Market Portfolio Institutional Class | 466,323 | 466,323 | |
Fidelity Short-Term Bond Fund | 54,920 | 456,931 | |
TOTAL SHORT-TERM FUNDS (Cost $937,144) | 923,254 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $5,894,520) | $ 5,539,028 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2022 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (cost $5,894,520) - See accompanying schedule | $ 5,539,028 | |
Cash | 72 | |
Receivable for investments sold | 252 | |
Total assets | 5,539,352 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | $ 250 | |
Distribution fees payable | 238 | |
Total liabilities | 488 | |
|
|
|
Net Assets | $ 5,538,864 | |
Net Assets consist of: |
| |
Paid in capital | $ 5,882,033 | |
Undistributed net investment income | 2,475 | |
Accumulated undistributed net realized gain (loss) on investments | 9,848 | |
Net unrealized appreciation (depreciation) on investments | (355,492) | |
Net Assets | $ 5,538,864 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 47.05 | |
|
|
|
Maximum offering price per share (100/94.25 of $47.05) | $ 49.92 | |
Class T: | $ 47.04 | |
|
|
|
Maximum offering price per share (100/96.50 of $47.04) | $ 48.75 | |
|
|
|
Class C: | $ 47.04 | |
|
|
|
Income Replacement 2022: | $ 47.06 | |
|
|
|
Institutional Class: | $ 47.06 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period August 30, 2007 | |
|
|
|
Investment Income |
|
|
Income distributions from underlying funds |
| $ 87,382 |
Interest |
| 72 |
Total income |
| 87,454 |
|
|
|
Expenses | ||
Distribution fees | $ 1,974 | |
Independent trustees' compensation | 12 | |
Total expenses before reductions | 1,986 | |
Expense reductions | (12) | 1,974 |
Net investment income (loss) | 85,480 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (23,894) | |
Capital gain distributions from underlying funds | 42,834 | 18,940 |
Change in net unrealized appreciation (depreciation) on underlying funds | (355,492) | |
Net gain (loss) | (336,552) | |
Net increase (decrease) in net assets resulting from operations | $ (251,072) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2022 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 85,480 |
Net realized gain (loss) | 18,940 |
Change in net unrealized appreciation (depreciation) | (355,492) |
Net increase (decrease) in net assets resulting from operations | (251,072) |
Distributions to shareholders from net investment income | (83,005) |
Distributions to shareholders from net realized gain | (9,092) |
Total distributions | (92,097) |
Share transactions - net increase (decrease) | 5,882,033 |
Total increase (decrease) in net assets | 5,538,864 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $2,475) | $ 5,538,864 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | 1.087 |
Net realized and unrealized gain (loss) | (2.853) |
Total from investment operations | (1.766) |
Distributions from net investment income | (1.014) |
Distributions from net realized gain | (.170) |
Total distributions | (1.184) |
Net asset value, end of period | $ 47.05 |
Total Return B, C, D | (3.64)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 2.41% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 289 |
Portfolio turnover rate | 32% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .982 |
Net realized and unrealized gain (loss) | (2.862) |
Total from investment operations | (1.880) |
Distributions from net investment income | (.910) |
Distributions from net realized gain | (.170) |
Total distributions | (1.080) |
Net asset value, end of period | $ 47.04 |
Total Return B, C, D | (3.87)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 2.16% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 187 |
Portfolio turnover rate | 32% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .760 |
Net realized and unrealized gain (loss) | (2.860) |
Total from investment operations | (2.100) |
Distributions from net investment income | (.690) |
Distributions from net realized gain | (.170) |
Total distributions | (.860) |
Net asset value, end of period | $ 47.04 |
Total Return B, C, D | (4.29)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | 1.66% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 120 |
Portfolio turnover rate | 32% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2022
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.190 |
Net realized and unrealized gain (loss) | (2.836) |
Total from investment operations | (1.646) |
Distributions from net investment income | (1.124) |
Distributions from net realized gain | (.170) |
Total distributions | (1.294) |
Net asset value, end of period | $ 47.06 |
Total Return B, C | (3.41)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.66% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 4,666 |
Portfolio turnover rate | 32% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.208 |
Net realized and unrealized gain (loss) | (2.854) |
Total from investment operations | (1.646) |
Distributions from net investment income | (1.124) |
Distributions from net realized gain | (.170) |
Total distributions | (1.294) |
Net asset value, end of period | $ 47.06 |
Total Return B, C | (3.41)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.66% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 277 |
Portfolio turnover rate | 32% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2024 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 6.3 | 6.4 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 5.3 | 5.2 |
Fidelity Broad Market Opportunities Fund | 8.5 | 8.5 |
Fidelity Disciplined Equity Fund | 5.4 | 5.4 |
Fidelity Equity-Income Fund | 5.2 | 5.3 |
Fidelity Large Cap Core Enhanced Index Fund | 8.6 | 8.5 |
Fidelity Small Cap Opportunities Fund | 3.4 | 3.3 |
| 42.7 | 42.6 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 6.5 | 6.7 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 2.3 | 2.3 |
Fidelity Strategic Income Fund | 2.4 | 2.4 |
| 4.7 | 4.7 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 6.2 | 6.3 |
Fidelity Strategic Real Return Fund | 6.2 | 6.3 |
Fidelity Total Bond Fund | 18.4 | 18.4 |
| 30.8 | 31.0 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 7.7 | 7.4 |
Fidelity Short-Term Bond Fund | 7.6 | 7.6 |
| 15.3 | 15.0 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 42.7% |
|
![]() | International Equity Funds | 6.5% |
|
![]() | High Yield Fixed-Income Funds | 4.7% |
|
![]() | Investment Grade Fixed-Income Funds | 30.8% |
|
![]() | Short-Term Funds | 15.3% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 42.6% |
|
![]() | International Equity Funds | 6.7% |
|
![]() | High Yield Fixed-Income Funds | 4.7% |
|
![]() | Investment Grade Fixed-Income Funds | 31.0% |
|
![]() | Short-Term Funds | 15.0% |
|
Expected | |||
![]() | Domestic Equity Funds | 43.0% |
|
![]() | International Equity Funds | 6.4% |
|
![]() | High Yield Fixed-Income Funds | 4.4% |
|
![]() | Investment Grade Fixed-Income Funds | 30.6% |
|
![]() | Short-Term Funds | 15.6% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2024 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 49.2% | |||
Shares | Value | ||
Domestic Equity Funds - 42.7% | |||
Fidelity 100 Index Fund | 9,895 | $ 90,440 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 4,863 | 76,206 | |
Fidelity Broad Market Opportunities Fund | 13,516 | 120,425 | |
Fidelity Disciplined Equity Fund | 2,998 | 76,237 | |
Fidelity Equity-Income Fund | 1,628 | 73,526 | |
Fidelity Large Cap Core Enhanced Index Fund | 13,764 | 122,228 | |
Fidelity Small Cap Opportunities Fund | 6,163 | 49,119 | |
TOTAL DOMESTIC EQUITY FUNDS | 608,181 | ||
International Equity Funds - 6.5% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 2,568 | 93,485 | |
TOTAL EQUITY FUNDS (Cost $779,890) | 701,666 | ||
Fixed-Income Funds - 35.5% | |||
|
|
|
|
High Yield Fixed-Income Funds - 4.7% | |||
Fidelity Capital & Income Fund | 4,101 | 33,177 | |
Fidelity Strategic Income Fund | 3,308 | 33,644 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 66,821 | ||
Investment Grade Fixed-Income Funds - 30.8% | |||
Fidelity Government Income Fund | 8,552 | 88,774 | |
Fidelity Strategic Real Return Fund | 8,774 | 88,701 | |
Fidelity Total Bond Fund | 25,987 | 261,424 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 438,899 | ||
TOTAL FIXED-INCOME FUNDS (Cost $513,281) | 505,720 | ||
Short-Term Funds - 15.3% | |||
|
|
|
|
Fidelity Institutional Money Market Portfolio Institutional Class | 109,794 | 109,794 | |
Fidelity Short-Term Bond Fund | 13,026 | 108,380 | |
TOTAL SHORT-TERM FUNDS (Cost $221,178) | 218,174 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $1,514,349) | $ 1,425,560 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2024 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (cost $1,514,349) - See accompanying schedule | $ 1,425,560 | |
Cash | 72 | |
Total assets | 1,425,632 | |
|
|
|
Liabilities | ||
Distribution fees payable | 242 | |
|
|
|
Net Assets | $ 1,425,390 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,512,902 | |
Undistributed net investment income | 575 | |
Accumulated undistributed net realized gain (loss) on investments | 702 | |
Net unrealized appreciation (depreciation) on investments | (88,789) | |
Net Assets | $ 1,425,390 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 46.97 | |
|
|
|
Maximum offering price per share (100/94.25 of $46.97) | $ 49.84 | |
Class T: | $ 46.97 | |
|
|
|
Maximum offering price per share (100/96.50 of $46.97) | $ 48.67 | |
|
|
|
Class C: | $ 46.93 | |
|
|
|
Income Replacement 2024: | $ 46.98 | |
|
|
|
Institutional Class: | $ 46.98 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period August 30, 2007 | |
|
|
|
Investment Income |
|
|
Income distributions from underlying funds |
| $ 23,762 |
Interest |
| 72 |
Total income |
| 23,834 |
|
|
|
Expenses | ||
Distribution fees | $ 2,058 | |
Independent trustees' compensation | 3 | |
Total expenses before reductions | 2,061 | |
Expense reductions | (3) | 2,058 |
Net investment income (loss) | 21,776 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (8,785) | |
Capital gain distributions from underlying funds | 12,382 | 3,597 |
Change in net unrealized appreciation (depreciation) on underlying funds | (88,789) | |
Net gain (loss) | (85,192) | |
Net increase (decrease) in net assets resulting from operations | $ (63,416) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2024 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 21,776 |
Net realized gain (loss) | 3,597 |
Change in net unrealized appreciation (depreciation) | (88,789) |
Net increase (decrease) in net assets resulting from operations | (63,416) |
Distributions to shareholders from net investment income | (21,201) |
Distributions to shareholders from net realized gain | (2,896) |
Total distributions | (24,097) |
Share transactions - net increase (decrease) | 1,512,903 |
Total increase (decrease) in net assets | 1,425,390 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $575) | $ 1,425,390 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | 1.063 |
Net realized and unrealized gain (loss) | (2.884) |
Total from investment operations | (1.821) |
Distributions from net investment income | (1.039) |
Distributions from net realized gain | (.170) |
Total distributions | (1.209) |
Net asset value, end of period | $ 46.97 |
Total Return B, C, D | (3.77)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 2.35% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 286 |
Portfolio turnover rate | 41% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .966 |
Net realized and unrealized gain (loss) | (2.901) |
Total from investment operations | (1.937) |
Distributions from net investment income | (.923) |
Distributions from net realized gain | (.170) |
Total distributions | (1.093) |
Net asset value, end of period | $ 46.97 |
Total Return B, C, D | (3.99)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 2.11% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 96 |
Portfolio turnover rate | 41% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .728 |
Net realized and unrealized gain (loss) | (2.903) |
Total from investment operations | (2.175) |
Distributions from net investment income | (.725) |
Distributions from net realized gain | (.170) |
Total distributions | (.895) |
Net asset value, end of period | $ 46.93 |
Total Return B, C, D | (4.45)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | 1.61% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 233 |
Portfolio turnover rate | 41% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2024
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.166 |
Net realized and unrealized gain (loss) | (2.868) |
Total from investment operations | (1.702) |
Distributions from net investment income | (1.148) |
Distributions from net realized gain | (.170) |
Total distributions | (1.318) |
Net asset value, end of period | $ 46.98 |
Total Return B, C | (3.53)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.60% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 714 |
Portfolio turnover rate | 41% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.194 |
Net realized and unrealized gain (loss) | (2.896) |
Total from investment operations | (1.702) |
Distributions from net investment income | (1.148) |
Distributions from net realized gain | (.170) |
Total distributions | (1.318) |
Net asset value, end of period | $ 46.98 |
Total Return B, C | (3.53)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.60% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 97 |
Portfolio turnover rate | 41% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2026 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 6.5 | 6.6 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 5.5 | 5.2 |
Fidelity Broad Market Opportunities Fund | 8.7 | 8.6 |
Fidelity Disciplined Equity Fund | 5.5 | 5.5 |
Fidelity Equity-Income Fund | 5.4 | 5.4 |
Fidelity Large Cap Core Enhanced Index Fund | 8.8 | 8.8 |
Fidelity Small Cap Opportunities Fund | 3.6 | 3.3 |
| 44.0 | 43.4 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 7.3 | 7.4 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 2.4 | 2.4 |
Fidelity Strategic Income Fund | 2.5 | 2.5 |
| 4.9 | 4.9 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 6.0 | 6.2 |
Fidelity Strategic Real Return Fund | 6.0 | 6.1 |
Fidelity Total Bond Fund | 18.0 | 18.2 |
| 30.0 | 30.5 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 7.0 | 6.8 |
Fidelity Short-Term Bond Fund | 6.8 | 7.0 |
| 13.8 | 13.8 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 44.0% |
|
![]() | International Equity Funds | 7.3% |
|
![]() | High Yield Fixed-Income Funds | 4.9% |
|
![]() | Investment Grade Fixed-Income Funds | 30.0% |
|
![]() | Short-Term Funds | 13.8% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 43.4% |
|
![]() | International Equity Funds | 7.4% |
|
![]() | High Yield Fixed-Income Funds | 4.9% |
|
![]() | Investment Grade Fixed-Income Funds | 30.5% |
|
![]() | Short-Term Funds | 13.8% |
|
Expected | |||
![]() | Domestic Equity Funds | 44.3% |
|
![]() | International Equity Funds | 7.2% |
|
![]() | High Yield Fixed-Income Funds | 4.7% |
|
![]() | Investment Grade Fixed-Income Funds | 29.6% |
|
![]() | Short-Term Funds | 14.2% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2026 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 51.3% | |||
Shares | Value | ||
Domestic Equity Funds - 44.0% | |||
Fidelity 100 Index Fund | 11,402 | $ 104,219 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 5,555 | 87,048 | |
Fidelity Broad Market Opportunities Fund | 15,575 | 138,773 | |
Fidelity Disciplined Equity Fund | 3,435 | 87,354 | |
Fidelity Equity-Income Fund | 1,886 | 85,165 | |
Fidelity Large Cap Core Enhanced Index Fund | 15,853 | 140,775 | |
Fidelity Small Cap Opportunities Fund | 7,090 | 56,511 | |
TOTAL DOMESTIC EQUITY FUNDS | 699,845 | ||
International Equity Funds - 7.3% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 3,196 | 116,382 | |
TOTAL EQUITY FUNDS (Cost $911,251) | 816,227 | ||
Fixed-Income Funds - 34.9% | |||
|
|
|
|
High Yield Fixed-Income Funds - 4.9% | |||
Fidelity Capital & Income Fund | 4,837 | 39,133 | |
Fidelity Strategic Income Fund | 3,884 | 39,496 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 78,629 | ||
Investment Grade Fixed-Income Funds - 30.0% | |||
Fidelity Government Income Fund | 9,233 | 95,839 | |
Fidelity Strategic Real Return Fund | 9,456 | 95,600 | |
Fidelity Total Bond Fund | 28,418 | 285,882 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 477,321 | ||
TOTAL FIXED-INCOME FUNDS (Cost $564,638) | 555,950 | ||
Short-Term Funds - 13.8% | |||
|
|
|
|
Fidelity Institutional Money Market Portfolio Institutional Class | 110,748 | 110,748 | |
Fidelity Short-Term Bond Fund | 13,100 | 108,992 | |
TOTAL SHORT-TERM FUNDS (Cost $223,127) | 219,740 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $1,699,016) | $ 1,591,917 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2026 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (cost $1,699,016) - See accompanying schedule | $ 1,591,917 | |
Cash | 72 | |
Receivable for investments sold | 2,237 | |
Receivable for fund shares sold | 25,000 | |
Total assets | 1,619,226 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 24,839 | |
Payable for fund shares redeemed | 2,396 | |
Distribution fees payable | 473 | |
Total liabilities | 27,708 | |
|
|
|
Net Assets | $ 1,591,518 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,687,356 | |
Undistributed net investment income | 600 | |
Accumulated undistributed net realized gain (loss) on investments | 10,661 | |
Net unrealized appreciation (depreciation) on investments | (107,099) | |
Net Assets | $ 1,591,518 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 46.76 | |
|
|
|
Maximum offering price per share (100/94.25 of $46.76) | $ 49.61 | |
Class T: | $ 46.76 | |
|
|
|
Maximum offering price per share (100/96.50 of $46.76) | $ 48.46 | |
|
|
|
Class C: | $ 46.72 | |
|
|
|
Income Replacement 2026: | $ 46.77 | |
|
|
|
Institutional Class: | $ 46.77 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period August 30, 2007 | |
|
|
|
Investment Income |
|
|
Income distributions from underlying funds |
| $ 26,580 |
Interest |
| 111 |
Total income |
| 26,691 |
|
|
|
Expenses | ||
Distribution fees | $ 4,039 | |
Independent trustees' compensation | 4 | |
Total expenses before reductions | 4,043 | |
Expense reductions | (4) | 4,039 |
Net investment income (loss) | 22,652 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (2,963) | |
Capital gain distributions from underlying funds | 17,330 | 14,367 |
Change in net unrealized appreciation (depreciation) on underlying funds | (107,099) | |
Net gain (loss) | (92,732) | |
Net increase (decrease) in net assets resulting from operations | $ (70,080) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2026 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 22,652 |
Net realized gain (loss) | 14,367 |
Change in net unrealized appreciation (depreciation) | (107,099) |
Net increase (decrease) in net assets resulting from operations | (70,080) |
Distributions to shareholders from net investment income | (22,051) |
Distributions to shareholders from net realized gain | (3,706) |
Total distributions | (25,757) |
Share transactions - net increase (decrease) | 1,687,355 |
Total increase (decrease) in net assets | 1,591,518 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $600) | $ 1,591,518 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | 1.076 |
Net realized and unrealized gain (loss) | (3.105) |
Total from investment operations | (2.029) |
Distributions from net investment income | (1.031) |
Distributions from net realized gain | (.180) |
Total distributions | (1.211) |
Net asset value, end of period | $ 46.76 |
Total Return B, C, D | (4.19)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 2.36% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 131 |
Portfolio turnover rate | 21% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .966 |
Net realized and unrealized gain (loss) | (3.110) |
Total from investment operations | (2.144) |
Distributions from net investment income | (.916) |
Distributions from net realized gain | (.180) |
Total distributions | (1.096) |
Net asset value, end of period | $ 46.76 |
Total Return B, C, D | (4.41)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 2.11% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 96 |
Portfolio turnover rate | 21% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .723 |
Net realized and unrealized gain (loss) | (3.090) |
Total from investment operations | (2.367) |
Distributions from net investment income | (.733) |
Distributions from net realized gain | (.180) |
Total distributions | (.913) |
Net asset value, end of period | $ 46.72 |
Total Return B, C, D | (4.85)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | 1.61% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 485 |
Portfolio turnover rate | 21% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2026
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.168 |
Net realized and unrealized gain (loss) | (3.079) |
Total from investment operations | (1.911) |
Distributions from net investment income | (1.139) |
Distributions from net realized gain | (.180) |
Total distributions | (1.319) |
Net asset value, end of period | $ 46.77 |
Total Return B, C | (3.96)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.61% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 783 |
Portfolio turnover rate | 21% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.196 |
Net realized and unrealized gain (loss) | (3.107) |
Total from investment operations | (1.911) |
Distributions from net investment income | (1.139) |
Distributions from net realized gain | (.180) |
Total distributions | (1.319) |
Net asset value, end of period | $ 46.77 |
Total Return B, C | (3.96)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.61% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 96 |
Portfolio turnover rate | 21% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2028 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 6.7 | 6.8 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 5.6 | 5.4 |
Fidelity Broad Market Opportunities Fund | 8.8 | 8.9 |
Fidelity Disciplined Equity Fund | 5.6 | 5.6 |
Fidelity Equity-Income Fund | 5.4 | 5.6 |
Fidelity Large Cap Core Enhanced Index Fund | 9.0 | 9.0 |
Fidelity Small Cap Opportunities Fund | 3.7 | 3.6 |
| 44.8 | 44.9 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 8.0 | 8.1 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 2.6 | 2.6 |
Fidelity Strategic Income Fund | 2.6 | 2.6 |
| 5.2 | 5.2 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 5.8 | 5.8 |
Fidelity Strategic Real Return Fund | 5.8 | 5.8 |
Fidelity Total Bond Fund | 17.3 | 17.4 |
| 28.9 | 29.0 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 6.6 | 6.5 |
Fidelity Short-Term Bond Fund | 6.5 | 6.3 |
| 13.1 | 12.8 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 44.8% |
|
![]() | International Equity Funds | 8.0% |
|
![]() | High Yield Fixed-Income Funds | 5.2% |
|
![]() | Investment Grade Fixed-Income Funds | 28.9% |
|
![]() | Short-Term Funds | 13.1% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 44.9% |
|
![]() | International Equity Funds | 8.1% |
|
![]() | High Yield Fixed-Income Funds | 5.2% |
|
![]() | Investment Grade Fixed-Income Funds | 29.0% |
|
![]() | Short-Term Funds | 12.8% |
|
Expected | |||
![]() | Domestic Equity Funds | 45.2% |
|
![]() | International Equity Funds | 8.0% |
|
![]() | High Yield Fixed-Income Funds | 5.0% |
|
![]() | Investment Grade Fixed-Income Funds | 28.5% |
|
![]() | Short-Term Funds | 13.3% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2028 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 52.8% | |||
Shares | Value | ||
Domestic Equity Funds - 44.8% | |||
Fidelity 100 Index Fund | 53,493 | $ 488,923 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 25,935 | 406,404 | |
Fidelity Broad Market Opportunities Fund | 72,248 | 643,732 | |
Fidelity Disciplined Equity Fund | 15,991 | 406,662 | |
Fidelity Equity-Income Fund | 8,792 | 397,034 | |
Fidelity Large Cap Core Enhanced Index Fund | 73,653 | 654,041 | |
Fidelity Small Cap Opportunities Fund | 33,596 | 267,757 | |
TOTAL DOMESTIC EQUITY FUNDS | 3,264,553 | ||
International Equity Funds - 8.0% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 16,052 | 584,466 | |
TOTAL EQUITY FUNDS (Cost $4,200,490) | 3,849,019 | ||
Fixed-Income Funds - 34.1% | |||
|
|
|
|
High Yield Fixed-Income Funds - 5.2% | |||
Fidelity Capital & Income Fund | 23,553 | 190,548 | |
Fidelity Strategic Income Fund | 18,962 | 192,841 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 383,389 | ||
Investment Grade Fixed-Income Funds - 28.9% | |||
Fidelity Government Income Fund | 40,782 | 423,315 | |
Fidelity Strategic Real Return Fund | 41,564 | 420,209 | |
Fidelity Total Bond Fund | 125,459 | 1,262,117 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 2,105,641 | ||
TOTAL FIXED-INCOME FUNDS (Cost $2,535,313) | 2,489,030 | ||
Short-Term Funds - 13.1% | |||
Shares | Value | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 481,175 | $ 481,175 | |
Fidelity Short-Term Bond Fund | 56,698 | 471,731 | |
TOTAL SHORT-TERM FUNDS (Cost $963,481) | 952,906 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $7,699,284) | $ 7,290,955 |
Income Tax Information |
At July 31, 2008, the fund had a capital loss carryforward of approximately $30 all of which will expire on July 31, 2016. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2028 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (cost $7,699,284) - See accompanying schedule | $ 7,290,955 | |
Cash | 73 | |
Receivable for investments sold | 3 | |
Receivable for fund shares sold | 10,000 | |
Total assets | 7,301,031 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 10,003 | |
Distribution fees payable | 455 | |
Total liabilities | 10,458 | |
|
|
|
Net Assets | $ 7,290,573 | |
Net Assets consist of: |
| |
Paid in capital | $ 7,701,790 | |
Undistributed net investment income | 3,156 | |
Accumulated undistributed net realized gain (loss) on investments | (6,044) | |
Net unrealized appreciation (depreciation) on investments | (408,329) | |
Net Assets | $ 7,290,573 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 46.81 | |
|
|
|
Maximum offering price per share (100/94.25 of $46.81) | $ 49.67 | |
Class T: | $ 46.80 | |
|
|
|
Maximum offering price per share (100/96.50 of $46.80) | $ 48.50 | |
|
|
|
Class C: | $ 46.79 | |
|
|
|
Income Replacement 2028: | $ 46.82 | |
|
|
|
Institutional Class: | $ 46.82 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period August 30, 2007 | |
|
|
|
Investment Income |
|
|
Income distributions from underlying funds |
| $ 83,927 |
Interest |
| 120 |
Total income |
| 84,047 |
|
|
|
Expenses | ||
Distribution fees | $ 2,476 | |
Independent trustees' compensation | 13 | |
Total expenses before reductions | 2,489 | |
Expense reductions | (13) | 2,476 |
Net investment income (loss) | 81,571 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (36,623) | |
Capital gain distributions from underlying funds | 39,184 | 2,561 |
Change in net unrealized appreciation (depreciation) on underlying funds | (408,329) | |
Net gain (loss) | (405,768) | |
Net increase (decrease) in net assets resulting from operations | $ (324,197) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2028 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 81,571 |
Net realized gain (loss) | 2,561 |
Change in net unrealized appreciation (depreciation) | (408,329) |
Net increase (decrease) in net assets resulting from operations | (324,197) |
Distributions to shareholders from net investment income | (78,416) |
Distributions to shareholders from net realized gain | (8,604) |
Total distributions | (87,020) |
Share transactions - net increase (decrease) | 7,701,790 |
Total increase (decrease) in net assets | 7,290,573 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $3,156) | $ 7,290,573 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .966 |
Net realized and unrealized gain (loss) | (3.085) |
Total from investment operations | (2.119) |
Distributions from net investment income | (.911) |
Distributions from net realized gain | (.160) |
Total distributions | (1.071) |
Net asset value, end of period | $ 46.81 |
Total Return B, C, D | (4.36)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 2.16% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 371 |
Portfolio turnover rate | 33% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .847 |
Net realized and unrealized gain (loss) | (3.079) |
Total from investment operations | (2.232) |
Distributions from net investment income | (.808) |
Distributions from net realized gain | (.160) |
Total distributions | (.968) |
Net asset value, end of period | $ 46.80 |
Total Return B, C, D | (4.57)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 1.91% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 606 |
Portfolio turnover rate | 33% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .639 |
Net realized and unrealized gain (loss) | (3.104) |
Total from investment operations | (2.465) |
Distributions from net investment income | (.585) |
Distributions from net realized gain | (.160) |
Total distributions | (.745) |
Net asset value, end of period | $ 46.79 |
Total Return B, C, D | (5.02)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | 1.41% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 150 |
Portfolio turnover rate | 33% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2028
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.067 |
Net realized and unrealized gain (loss) | (3.072) |
Total from investment operations | (2.005) |
Distributions from net investment income | (1.015) |
Distributions from net realized gain | (.160) |
Total distributions | (1.175) |
Net asset value, end of period | $ 46.82 |
Total Return B, C | (4.14)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.40% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 6,068 |
Portfolio turnover rate | 33% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.101 |
Net realized and unrealized gain (loss) | (3.106) |
Total from investment operations | (2.005) |
Distributions from net investment income | (1.015) |
Distributions from net realized gain | (.160) |
Total distributions | (1.175) |
Net asset value, end of period | $ 46.82 |
Total Return B, C | (4.14)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.40% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 96 |
Portfolio turnover rate | 33% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2030 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 6.8 | 6.8 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 5.6 | 5.4 |
Fidelity Broad Market Opportunities Fund | 9.0 | 8.9 |
Fidelity Disciplined Equity Fund | 5.7 | 5.7 |
Fidelity Equity-Income Fund | 5.5 | 5.5 |
Fidelity Large Cap Core Enhanced Index Fund | 9.1 | 9.1 |
Fidelity Small Cap Opportunities Fund | 3.7 | 3.4 |
| 45.4 | 44.8 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 8.9 | 9.1 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 2.7 | 2.7 |
Fidelity Strategic Income Fund | 2.8 | 2.8 |
| 5.5 | 5.5 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 5.8 | 5.9 |
Fidelity Strategic Real Return Fund | 5.7 | 5.8 |
Fidelity Total Bond Fund | 17.1 | 17.4 |
| 28.6 | 29.1 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 5.8 | 5.6 |
Fidelity Short-Term Bond Fund | 5.8 | 5.9 |
| 11.6 | 11.5 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 45.4% |
|
![]() | International Equity Funds | 8.9% |
|
![]() | High Yield Fixed-Income Funds | 5.5% |
|
![]() | Investment Grade Fixed-Income Funds | 28.6% |
|
![]() | Short-Term Funds | 11.6% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 44.8% |
|
![]() | International Equity Funds | 9.1% |
|
![]() | High Yield Fixed-Income Funds | 5.5% |
|
![]() | Investment Grade Fixed-Income Funds | 29.1% |
|
![]() | Short-Term Funds | 11.5% |
|
Expected | |||
![]() | Domestic Equity Funds | 46.0% |
|
![]() | International Equity Funds | 8.8% |
|
![]() | High Yield Fixed-Income Funds | 5.2% |
|
![]() | Investment Grade Fixed-Income Funds | 27.9% |
|
![]() | Short-Term Funds | 12.1% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2030 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 54.3% | |||
Shares | Value | ||
Domestic Equity Funds - 45.4% | |||
Fidelity 100 Index Fund | 9,165 | $ 83,768 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 4,472 | 70,069 | |
Fidelity Broad Market Opportunities Fund | 12,491 | 111,297 | |
Fidelity Disciplined Equity Fund | 2,768 | 70,387 | |
Fidelity Equity-Income Fund | 1,501 | 67,802 | |
Fidelity Large Cap Core Enhanced Index Fund | 12,707 | 112,837 | |
Fidelity Small Cap Opportunities Fund | 5,704 | 45,464 | |
TOTAL DOMESTIC EQUITY FUNDS | 561,624 | ||
International Equity Funds - 8.9% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 3,008 | 109,519 | |
TOTAL EQUITY FUNDS (Cost $745,041) | 671,143 | ||
Fixed-Income Funds - 34.1% | |||
|
|
|
|
High Yield Fixed-Income Funds - 5.5% | |||
Fidelity Capital & Income Fund | 4,171 | 33,743 | |
Fidelity Strategic Income Fund | 3,367 | 34,241 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 67,984 | ||
Investment Grade Fixed-Income Funds - 28.6% | |||
Fidelity Government Income Fund | 6,841 | 71,005 | |
Fidelity Strategic Real Return Fund | 6,981 | 70,576 | |
Fidelity Total Bond Fund | 21,067 | 211,932 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 353,513 | ||
TOTAL FIXED-INCOME FUNDS (Cost $427,738) | 421,497 | ||
Short-Term Funds - 11.6% | |||
|
|
|
|
Fidelity Institutional Money Market Portfolio Institutional Class | 72,243 | 72,243 | |
Fidelity Short-Term Bond Fund | 8,646 | 71,934 | |
TOTAL SHORT-TERM FUNDS (Cost $145,873) | 144,177 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $1,318,652) | $ 1,236,817 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2030 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (cost $1,318,652) - See accompanying schedule | $ 1,236,817 | |
Cash | 72 | |
Total assets | 1,236,889 | |
|
|
|
Liabilities | ||
Distribution fees payable | 309 | |
|
|
|
Net Assets | $ 1,236,580 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,309,254 | |
Undistributed net investment income | 545 | |
Accumulated undistributed net realized gain (loss) on investments | 8,616 | |
Net unrealized appreciation (depreciation) on investments | (81,835) | |
Net Assets | $ 1,236,580 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 46.61 | |
|
|
|
Maximum offering price per share (100/94.25 of $46.61) | $ 49.45 | |
Class T: | $ 46.61 | |
|
|
|
Maximum offering price per share (100/96.50 of $46.61) | $ 48.30 | |
|
|
|
Class C: | $ 46.58 | |
|
|
|
Income Replacement 2030: | $ 46.61 | |
|
|
|
Institutional Class: | $ 46.61 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period August 30, 2007 | |
|
|
|
Investment Income |
|
|
Income distributions from underlying funds |
| $ 17,539 |
Interest |
| 112 |
Total income |
| 17,651 |
|
|
|
Expenses | ||
Distribution fees | $ 2,803 | |
Independent trustees' compensation | 2 | |
Total expenses before reductions | 2,805 | |
Expense reductions | (2) | 2,803 |
Net investment income (loss) | 14,848 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (555) | |
Capital gain distributions from underlying funds | 11,821 | 11,266 |
Change in net unrealized appreciation (depreciation) on underlying funds | (81,835) | |
Net gain (loss) | (70,569) | |
Net increase (decrease) in net assets resulting from operations | $ (55,721) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2030 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 14,848 |
Net realized gain (loss) | 11,266 |
Change in net unrealized appreciation (depreciation) | (81,835) |
Net increase (decrease) in net assets resulting from operations | (55,721) |
Distributions to shareholders from net investment income | (14,428) |
Distributions to shareholders from net realized gain | (2,528) |
Total distributions | (16,956) |
Share transactions - net increase (decrease) | 1,309,257 |
Total increase (decrease) in net assets | 1,236,580 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $545) | $ 1,236,580 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | 1.034 |
Net realized and unrealized gain (loss) | (3.239) |
Total from investment operations | (2.205) |
Distributions from net investment income | (.995) |
Distributions from net realized gain | (.190) |
Total distributions | (1.185) |
Net asset value, end of period | $ 46.61 |
Total Return B, C, D | (4.55)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 2.26% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 95 |
Portfolio turnover rate | 12% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .920 |
Net realized and unrealized gain (loss) | (3.234) |
Total from investment operations | (2.314) |
Distributions from net investment income | (.886) |
Distributions from net realized gain | (.190) |
Total distributions | (1.076) |
Net asset value, end of period | $ 46.61 |
Total Return B, C, D | (4.76)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 2.01% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 95 |
Portfolio turnover rate | 12% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .682 |
Net realized and unrealized gain (loss) | (3.227) |
Total from investment operations | (2.545) |
Distributions from net investment income | (.685) |
Distributions from net realized gain | (.190) |
Total distributions | (.875) |
Net asset value, end of period | $ 46.58 |
Total Return B, C, D | (5.21)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | 1.51% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 297 |
Portfolio turnover rate | 12% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2030
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.117 |
Net realized and unrealized gain (loss) | (3.209) |
Total from investment operations | (2.092) |
Distributions from net investment income | (1.108) |
Distributions from net realized gain | (.190) |
Total distributions | (1.298) |
Net asset value, end of period | $ 46.61 |
Total Return B, C | (4.33)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.51% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 653 |
Portfolio turnover rate | 12% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.149 |
Net realized and unrealized gain (loss) | (3.241) |
Total from investment operations | (2.092) |
Distributions from net investment income | (1.108) |
Distributions from net realized gain | (.190) |
Total distributions | (1.298) |
Net asset value, end of period | $ 46.61 |
Total Return B, C | (4.33)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.51% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 96 |
Portfolio turnover rate | 12% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2032 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 6.9 | 6.9 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 5.8 | 5.5 |
Fidelity Broad Market Opportunities Fund | 9.1 | 9.1 |
Fidelity Disciplined Equity Fund | 5.8 | 5.8 |
Fidelity Equity-Income Fund | 5.6 | 5.7 |
Fidelity Large Cap Core Enhanced Index Fund | 9.3 | 9.2 |
Fidelity Small Cap Opportunities Fund | 3.7 | 3.5 |
| 46.2 | 45.7 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 9.6 | 9.7 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 2.9 | 2.8 |
Fidelity Strategic Income Fund | 2.9 | 3.0 |
| 5.8 | 5.8 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 5.6 | 5.8 |
Fidelity Strategic Real Return Fund | 5.6 | 5.7 |
Fidelity Total Bond Fund | 16.7 | 16.9 |
| 27.9 | 28.4 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 5.3 | 5.1 |
Fidelity Short-Term Bond Fund | 5.2 | 5.3 |
| 10.5 | 10.4 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 46.2% |
|
![]() | International Equity Funds | 9.6% |
|
![]() | High Yield Fixed-Income Funds | 5.8% |
|
![]() | Investment Grade Fixed-Income Funds | 27.9% |
|
![]() | Short-Term Funds | 10.5% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 45.7% |
|
![]() | International Equity Funds | 9.7% |
|
![]() | High Yield Fixed-Income Funds | 5.8% |
|
![]() | Investment Grade Fixed-Income Funds | 28.4% |
|
![]() | Short-Term Funds | 10.4% |
|
Expected | |||
![]() | Domestic Equity Funds | 46.9% |
|
![]() | International Equity Funds | 9.6% |
|
![]() | High Yield Fixed-Income Funds | 5.5% |
|
![]() | Investment Grade Fixed-Income Funds | 27.5% |
|
![]() | Short-Term Funds | 10.5% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2032 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 55.8% | |||
Shares | Value | ||
Domestic Equity Funds - 46.2% | |||
Fidelity 100 Index Fund | 10,662 | $ 97,453 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 5,230 | 81,956 | |
Fidelity Broad Market Opportunities Fund | 14,552 | 129,659 | |
Fidelity Disciplined Equity Fund | 3,219 | 81,858 | |
Fidelity Equity-Income Fund | 1,757 | 79,364 | |
Fidelity Large Cap Core Enhanced Index Fund | 14,841 | 131,790 | |
Fidelity Small Cap Opportunities Fund | 6,635 | 52,879 | |
TOTAL DOMESTIC EQUITY FUNDS | 654,959 | ||
International Equity Funds - 9.6% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 3,742 | 136,239 | |
TOTAL EQUITY FUNDS (Cost $914,977) | 791,198 | ||
Fixed-Income Funds - 33.7% | |||
|
|
|
|
High Yield Fixed-Income Funds - 5.8% | |||
Fidelity Capital & Income Fund | 5,026 | 40,662 | |
Fidelity Strategic Income Fund | 4,050 | 41,189 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 81,851 | ||
Investment Grade Fixed-Income Funds - 27.9% | |||
Fidelity Government Income Fund | 7,713 | 80,060 | |
Fidelity Strategic Real Return Fund | 7,908 | 79,952 | |
Fidelity Total Bond Fund | 23,486 | 236,268 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 396,280 | ||
TOTAL FIXED-INCOME FUNDS (Cost $486,692) | 478,131 | ||
Short-Term Funds - 10.5% | |||
|
|
|
|
Fidelity Institutional Money Market Portfolio Institutional Class | 75,042 | 75,042 | |
Fidelity Short-Term Bond Fund | 8,902 | 74,067 | |
TOTAL SHORT-TERM FUNDS (Cost $151,644) | 149,109 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $1,553,313) | $ 1,418,438 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2032 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (cost $1,553,313) - See accompanying schedule | $ 1,418,438 | |
Cash | 72 | |
Other receivables | 102 | |
Total assets | 1,418,612 | |
|
|
|
Liabilities | ||
Distribution fees payable | 202 | |
|
|
|
Net Assets | $ 1,418,410 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,540,219 | |
Undistributed net investment income | 555 | |
Accumulated undistributed net realized gain (loss) on investments | 12,511 | |
Net unrealized appreciation (depreciation) on investments | (134,875) | |
Net Assets | $ 1,418,410 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 46.52 | |
|
|
|
Maximum offering price per share (100/94.25 of $46.52) | $ 49.36 | |
Class T: | $ 46.52 | |
|
|
|
Maximum offering price per share (100/96.50 of $46.52) | $ 48.20 | |
|
|
|
Class C: | $ 46.51 | |
|
|
|
Income Replacement 2032: | $ 46.53 | |
|
|
|
Institutional Class: | $ 46.53 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period August 30, 2007 | |
|
|
|
Investment Income |
|
|
Income distributions from underlying funds |
| $ 25,916 |
Interest |
| 114 |
Total income |
| 26,030 |
|
|
|
Expenses | ||
Distribution fees | $ 2,106 | |
Independent trustees' compensation | 4 | |
Total expenses before reductions | 2,110 | |
Expense reductions | (4) | 2,106 |
Net investment income (loss) | 23,924 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (3,706) | |
Capital gain distributions from underlying funds | 20,637 | 16,931 |
Change in net unrealized appreciation (depreciation) on underlying funds | (134,875) | |
Net gain (loss) | (117,944) | |
Net increase (decrease) in net assets resulting from operations | $ (94,020) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2032 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 23,924 |
Net realized gain (loss) | 16,931 |
Change in net unrealized appreciation (depreciation) | (134,875) |
Net increase (decrease) in net assets resulting from operations | (94,020) |
Distributions to shareholders from net investment income | (23,370) |
Distributions to shareholders from net realized gain | (4,420) |
Total distributions | (27,790) |
Share transactions - net increase (decrease) | 1,540,220 |
Total increase (decrease) in net assets | 1,418,410 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $555) | $ 1,418,410 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | 1.019 |
Net realized and unrealized gain (loss) | (3.322) |
Total from investment operations | (2.303) |
Distributions from net investment income | (.987) |
Distributions from net realized gain | (.190) |
Total distributions | (1.177) |
Net asset value, end of period | $ 46.52 |
Total Return B, C, D | (4.75)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 2.27% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 402 |
Portfolio turnover rate | 23% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .918 |
Net realized and unrealized gain (loss) | (3.339) |
Total from investment operations | (2.421) |
Distributions from net investment income | (.869) |
Distributions from net realized gain | (.190) |
Total distributions | (1.059) |
Net asset value, end of period | $ 46.52 |
Total Return B, C, D | (4.98)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 2.02% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 95 |
Portfolio turnover rate | 23% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .690 |
Net realized and unrealized gain (loss) | (3.342) |
Total from investment operations | (2.652) |
Distributions from net investment income | (.648) |
Distributions from net realized gain | (.190) |
Total distributions | (.838) |
Net asset value, end of period | $ 46.51 |
Total Return B, C, D | (5.42)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | 1.52% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 95 |
Portfolio turnover rate | 23% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2032
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.122 |
Net realized and unrealized gain (loss) | (3.310) |
Total from investment operations | (2.188) |
Distributions from net investment income | (1.092) |
Distributions from net realized gain | (.190) |
Total distributions | (1.282) |
Net asset value, end of period | $ 46.53 |
Total Return B, C | (4.53)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.52% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 731 |
Portfolio turnover rate | 23% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.147 |
Net realized and unrealized gain (loss) | (3.335) |
Total from investment operations | (2.188) |
Distributions from net investment income | (1.092) |
Distributions from net realized gain | (.190) |
Total distributions | (1.282) |
Net asset value, end of period | $ 46.53 |
Total Return B, C | (4.53)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.52% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 96 |
Portfolio turnover rate | 23% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2034 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 7.0 | 7.1 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 6.0 | 5.7 |
Fidelity Broad Market Opportunities Fund | 9.4 | 9.4 |
Fidelity Disciplined Equity Fund | 5.9 | 6.0 |
Fidelity Equity-Income Fund | 5.7 | 5.8 |
Fidelity Large Cap Core Enhanced Index Fund | 9.5 | 9.5 |
Fidelity Small Cap Opportunities Fund | 3.8 | 3.6 |
| 47.3 | 47.1 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 10.7 | 10.9 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 3.0 | 3.0 |
Fidelity Strategic Income Fund | 3.1 | 3.1 |
| 6.1 | 6.1 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 5.5 | 5.6 |
Fidelity Strategic Real Return Fund | 5.6 | 5.6 |
Fidelity Total Bond Fund | 16.3 | 16.5 |
| 27.4 | 27.7 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 4.2 | 3.9 |
Fidelity Short-Term Bond Fund | 4.3 | 4.3 |
| 8.5 | 8.2 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 47.3% |
|
![]() | International Equity Funds | 10.7% |
|
![]() | High Yield Fixed-Income Funds | 6.1% |
|
![]() | Investment Grade Fixed-Income Funds | 27.4% |
|
![]() | Short-Term Funds | 8.5% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 47.1% |
|
![]() | International Equity Funds | 10.9% |
|
![]() | High Yield Fixed-Income Funds | 6.1% |
|
![]() | Investment Grade Fixed-Income Funds | 27.7% |
|
![]() | Short-Term Funds | 8.2% |
|
Expected | |||
![]() | Domestic Equity Funds | 47.8% |
|
![]() | International Equity Funds | 10.5% |
|
![]() | High Yield Fixed-Income Funds | 5.7% |
|
![]() | Investment Grade Fixed-Income Funds | 26.7% |
|
![]() | Short-Term Funds | 9.3% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2034 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 58.0% | |||
Shares | Value | ||
Domestic Equity Funds - 47.3% | |||
Fidelity 100 Index Fund | 7,485 | $ 68,410 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 3,704 | 58,048 | |
Fidelity Broad Market Opportunities Fund | 10,272 | 91,522 | |
Fidelity Disciplined Equity Fund | 2,276 | 57,879 | |
Fidelity Equity-Income Fund | 1,225 | 55,335 | |
Fidelity Large Cap Core Enhanced Index Fund | 10,453 | 92,823 | |
Fidelity Small Cap Opportunities Fund | 4,681 | 37,304 | |
TOTAL DOMESTIC EQUITY FUNDS | 461,321 | ||
International Equity Funds - 10.7% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 2,847 | 103,661 | |
TOTAL EQUITY FUNDS (Cost $634,539) | 564,982 | ||
Fixed-Income Funds - 33.5% | |||
|
|
|
|
High Yield Fixed-Income Funds - 6.1% | |||
Fidelity Capital & Income Fund | 3,681 | 29,782 | |
Fidelity Strategic Income Fund | 2,939 | 29,889 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 59,671 | ||
Investment Grade Fixed-Income Funds - 27.4% | |||
Fidelity Government Income Fund | 5,172 | 53,689 | |
Fidelity Strategic Real Return Fund | 5,344 | 54,032 | |
Fidelity Total Bond Fund | 15,805 | 158,999 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 266,720 | ||
TOTAL FIXED-INCOME FUNDS (Cost $331,878) | 326,391 | ||
Short-Term Funds - 8.5% | |||
|
|
|
|
Fidelity Institutional Money Market Portfolio Institutional Class | 41,521 | 41,521 | |
Fidelity Short-Term Bond Fund | 5,018 | 41,749 | |
TOTAL SHORT-TERM FUNDS (Cost $84,579) | 83,270 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $1,050,996) | $ 974,643 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2034 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (cost $1,050,996) - See accompanying schedule | $ 974,643 | |
Cash | 72 | |
Total assets | 974,715 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 62 | |
Distribution fees payable | 147 | |
Total liabilities | 209 | |
|
|
|
Net Assets | $ 974,506 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,041,054 | |
Undistributed net investment income | 367 | |
Accumulated undistributed net realized gain (loss) on investments | 9,438 | |
Net unrealized appreciation (depreciation) on investments | (76,353) | |
Net Assets | $ 974,506 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 46.40 | |
|
|
|
Maximum offering price per share (100/94.25 of $46.40) | $ 49.21 | |
Class T: | $ 46.40 | |
|
|
|
Maximum offering price per share (100/96.50 of $46.40) | $ 48.08 | |
|
|
|
Class C: | $ 46.39 | |
|
|
|
Income Replacement 2034: | $ 46.40 | |
|
|
|
Institutional Class: | $ 46.41 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period August 30, 2007 | |
|
|
|
Investment Income |
|
|
Income distributions from underlying funds |
| $ 17,494 |
Interest |
| 114 |
Total income |
| 17,608 |
|
|
|
Expenses | ||
Distribution fees | $ 1,665 | |
Independent trustees' compensation | 2 | |
Total expenses before reductions | 1,667 | |
Expense reductions | (2) | 1,665 |
Net investment income (loss) | 15,943 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (1,672) | |
Capital gain distributions from underlying funds | 14,075 | 12,403 |
Change in net unrealized appreciation (depreciation) on underlying funds | (76,353) | |
Net gain (loss) | (63,950) | |
Net increase (decrease) in net assets resulting from operations | $ (48,007) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2034 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 15,943 |
Net realized gain (loss) | 12,403 |
Change in net unrealized appreciation (depreciation) | (76,353) |
Net increase (decrease) in net assets resulting from operations | (48,007) |
Distributions to shareholders from net investment income | (15,577) |
Distributions to shareholders from net realized gain | (2,963) |
Total distributions | (18,540) |
Share transactions - net increase (decrease) | 1,041,053 |
Total increase (decrease) in net assets | 974,506 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $367) | $ 974,506 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .994 |
Net realized and unrealized gain (loss) | (3.438) |
Total from investment operations | (2.444) |
Distributions from net investment income | (.956) |
Distributions from net realized gain | (.200) |
Total distributions | (1.156) |
Net asset value, end of period | $ 46.40 |
Total Return B, C, D | (5.04)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 2.19% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 138 |
Portfolio turnover rate | 12% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the period shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .875 |
Net realized and unrealized gain (loss) | (3.431) |
Total from investment operations | (2.556) |
Distributions from net investment income | (.844) |
Distributions from net realized gain | (.200) |
Total distributions | (1.044) |
Net asset value, end of period | $ 46.40 |
Total Return B, C, D | (5.25)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 1.94% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 95 |
Portfolio turnover rate | 12% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the period shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .658 |
Net realized and unrealized gain (loss) | (3.448) |
Total from investment operations | (2.790) |
Distributions from net investment income | (.620) |
Distributions from net realized gain | (.200) |
Total distributions | (.820) |
Net asset value, end of period | $ 46.39 |
Total Return B, C, D | (5.70)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | 1.44% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 94 |
Portfolio turnover rate | 12% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the period shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2034
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.090 |
Net realized and unrealized gain (loss) | (3.425) |
Total from investment operations | (2.335) |
Distributions from net investment income | (1.065) |
Distributions from net realized gain | (.200) |
Total distributions | (1.265) |
Net asset value, end of period | $ 46.40 |
Total Return B, C | (4.83)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.44% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 552 |
Portfolio turnover rate | 12% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.114 |
Net realized and unrealized gain (loss) | (3.439) |
Total from investment operations | (2.325) |
Distributions from net investment income | (1.065) |
Distributions from net realized gain | (.200) |
Total distributions | (1.265) |
Net asset value, end of period | $ 46.41 |
Total Return B, C | (4.81)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.44% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 95 |
Portfolio turnover rate | 12% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the period shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2036 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 7.2 | 7.3 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 6.1 | 5.8 |
Fidelity Broad Market Opportunities Fund | 9.6 | 9.5 |
Fidelity Disciplined Equity Fund | 6.1 | 6.0 |
Fidelity Equity-Income Fund | 5.9 | 6.0 |
Fidelity Large Cap Core Enhanced Index Fund | 9.7 | 9.6 |
Fidelity Small Cap Opportunities Fund | 3.9 | 3.7 |
| 48.5 | 47.9 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 11.6 | 11.7 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 3.2 | 3.2 |
Fidelity Strategic Income Fund | 3.2 | 3.3 |
| 6.4 | 6.5 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 5.5 | 5.7 |
Fidelity Strategic Real Return Fund | 5.5 | 5.6 |
Fidelity Total Bond Fund | 16.4 | 16.8 |
| 27.4 | 28.1 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 3.1 | 2.8 |
Fidelity Short-Term Bond Fund | 3.0 | 3.0 |
| 6.1 | 5.8 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 48.5% |
|
![]() | International Equity Funds | 11.6% |
|
![]() | High Yield Fixed-Income Funds | 6.4% |
|
![]() | Investment Grade Fixed-Income Funds | 27.4% |
|
![]() | Short-Term Funds | 6.1% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 47.9% |
|
![]() | International Equity Funds | 11.7% |
|
![]() | High Yield Fixed-Income Funds | 6.5% |
|
![]() | Investment Grade Fixed-Income Funds | 28.1% |
|
![]() | Short-Term Funds | 5.8% |
|
Expected | |||
![]() | Domestic Equity Funds | 49.0% |
|
![]() | International Equity Funds | 11.5% |
|
![]() | High Yield Fixed-Income Funds | 6.0% |
|
![]() | Investment Grade Fixed-Income Funds | 26.4% |
|
![]() | Short-Term Funds | 7.1% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2036 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 60.1% | |||
Shares | Value | ||
Domestic Equity Funds - 48.5% | |||
Fidelity 100 Index Fund | 13,281 | $ 121,389 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 6,504 | 101,918 | |
Fidelity Broad Market Opportunities Fund | 18,079 | 161,081 | |
Fidelity Disciplined Equity Fund | 4,003 | 101,787 | |
Fidelity Equity-Income Fund | 2,187 | 98,752 | |
Fidelity Large Cap Core Enhanced Index Fund | 18,453 | 163,859 | |
Fidelity Small Cap Opportunities Fund | 8,243 | 65,699 | |
TOTAL DOMESTIC EQUITY FUNDS | 814,485 | ||
International Equity Funds - 11.6% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 5,327 | 193,971 | |
TOTAL EQUITY FUNDS (Cost $1,143,190) | 1,008,456 | ||
Fixed-Income Funds - 33.8% | |||
|
|
|
|
High Yield Fixed-Income Funds - 6.4% | |||
Fidelity Capital & Income Fund | 6,650 | 53,799 | |
Fidelity Strategic Income Fund | 5,363 | 54,547 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 108,346 | ||
Investment Grade Fixed-Income Funds - 27.4% | |||
Fidelity Government Income Fund | 8,929 | 92,679 | |
Fidelity Strategic Real Return Fund | 9,125 | 92,250 | |
Fidelity Total Bond Fund | 27,313 | 274,767 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 459,696 | ||
TOTAL FIXED-INCOME FUNDS (Cost $577,023) | 568,042 | ||
Short-Term Funds - 6.1% | |||
|
|
|
|
Fidelity Institutional Money Market Portfolio Institutional Class | 51,102 | 51,102 | |
Fidelity Short-Term Bond Fund | 6,101 | 50,762 | |
TOTAL SHORT-TERM FUNDS (Cost $103,562) | 101,864 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $1,823,775) | $ 1,678,362 |
Income Tax Information |
At July 31, 2008, the fund had a capital loss carryforward of approximately $20 all of which will expire on July 31, 2016. |
The fund intends to elect to defer to its fiscal year ending July 31, 2009 approximately $24,292 of losses recognized during the period November 1, 2007 to July 31, 2008. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2036 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (cost $1,823,775) - See accompanying schedule | $ 1,678,362 | |
Cash | 75 | |
Total assets | 1,678,437 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 1 | |
Distribution fees payable | 259 | |
Total liabilities | 260 | |
|
|
|
Net Assets | $ 1,678,177 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,846,905 | |
Undistributed net investment income | 605 | |
Accumulated undistributed net realized gain (loss) on investments | (23,920) | |
Net unrealized appreciation (depreciation) on investments | (145,413) | |
Net Assets | $ 1,678,177 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 46.40 | |
|
|
|
Maximum offering price per share (100/94.25 of $46.40) | $ 49.22 | |
Class T: | $ 46.39 | |
|
|
|
Maximum offering price per share (100/96.50 of $46.39) | $ 48.07 | |
|
|
|
Class C: | $ 46.39 | |
|
|
|
Income Replacement 2036: | $ 46.40 | |
|
|
|
Institutional Class: | $ 46.40 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period August 30, 2007 | |
|
|
|
Investment Income |
|
|
Income distributions from underlying funds |
| $ 29,590 |
Interest |
| 75 |
Total income |
| 29,665 |
|
|
|
Expenses | ||
Distribution fees | $ 2,499 | |
Independent trustees' compensation | 5 | |
Total expenses before reductions | 2,504 | |
Expense reductions | (5) | 2,499 |
Net investment income (loss) | 27,166 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (43,572) | |
Capital gain distributions from underlying funds | 24,643 | (18,929) |
Change in net unrealized appreciation (depreciation) on underlying funds | (145,413) | |
Net gain (loss) | (164,342) | |
Net increase (decrease) in net assets resulting from operations | $ (137,176) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2036 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 27,166 |
Net realized gain (loss) | (18,929) |
Change in net unrealized appreciation (depreciation) | (145,413) |
Net increase (decrease) in net assets resulting from operations | (137,176) |
Distributions to shareholders from net investment income | (26,561) |
Distributions to shareholders from net realized gain | (4,991) |
Total distributions | (31,552) |
Share transactions - net increase (decrease) | 1,846,905 |
Total increase (decrease) in net assets | 1,678,177 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $605) | $ 1,678,177 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .951 |
Net realized and unrealized gain (loss) | (3.464) |
Total from investment operations | (2.513) |
Distributions from net investment income | (.897) |
Distributions from net realized gain | (.190) |
Total distributions | (1.087) |
Net asset value, end of period | $ 46.40 |
Total Return B, C, D | (5.17)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 2.08% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 95 |
Portfolio turnover rate | 44% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .823 |
Net realized and unrealized gain (loss) | (3.449) |
Total from investment operations | (2.626) |
Distributions from net investment income | (.794) |
Distributions from net realized gain | (.190) |
Total distributions | (.984) |
Net asset value, end of period | $ 46.39 |
Total Return B, C, D | (5.39)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 1.83% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 384 |
Portfolio turnover rate | 44% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .609 |
Net realized and unrealized gain (loss) | (3.465) |
Total from investment operations | (2.856) |
Distributions from net investment income | (.564) |
Distributions from net realized gain | (.190) |
Total distributions | (.754) |
Net asset value, end of period | $ 46.39 |
Total Return B, C, D | (5.82)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | 1.33% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 94 |
Portfolio turnover rate | 44% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 30, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2036
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.043 |
Net realized and unrealized gain (loss) | (3.445) |
Total from investment operations | (2.402) |
Distributions from net investment income | (1.008) |
Distributions from net realized gain | (.190) |
Total distributions | (1.198) |
Net asset value, end of period | $ 46.40 |
Total Return B, C | (4.96)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.33% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 986 |
Portfolio turnover rate | 44% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | 1.064 |
Net realized and unrealized gain (loss) | (3.466) |
Total from investment operations | (2.402) |
Distributions from net investment income | (1.008) |
Distributions from net realized gain | (.190) |
Total distributions | (1.198) |
Net asset value, end of period | $ 46.40 |
Total Return B, C | (4.96)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 2.33% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 119 |
Portfolio turnover rate | 44% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period August 30, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2038 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 7.5 | 7.6 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 6.2 | 6.0 |
Fidelity Broad Market Opportunities Fund | 9.9 | 10.1 |
Fidelity Disciplined Equity Fund | 6.3 | 6.3 |
Fidelity Equity-Income Fund | 6.1 | 6.5 |
Fidelity Large Cap Core Enhanced Index Fund | 10.1 | 10.2 |
Fidelity Small Cap Opportunities Fund | 4.1 | 4.1 |
| 50.2 | 50.8 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 12.2 | 12.4 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 3.4 | 3.3 |
Fidelity Strategic Income Fund | 3.4 | 3.3 |
| 6.8 | 6.6 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 5.4 | 5.3 |
Fidelity Strategic Real Return Fund | 5.4 | 5.3 |
Fidelity Total Bond Fund | 16.0 | 15.7 |
| 26.8 | 26.3 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 2.0 | 2.0 |
Fidelity Short-Term Bond Fund | 2.0 | 1.9 |
| 4.0 | 3.9 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 50.2% |
|
![]() | International Equity Funds | 12.2% |
|
![]() | High Yield Fixed-Income Funds | 6.8% |
|
![]() | Investment Grade Fixed-Income Funds | 26.8% |
|
![]() | Short-Term Funds | 4.0% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 50.8% |
|
![]() | International Equity Funds | 12.4% |
|
![]() | High Yield Fixed-Income Funds | 6.6% |
|
![]() | Investment Grade Fixed-Income Funds | 26.3% |
|
![]() | Short-Term Funds | 3.9% |
|
Expected | |||
![]() | Domestic Equity Funds | 50.4% |
|
![]() | International Equity Funds | 12.6% |
|
![]() | High Yield Fixed-Income Funds | 6.5% |
|
![]() | Investment Grade Fixed-Income Funds | 26.0% |
|
![]() | Short-Term Funds | 4.5% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2038 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 62.4% | |||
Shares | Value | ||
Domestic Equity Funds - 50.2% | |||
Fidelity 100 Index Fund | 12,155 | $ 111,093 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 5,931 | 92,946 | |
Fidelity Broad Market Opportunities Fund | 16,553 | 147,484 | |
Fidelity Disciplined Equity Fund | 3,657 | 93,002 | |
Fidelity Equity-Income Fund | 2,009 | 90,711 | |
Fidelity Large Cap Core Enhanced Index Fund | 16,858 | 149,696 | |
Fidelity Small Cap Opportunities Fund | 7,672 | 61,145 | |
TOTAL DOMESTIC EQUITY FUNDS | 746,077 | ||
International Equity Funds - 12.2% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 5,000 | 182,036 | |
TOTAL EQUITY FUNDS (Cost $1,014,447) | 928,113 | ||
Fixed-Income Funds - 33.6% | |||
|
|
|
|
High Yield Fixed-Income Funds - 6.8% | |||
Fidelity Capital & Income Fund | 6,195 | 50,118 | |
Fidelity Strategic Income Fund | 4,952 | 50,362 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 100,480 | ||
Investment Grade Fixed-Income Funds - 26.8% | |||
Fidelity Government Income Fund | 7,729 | 80,225 | |
Fidelity Strategic Real Return Fund | 7,917 | 80,042 | |
Fidelity Total Bond Fund | 23,725 | 238,674 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 398,941 | ||
TOTAL FIXED-INCOME FUNDS (Cost $509,679) | 499,421 | ||
Short-Term Funds - 4.0% | |||
|
|
|
|
Fidelity Institutional Money Market Portfolio Institutional Class | 29,973 | 29,973 | |
Fidelity Short-Term Bond Fund | 3,540 | 29,452 | |
TOTAL SHORT-TERM FUNDS (Cost $60,171) | 59,425 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $1,584,297) | $ 1,486,959 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2038 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
Assets | ||
Investment in securities, at value (cost $1,584,297) - See accompanying schedule | $ 1,486,959 | |
Cash | 39 | |
Total assets | 1,486,998 | |
|
|
|
Liabilities | ||
Distribution fees payable |
| 131 |
|
|
|
Net Assets | $ 1,486,867 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,585,675 | |
Undistributed net investment income | 476 | |
Accumulated undistributed net realized gain (loss) on investments | (1,946) | |
Net unrealized appreciation (depreciation) on investments | (97,338) | |
Net Assets | $ 1,486,867 | |
Calculation of Maximum Offering Price Class A: | $ 45.26 | |
|
|
|
Maximum offering price per share (100/94.25 of $45.26) | $ 48.02 | |
Class T: | $ 45.26 | |
|
|
|
Maximum offering price per share (100/96.50 of $45.26) | $ 46.90 | |
|
|
|
Class C: | $ 45.24 | |
|
|
|
Income Replacement 2038: | $ 45.27 | |
|
|
|
Institutional Class: | $ 45.26 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period December 31, 2007 | |
Investment Income |
|
|
Income distributions from underlying funds |
| $ 12,507 |
Interest |
| 39 |
Total income |
| 12,546 |
|
|
|
Expenses | ||
Distribution fees | $ 973 | |
Independent trustees' compensation | 2 | |
Total expenses before reductions | 975 | |
Expense reductions | (2) | 973 |
Net investment income (loss) | 11,573 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (3,522) | |
Capital gain distributions from underlying funds | 1,576 | (1,946) |
Change in net unrealized appreciation (depreciation) on underlying funds | (97,338) | |
Net gain (loss) | (99,284) | |
Net increase (decrease) in net assets resulting from operations | $ (87,711) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2038 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 11,573 |
Net realized gain (loss) | (1,946) |
Change in net unrealized appreciation (depreciation) | (97,338) |
Net increase (decrease) in net assets resulting from operations | (87,711) |
Distributions to shareholders from net investment income | (11,097) |
Share transactions - net increase (decrease) | 1,585,675 |
Total increase (decrease) in net assets | 1,486,867 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $476) | $ 1,486,867 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .442 |
Net realized and unrealized gain (loss) | (4.811) |
Total from investment operations | (4.369) |
Distributions from net investment income | (.371) |
Net asset value, end of period | $ 45.26 |
Total Return B, C, D | (8.76)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 1.59% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 91 |
Portfolio turnover rate | 13%A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period December 31, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .373 |
Net realized and unrealized gain (loss) | (4.809) |
Total from investment operations | (4.436) |
Distributions from net investment income | (.304) |
Net asset value, end of period | $ 45.26 |
Total Return B, C, D | (8.89)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 1.34% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 91 |
Portfolio turnover rate | 13%A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period December 31, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .233 |
Net realized and unrealized gain (loss) | (4.812) |
Total from investment operations | (4.579) |
Distributions from net investment income | (.181) |
Net asset value, end of period | $ 45.24 |
Total Return B, C, D | (9.17)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | .84% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 91 |
Portfolio turnover rate | 13%A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period December 31, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2038
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | .502 |
Net realized and unrealized gain (loss) | (4.795) |
Total from investment operations | (4.293) |
Distributions from net investment income | (.437) |
Net asset value, end of period | $ 45.27 |
Total Return B, C | (8.61)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 1.84% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 1,122 |
Portfolio turnover rate | 13%A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period December 31, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | .511 |
Net realized and unrealized gain (loss) | (4.814) |
Total from investment operations | (4.303) |
Distributions from net investment income | (.437) |
Net asset value, end of period | $ 45.26 |
Total Return B, C | (8.63)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 1.84% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 91 |
Portfolio turnover rate | 13%A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period December 31, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2040 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 7.6 | 7.7 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 6.3 | 6.0 |
Fidelity Broad Market Opportunities Fund | 10.1 | 10.1 |
Fidelity Disciplined Equity Fund | 6.3 | 6.3 |
Fidelity Equity-Income Fund | 6.2 | 6.5 |
Fidelity Large Cap Core Enhanced Index Fund | 10.2 | 10.1 |
Fidelity Small Cap Opportunities Fund | 4.2 | 4.0 |
| 50.9 | 50.7 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 12.4 | 12.3 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 3.5 | 3.5 |
Fidelity Strategic Income Fund | 3.5 | 3.5 |
| 7.0 | 7.0 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 5.4 | 5.5 |
Fidelity Strategic Real Return Fund | 5.4 | 5.4 |
Fidelity Total Bond Fund | 16.1 | 16.3 |
| 26.9 | 27.2 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 1.4 | 1.4 |
Fidelity Short-Term Bond Fund | 1.4 | 1.4 |
| 2.8 | 2.8 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 50.9% |
|
![]() | International Equity Funds | 12.4% |
|
![]() | High Yield Fixed-Income Funds | 7.0% |
|
![]() | Investment Grade Fixed-Income Funds | 26.9% |
|
![]() | Short-Term Funds | 2.8% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 50.7% |
|
![]() | International Equity Funds | 12.3% |
|
![]() | High Yield Fixed-Income Funds | 7.0% |
|
![]() | Investment Grade Fixed-Income Funds | 27.2% |
|
![]() | Short-Term Funds | 2.8% |
|
Expected | |||
![]() | Domestic Equity Funds | 51.3% |
|
![]() | International Equity Funds | 12.8% |
|
![]() | High Yield Fixed-Income Funds | 6.7% |
|
![]() | Investment Grade Fixed-Income Funds | 26.0% |
|
![]() | Short-Term Funds | 3.2% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2040 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 63.3% | |||
Shares | Value | ||
Domestic Equity Funds - 50.9% | |||
Fidelity 100 Index Fund | 8,324 | $ 76,083 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 4,056 | 63,552 | |
Fidelity Broad Market Opportunities Fund | 11,328 | 100,931 | |
Fidelity Disciplined Equity Fund | 2,497 | 63,486 | |
Fidelity Equity-Income Fund | 1,378 | 62,245 | |
Fidelity Large Cap Core Enhanced Index Fund | 11,543 | 102,505 | |
Fidelity Small Cap Opportunities Fund | 5,211 | 41,535 | |
TOTAL DOMESTIC EQUITY FUNDS | 510,337 | ||
International Equity Funds - 12.4% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 3,419 | 124,493 | |
TOTAL EQUITY FUNDS (Cost $703,741) | 634,830 | ||
Fixed-Income Funds - 33.9% | |||
|
|
|
|
High Yield Fixed-Income Funds - 7.0% | |||
Fidelity Capital & Income Fund | 4,342 | 35,127 | |
Fidelity Strategic Income Fund | 3,475 | 35,344 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 70,471 | ||
Investment Grade Fixed-Income Funds - 26.9% | |||
Fidelity Government Income Fund | 5,233 | 54,318 | |
Fidelity Strategic Real Return Fund | 5,368 | 54,269 | |
Fidelity Total Bond Fund | 16,049 | 161,459 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 270,046 | ||
TOTAL FIXED-INCOME FUNDS (Cost $347,881) | 340,517 | ||
Short-Term Funds - 2.8% | |||
|
|
|
|
Fidelity Institutional Money Market Portfolio Institutional Class | 14,408 | 14,408 | |
Fidelity Short-Term Bond Fund | 1,693 | 14,083 | |
TOTAL SHORT-TERM FUNDS (Cost $28,905) | 28,491 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $1,080,527) | $ 1,003,838 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2040 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
Assets | ||
Investment in securities, at value (cost $1,080,527) - See accompanying schedule | $ 1,003,838 | |
Cash | 39 | |
Total assets | 1,003,877 | |
|
|
|
Liabilities | ||
Distribution fees payable |
| 148 |
|
|
|
Net Assets | $ 1,003,729 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,079,269 | |
Undistributed net investment income | 337 | |
Accumulated undistributed net realized gain (loss) on investments | 812 | |
Net unrealized appreciation (depreciation) on investments | (76,689) | |
Net Assets | $ 1,003,729 | |
Calculation of Maximum Offering Price Class A: | $ 45.23 | |
|
|
|
Maximum offering price per share (100/94.25 of $45.23) | $ 47.99 | |
Class T: | $ 45.23 | |
|
|
|
Maximum offering price per share (100/96.50 of $45.23) | $ 46.87 | |
|
|
|
Class C: | $ 45.22 | |
|
|
|
Income Replacement 2040: | $ 45.23 | |
|
|
|
Institutional Class: | $ 45.23 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period December 31, 2007 | |
Investment Income |
|
|
Income distributions from underlying funds |
| $ 9,280 |
Interest |
| 39 |
Total income |
| 9,319 |
|
|
|
Expenses | ||
Distribution fees | $ 1,003 | |
Independent trustees' compensation | 2 | |
Total expenses before reductions | 1,005 | |
Expense reductions | (2) | 1,003 |
Net investment income (loss) | 8,316 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (493) | |
Capital gain distributions from underlying funds | 1,305 | 812 |
Change in net unrealized appreciation (depreciation) on underlying funds | (76,689) | |
Net gain (loss) | (75,877) | |
Net increase (decrease) in net assets resulting from operations | $ (67,561) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2040 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 8,316 |
Net realized gain (loss) | 812 |
Change in net unrealized appreciation (depreciation) | (76,689) |
Net increase (decrease) in net assets resulting from operations | (67,561) |
Distributions to shareholders from net investment income | (7,979) |
Share transactions - net increase (decrease) | 1,079,269 |
Total increase (decrease) in net assets | 1,003,729 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $337) | $ 1,003,729 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .442 |
Net realized and unrealized gain (loss) | (4.814) |
Total from investment operations | (4.372) |
Distributions from net investment income | (.398) |
Net asset value, end of period | $ 45.23 |
Total Return B, C, D | (8.77)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 1.60% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 91 |
Portfolio turnover rate | 4% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period December 31, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .371 |
Net realized and unrealized gain (loss) | (4.809) |
Total from investment operations | (4.438) |
Distributions from net investment income | (.332) |
Net asset value, end of period | $ 45.23 |
Total Return B, C, D | (8.90)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 1.35% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 132 |
Portfolio turnover rate | 4% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period December 31, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .234 |
Net realized and unrealized gain (loss) | (4.816) |
Total from investment operations | (4.582) |
Distributions from net investment income | (.198) |
Net asset value, end of period | $ 45.22 |
Total Return B, C, D | (9.18)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | .84% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 91 |
Portfolio turnover rate | 4% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period December 31, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2040
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | .504 |
Net realized and unrealized gain (loss) | (4.810) |
Total from investment operations | (4.306) |
Distributions from net investment income | (.464) |
Net asset value, end of period | $ 45.23 |
Total Return B, C | (8.64)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 1.85% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 598 |
Portfolio turnover rate | 4% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period December 31, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | .512 |
Net realized and unrealized gain (loss) | (4.818) |
Total from investment operations | (4.306) |
Distributions from net investment income | (.464) |
Net asset value, end of period | $ 45.23 |
Total Return B, C | (8.64)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 1.85% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 91 |
Portfolio turnover rate | 4% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period December 31, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2042 Fund
Investment Changes (Unaudited)
Fund Holdings as of July 31, 2008 | ||
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | ||
Fidelity 100 Index Fund | 7.6 | 7.8 |
Fidelity Advisor Mid Cap II Fund Institutional Class | 6.4 | 6.1 |
Fidelity Broad Market Opportunities Fund | 10.2 | 10.2 |
Fidelity Disciplined Equity Fund | 6.4 | 6.4 |
Fidelity Equity-Income Fund | 6.2 | 6.6 |
Fidelity Large Cap Core Enhanced Index Fund | 10.3 | 10.3 |
Fidelity Small Cap Opportunities Fund | 4.2 | 4.2 |
| 51.3 | 51.6 |
International Equity Funds | ||
Fidelity Advisor International Discovery Fund Institutional Class | 12.5 | 12.4 |
High Yield Fixed-Income Funds | ||
Fidelity Capital & Income Fund | 3.6 | 3.5 |
Fidelity Strategic Income Fund | 3.6 | 3.6 |
| 7.2 | 7.1 |
Investment Grade Fixed-Income Funds | ||
Fidelity Government Income Fund | 5.4 | 5.4 |
Fidelity Strategic Real Return Fund | 5.4 | 5.4 |
Fidelity Total Bond Fund | 16.1 | 16.0 |
| 26.9 | 26.8 |
Short-Term Funds | ||
Fidelity Institutional Money Market Portfolio Institutional Class | 1.1 | 1.1 |
Fidelity Short-Term Bond Fund | 1.0 | 1.0 |
| 2.1 | 2.1 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) | |||
Current | |||
![]() | Domestic Equity Funds | 51.3% |
|
![]() | International Equity Funds | 12.5% |
|
![]() | High Yield Fixed-Income Funds | 7.2% |
|
![]() | Investment Grade Fixed-Income Funds | 26.9% |
|
![]() | Short-Term Funds | 2.1% |
|
Six months ago | |||
![]() | Domestic Equity Funds | 51.6% |
|
![]() | International Equity Funds | 12.4% |
|
![]() | High Yield Fixed-Income Funds | 7.1% |
|
![]() | Investment Grade Fixed-Income Funds | 26.8% |
|
![]() | Short-Term Funds | 2.1% |
|
Expected | |||
![]() | Domestic Equity Funds | 51.8% |
|
![]() | International Equity Funds | 13.0% |
|
![]() | High Yield Fixed-Income Funds | 6.9% |
|
![]() | Investment Grade Fixed-Income Funds | 26.0% |
|
![]() | Short-Term Funds | 2.3% |
|
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The six months ago allocation is based on the fund's holdings as of January 31, 2008. The current allocation is based on the fund's holdings as of July 31, 2008. The expected allocation represents the fund's anticipated allocation at January 31, 2009. |
Annual Report
Fidelity Income Replacement 2042 Fund
Investments July 31, 2008
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 63.8% | |||
Shares | Value | ||
Domestic Equity Funds - 51.3% | |||
Fidelity 100 Index Fund | 11,136 | $ 101,787 | |
Fidelity Advisor Mid Cap II Fund Institutional Class | 5,438 | 85,209 | |
Fidelity Broad Market Opportunities Fund | 15,204 | 135,470 | |
Fidelity Disciplined Equity Fund | 3,348 | 85,151 | |
Fidelity Equity-Income Fund | 1,848 | 83,464 | |
Fidelity Large Cap Core Enhanced Index Fund | 15,459 | 137,276 | |
Fidelity Small Cap Opportunities Fund | 7,033 | 56,053 | |
TOTAL DOMESTIC EQUITY FUNDS | 684,410 | ||
International Equity Funds - 12.5% | |||
Fidelity Advisor International Discovery Fund Institutional Class | 4,567 | 166,273 | |
TOTAL EQUITY FUNDS (Cost $951,224) | 850,683 | ||
Fixed-Income Funds - 34.1% | |||
|
|
|
|
High Yield Fixed-Income Funds - 7.2% | |||
Fidelity Capital & Income Fund | 5,924 | 47,929 | |
Fidelity Strategic Income Fund | 4,744 | 48,245 | |
TOTAL HIGH YIELD FIXED-INCOME FUNDS | 96,174 | ||
Investment Grade Fixed-Income Funds - 26.9% | |||
Fidelity Government Income Fund | 6,941 | 72,046 | |
Fidelity Strategic Real Return Fund | 7,126 | 72,046 | |
Fidelity Total Bond Fund | 21,318 | 214,462 | |
TOTAL INVESTMENT GRADE FIXED-INCOME FUNDS | 358,554 | ||
TOTAL-INCOME FUNDS (Cost $464,810) | 454,728 | ||
Short-Term Funds - 2.1% | |||
|
|
|
|
Fidelity Institutional Money Market Portfolio Institutional Class | 14,175 | 14,175 | |
Fidelity Short-Term Bond Fund | 1,663 | 13,836 | |
TOTAL SHORT-TERM FUNDS (Cost $28,401) | 28,011 | ||
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $1,444,435) | $ 1,333,422 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2042 Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (cost $1,444,435) - See accompanying schedule | $ 1,333,422 | |
Cash | 39 | |
Total assets | 1,333,461 | |
|
|
|
Liabilities | ||
Distribution fees payable | 133 | |
|
|
|
Net Assets | $ 1,333,328 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,443,784 | |
Undistributed net investment income | 450 | |
Accumulated undistributed net realized gain (loss) on investments | 107 | |
Net unrealized appreciation (depreciation) on investments | (111,013) | |
Net Assets | $ 1,333,328 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 45.20 | |
|
|
|
Maximum offering price per share (100/94.25 of $45.20) | $ 47.96 | |
Class T: | $ 45.19 | |
|
|
|
Maximum offering price per share (100/96.50 of $45.19) | $ 46.83 | |
|
|
|
Class C: | $ 45.19 | |
|
|
|
Income Replacement 2042: | $ 45.20 | |
|
|
|
Institutional Class: | $ 45.20 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
| For the period December 31, 2007 | |
|
|
|
Investment Income |
|
|
Income distributions from underlying funds |
| $ 12,163 |
Interest |
| 39 |
Total income |
| 12,202 |
|
|
|
Expenses | ||
Distribution fees | $ 973 | |
Independent trustees' compensation | 3 | |
Total expenses before reductions | 976 | |
Expense reductions | (3) | 973 |
Net investment income (loss) | 11,229 | |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (1,593) | |
Capital gain distributions from underlying funds | 1,700 | 107 |
Change in net unrealized appreciation (depreciation) on underlying funds | (111,013) | |
Net gain (loss) | (110,906) | |
Net increase (decrease) in net assets resulting from operations | $ (99,677) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Income Replacement 2042 Fund
Financial Statements - continued
Statement of Changes in Net Assets
| For the period |
Increase (Decrease) in Net Assets |
|
Operations |
|
Net investment income (loss) | $ 11,229 |
Net realized gain (loss) | 107 |
Change in net unrealized appreciation (depreciation) | (111,013) |
Net increase (decrease) in net assets resulting from operations | (99,677) |
Distributions to shareholders from net investment income | (10,780) |
Share transactions - net increase (decrease) | 1,443,785 |
Total increase (decrease) in net assets | 1,333,328 |
|
|
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $450) | $ 1,333,328 |
Financial Highlights - Class A
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .425 |
Net realized and unrealized gain (loss) | (4.836) |
Total from investment operations | (4.411) |
Distributions from net investment income | (.389) |
Net asset value, end of period | $ 45.20 |
Total Return B, C, D | (8.85)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .25% A |
Expenses net of all reductions | .25% A |
Net investment income (loss) | 1.57% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 91 |
Portfolio turnover rate | 8% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period December 31, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .365 |
Net realized and unrealized gain (loss) | (4.852) |
Total from investment operations | (4.487) |
Distributions from net investment income | (.323) |
Net asset value, end of period | $ 45.19 |
Total Return B, C, D | (9.00)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .50% A |
Expenses net of all reductions | .50% A |
Net investment income (loss) | 1.32% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 91 |
Portfolio turnover rate | 8% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period December 31, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Class C
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) E | .226 |
Net realized and unrealized gain (loss) | (4.846) |
Total from investment operations | (4.620) |
Distributions from net investment income | (.190) |
Net asset value, end of period | $ 45.19 |
Total Return B, C, D | (9.25)% |
Ratios to Average Net Assets F, H |
|
Expenses before reductions | 1.00% A |
Expenses net of fee waivers, if any | 1.00% A |
Expenses net of all reductions | 1.00% A |
Net investment income (loss) | .82% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 91 |
Portfolio turnover rate | 8% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period December 31, 2007 (commencement of operations) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Income Replacement 2042
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | .496 |
Net realized and unrealized gain (loss) | (4.840) |
Total from investment operations | (4.344) |
Distributions from net investment income | (.456) |
Net asset value, end of period | $ 45.20 |
Total Return B, C | (8.72)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 1.82% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 969 |
Portfolio turnover rate | 8% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period December 31, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
Financial Highlights - Institutional Class
Year ended July 31, | 2008 F |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 50.00 |
Income from Investment Operations |
|
Net investment income (loss) D | .504 |
Net realized and unrealized gain (loss) | (4.848) |
Total from investment operations | (4.344) |
Distributions from net investment income | (.456) |
Net asset value, end of period | $ 45.20 |
Total Return B, C | (8.72)% |
Ratios to Average Net Assets E, G |
|
Expenses before reductions | .00% A |
Expenses net of fee waivers, if any | .00% A |
Expenses net of all reductions | .00% A |
Net investment income (loss) | 1.82% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 91 |
Portfolio turnover rate | 8% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period December 31, 2007 (commencement of operations) to July 31, 2008.
G Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the Fund invests.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended July 31, 2008
1. Organization.
Fidelity Income Replacement 2016 Fund, Fidelity Income Replacement 2018 Fund, Fidelity Income Replacement 2020 Fund, Fidelity Income Replacement 2022 Fund, Fidelity Income Replacement 2024 Fund, Fidelity Income Replacement 2026 Fund, Fidelity Income Replacement 2028 Fund, Fidelity Income Replacement 2030 Fund, Fidelity Income Replacement 2032 Fund, Fidelity Income Replacement 2034 Fund, Fidelity Income Replacement 2036 Fund, Fidelity Income Replacement 2038 Fund, Fidelity Income Replacement 2040 Fund and Fidelity Income Replacement 2042 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. The Funds invest primarily in a combination of other Fidelity equity, fixed income, and short-term funds (the Underlying Funds) managed by Fidelity Management & Research Company (FMR) and its affiliates.
The Funds are designed for investors who seek to convert accumulated assets into regular payments over a defined period of time. The payment strategy for each Fund is designed to be implemented through a shareholder's voluntary participation in the Smart Payment Program. Participation in the Smart Payment Program will result in the gradual liquidation of the shareholder's entire investment in the Fund by its horizon date. Each Fund's name refers to the year of its horizon date.
Each Fund offers Class A, Class T, Class C, Income Replacement and Institutional Class shares, each of which has equal rights as to assets and voting privileges, except for matters affecting a single class. 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 distribution and service plan fees incurred. Certain expense reductions also differ by class.
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. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Funds:
Security Valuation. Investments in the Underlying Funds are valued at their closing net asset value (NAV) 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 per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 pm Eastern time and 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. Income and capital gain distributions from the Underlying Funds, if any, are recorded on the ex-dividend date. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities.
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. Expenses included in the accompanying financial statements reflect the expenses of the Fund and do not include any expenses associated with the Underlying Funds. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. Each Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. There are no unrecognized tax benefits in the accompanying financial statements in connection with the tax positions expected to be taken in the initial filing of each Fund's federal tax return. Each of the Funds' federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service.
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. In addition, certain Funds will claim a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
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 short-term gain distributions from the Underlying Funds, capital loss carryforwards, losses deferred due to wash sales and losses deferred due to excise tax regulations.
Annual Report
2. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
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 | Unrealized | Unrealized | Net Unrealized |
Fidelity Income Replacement 2016 Fund | $ 10,040,129 | $ 13,257 | $ (504,721) | $ (491,464) |
Fidelity Income Replacement 2018 Fund | 7,416,956 | 9,245 | (418,727) | (409,482) |
Fidelity Income Replacement 2020 Fund | 2,480,007 | 2,796 | (121,235) | (118,439) |
Fidelity Income Replacement 2022 Fund | 5,894,525 | 6,203 | (361,700) | (355,497) |
Fidelity Income Replacement 2024 Fund | 1,514,429 | 2,901 | (91,770) | (88,869) |
Fidelity Income Replacement 2026 Fund | 1,699,017 | 3,729 | (110,829) | (107,100) |
Fidelity Income Replacement 2028 Fund | 7,699,284 | 9,337 | (417,666) | (408,329) |
Fidelity Income Replacement 2030 Fund | 1,318,650 | 2,390 | (84,223) | (81,833) |
Fidelity Income Replacement 2032 Fund | 1,553,312 | 2,016 | (136,890) | (134,874) |
Fidelity Income Replacement 2034 Fund | 1,050,996 | 1,445 | (77,798) | (76,353) |
Fidelity Income Replacement 2036 Fund | 1,823,776 | 3,217 | (148,631) | (145,414) |
Fidelity Income Replacement 2038 Fund | 1,584,334 | 1,022 | (98,397) | (97,375) |
Fidelity Income Replacement 2040 Fund | 1,080,528 | 900 | (77,590) | (76,690) |
Fidelity Income Replacement 2042 Fund | 1,444,434 | 979 | (111,991) | (111,012) |
| Undistributed | Undistributed | Capital Loss |
Fidelity Income Replacement 2016 Fund | $ 4,829 | $ - | $ (827) |
Fidelity Income Replacement 2018 Fund | 3,581 | - | (62) |
Fidelity Income Replacement 2020 Fund | 1,110 | 3,188 | - |
Fidelity Income Replacement 2022 Fund | 2,475 | 6,495 | - |
Fidelity Income Replacement 2024 Fund | 575 | - | - |
Fidelity Income Replacement 2026 Fund | 600 | 10,150 | - |
Fidelity Income Replacement 2028 Fund | 3,156 | - | (30) |
Fidelity Income Replacement 2030 Fund | 545 | 8,517 | - |
Fidelity Income Replacement 2032 Fund | 555 | 10,977 | - |
Fidelity Income Replacement 2034 Fund | 367 | 9,196 | - |
Fidelity Income Replacement 2036 Fund | 605 | - | (20) |
Fidelity Income Replacement 2038 Fund | 560 | - | - |
Fidelity Income Replacement 2040 Fund | 477 | 654 | - |
Fidelity Income Replacement 2042 Fund | 599 | - | - |
The tax character of distributions paid was as follows:
July 31, 2008 |
|
| Ordinary Income |
Fidelity Income Replacement 2016 Fund | $ 156,368 |
Fidelity Income Replacement 2018 Fund | 113,404 |
Fidelity Income Replacement 2020 Fund | 32,472 |
Fidelity Income Replacement 2022 Fund | 92,097 |
Fidelity Income Replacement 2024 Fund | 24,097 |
Fidelity Income Replacement 2026 Fund | 25,757 |
Fidelity Income Replacement 2028 Fund | 87,020 |
Fidelity Income Replacement 2030 Fund | 16,956 |
Fidelity Income Replacement 2032 Fund | 27,790 |
Fidelity Income Replacement 2034 Fund | 18,540 |
Fidelity Income Replacement 2036 Fund | 31,552 |
Fidelity Income Replacement 2038 Fund | 11,097 |
Fidelity Income Replacement 2040 Fund | 7,979 |
Fidelity Income Replacement 2042 Fund | 10,780 |
Annual Report
Notes to Financial Statements - continued
2. Significant Accounting Policies - continued
New Accounting Pronouncement. 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 results in expanded disclosures about fair value measurements. The Funds will adopt the provisions of SFAS 157 effective for the fiscal year beginning August 1, 2008.
3. Operating Policies.
Repurchase Agreements. 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 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.
4. Purchases and Sales of Investments.
Purchases and redemptions of the Underlying Fund shares are noted in the table below.
| Purchases ($) | Redemptions ($) |
Fidelity Income Replacement 2016 Fund | 13,062,115 | 2,980,893 |
Fidelity Income Replacement 2018 Fund | 9,234,682 | 1,788,822 |
Fidelity Income Replacement 2020 Fund | 2,748,647 | 263,672 |
Fidelity Income Replacement 2022 Fund | 6,976,253 | 1,057,843 |
Fidelity Income Replacement 2024 Fund | 1,898,393 | 375,337 |
Fidelity Income Replacement 2026 Fund | 1,912,729 | 210,749 |
Fidelity Income Replacement 2028 Fund | 8,894,212 | 1,158,306 |
Fidelity Income Replacement 2030 Fund | 1,407,720 | 88,513 |
Fidelity Income Replacement 2032 Fund | 1,795,895 | 238,876 |
Fidelity Income Replacement 2034 Fund | 1,140,831 | 88,159 |
Fidelity Income Replacement 2036 Fund | 2,414,130 | 546,784 |
Fidelity Income Replacement 2038 Fund | 1,677,906 | 90,122 |
Fidelity Income Replacement 2040 Fund | 1,099,795 | 18,777 |
Fidelity Income Replacement 2042 Fund | 1,500,619 | 54,609 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Strategic Advisers, Inc. (Strategic Advisers), an affiliate of FMR, provides the Funds with investment management related services. The Funds do not pay any fees for these services. Under the management contract, Strategic Advisers pays all other fund-level expenses, except the compensation of the independent Trustees and certain other expenses such as interest expense.
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:
Fidelity Income Replacement 2016 Fund | Distribution | Service | Paid to | Retained |
Class A | 0% | .25% | $ 2,297 | $ 188 |
Class T | .25% | .25% | 1,412 | 454 |
Class C | .75% | .25% | 9,525 | 9,495 |
|
|
| $ 13,234 | $ 10,137 |
Fidelity Income Replacement 2018 Fund |
|
|
|
|
Class A | 0% | .25% | $ 1,215 | $ 232 |
Class T | .25% | .25% | 570 | 467 |
Class C | .75% | .25% | 2,313 | 2,312 |
|
|
| $ 4,098 | $ 3,011 |
Annual Report
5. Fees and Other Transactions with Affiliates - continued
Distribution and Service Plan - continued
Fidelity Income Replacement 2020 Fund | Distribution | Service | Paid to | Retained |
Class A | 0% | .25% | $ 663 | $ 230 |
Class T | .25% | .25% | 690 | 462 |
Class C | .75% | .25% | 1,593 | 1,501 |
|
|
| $ 2,946 | $ 2,193 |
Fidelity Income Replacement 2022 Fund |
|
|
|
|
Class A | 0% | .25% | $ 469 | $ 231 |
Class T | .25% | .25% | 550 | 463 |
Class C | .75% | .25% | 955 | 955 |
|
|
| $ 1,974 | $ 1,649 |
Fidelity Income Replacement 2024 Fund |
|
|
|
|
Class A | 0% | .25% | $ 494 | $ 231 |
Class T | .25% | .25% | 466 | 466 |
Class C | .75% | .25% | 1,098 | 1,097 |
|
|
| $ 2,058 | $ 1,794 |
Fidelity Income Replacement 2026 Fund |
|
|
|
|
Class A | 0% | .25% | $ 274 | $ 231 |
Class T | .25% | .25% | 464 | 464 |
Class C | .75% | .25% | 3,301 | 3,297 |
|
|
| $ 4,039 | $ 3,992 |
Fidelity Income Replacement 2028 Fund |
|
|
|
|
Class A | 0% | .25% | $ 360 | $ 225 |
Class T | .25% | .25% | 952 | 454 |
Class C | .75% | .25% | 1,164 | 1,115 |
|
|
| $ 2,476 | $ 1,794 |
Fidelity Income Replacement 2030 Fund |
|
|
|
|
Class A | 0% | .25% | $ 232 | $ 232 |
Class T | .25% | .25% | 462 | 462 |
Class C | .75% | .25% | 2,109 | 2,108 |
|
|
| $ 2,803 | $ 2,802 |
Fidelity Income Replacement 2032 Fund |
|
|
|
|
Class A | 0% | .25% | $ 723 | $ 231 |
Class T | .25% | .25% | 462 | 462 |
Class C | .75% | .25% | 921 | 921 |
|
|
| $ 2,106 | $ 1,614 |
Fidelity Income Replacement 2034 Fund |
|
|
|
|
Class A | 0% | .25% | $ 280 | $ 232 |
Class T | .25% | .25% | 464 | 464 |
Class C | .75% | .25% | 921 | 921 |
|
|
| $ 1,665 | $ 1,617 |
Fidelity Income Replacement 2036 Fund |
|
|
|
|
Class A | 0% | .25% | $ 232 | $ 232 |
Class T | .25% | .25% | 1,346 | 458 |
Class C | .75% | .25% | 921 | 921 |
|
|
| $ 2,499 | $ 1,611 |
Fidelity Income Replacement 2038 Fund |
|
|
|
|
Class A | 0% | .25% | $ 139 | $ 139 |
Class T | .25% | .25% | 278 | 278 |
Class C | .75% | .25% | 556 | 556 |
|
|
| $ 973 | $ 973 |
Annual Report
Notes to Financial Statements - continued
5. Fees and Other Transactions with Affiliates - continued
Distribution and Service Plan - continued
Fidelity Income Replacement 2040 Fund | Distribution | Service | Paid to | Retained |
Class A | 0% | .25% | $ 139 | $ 139 |
Class T | .25% | .25% | 308 | 276 |
Class C | .75% | .25% | 556 | 556 |
|
|
| $ 1,003 | $ 971 |
Fidelity Income Replacement 2042 Fund |
|
|
|
|
Class A | 0% | .25% | $ 139 | $ 139 |
Class T | .25% | .25% | 278 | 278 |
Class C | .75% | .25% | 556 | 556 |
|
|
| $ 973 | $ 973 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, 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, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Fidelity Income Replacement 2016 Fund | Retained |
Class A | $ 17,045 |
Class T | 1,570 |
Class C* | 757 |
| $ 19,372 |
Fidelity Income Replacement 2018 Fund |
|
Class A | $ 7,145 |
Class T | 305 |
Class C* | 11 |
| $ 7,461 |
Fidelity Income Replacement 2020 Fund |
|
Class A | $ 2,668 |
Class T | 237 |
| $ 2,905 |
Fidelity Income Replacement 2022 Fund |
|
Class A | $ 1,600 |
Class T | 235 |
| $ 1,835 |
Fidelity Income Replacement 2024 Fund |
|
Class A | $ 1,638 |
Fidelity Income Replacement 2026 Fund |
|
Class A | $ 188 |
Fidelity Income Replacement 2028 Fund |
|
Class A | $ 1,519 |
Class T | 778 |
| $ 2,297 |
Fidelity Income Replacement 2032 Fund |
|
Class A | $ 1,114 |
Fidelity Income Replacement 2034 Fund |
|
Class A | $ 453 |
Annual Report
5. Fees and Other Transactions with Affiliates - continued
Sales Load - continued
Fidelity Income Replacement 2036 Fund | Retained |
Class T | $ 533 |
Fidelity Income Replacement 2040 Fund |
|
Class T | $ 223 |
* When Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
6. Expense Reductions.
FMR voluntarily agreed to reimburse funds to the extent annual operating expenses exceeded 0.00% of average net assets plus distribution and service fees applicable to each class. Some expenses, for example interest expense, are excluded from this reimbursement.
The following Fund's were in reimbursement during the period:
| Reimbursement |
|
|
| |
Fidelity Income Replacement 2016 Fund | $ 20 |
Fidelity Income Replacement 2018 Fund | 15 |
Fidelity Income Replacement 2020 Fund | 5 |
Fidelity Income Replacement 2022 Fund | 12 |
Fidelity Income Replacement 2024 Fund | 3 |
Fidelity Income Replacement 2026 Fund | 4 |
Fidelity Income Replacement 2028 Fund | 13 |
Fidelity Income Replacement 2030 Fund | 2 |
Fidelity Income Replacement 2032 Fund | 4 |
Fidelity Income Replacement 2034 Fund | 2 |
Fidelity Income Replacement 2036 Fund | 5 |
Fidelity Income Replacement 2038 Fund | 2 |
Fidelity Income Replacement 2040 Fund | 2 |
Fidelity Income Replacement 2042 Fund | 3 |
* Represents total amount reimbursed to the Fund. Each class has received its pro-rata allocation of reimbursement.
7. 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.
The Funds do not invest in the Underlying Funds for the purpose of exercising management or control; however, investments by the Funds within their principal investment strategies may represent a significant portion of the Underlying Fund's net assets. At the end of the period, the following Funds were the owners of record of 10% or more of the total outstanding shares of the Underlying Funds.
Fund | Fidelity Income | Fidelity Income | Fidelity Income | Fidelity Income |
Fidelity Broad Market Opportunities Fund | 14% | 11% | 10% | 15% |
Annual Report
Notes to Financial Statements - continued
7. Other - continued
The Funds, in aggregate, were the owners of record of more than 20% of the total outstanding shares of the following Underlying Funds.
Fund | % of Share held |
Fidelity Broad Market Opportunities Fund | 80% |
In addition, at the end of the period, FMR or its affiliates were owners of record of more than 10% of the outstanding shares of the following funds:
| Affiliated % |
Fidelity Income Replacement 2020 Fund | 16% |
Fidelity Income Replacement 2024 Fund | 27% |
Fidelity Income Replacement 2032 Fund | 27% |
Fidelity Income Replacement 2034 Fund | 39% |
Fidelity Income Replacement 2036 Fund | 24% |
Fidelity Income Replacement 2038 Fund | 25% |
Fidelity Income Replacement 2040 Fund | 36% |
Fidelity Income Replacement 2042 Fund | 27% |
8. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Year ended July 31, | 2008A |
Fidelity Income Replacement 2016 Fund |
|
From net investment income |
|
Class A | $ 24,373 |
Class T | 6,831 |
Class C | 18,135 |
Income Replacement 2016 | 90,325 |
Institutional Class | 3,781 |
Total | $ 143,445 |
From net realized gain |
|
Class A | $ 614 |
Class T | 512 |
Class C | 2,180 |
Income Replacement 2016 | 9,335 |
Institutional Class | 282 |
Total | $ 12,923 |
Fidelity Income Replacement 2018 Fund |
|
From net investment income |
|
Class A | $ 12,180 |
Class T | 2,589 |
Class C | 4,326 |
Income Replacement 2018 | 82,709 |
Institutional Class | 3,472 |
Total | $ 105,276 |
From net realized gain |
|
Class A | $ 262 |
Class T | 323 |
Class C | 389 |
Income Replacement 2018 | 6,892 |
Institutional Class | 262 |
Total | $ 8,128 |
Annual Report
8. Distributions to Shareholders - continued
Year ended July 31, | 2008A |
Fidelity Income Replacement 2020 Fund |
|
From net investment income |
|
Class A | $ 6,115 |
Class T | 3,050 |
Class C | 2,845 |
Income Replacement 2020 | 14,934 |
Institutional Class | 3,046 |
Total | $ 29,990 |
From net realized gain |
|
Class A | $ 342 |
Class T | 498 |
Class C | 510 |
Income Replacement 2020 | 790 |
Institutional Class | 342 |
Total | $ 2,482 |
Fidelity Income Replacement 2022 Fund |
|
From net investment income |
|
Class A | $ 4,024 |
Class T | 2,271 |
Class C | 1,457 |
Income Replacement 2022 | 69,351 |
Institutional Class | 5,902 |
Total | $ 83,005 |
From net realized gain |
|
Class A | $ 341 |
Class T | 341 |
Class C | 341 |
Income Replacement 2022 | 7,075 |
Institutional Class | 994 |
Total | $ 9,092 |
Fidelity Income Replacement 2024 Fund |
|
From net investment income |
|
Class A | $ 4,555 |
Class T | 1,866 |
Class C | 1,852 |
Income Replacement 2024 | 10,602 |
Institutional Class | 2,326 |
Total | $ 21,201 |
From net realized gain |
|
Class A | $ 761 |
Class T | 342 |
Class C | 341 |
Income Replacement 2024 | 1,110 |
Institutional Class | 342 |
Total | $ 2,896 |
Fidelity Income Replacement 2026 Fund |
|
From net investment income |
|
Class A | $ 2,500 |
Class T | 1,852 |
Class C | 5,330 |
Income Replacement 2026 | 10,061 |
Institutional Class | 2,308 |
Total | $ 22,051 |
From net realized gain |
|
Class A | $ 407 |
Class T | 362 |
Class C | 1,176 |
Income Replacement 2026 | 1,399 |
Institutional Class | 362 |
Total | $ 3,706 |
Annual Report
Notes to Financial Statements - continued
8. Distributions to Shareholders - continued
Year ended July 31, | 2008A |
Fidelity Income Replacement 2028 Fund |
|
From net investment income |
|
Class A | $ 3,090 |
Class T | 3,796 |
Class C | 1,482 |
Income Replacement 2028 | 67,994 |
Institutional Class | 2,054 |
Total | $ 78,416 |
From net realized gain |
|
Class A | $ 322 |
Class T | 519 |
Class C | 321 |
Income Replacement 2028 | 7,120 |
Institutional Class | 322 |
Total | $ 8,604 |
Fidelity Income Replacement 2030 Fund |
|
From net investment income |
|
Class A | $ 2,013 |
Class T | 1,791 |
Class C | 3,220 |
Income Replacement 2030 | 5,160 |
Institutional Class | 2,244 |
Total | $ 14,428 |
From net realized gain |
|
Class A | $ 382 |
Class T | 382 |
Class C | 905 |
Income Replacement 2030 | 477 |
Institutional Class | 382 |
Total | $ 2,528 |
Fidelity Income Replacement 2032 Fund |
|
From net investment income |
|
Class A | $ 6,514 |
Class T | 1,757 |
Class C | 1,307 |
Income Replacement 2032 | 11,580 |
Institutional Class | 2,212 |
Total | $ 23,370 |
From net realized gain |
|
Class A | $ 1,345 |
Class T | 382 |
Class C | 381 |
Income Replacement 2032 | 1,930 |
Institutional Class | 382 |
Total | $ 4,420 |
Fidelity Income Replacement 2034 Fund |
|
From net investment income |
|
Class A | $ 2,325 |
Class T | 1,706 |
Class C | 1,250 |
Income Replacement 2034 | 8,139 |
Institutional Class | 2,157 |
Total | $ 15,577 |
From net realized gain |
|
Class A | $ 402 |
Class T | 402 |
Class C | 401 |
Income Replacement 2034 | 1,356 |
Institutional Class | 402 |
Total | $ 2,963 |
Annual Report
8. Distributions to Shareholders - continued
Year ended July 31, | 2008A |
Fidelity Income Replacement 2036 Fund |
|
From net investment income |
|
Class A | $ 1,814 |
Class T | 4,886 |
Class C | 1,137 |
Income Replacement 2036 | 16,179 |
Institutional Class | 2,545 |
Total | $ 26,561 |
From net realized gain |
|
Class A | $ 381 |
Class T | 1,187 |
Class C | 381 |
Income Replacement 2036 | 2,566 |
Institutional Class | 476 |
Total | $ 4,991 |
Fidelity Income Replacement 2038 Fund |
|
From net investment income |
|
Class A | $ 745 |
Class T | 610 |
Class C | 363 |
Income Replacement 2038 | 8,501 |
Institutional Class | 878 |
Total | $ 11,097 |
Fidelity Income Replacement 2040 Fund |
|
From net investment income |
|
Class A | $ 799 |
Class T | 766 |
Class C | 397 |
Income Replacement 2040 | 5,085 |
Institutional Class | 932 |
Total | $ 7,979 |
Fidelity Income Replacement 2042 Fund |
|
From net investment income |
|
Class A | $ 781 |
Class T | 648 |
Class C | 381 |
Income Replacement 2042 | 8,054 |
Institutional Class | 916 |
Total | $ 10,780 |
A For the period August 30, 2007 (commencement of operations) to July 31, 2008 for Fidelity Income Replacement 2016, 2018, 2020, 2022, 2024, 2026, 2028, 2030, 2032, 2034, 2036 Funds and for the period December 31, 2007 (commencement of operations) to July 31, 2008 for Fidelity Income Replacement 2038, 2040, 2042 Funds.
9. Share Transactions.
Transactions for each class of shares were as follows:
Year ended July 31, | Shares | Dollars |
Fidelity Income Replacement 2016 Fund |
|
|
Class A |
|
|
Shares sold | 51,887 | $ 2,562,164 |
Reinvestment of distributions | 481 | 23,577 |
Shares redeemed | (6,012) | (294,658) |
Net increase (decrease) | 46,356 | $ 2,291,083 |
Class T |
|
|
Shares sold | 14,213 | $ 703,303 |
Reinvestment of distributions | 126 | 6,237 |
Shares redeemed | (243) | (11,945) |
Net increase (decrease) | 14,096 | $ 697,595 |
Annual Report
Notes to Financial Statements - continued
9. Share Transactions - continued
Year ended July 31, | Shares | Dollars |
Class C |
|
|
Shares sold | 36,624 | $ 1,842,263 |
Reinvestment of distributions | 396 | 19,625 |
Shares redeemed | (3,603) | (178,499) |
Net increase (decrease) | 33,417 | $ 1,683,389 |
Income Replacement 2016 |
|
|
Shares sold | 128,125 | $ 6,454,165 |
Reinvestment of distributions | 282 | 14,202 |
Shares redeemed | (26,243) | (1,295,692) |
Net increase (decrease) | 102,164 | $ 5,172,675 |
Institutional Class |
|
|
Shares sold | 3,795 | $ 190,050 |
Reinvestment of distributions | 58 | 2,900 |
Net increase (decrease) | 3,853 | $ 192,950 |
Fidelity Income Replacement 2018 Fund |
|
|
Class A |
|
|
Shares sold | 24,773 | $ 1,220,917 |
Reinvestment of distributions | 151 | 7,408 |
Shares redeemed | (1,591) | (78,122) |
Net increase (decrease) | 23,333 | $ 1,150,203 |
Class T |
|
|
Shares sold | 3,187 | $ 158,040 |
Reinvestment of distributions | 49 | 2,418 |
Net increase (decrease) | 3,236 | $ 160,458 |
Class C |
|
|
Shares sold | 11,169 | $ 549,643 |
Reinvestment of distributions | 53 | 2,662 |
Shares redeemed | (3,529) | (172,565) |
Net increase (decrease) | 7,693 | $ 379,740 |
Income Replacement 2018 |
|
|
Shares sold | 122,952 | $ 6,187,553 |
Reinvestment of distributions | 278 | 13,952 |
Shares redeemed | (14,368) | (704,704) |
Net increase (decrease) | 108,862 | $ 5,496,801 |
Institutional Class |
|
|
Shares sold | 4,519 | $ 225,289 |
Reinvestment of distributions | 56 | 2,804 |
Shares redeemed | (60) | (2,900) |
Net increase (decrease) | 4,515 | $ 225,193 |
Fidelity Income Replacement 2020 Fund |
|
|
Class A |
|
|
Shares sold | 10,762 | $ 527,052 |
Reinvestment of distributions | 71 | 3,536 |
Shares redeemed | (160) | (7,749) |
Net increase (decrease) | 10,673 | $ 522,839 |
Class T |
|
|
Shares sold | 4,042 | $ 202,738 |
Reinvestment of distributions | 71 | 3,548 |
Shares redeemed | (139) | (6,586) |
Net increase (decrease) | 3,974 | $ 199,700 |
Class C |
|
|
Shares sold | 5,838 | $ 288,035 |
Reinvestment of distributions | 55 | 2,753 |
Shares redeemed | (50) | (2,417) |
Net increase (decrease) | 5,843 | $ 288,371 |
Income Replacement 2020 |
|
|
Shares sold | 28,174 | $ 1,389,273 |
Reinvestment of distributions | 71 | 3,552 |
Shares redeemed | (2,068) | (99,949) |
Net increase (decrease) | 26,177 | $ 1,292,876 |
Annual Report
9. Share Transactions - continued
Year ended July 31, | Shares | Dollars |
Institutional Class |
|
|
Shares sold | 3,397 | $ 168,160 |
Reinvestment of distributions | 57 | 2,822 |
Net increase (decrease) | 3,454 | $ 170,982 |
Fidelity Income Replacement 2022 Fund |
|
|
Class A |
|
|
Shares sold | 6,185 | $ 306,290 |
Reinvestment of distributions | 48 | 2,394 |
Shares redeemed | (93) | (4,482) |
Net increase (decrease) | 6,140 | $ 304,202 |
Class T |
|
|
Shares sold | 3,924 | $ 195,654 |
Reinvestment of distributions | 53 | 2,613 |
Net increase (decrease) | 3,977 | $ 198,267 |
Class C |
|
|
Shares sold | 2,513 | $ 125,050 |
Reinvestment of distributions | 35 | 1,733 |
Net increase (decrease) | 2,548 | $ 126,783 |
Income Replacement 2022 |
|
|
Shares sold | 114,310 | $ 5,694,740 |
Reinvestment of distributions | 193 | 9,783 |
Shares redeemed | (15,364) | (754,411) |
Net increase (decrease) | 99,139 | $ 4,950,112 |
Institutional Class |
|
|
Shares sold | 5,837 | $ 300,050 |
Reinvestment of distributions | 52 | 2,619 |
Net increase (decrease) | 5,889 | $ 302,669 |
Fidelity Income Replacement 2024 Fund |
|
|
Class A |
|
|
Shares sold | 6,152 | $ 310,133 |
Reinvestment of distributions | 95 | 4,738 |
Shares redeemed | (155) | (7,496) |
Net increase (decrease) | 6,092 | $ 307,375 |
Class T |
|
|
Shares sold | 2,001 | $ 99,021 |
Reinvestment of distributions | 44 | 2,208 |
Net increase (decrease) | 2,045 | $ 101,229 |
Class C |
|
|
Shares sold | 4,943 | $ 242,316 |
Reinvestment of distributions | 40 | 2,004 |
Shares redeemed | (20) | (939) |
Net increase (decrease) | 4,963 | $ 243,381 |
Income Replacement 2024 |
|
|
Shares sold | 18,071 | $ 894,960 |
Reinvestment of distributions | 80 | 3,983 |
Shares redeemed | (2,959) | (140,970) |
Net increase (decrease) | 15,192 | $ 757,973 |
Institutional Class |
|
|
Shares sold | 2,001 | $ 100,277 |
Reinvestment of distributions | 53 | 2,668 |
Net increase (decrease) | 2,054 | $ 102,945 |
Fidelity Income Replacement 2026 Fund |
|
|
Class A |
|
|
Shares sold | 2,750 | $ 136,448 |
Reinvestment of distributions | 58 | 2,907 |
Net increase (decrease) | 2,808 | $ 139,355 |
Annual Report
Notes to Financial Statements - continued
9. Share Transactions - continued
Year ended July 31, | Shares | Dollars |
Class T |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 44 | 2,214 |
Net increase (decrease) | 2,045 | $ 102,264 |
Class C |
|
|
Shares sold | 10,559 | $ 527,050 |
Reinvestment of distributions | 131 | 6,505 |
Shares redeemed | (307) | (14,828) |
Net increase (decrease) | 10,383 | $ 518,727 |
Income Replacement 2026 |
|
|
Shares sold | 17,326 | $ 852,072 |
Reinvestment of distributions | 117 | 5,806 |
Shares redeemed | (693) | (33,589) |
Net increase (decrease) | 16,750 | $ 824,289 |
Institutional Class |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 53 | 2,670 |
Net increase (decrease) | 2,054 | $ 102,720 |
Fidelity Income Replacement 2028 Fund |
|
|
Class A |
|
|
Shares sold | 7,922 | $ 392,531 |
Reinvestment of distributions | 69 | 3,412 |
Shares redeemed | (65) | (3,072) |
Net increase (decrease) | 7,926 | $ 392,871 |
Class T |
|
|
Shares sold | 13,004 | $ 639,428 |
Reinvestment of distributions | 58 | 2,913 |
Shares redeemed | (120) | (5,688) |
Net increase (decrease) | 12,942 | $ 636,653 |
Class C |
|
|
Shares sold | 3,181 | $ 157,488 |
Reinvestment of distributions | 31 | 1,557 |
Net increase (decrease) | 3,212 | $ 159,045 |
Income Replacement 2028 |
|
|
Shares sold | 148,761 | $ 7,341,752 |
Reinvestment of distributions | 196 | 9,925 |
Shares redeemed | (19,359) | (940,882) |
Net increase (decrease) | 129,598 | $ 6,410,795 |
Institutional Class |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 48 | 2,376 |
Net increase (decrease) | 2,049 | $ 102,426 |
Fidelity Income Replacement 2030 Fund |
|
|
Class A |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 48 | 2,395 |
Net increase (decrease) | 2,049 | $ 102,445 |
Class T |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 43 | 2,173 |
Net increase (decrease) | 2,044 | $ 102,223 |
Class C |
|
|
Shares sold | 6,410 | $ 322,141 |
Reinvestment of distributions | 83 | 4,124 |
Shares redeemed | (120) | (5,838) |
Net increase (decrease) | 6,373 | $ 320,427 |
Annual Report
9. Share Transactions - continued
Year ended July 31, | Shares | Dollars |
Income Replacement 2030 |
|
|
Shares sold | 14,029 | $ 682,104 |
Reinvestment of distributions | 72 | 3,547 |
Shares redeemed | (87) | (4,166) |
Net increase (decrease) | 14,014 | $ 681,485 |
Institutional Class |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 53 | 2,627 |
Net increase (decrease) | 2,054 | $ 102,677 |
Fidelity Income Replacement 2032 Fund |
|
|
Class A |
|
|
Shares sold | 8,485 | $ 428,673 |
Reinvestment of distributions | 158 | 7,859 |
Net increase (decrease) | 8,643 | $ 436,532 |
Class T |
|
|
Shares sold | 2,001 | $ 100,059 |
Reinvestment of distributions | 43 | 2,138 |
Net increase (decrease) | 2,044 | $ 102,197 |
Class C |
|
|
Shares sold | 2,001 | $ 100,059 |
Reinvestment of distributions | 34 | 1,688 |
Net increase (decrease) | 2,035 | $ 101,747 |
Income Replacement 2032 |
|
|
Shares sold | 18,568 | $ 934,542 |
Reinvestment of distributions | 96 | 4,859 |
Shares redeemed | (2,950) | (142,310) |
Net increase (decrease) | 15,714 | $ 797,091 |
Institutional Class |
|
|
Shares sold | 2,001 | $ 100,059 |
Reinvestment of distributions | 52 | 2,594 |
Net increase (decrease) | 2,053 | $ 102,653 |
Fidelity Income Replacement 2034 Fund |
|
|
Class A |
|
|
Shares sold | 3,214 | $ 158,381 |
Reinvestment of distributions | 55 | 2,727 |
Shares redeemed | (289) | (14,048) |
Net increase (decrease) | 2,980 | $ 147,060 |
Class T |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 42 | 2,108 |
Net increase (decrease) | 2,043 | $ 102,158 |
Class C |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 33 | 1,652 |
Net increase (decrease) | 2,034 | $ 101,702 |
Income Replacement 2034 |
|
|
Shares sold | 11,938 | $ 589,565 |
Reinvestment of distributions | 100 | 4,987 |
Shares redeemed | (145) | (7,028) |
Net increase (decrease) | 11,893 | $ 587,524 |
Institutional Class |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 51 | 2,559 |
Net increase (decrease) | 2,052 | $ 102,609 |
Annual Report
Notes to Financial Statements - continued
9. Share Transactions - continued
Year ended July 31, | Shares | Dollars |
Fidelity Income Replacement 2036 Fund |
|
|
Class A |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 44 | 2,195 |
Net increase (decrease) | 2,045 | $ 102,245 |
Class T |
|
|
Shares sold | 8,360 | $ 427,487 |
Reinvestment of distributions | 59 | 2,995 |
Shares redeemed | (139) | (6,726) |
Net increase (decrease) | 8,280 | $ 423,756 |
Class C |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 30 | 1,518 |
Net increase (decrease) | 2,031 | $ 101,568 |
Income Replacement 2036 |
|
|
Shares sold | 30,339 | $ 1,531,859 |
Reinvestment of distributions | 136 | 6,842 |
Shares redeemed | (9,217) | (447,459) |
Net increase (decrease) | 21,258 | $ 1,091,242 |
Institutional Class |
|
|
Shares sold | 2,505 | $ 125,551 |
Reinvestment of distributions | 60 | 3,020 |
Shares redeemed | (10) | (477) |
Net increase (decrease) | 2,555 | $ 128,094 |
Fidelity Income Replacement 2038 Fund |
|
|
Class A |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 16 | 745 |
Net increase (decrease) | 2,017 | $ 100,795 |
Class T |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 13 | 610 |
Net increase (decrease) | 2,014 | $ 100,660 |
Class C |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 8 | 363 |
Net increase (decrease) | 2,009 | $ 100,413 |
Income Replacement 2038 |
|
|
Shares sold | 26,117 | $ 1,244,662 |
Reinvestment of distributions | 24 | 1,115 |
Shares redeemed | (1,352) | (62,898) |
Net increase (decrease) | 24,789 | $ 1,182,879 |
Institutional Class |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 19 | 878 |
Net increase (decrease) | 2,020 | $ 100,928 |
Fidelity Income Replacement 2040 Fund |
|
|
Class A |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 17 | 799 |
Net increase (decrease) | 2,018 | $ 100,849 |
Class T |
|
|
Shares sold | 2,913 | $ 143,477 |
Reinvestment of distributions | 16 | 766 |
Net increase (decrease) | 2,929 | $ 144,243 |
Annual Report
9. Share Transactions - continued
Year ended July 31, | Shares | Dollars |
Class C |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 8 | 397 |
Net increase (decrease) | 2,009 | $ 100,447 |
Income Replacement 2040 |
|
|
Shares sold | 13,341 | $ 638,742 |
Reinvestment of distributions | 45 | 2,091 |
Shares redeemed | (172) | (8,085) |
Net increase (decrease) | 13,214 | $ 632,748 |
Institutional Class |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 20 | 932 |
Net increase (decrease) | 2,021 | $ 100,982 |
Fidelity Income Replacement 2042 Fund |
|
|
Class A |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 17 | 781 |
Net increase (decrease) | 2,018 | $ 100,831 |
Class T |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 14 | 648 |
Net increase (decrease) | 2,015 | $ 100,698 |
Class C |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 8 | 381 |
Net increase (decrease) | 2,009 | $ 100,431 |
Income Replacement 2042 |
|
|
Shares sold | 21,824 | $ 1,059,126 |
Reinvestment of distributions | 34 | 1,577 |
Shares redeemed | (420) | (19,844) |
Net increase (decrease) | 21,438 | $ 1,040,859 |
Institutional Class |
|
|
Shares sold | 2,001 | $ 100,050 |
Reinvestment of distributions | 20 | 916 |
Net increase (decrease) | 2,021 | $ 100,966 |
A For the period August 30, 2007 (commencement of operations) to July 31, 2008 for Fidelity Income Replacement 2016, 2018, 2020, 2022, 2024, 2026, 2028, 2030, 2032, 2034, 2036 Funds and for the period December 31, 2007 (commencement of operations) to July 31, 2008 for Fidelity Income Replacement 2038, 2040, 2042 Funds.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Income Fund and the Shareholders of Fidelity Income Replacement 2016 Fund, Fidelity Income Replacement 2018 Fund, Fidelity Income Replacement 2020 Fund, Fidelity Income Replacement 2022 Fund, Fidelity Income Replacement 2024 Fund, Fidelity Income Replacement 2026 Fund, Fidelity Income Replacement 2028 Fund, Fidelity Income Replacement 2030 Fund, Fidelity Income Replacement 2032 Fund, Fidelity Income Replacement 2034 Fund, Fidelity Income Replacement 2036 Fund, Fidelity Income Replacement 2038 Fund, Fidelity Income Replacement 2040 Fund and Fidelity Income Replacement 2042 Fund:
We have audited the accompanying statements of assets and liabilities of Fidelity Income Replacement 2016 Fund, Fidelity Income Replacement 2018 Fund, Fidelity Income Replacement 2020 Fund, Fidelity Income Replacement 2022 Fund, Fidelity Income Replacement 2024 Fund, Fidelity Income Replacement 2026 Fund, Fidelity Income Replacement 2028 Fund, Fidelity Income Replacement 2030 Fund, Fidelity Income Replacement 2032 Fund, Fidelity Income Replacement 2034 Fund, Fidelity Income Replacement 2036 Fund, Fidelity Income Replacement 2038 Fund, Fidelity Income Replacement 2040 Fund and Fidelity Income Replacement 2042 Fund (the Funds), each of which are funds of Fidelity Income Fund (the trust), including the schedules of investments, as of July 31, 2008, and the related statements of operations, the statements of changes in net assets, and the financial highlights for the period from commencement of operations (August 30, 2007 or December 31, 2007) to July 31, 2008. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with 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 and financial highlights are free of material misstatement. The Funds are not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds' internal control over financial reporting. Accordingly, we express no such opinion. An audit also 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, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2008, by correspondence with the custodians and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Fidelity Income Replacement 2016 Fund, Fidelity Income Replacement 2018 Fund, Fidelity Income Replacement 2020 Fund, Fidelity Income Replacement 2022 Fund, Fidelity Income Replacement 2024 Fund, Fidelity Income Replacement 2026 Fund, Fidelity Income Replacement 2028 Fund, Fidelity Income Replacement 2030 Fund, Fidelity Income Replacement 2032 Fund, Fidelity Income Replacement 2034 Fund, Fidelity Income Replacement 2036 Fund, Fidelity Income Replacement 2038 Fund, Fidelity Income Replacement 2040 Fund and Fidelity Income Replacement 2042 Fund as of July 31, 2008, the results of their operations, the changes in their net assets and their financial highlights for the period from commencement of operations (August 30, 2007 or December 31, 2007) to July 31, 2008 in conformity with accounting principles generally accepted in the United States of America.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Boston, Massachusetts
September 19, 2008
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each Income Replacement Fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each Income Replacement Fund's activities, review contractual arrangements with companies that provide services to each Income Replacement Fund, and review each Income Replacement Fund's performance. If the interests of an Income Replacement Fund and an underlying Fidelity fund were to diverge, a conflict of interest could arise and affect how the Trustees and Member of the Advisory Board fulfill their fiduciary duties to the affected funds. Strategic Advisers has structured the Income Replacement Funds to avoid these potential conflicts, although there may be situations where a conflict of interest is unavoidable. In such instances, Strategic Advisers, the Trustees, and Member of the Advisory Board would take reasonable steps to minimize and, if possible, eliminate the conflict. Except for Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 159 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 377 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 Member 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 1-877-208-0098.
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 (78) | |
| Year of Election or Appointment: 1984 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; 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 and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). Mr. Edward C. Johnson 3d and Mr. Arthur E. Johnson are not related. |
James C. Curvey (73) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
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.
Annual Report
Trustees and Officers - continued
Name, Age; Principal Occupation | |
Albert R. Gamper, Jr. (66) | |
| 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), a member of the Board of Governors, Rutgers University (2004-present), and Chairman of the Board of Saint Barnabas Health Care System. Previously, Mr. Gamper served as Chairman of the Board of Governors, Rutgers University (2004-2007). |
George H. Heilmeier (72) | |
| 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), Compaq, Automatic Data Processing, Inc. (ADP) (technology-based business outsourcing), 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. |
Arthur E. Johnson (61) | |
| Year of Election or Appointment: 2008 Mr. Johnson serves as Senior Vice President of Corporate Strategic Development of Lockheed Martin Corporation (defense contractor). In addition, Mr. Johnson serves as a member of the Board of Directors of AGL Resources, Inc. (holding company), and IKON Office Solutions, Inc. (document management systems and services). Mr. Arthur E. Johnson and Mr. Edward C. Johnson 3d are not related. |
James H. Keyes (67) | |
| 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 Navistar International Corporation (manufacture and sale of trucks, buses, and diesel engines) and Pitney Bowes, Inc. (integrated mail, messaging, and document management solutions). Previously, Mr. Keyes served as a member of the Board of LSI Logic Corporation (semiconductor technologies, 1984-2008). |
Marie L. Knowles (61) | |
| 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 McKesson Corporation (healthcare service). 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. Previously, Ms. Knowles served as a Director of Phelps Dodge Corporation (copper mining and manufacturing, 1994-2007). |
Kenneth L. Wolfe (69) | |
| Year of Election or Appointment: 2005 Mr. Wolfe is Chairman and a Director of Hershey Foods Corporation (2007-present), where prior to his retirement in 2001, he was Chairman and Chief Executive Officer. Mr. Wolfe currently serves as a member of the board of Revlon Inc. (2004-present). Previously, Mr. Wolfe served as a member of the boards of Adelphia Communications Corporation (2003-2006) and Bausch & Lomb, Inc. (1993-2007). |
Advisory Board Member and Executive Officers**:
Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Annual Report
Name, Age; Principal Occupation | |
Peter S. Lynch (64) | |
| 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. |
John R. Hebble (50) | |
| Year of Election or Appointment: 2008 President and Treasurer of each Income Replacement Fund. Mr. Hebble also serves as President and Treasurer of Fidelity's Fixed Income and Asset Allocation Funds (2008-present) and is an employee of FMR (2003-present). Before joining Fidelity Investments, Mr. Hebble worked at Deutsche Asset Management where he served as Director of Fund Accounting (2002-2003) and Assistant Treasurer of the Scudder Funds. |
Ren Y. Cheng (51) | |
| Year of Election or Appointment: 2007 Vice President of each Income Replacement Fund. Mr. Cheng also serves as Vice President of certain Asset Allocation Funds (2007-present) and Group Chief Investment Officer, Asset Allocation of FMR. Previously, Mr. Cheng served as a portfolio manager for the Fidelity Freedom Funds. |
Boyce I. Greer (52) | |
| Year of Election or Appointment: 2007 Vice President of each Income Replacement Fund. Mr. Greer also serves as Vice President of 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). Mr. Greer is President and a Director of Fidelity Investments Money Management, Inc. (2007-present), and an Executive Vice President of FMR and FMR Co., Inc. (2005-present). Previously, Mr. Greer served as a Director and Managing Director of Strategic Advisers, Inc. (2002-2005). |
Scott C. Goebel (40) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of each Income Replacement Fund. Mr. Goebel also serves as Secretary and CLO of other Fidelity funds (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present); and Deputy General Counsel of FMR LLC. Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
Nancy D. Prior (41) | |
| Year of Election or Appointment: 2008 Assistant Secretary of each Income Replacement Fund. Ms. Prior also serves as Assistant Secretary of Fidelity's Fixed Income and Asset Allocation Funds (2008-present) and is an employee of FMR (2002-present). |
Holly C. Laurent (54) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) officer of each Income Replacement Fund. Ms. Laurent also serves as AML officer of other Fidelity funds (2008-present) and is an employee of FMR LLC. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (49) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of each Income Replacement Fund. Ms. Reynolds also serves as Chief Financial Officer of other Fidelity funds (2008-present). Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was an audit partner with PwC's investment management practice. |
Michael H. Whitaker (41) | |
| Year of Election or Appointment: 2008 Chief Compliance Officer of each Income Replacement Fund. Mr. Whitaker also serves as Chief Compliance Officer of Fidelity's Fixed Income and Asset Allocation Funds (2008-present) and is an employee of FMR (2007-present). Prior to joining Fidelity Investments, Mr. Whitaker worked at MFS Investment Management where he served as Senior Vice President and Chief Compliance Officer (2004-2006), and Assistant General Counsel. |
Bryan A. Mehrmann (47) | |
| Year of Election or Appointment: 2007 Deputy Treasurer of each Income Replacement Fund. 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). |
Robert G. Byrnes (41) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of each Income Replacement Fund. 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 Fidelity Pricing and Cash Management Services (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 (54) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of each Income Replacement Fund. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004-present) and is an employee of FMR. |
Paul M. Murphy (61) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of each Income Replacement Fund. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (49) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of each Income Replacement Fund. 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 Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Distributions (Unaudited)
The Board of Trustees of each fund voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities:
Fund | Pay Date | Record Date | Capital Gains |
Income Replacement 2020 |
|
|
|
Institutional Class | 09/15/08 | 09/12/08 | $.06 |
Income Replacement 2022 |
|
|
|
Institutional Class | 09/15/08 | 09/12/08 | $.06 |
Income Replacement 2026 |
|
|
|
Institutional Class | 09/15/08 | 09/12/08 | $.32 |
Income Replacement 2030 |
|
|
|
Institutional Class | 09/15/08 | 09/12/08 | $.29 |
Income Replacement 2032 |
|
|
|
Institutional Class | 09/15/08 | 09/12/08 | $.37 |
Income Replacement 2034 |
|
|
|
Institutional Class | 09/15/08 | 09/12/08 | $.32 |
Income Replacement 2040 |
|
|
|
Institutional Class | 09/15/08 | 09/12/08 | $.03 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended July 31, 2008, or, if subsequently determined to be different, the net capital gain of such year.
Fund |
|
Income Replacement 2020 | $3,687 |
Income Replacement 2022 | $9,113 |
Income Replacement 2024 | $597 |
Income Replacement 2026 | $10,427 |
Income Replacement 2030 | $8,616 |
Income Replacement 2032 | $12,348 |
Income Replacement 2034 | $9,326 |
Income Replacement 2040 | $654 |
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:
Income Replacement 2016 |
|
Institutional Class | 4.73% |
Income Replacement 2018 |
|
Institutional Class | 4.59% |
Income Replacement 2020 |
|
Institutional Class | 4.91% |
Income Replacement 2022 |
|
Institutional Class | 4.02% |
Income Replacement 2024 |
|
Institutional Class | 3.67% |
Income Replacement 2026 |
|
Institutional Class | 3.21% |
Income Replacement 2028 |
|
Institutional Class | 4.48% |
Income Replacement 2030 |
|
Institutional Class | 3.20% |
Income Replacement 2032 |
|
Institutional Class | 2.85% |
Income Replacement 2034 |
|
Institutional Class | 2.94% |
Income Replacement 2036 |
|
Institutional Class | 2.89% |
Income Replacement 2038 |
|
Institutional Class | 7.43% |
Income Replacement 2040 |
|
Institutional Class | 7.12% |
Income Replacement 2042 |
|
Institutional Class | 7.16% |
Annual Report
Distributions - continued
A percentage of the dividends distributed during the fiscal year for the following funds qualifies for the dividends-received deduction for corporate shareholders:
| Institutional Class |
Income Replacement 2016 |
|
September 2007 | 8% |
October 2007 | 8% |
November 2007 | 8% |
December 2007 (Ex-Date 12/26/07) | 9% |
December 2007 (Ex-Date 12/28/07) | 9% |
January 2008 | 4% |
February 2008 | 4% |
March 2008 | 4% |
April 2008 | 4% |
May 2008 | 4% |
June 2008 | 4% |
July 2008 | 4% |
| Institutional Class |
Income Replacement 2018 |
|
September 2007 | 8% |
October 2007 | 9% |
November 2007 | 9% |
December 2007 (Ex-Date 12/26/07) | 9% |
December 2007 (Ex-Date 12/28/07) | 9% |
January 2008 | 5% |
February 2008 | 5% |
March 2008 | 5% |
April 2008 | 5% |
May 2008 | 5% |
June 2008 | 5% |
July 2008 | 5% |
| Institutional Class |
Income Replacement 2020 |
|
September 2007 | 9% |
October 2007 | 10% |
November 2007 | 9% |
December 2007 (Ex-Date 12/26/07) | 11% |
December 2007 (Ex-Date 12/28/07) | 10% |
January 2008 | 5% |
February 2008 | 6% |
March 2008 | 6% |
April 2008 | 6% |
May 2008 | 6% |
June 2008 | 6% |
July 2008 | 6% |
| Institutional Class |
Income Replacement 2022 |
|
September 2007 | 10% |
October 2007 | 12% |
November 2007 | 12% |
December 2007 (Ex-Date 12/26/07) | 12% |
December 2007 (Ex-Date 12/28/07) | 12% |
January 2008 | 7% |
February 2008 | 7% |
March 2008 | 7% |
April 2008 | 7% |
May 2008 | 7% |
June 2008 | 7% |
July 2008 | 7% |
| Institutional Class |
Income Replacement 2024 |
|
September 2007 | 10% |
October 2007 | 11% |
November 2007 | 10% |
December 2007 (Ex-Date 12/26/07) | 12% |
December 2007 (Ex-Date 12/28/07) | 11% |
January 2008 | 6% |
February 2008 | 6% |
March 2008 | 6% |
April 2008 | 6% |
May 2008 | 6% |
June 2008 | 6% |
July 2008 | 6% |
| Institutional Class |
Income Replacement 2026 |
|
September 2007 | 11% |
October 2007 | 12% |
November 2007 | 11% |
December 2007 (Ex-Date 12/26/07) | 13% |
December 2007 (Ex-Date 12/28/07) | 12% |
January 2008 | 7% |
February 2008 | 7% |
March 2008 | 6% |
April 2008 | 7% |
May 2008 | 6% |
June 2008 | 6% |
July 2008 | 7% |
| Institutional Class |
Income Replacement 2028 |
|
September 2007 | 11% |
October 2007 | 12% |
November 2007 | 12% |
December 2007 (Ex-Date 12/26/07) | 13% |
December 2007 (Ex-Date 12/28/07) | 13% |
January 2008 | 8% |
February 2008 | 8% |
March 2008 | 8% |
April 2008 | 8% |
May 2008 | 8% |
June 2008 | 8% |
July 2008 | 8% |
| Institutional Class |
Income Replacement 2030 |
|
September 2007 | 11% |
October 2007 | 12% |
November 2007 | 10% |
December 2007 (Ex-Date 12/26/07) | 13% |
December 2007 (Ex-Date 12/28/07) | 12% |
January 2008 | 6% |
February 2008 | 6% |
March 2008 | 6% |
April 2008 | 7% |
May 2008 | 6% |
June 2008 | 7% |
July 2008 | 8% |
| Institutional Class |
Income Replacement 2032 |
|
September 2007 | 11% |
October 2007 | 13% |
November 2007 | 12% |
December 2007 (Ex-Date 12/26/07) | 14% |
December 2007 (Ex-Date 12/28/07) | 14% |
January 2008 | 8% |
February 2008 | 8% |
March 2008 | 8% |
April 2008 | 8% |
May 2008 | 8% |
June 2008 | 8% |
July 2008 | 8% |
| Institutional Class |
Income Replacement 2034 |
|
September 2007 | 11% |
October 2007 | 12% |
November 2007 | 12% |
December 2007 (Ex-Date 12/26/07) | 14% |
December 2007 (Ex-Date 12/28/07) | 13% |
January 2008 | 8% |
February 2008 | 8% |
March 2008 | 8% |
April 2008 | 9% |
May 2008 | 8% |
June 2008 | 8% |
July 2008 | 9% |
| Institutional Class |
Income Replacement 2036 |
|
September 2007 | 11% |
October 2007 | 13% |
November 2007 | 12% |
December 2007 (Ex-Date 12/26/07) | 14% |
December 2007 (Ex-Date 12/28/07) | 13% |
January 2008 | 9% |
February 2008 | 9% |
March 2008 | 8% |
April 2008 | 9% |
May 2008 | 8% |
June 2008 | 8% |
July 2008 | 9% |
| Institutional Class |
Income Replacement 2038 |
|
January 2008 | 9% |
February 2008 | 10% |
March 2008 | 10% |
April 2008 | 10% |
May 2008 | 10% |
June 2008 | 10% |
July 2008 | 10% |
| Institutional Class |
Income Replacement 2040 |
|
January 2008 | 9% |
February 2008 | 10% |
March 2008 | 10% |
April 2008 | 11% |
May 2008 | 10% |
June 2008 | 10% |
July 2008 | 11% |
| Institutional Class |
Income Replacement 2042 |
|
January 2008 | 9% |
February 2008 | 10% |
March 2008 | 11% |
April 2008 | 11% |
May 2008 | 10% |
June 2008 | 10% |
July 2008 | 11% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
| Institutional Class |
Income Replacement 2016 |
|
September 2007 | 18% |
October 2007 | 19% |
November 2007 | 18% |
December 2007 (Ex-Date 12/26/07) | 21% |
December 2007 (Ex-Date 12/28/07) | 20% |
January 2008 | 5% |
February 2008 | 5% |
March 2008 | 5% |
April 2008 | 5% |
May 2008 | 5% |
June 2008 | 5% |
July 2008 | 5% |
| Institutional Class |
Income Replacement 2018 |
|
September 2007 | 18% |
October 2007 | 20% |
November 2007 | 20% |
December 2007 (Ex-Date 12/26/07) | 21% |
December 2007 (Ex-Date 12/28/07) | 20% |
January 2008 | 6% |
February 2008 | 6% |
March 2008 | 6% |
April 2008 | 6% |
May 2008 | 6% |
June 2008 | 6% |
July 2008 | 6% |
| Institutional Class |
Income Replacement 2020 |
|
September 2007 | 22% |
October 2007 | 23% |
November 2007 | 22% |
December 2007 (Ex-Date 12/26/07) | 26% |
December 2007 (Ex-Date 12/28/07) | 24% |
January 2008 | 6% |
February 2008 | 6% |
March 2008 | 6% |
April 2008 | 7% |
May 2008 | 6% |
June 2008 | 6% |
July 2008 | 7% |
| Institutional Class |
Income Replacement 2022 |
|
September 2007 | 25% |
October 2007 | 28% |
November 2007 | 29% |
December 2007 (Ex-Date 12/26/07) | 30% |
December 2007 (Ex-Date 12/28/07) | 29% |
January 2008 | 7% |
February 2008 | 7% |
March 2008 | 7% |
April 2008 | 7% |
May 2008 | 7% |
June 2008 | 7% |
July 2008 | 7% |
| Institutional Class |
Income Replacement 2024 |
|
September 2007 | 23% |
October 2007 | 25% |
November 2007 | 24% |
December 2007 (Ex-Date 12/26/07) | 28% |
December 2007 (Ex-Date 12/28/07) | 26% |
January 2008 | 7% |
February 2008 | 7% |
March 2008 | 7% |
April 2008 | 7% |
May 2008 | 7% |
June 2008 | 7% |
July 2008 | 7% |
| Institutional Class |
Income Replacement 2026 |
|
September 2007 | 27% |
October 2007 | 30% |
November 2007 | 28% |
December 2007 (Ex-Date 12/26/07) | 33% |
December 2007 (Ex-Date 12/28/07) | 31% |
January 2008 | 7% |
February 2008 | 8% |
March 2008 | 7% |
April 2008 | 8% |
May 2008 | 7% |
June 2008 | 7% |
July 2008 | 8% |
| Institutional Class |
Income Replacement 2028 |
|
September 2007 | 26% |
October 2007 | 30% |
November 2007 | 30% |
December 2007 (Ex-Date 12/26/07) | 32% |
December 2007 (Ex-Date 12/28/07) | 32% |
January 2008 | 8% |
February 2008 | 8% |
March 2008 | 8% |
April 2008 | 8% |
May 2008 | 8% |
June 2008 | 8% |
July 2008 | 8% |
| Institutional Class |
Income Replacement 2030 |
|
September 2007 | 27% |
October 2007 | 30% |
November 2007 | 26% |
December 2007 (Ex-Date 12/26/07) | 33% |
December 2007 (Ex-Date 12/28/07) | 30% |
January 2008 | 7% |
February 2008 | 7% |
March 2008 | 8% |
April 2008 | 9% |
May 2008 | 7% |
June 2008 | 8% |
July 2008 | 9% |
| Institutional Class |
Income Replacement 2032 |
|
September 2007 | 29% |
October 2007 | 32% |
November 2007 | 30% |
December 2007 (Ex-Date 12/26/07) | 36% |
December 2007 (Ex-Date 12/28/07) | 35% |
January 2008 | 8% |
February 2008 | 8% |
March 2008 | 8% |
April 2008 | 9% |
May 2008 | 8% |
June 2008 | 8% |
July 2008 | 9% |
| Institutional Class |
Income Replacement 2034 |
|
September 2007 | 29% |
October 2007 | 32% |
November 2007 | 32% |
December 2007 (Ex-Date 12/26/07) | 37% |
December 2007 (Ex-Date 12/28/07) | 35% |
January 2008 | 9% |
February 2008 | 9% |
March 2008 | 9% |
April 2008 | 10% |
May 2008 | 9% |
June 2008 | 9% |
July 2008 | 10% |
| Institutional Class |
Income Replacement 2036 |
|
September 2007 | 30% |
October 2007 | 34% |
November 2007 | 33% |
December 2007 (Ex-Date 12/26/07) | 38% |
December 2007 (Ex-Date 12/28/07) | 36% |
January 2008 | 9% |
February 2008 | 9% |
March 2008 | 9% |
April 2008 | 10% |
May 2008 | 9% |
June 2008 | 9% |
July 2008 | 10% |
| Institutional Class |
Income Replacement 2038 |
|
January 2008 | 10% |
February 2008 | 10% |
March 2008 | 11% |
April 2008 | 10% |
May 2008 | 10% |
June 2008 | 10% |
July 2008 | 11% |
| Institutional Class |
Income Replacement 2040 |
|
January 2008 | 10% |
February 2008 | 10% |
March 2008 | 11% |
April 2008 | 11% |
May 2008 | 10% |
June 2008 | 10% |
July 2008 | 11% |
| Institutional Class |
Income Replacement 2042 |
|
January 2008 | 10% |
February 2008 | 11% |
March 2008 | 11% |
April 2008 | 11% |
May 2008 | 10% |
June 2008 | 11% |
July 2008 | 11% |
The fund will notify shareholders in January 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Income Replacement Funds
Each year, typically in June, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract (the Advisory Contract) 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 and, acting directly and through its separate committees, requests and receives information concerning, and considers at each of its meetings factors that are relevant to, its annual consideration of the renewal of each fund's Advisory Contract, 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 a written charter outlining the structure and purposes of the committee. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of each fund's Advisory Contract.
At its June 2008 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew each fund's Advisory Contract. In reaching its determination, the Board considered all factors it believed relevant and ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of each fund's Advisory Contract and the compensation to be received by Fidelity under the management contracts is consistent with Fidelity's fiduciary duty under applicable law. The Board's decision to renew each fund's Advisory Contract was not based on any single factor noted above, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. In reaching its determination to renew each fund's Advisory Contract, the Board 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.
Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, Strategic Advisers, Inc. (the Investment Adviser), including the backgrounds of the funds' investment personnel 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 Adviser's investment staff, its use of technology, and the Investment Adviser's approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. 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.
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 Adviser and its affiliates under the each fund's Advisory Contract 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 Adviser's 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.
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 Fidelity has taken a number of actions over the previous year 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 fees on Fidelity's Institutional Money Market Funds and launching Class IV and Institutional Class of certain of these funds; (iii) reducing the transfer agent fees for the Fidelity Select Portfolios and Investor Class of the VIP funds; and (iv) launching Class K of 29 equity funds as a lower-fee class available to certain employer-sponsored retirement plans.
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. The Board noted that it is not possible to evaluate performance in any comprehensive fashion because each fund had been in operation for less than one calendar year. Once a fund has been in operation for at least one calendar year, the Board will review the fund's absolute investment performance for each class, as well as the fund's relative investment performance for each class measured against a proprietary custom index and, if a meaningful peer group exists, a peer group of mutual funds.
The Board considered that FMR has taken steps to refocus and strengthen equity research, equity portfolio management, and compliance.
Annual Report
Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Adviser 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 noted that the funds do not pay the Investment Adviser a management fee for investment advisory services. 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 period of each fund's operations 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." 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 0% means that 100% 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.
Income Replacement 2016 Fund
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Income Replacement 2018 Fund
Income Replacement 2020 Fund
Annual Report
Income Replacement 2022 Fund
Income Replacement 2024 Fund
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Income Replacement 2026 Fund
Income Replacement 2028 Fund
Annual Report
Income Replacement 2030 Fund
Income Replacement 2032 Fund
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Income Replacement 2034 Fund
Income Replacement 2036 Fund
Annual Report
Income Replacement 2038 Fund
Income Replacement 2040 Fund
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Income Replacement 2042 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 the period.
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 the total expenses of each class of each fund, the Board noted that each fund invests in Institutional Class of the underlying fund (if that underlying fund offers multiple classes of shares) to avoid charging fund-paid 12b-1 fees at both fund levels. The Board considered that the funds do not pay transfer agent fees. Instead, Institutional Class of each underlying fund (or the underlying fund, if that underlying fund does not offer multiple classes of shares) bears its pro rata portion of each fund's transfer agent fee according to the percentage of each fund's assets invested in that underlying fund. The Board further noted that the Investment Adviser pays all other expenses of each fund, with limited exceptions.
The Board noted that the total expenses of each of Class A, Class C, and Institutional Class of each fund ranked below its competitive median for the period, and each of Class T and the retail class of each fund ranked equal to its competitive median.
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.
Based on its review, the Board concluded that the total expenses of each class of each 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 level of Fidelity's profits in respect of all the Fidelity funds, as well as the profitability of each underlying fund.
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 concluded that the costs of the services provided by and the profits realized by Fidelity in connection with the operation of each fund were not relevant to the renewal of each fund's Advisory Contract because the funds do not pay management fees and FMR pays all other expenses of each fund, with limited exceptions.
Annual Report
Economies of Scale. The Board concluded that the realization of economies of scale was not relevant to the renewal of each fund's Advisory Contract because the funds do not pay management fees and the Investment Adviser pays all other expenses of each fund, with limited exceptions.
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 certain topics, including (i) fund performance trends and actions to be taken by FMR to improve certain funds' overall performance; (ii) portfolio manager changes that have occurred during the past year; (iii) Fidelity's fund profitability methodology, the profitability of certain fund service providers, and profitability trends for certain funds; (iv) Fidelity's compensation structure for portfolio managers and key personnel, including its effects on fund profitability and the extent to which portfolio manager compensation is linked to fund performance; (v) Fidelity's fee structures; (vi) the funds' sub-advisory arrangements; and (vii) accounts managed by Fidelity other than the Fidelity funds.
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 Contract should be renewed.
Annual Report
Investment Adviser
Strategic Advisers, Inc.
Boston, MA
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Mellon Bank
Pittsburgh, PA
ARWI-UANN-0908 1.848183.100
Fidelity®
Ultra-Short Bond
Fund
Annual Report
July 31, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
Performance | How the fund has done over time. | |
Management's Discussion | The manager's review of fund performance, strategy and outlook. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, | |
Notes | Notes to the financial statements. | |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Board Approval of Investment Advisory Contracts and Management Fees |
|
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 LLC 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.
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 fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Domestic and international securities markets have struggled thus far in 2008. High-grade fixed-income investments produced modestly positive results, but many stock benchmarks suffered double-digit losses through the first half of this year. Financial markets are always unpredictable, but 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
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of Ultra-Short Bond's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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, 2008 | Past 1 | Past 5 | Life of |
Ultra-Short Bond | -12.42% | -0.48% | -0.08% |
A From August 29, 2002.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Ultra-Short Bond, a class of the fund, on August 29, 2002, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the Lehman Brothers® 6 Month Swap Index performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Comments from Robert Galusza, who became sole Portfolio Manager of Fidelity® Ultra-Short Bond Fund on July 1, 2008
Bonds with less credit risk generally produced higher returns for investment-grade debt during the 12 months ending July 31, 2008. In that span, the Lehman Brothers® U.S. Aggregate Index - a proxy for high-quality, fixed-rate, taxable bonds - returned 6.15%. Treasuries did the best, buoyed by their reputation as the safest haven in turbulent times, with the Lehman Brothers U.S. Treasury Index up 8.99% during the period. Agency bonds, with their perceived "implicit" government backing, also did well, as the Lehman Brothers U.S. Agency Index rose 7.79%. Mortgage-backed securities ended the period with a gain of 6.96%, according to the Lehman Brothers U.S. Mortgage-Backed Securities Index, while the Lehman Brothers U.S. Credit Index - a measure of high-quality corporate debt - finished with a modest 2.85% increase. The asset-backed sector - home to weak-performing subprime debt - had negative results, as reflected in the 2.69% loss of the Lehman Brothers U.S. Fixed-Rate Asset-Backed Securities Index.
During the past year, Ultra-Short Bond returned -12.42% and the Lehman Brothers 6 Month Swap Index gained 4.62%. Throughout much of the reporting period, the fund held positions in a number of sectors that were hurt the worst by an expanding host of worries related to the credit crunch. Specifically, the bulk of the fund's underperformance stemmed from its exposure to asset-backed securities (ABS) - particularly those backed by subprime mortgages - commercial mortgage-backed securities (CMBS), collateralized mortgage obligations (CMOs) and corporate securities. Though these short-duration instruments - held both directly and also through Fidelity Ultra-Short Central Fund - were mostly highly rated (AA or AAA), their market values dropped significantly during the period. In an attempt to reduce the fund's overall volatility, manage anticipated shareholder redemptions and position the fund based on our view of future market risk, we undertook a number of initiatives in accordance with the principal investment strategies of the fund. We considerably reduced our stake in subprime mortgage securities and other types of securitized investments. We achieved this by initially reducing and ultimately liquidating the fund's underlying stake in Fidelity Ultra-Short Central Fund and by selling some holdings we believed would continue to experience extreme volatility. At the end of the period, the fund's stake in cash and cash-like instruments stood at roughly 82% of net assets, with the remainder invested in ABS, CMBS, CMOs, commercial paper, corporate bonds and mortgage pass-through securities.
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
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees, 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, 2008 to July 31, 2008).
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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
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. In addition, if these transactional costs were included, your costs would have been higher.
Annual Report
Shareholder Expense Example - continued
| Beginning | Ending | Expenses Paid |
Class A |
|
|
|
Actual | $ 1,000.00 | $ 945.60 | $ 3.29 |
HypotheticalA | $ 1,000.00 | $ 1,021.48 | $ 3.42 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 945.50 | $ 3.43 |
HypotheticalA | $ 1,000.00 | $ 1,021.33 | $ 3.57 |
Ultra-Short Bond |
|
|
|
Actual | $ 1,000.00 | $ 946.70 | $ 2.18 |
HypotheticalA | $ 1,000.00 | $ 1,022.63 | $ 2.26 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 946.40 | $ 2.56 |
HypotheticalA | $ 1,000.00 | $ 1,022.23 | $ 2.66 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). The fees and expenses of the underlying Fidelity Central Funds in which the Fund invests are not included in the Fund's annualized expense ratio.
| Annualized |
Class A | .68% |
Class T | .71% |
Ultra-Short Bond | .45% |
Institutional Class | .53% |
Annual Report
Investment Changes (Unaudited)
The information in the following tables is based on the combined investments of the Fund and its pro-rata share of its investments in each Fidelity Central Fund. |
Quality Diversification (% of fund's net assets) | |||||||
As of July 31, 2008* | As of January 31, 2008* | ||||||
![]() | U.S. Government and |
| ![]() | U.S. Government and |
| ||
![]() | AAA 7.5% |
| ![]() | AAA 27.8% |
| ||
![]() | AA 2.1% |
| ![]() | AA 13.2% |
| ||
![]() | A 0.8% |
| ![]() | A 13.1% |
| ||
![]() | BBB 1.6% |
| ![]() | BBB 18.1% |
| ||
![]() | BB and Below 0.2% |
| ![]() | BB and Below 0.1% |
| ||
![]() | Not Rated 0.2% |
| ![]() | Not Rated 0.9% |
| ||
![]() | Short-Term |
| ![]() | Short-Term |
|
We have used ratings from Moody's® Investors Services, Inc. Where Moody's ratings are not available, we have used S&P® ratings. All ratings are as of the report date and do not reflect subsequent downgrades. Securities rated BB or below were rated investment grade at the time of acquisition. |
Weighted Average Maturity as of July 31, 2008 | ||
|
| 6 months ago |
Years | 0.3 | 1.6 |
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, 2008 | ||
|
| 6 months ago |
Years | 0.2 | 0.5 |
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, 2008* | As of January 31, 2008** | ||||||
![]() | Corporate Bonds 1.8% |
| ![]() | Corporate Bonds 11.0% |
| ||
![]() | U.S. Government and |
| ![]() | U.S. Government and |
| ||
![]() | Asset-Backed |
| ![]() | Asset-Backed |
| ||
![]() | CMOs and Other Mortgage Related |
| ![]() | CMOs and Other Mortgage Related |
| ||
![]() | Short-Term |
| ![]() | Short-Term |
| ||
* Foreign investments | 2.4% |
| ** Foreign investments | 14.5% |
| ||
* Futures and Swaps | 0.0% |
| ** Futures and Swaps | 27.0% |
|
A holdings listing for the Fund, which presents direct holdings as well as the pro rata share of any securities and other investments held indirectly through its investment in underlying non-money market Fidelity Central Funds is available at fidelity.com and/or advisor.fidelity.com, as applicable. |
Annual Report
Investments July 31, 2008
Showing Percentage of Net Assets
Nonconvertible Bonds - 1.8% | |||
| Principal Amount | Value | |
FINANCIALS - 1.8% | |||
Capital Markets - 0.4% | |||
Bear Stearns Companies, Inc. 2.7281% 2/23/10 (b) | $ 1,500,000 | $ 1,476,080 | |
Commercial Banks - 0.1% | |||
Sovereign Bank 4.375% 8/1/13 (b) | 500,000 | 383,978 | |
Consumer Finance - 0.6% | |||
General Electric Capital Corp. 2.8763% 6/15/09 (b) | 1,900,000 | 1,899,937 | |
Insurance - 0.5% | |||
Metropolitan Life Global Funding I 3.5513% 6/25/10 (a)(b) | 1,500,000 | 1,498,622 | |
Thrifts & Mortgage Finance - 0.2% | |||
Independence Community Bank Corp. 4.8625% 6/20/13 (b) | 735,000 | 547,708 | |
TOTAL NONCONVERTIBLE BONDS (Cost $6,086,888) | 5,806,325 | ||
U.S. Government Agency - Mortgage Securities - 0.5% | |||
| |||
Freddie Mac - 0.5% | |||
4.482% 6/1/35 (b) | 1,500,000 | 1,499,025 | |
Asset-Backed Securities - 6.4% | |||
| |||
ACE Securities Corp. Home Equity Loan Trust: | |||
Series 2003-HE1 Class M1, 3.4363% 11/25/33 (b)(c) | 113,099 | 90,057 | |
Series 2003-HS1: | |||
Class M1, 3.2113% 6/25/33 (b)(c) | 6,004 | 5,884 | |
Class M2, 4.2113% 6/25/33 (b)(c) | 50,000 | 42,437 | |
Series 2004-HE1 Class M1, 2.9613% 2/25/34 (b)(c) | 56,106 | 55,186 | |
Series 2006-HE2: | |||
Class M3, 2.8013% 5/25/36 (b)(c) | 240,000 | 16,800 | |
Class M4, 2.8613% 5/25/36 (b)(c) | 200,000 | 15,960 | |
Class M5, 2.9013% 5/25/36 (b)(c) | 295,000 | 15,316 | |
Ameriquest Mortgage Securities, Inc.: | |||
Series 2004-R11 Class M1, 3.1213% 11/25/34 (b)(c) | 560,000 | 434,203 | |
Series 2004-R9 Class M2, 3.1113% 10/25/34 (b)(c) | 720,000 | 534,346 | |
Argent Securities, Inc. Series 2004-W7 Class M1, 3.0113% 5/25/34 (b)(c) | 305,000 | 226,942 | |
Asset-Backed Securities - continued | |||
| Principal Amount | Value | |
Capital One Master Trust Series 2001-6 Class A, 2.65% 6/15/11 (b) | $ 2,000,000 | $ 1,999,987 | |
Capital Trust Ltd. Series 2004-1: | |||
Class A2, 3.2363% 7/20/39 (a)(b) | 265,000 | 204,050 | |
Class B, 3.5363% 7/20/39 (a)(b) | 140,000 | 93,800 | |
Class C, 3.5581% 7/20/39 (a)(b) | 180,000 | 93,600 | |
Cendant Timeshare Receivables Funding LLC Series 2005 1A Class 2A2, 2.6381% 5/20/17 (a)(b) | 329,520 | 276,381 | |
Chase Issuance Trust Series 2007-14 Class A, 2.7075% 9/15/11 (b) | 2,000,000 | 1,993,462 | |
Citibank Credit Card Issuance Trust Series 2003-A8 Class A8, 3.5% 8/16/10 | 3,000,000 | 3,000,690 | |
Countrywide Home Loans, Inc. Series 2002-6 Class AV1, 3.3213% 5/25/33 (b)(c) | 16,267 | 11,262 | |
Fannie Mae subordinate REMIC pass-thru certificates | |||
Class AB1, 2.5544% 5/28/35 (b) | 80,751 | 58,715 | |
Class AB3, 2.6976% 5/28/35 (b) | 32,052 | 21,558 | |
First Franklin Mortgage Loan Trust Series 2004-FF2 | 7,718 | 7,145 | |
Fremont Home Loan Trust: | |||
Series 2005-A: | |||
Class M1, 2.8913% 1/25/35 (b)(c) | 150,843 | 132,504 | |
Class M2, 2.9213% 1/25/35 (b)(c) | 325,000 | 276,937 | |
Class M4, 3.1413% 1/25/35 (b)(c) | 125,000 | 56,640 | |
Series 2006-A: | |||
Class M4, 2.8613% 5/25/36 (b)(c) | 685,000 | 34,654 | |
Class M5, 2.9613% 5/25/36 (b)(c) | 365,000 | 16,228 | |
GSAMP Trust: | |||
Series 2003-FM1 Class M1, 3.6881% 3/20/33 (b)(c) | 445,890 | 344,452 | |
Series 2006-NC2 Class M4, 2.8113% 6/25/36 (b)(c) | 1,541,000 | 79,130 | |
Series 2007-HE1 Class M1, 2.7113% 3/25/47 (b)(c) | 335,000 | 68,625 | |
GSR Mortgage Loan Trust Series 2005-9 Class 2A1, 2.5813% 8/25/35 (b) | 50,343 | 49,367 | |
Guggenheim Structured Real Estate Funding Ltd. | 650,741 | 475,041 | |
Home Equity Asset Trust: | |||
Series 2002-3 Class A5, 3.3413% 2/25/33 (b)(c) | 14 | 9 | |
Series 2003-5: | |||
Class A2, 3.1613% 12/25/33 (b)(c) | 10,566 | 8,443 | |
Class M1, 3.5113% 12/25/33 (b)(c) | 129,805 | 114,092 | |
Series 2003-7 Class A2, 3.2213% 3/25/34 (b)(c) | 2,079 | 1,382 | |
Household Home Equity Loan Trust Series 2004-1 | 83,635 | 65,943 | |
Asset-Backed Securities - continued | |||
| Principal Amount | Value | |
MBNA Credit Card Master Note Trust: | |||
Series 2003-A11 Class A11, 3.65% 3/15/11 | $ 2,000,000 | $ 2,002,753 | |
Series 2003-A9 Class A9, 2.59% 2/15/11 (b) | 2,000,000 | 1,999,821 | |
Meritage Mortgage Loan Trust Series 2004-1 Class M2, 3.2863% 7/25/34 (b)(c) | 3,764 | 1,102 | |
Merrill Lynch Mortgage Investors Trust Series 2004-HE2 | 39,863 | 30,477 | |
Morgan Stanley ABS Capital I Trust Series 2004-HE6 | 65,756 | 42,925 | |
Morgan Stanley Dean Witter Capital I Trust Series 2002-AM3 Class A3, 3.4413% 2/25/33 (b)(c) | 14,114 | 10,912 | |
NovaStar Mortgage Funding Trust Series 2003-3 Class A3, 2.9113% 12/25/33 (b)(c) | 41,200 | 35,503 | |
Ocala Funding LLC Series 2006-1A Class A, 4.1863% 3/20/11 (a)(b) | 965,000 | 675,500 | |
Park Place Securities, Inc.: | |||
Series 2004-WCW1 Class M4, 3.9113% 9/25/34 (b)(c) | 435,000 | 99,889 | |
Series 2004-WWF1: | |||
Class A5, 2.9313% 1/25/35 (b)(c) | 3 | 2 | |
Class M4, 3.5613% 1/25/35 (b)(c) | 945,000 | 546,440 | |
Series 2005-WCH1 Class M3, 3.0213% 1/25/35 (b)(c) | 425,000 | 265,819 | |
Providian Master Note Trust Series 2006-C1A Class C1, 3.01% 3/16/15 (a)(b) | 2,465,000 | 1,553,320 | |
Salomon Brothers Mortgage Securities VII, Inc. Series 2003-HE1 Class A, 3.2613% 4/25/33 (b)(c) | 1,451 | 1,110 | |
SLMA Student Loan Trust Series 2004-10 Class A3, 2.89% 10/25/16 (b) | 1,384,181 | 1,381,370 | |
Terwin Mortgage Trust: | |||
Series 2003-4HE Class A1, 2.8913% 9/25/34 (b)(c) | 21,802 | 16,147 | |
Series 2003-6HE Class A1, 2.9313% 11/25/33 (b)(c) | 17,086 | 13,322 | |
WaMu Master Note Trust Series 2007-C1 Class C1, 2.86% 5/15/14 (a)(b) | 1,595,000 | 1,194,614 | |
TOTAL ASSET-BACKED SECURITIES (Cost $27,915,513) | 20,792,254 | ||
Collateralized Mortgage Obligations - 3.4% | |||
| Principal Amount | Value | |
Private Sponsor - 3.4% | |||
Bear Stearns Alt-A Trust floater Series 2005-2 | $ 443,807 | $ 282,148 | |
Credit Suisse First Boston Adjustable Rate Mortgage Trust floater: | |||
Series 2004-2 Class 7A3, 2.8613% 2/25/35 (b) | 165,734 | 135,206 | |
Series 2004-4 Class 5A2, 2.8613% 3/25/35 (b) | 35,547 | 26,661 | |
Series 2005-1 Class 5A2, 2.7913% 5/25/35 (b) | 112,713 | 80,277 | |
Series 2005-10 Class 5A2, 2.7813% 1/25/36 (b) | 768,241 | 400,519 | |
Series 2005-2: | |||
Class 6A2, 2.7413% 6/25/35 (b) | 34,993 | 23,901 | |
Class 6M2, 2.9413% 6/25/35 (b) | 1,375,000 | 550,641 | |
Series 2005-3 Class 8A2, 2.7013% 7/25/35 (b) | 532,040 | 341,583 | |
Series 2005-5 Class 6A2, 2.6913% 9/25/35 (b) | 450,934 | 307,111 | |
Series 2005-8 Class 7A2, 2.7413% 11/25/35 (b) | 342,138 | 236,074 | |
Credit Suisse First Boston Mortgage Securities Corp. floater: | |||
Series 2004-AR2 Class 6A1, 2.8613% 3/25/34 (b) | 337 | 248 | |
Series 2004-AR3 Class 6A2, 3.2013% 4/25/34 (b) | 1,132 | 813 | |
Series 2004-AR5 Class 11A2, 3.2013% 6/25/34 (b) | 22,645 | 18,755 | |
Series 2004-AR6 Class 9A2, 3.2013% 10/25/34 (b) | 28,271 | 23,233 | |
Series 2004-AR7 Class 6A2, 2.8413% 8/25/34 (b) | 42,794 | 37,911 | |
Series 2004-AR8 Class 8A2, 2.8413% 9/25/34 (b) | 29,976 | 25,865 | |
Deutsche Alt-A Securities Mortgage Loan Trust floater | 1,375,000 | 726,659 | |
First Horizon Mortgage pass-thru Trust floater | 53,760 | 45,262 | |
GSR Mortgage Loan Trust floater Series 2004-11 | 462,326 | 425,344 | |
Homestar Mortgage Acceptance Corp. floater Series 2004-5 Class A1, 2.9113% 10/25/34 (b) | 321,101 | 254,478 | |
Impac CMB Trust floater: | |||
Series 2004-11 Class 2A2, 2.8313% 3/25/35 (b) | 231,100 | 174,772 | |
Series 2005-1: | |||
Class M4, 3.2113% 4/25/35 (b) | 32,297 | 6,847 | |
Class M5, 3.2313% 4/25/35 (b) | 32,297 | 5,711 | |
Class M6, 3.2813% 4/25/35 (b) | 50,384 | 7,641 | |
Series 2005-4 Class 1B1, 3.7613% 5/25/35 (b) | 212,658 | 27,131 | |
Lehman Structured Securities Corp. floater Series 2005-1 | 391,371 | 211,233 | |
MASTR Adjustable Rate Mortgages Trust floater: | |||
Series 2004-11: | |||
Class 1A4, 2.9513% 11/25/34 (b) | 28,840 | 22,294 | |
Collateralized Mortgage Obligations - continued | |||
| Principal Amount | Value | |
Private Sponsor - continued | |||
MASTR Adjustable Rate Mortgages Trust floater: - continued | |||
Series 2004-11: | |||
Class 2A1, 2.8413% 11/25/34 (b) | $ 10,577 | $ 8,598 | |
Class 2A2, 2.9013% 11/25/34 (b) | 2,329 | 1,822 | |
Series 2005-1 Class 1A1, 2.7313% 3/25/35 (b) | 57,000 | 39,337 | |
MASTR Seasoned Securitization Trust Series 2004-1 | 304,908 | 292,680 | |
Merrill Lynch Mortgage Investors Trust floater: | |||
Series 2003-A Class 2A2, 3.4806% 3/25/28 (b) | 21,616 | 19,312 | |
Series 2003-D Class A, 2.7713% 8/25/28 (b) | 276,715 | 257,793 | |
Series 2003-E Class A2, 3.4006% 10/25/28 (b) | 99,121 | 92,524 | |
Series 2003-F Class A2, 5.7613% 10/25/28 (b) | 114,742 | 107,030 | |
Series 2004-A Class A2, 2.7475% 4/25/29 (b) | 156,213 | 143,132 | |
Series 2004-B Class A2, 5.125% 6/25/29 (b) | 116,103 | 107,829 | |
Series 2004-C Class A2, 5.155% 7/25/29 (b) | 173,715 | 164,511 | |
Series 2004-D Class A2, 2.8575% 9/25/29 (b) | 201,634 | 186,903 | |
Series 2005-A Class A2, 3.3206% 2/25/30 (b) | 184,239 | 174,838 | |
Series 2005-B Class A2, 3.0388% 7/25/30 (b) | 197,010 | 164,913 | |
Series 2006-MLN1 Class M4, 2.8213% 7/25/37 (b)(c) | 1,015,000 | 62,905 | |
MortgageIT Trust floater Series 2004-2: | |||
Class A1, 2.8313% 12/25/34 (b) | 258,088 | 227,720 | |
Class A2, 2.9113% 12/25/34 (b) | 348,611 | 304,044 | |
Provident Funding Mortgage Loan Trust Series 2005-2 | 531,721 | 499,893 | |
Residential Asset Mortgage Products, Inc. Series 2005-AR5 Class 1A1, 4.7612% 9/19/35 (b) | 290,235 | 274,044 | |
Sequoia Mortgage Trust floater: | |||
Series 2003-5 Class A2, 3.31% 9/20/33 (b) | 101,851 | 82,714 | |
Series 2004-1 Class A, 4.1113% 2/20/34 (b) | 80,404 | 65,066 | |
Series 2004-10 Class A4, 4.0938% 11/20/34 (b) | 201,822 | 162,199 | |
Series 2004-12 Class 1A2, 5.115% 1/20/35 (b) | 354,352 | 292,726 | |
Series 2004-4 Class A, 4.0713% 5/20/34 (b) | 255,030 | 206,144 | |
Series 2004-5 Class A3, 3.1663% 6/20/34 (b) | 94,561 | 76,399 | |
Series 2004-6 Class A3A, 3.4913% 6/20/35 (b) | 100,524 | 80,999 | |
Series 2004-7: | |||
Class A3A, 4.1363% 8/20/34 (b) | 120,849 | 97,408 | |
Class A3B, 4.3613% 7/20/34 (b) | 234,657 | 191,658 | |
Series 2004-8 Class A2, 3.35% 9/20/34 (b) | 389,887 | 314,377 | |
Series 2005-1 Class A2, 4.0613% 2/20/35 (b) | 211,159 | 164,603 | |
Series 2005-2 Class A2, 3.23% 3/20/35 (b) | 288,345 | 209,897 | |
Soundview Home Equity Loan Trust floater Series 2006-EQ1 Class M7, 3.2613% 9/25/36 (b)(c) | 330,000 | 20,549 | |
Collateralized Mortgage Obligations - continued | |||
| Principal Amount | Value | |
Private Sponsor - continued | |||
Structured Asset Securities Corp. floater: | |||
Series 2004-NP1 Class A, 2.8613% 9/25/33 (a)(b) | $ 65,323 | $ 58,967 | |
Series 2007-GEL1 Class A2, 2.6513% 1/25/37 (a)(b)(c) | 1,000,000 | 559,500 | |
TBW Mortgage-Backed pass-thru certificates floater | 1,000,000 | 650,000 | |
WaMu Mortgage pass-thru certificates: | |||
floater Series 2006-AR11 Class C1B1, 2.5413% 9/25/46 (b) | 214,577 | 207,861 | |
sequential payer Series 2002-S6 Class A25, 6% 10/25/32 | 75,719 | 75,823 | |
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $17,063,644) | 11,045,036 | ||
Commercial Mortgage Securities - 0.8% | |||
| |||
Morgan Stanley Capital I Trust: | |||
floater: | |||
Series 2005-XLF Class K, 3.11% 8/15/19 (a)(b) | 420,000 | 361,200 | |
Series 2006-XLF Class C, 3.66% 7/15/19 (a)(b) | 570,000 | 478,800 | |
Series 2007-XLFA Class B, 2.59% 10/15/20 (a)(b) | 440,000 | 402,600 | |
Series 2007-XLC1: | |||
Class C, 3.0575% 7/17/17 (a)(b) | 843,811 | 607,544 | |
Class D, 3.1575% 7/17/17 (a)(b) | 397,088 | 266,049 | |
Class E, 3.2575% 7/17/17 (a)(b) | 320,725 | 205,264 | |
STRIPS III Ltd./STRIPS III Corp. floater Series 2004-1A Class A, 2.9419% 3/24/18 (a)(b) | 150,156 | 135,141 | |
TOTAL COMMERCIAL MORTGAGE SECURITIES (Cost $3,142,315) | 2,456,598 | ||
Commercial Paper - 4.9% | |||
| |||
Australia & New Zealand Banking Group Ltd. yankee 2.72% 10/15/08 | 2,000,000 | 1,988,389 | |
Barclays U.S. Funding Corp. yankee 2.78% 10/29/08 | 2,000,000 | 1,985,900 | |
BNP Paribas Finance, Inc. yankee 2.779% 11/3/08 | 2,000,000 | 1,985,001 | |
CBA Finance, Inc. yankee: | |||
2.72% 10/7/08 | 1,132,000 | 1,126,205 | |
2.72% 10/8/08 | 1,000,000 | 994,796 | |
Natexis Banques Populaires US Finance Co. LLC yankee 2.995% 11/4/08 | 2,000,000 | 1,984,821 | |
Commercial Paper - continued | |||
| Principal Amount | Value | |
Royal Bank of Scotland PLC yankee 2.82% 9/8/08 | $ 2,000,000 | $ 1,994,557 | |
Societe Generale North America, Inc. yankee 2.85% | 2,000,000 | 1,994,242 | |
UniCredito Italiano Bank (Ireland) PLC yankee 2.935% 10/24/08 | 2,000,000 | 1,986,660 | |
TOTAL COMMERCIAL PAPER (Cost $16,038,485) | 16,040,571 | ||
Cash Equivalents - 82.4% | |||
Maturity |
| ||
Investments in repurchase agreements in a joint trading account at 2.19%, dated 7/31/08 due 8/1/08 (Collateralized by U.S. Government Obligations) # | $ 182,126,086 | 182,115,000 | |
With: | |||
Banc of America Securities LLC at: | |||
2.37%, dated 7/31/08 due 8/1/08 (Collateralized by Corporate Obligations valued at $13,650,898, 2.73% - 6.63%, 11/28/08 - 7/15/18) | 13,000,855 | 13,000,000 | |
2.39%, dated 7/31/08 due 8/1/08 (Collateralized by Corporate Obligations valued at $2,100,139, 6.5%, 11/1/17) | 2,000,133 | 2,000,000 | |
Barclays Capital, Inc. at 2.34%, dated 7/31/08 due 8/1/08 (Collateralized by Corporate Obligations | 13,000,844 | 13,000,000 | |
J.P. Morgan Securities, Inc. at 2.39%, dated 7/31/08 | 13,000,862 | 13,000,000 | |
Lehman Brothers, Inc. at 2.41%, dated 7/31/08 | 15,001,003 | 15,000,000 | |
Cash Equivalents - 82.4% | |||
Maturity | Value | ||
With: - continued | |||
Merrill Lynch, Pierce, Fenner & Smith at 2.34%, dated 7/31/08 due 8/1/08 (Collateralized by Mortgage Loan Obligations valued at $15,752,629, 2.58%, 2/15/20) | $ 15,000,974 | $ 15,000,000 | |
Wachovia Securities, Inc. at 2.39%, dated 7/31/08 due 8/1/08 (Collateralized by Commercial Paper Obligations valued at $15,451,025, 8/12/08) | 15,000,995 | 15,000,000 | |
TOTAL CASH EQUIVALENTS (Cost $268,115,000) | 268,115,000 | ||
TOTAL INVESTMENT PORTFOLIO - 100.2% (Cost $339,871,220) | 325,754,809 | ||
NET OTHER ASSETS - (0.2)% | (581,564) | ||
NET ASSETS - 100% | $ 325,173,245 |
Legend |
(a) 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 $9,351,226 or 2.9% of net assets. |
(b) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. |
(c) Security or a portion of the security backed by subprime mortgage loans. At period end, the value of these securities amounted to $4,361,179 or 1.4% of net assets. |
# Additional Information on each counterparty to the repurchase agreement is as follows: |
Repurchase Agreement / Counterparty | Value |
$182,115,000 due 8/01/08 at 2.19% | |
BNP Paribas Securities Corp. | $ 13,614,591 |
Banc of America Securities LLC | 21,116,508 |
Bank of America, NA | 20,437,101 |
Barclays Capital, Inc. | 88,908,134 |
Greenwich Capital Markets, Inc. | 3,334,185 |
ING Financial Markets | 18,893,718 |
J.P. Morgan Securities, | 10,253,787 |
RBC Capital Markets Corp. | 2,778,488 |
WestLB AG | 2,778,488 |
| $ 182,115,000 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Ultra-Short Central Fund | $ 4,105,565 |
Additional information regarding the Fund's fiscal year to date purchases and sales, including the ownership percentage, of the non Money Market Central Funds is as follows: |
Fund | Value, | Purchases | Sales Proceeds | Value, end of period | % ownership, end of period |
Fidelity Ultra-Short Central Fund | $ 255,014,810 | $ - | $ 235,895,358 | $ - | 0.0% |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 97.6% |
Others (individually less than 1%) | 2.4% |
| 100.0% |
Income Tax Information |
At July 31, 2008, the fund had a capital loss carryforward of approximately $14,622,425 of which $1,917,431, $518,690 and $12,186,304 will expire on July 31, 2014, 2015 and 2016, respectively. |
The fund intends to elect to defer to its fiscal year ending July 31, 2009 approximately $97,399,166 of losses recognized during the period November 1, 2007 to July 31, 2008. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including repurchase agreements of $268,115,000) - See accompanying schedule: Unaffiliated issuers (cost $339,871,220) |
| $ 325,754,809 |
Receivable for fund shares sold | 140,581 | |
Interest receivable | 140,677 | |
Other receivables | 95,900 | |
Total assets | 326,131,967 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 395 | |
Payable for fund shares redeemed | 809,883 | |
Distributions payable | 22,945 | |
Accrued management fee | 86,493 | |
Distribution fees payable | 1,053 | |
Other affiliated payables | 37,953 | |
Total liabilities | 958,722 | |
|
|
|
Net Assets | $ 325,173,245 | |
Net Assets consist of: |
| |
Paid in capital | $ 451,846,561 | |
Distributions in excess of net investment income | (535,314) | |
Accumulated undistributed net realized gain (loss) on investments | (112,021,591) | |
Net unrealized appreciation (depreciation) on investments | (14,116,411) | |
Net Assets | $ 325,173,245 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Assets and Liabilities - continued
| July 31, 2008 | |
|
|
|
Calculation of Maximum Offering Price | $ 8.26 | |
|
|
|
Maximum offering price per share (100/98.50 of $8.26) | $ 8.39 | |
Class T: | $ 8.26 | |
|
|
|
Maximum offering price per share (100/98.50 of $8.26) | $ 8.39 | |
Ultra-Short Bond: | $ 8.26 | |
|
|
|
Institutional Class: | $ 8.26 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Operations
| Year ended July 31, 2008 | |
|
|
|
Investment Income |
|
|
Interest |
| $ 22,134,827 |
Income from Fidelity Central Funds |
| 4,105,565 |
Total income |
| 26,240,392 |
|
|
|
Expenses | ||
Management fee | $ 1,676,755 | |
Transfer agent fees | 542,646 | |
Distribution fees | 19,770 | |
Fund wide operations fee | 182,891 | |
Independent trustees' compensation | 2,524 | |
Miscellaneous | 1,577 | |
Total expenses before reductions | 2,426,163 | |
Expense reductions | (14,872) | 2,411,291 |
Net investment income | 23,829,101 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (83,363,462) | |
Fidelity Central Funds | (23,922,089) |
|
Futures contracts | 1,456,351 | |
Swap agreements | (6,787,666) |
|
Total net realized gain (loss) |
| (112,616,866) |
Change in net unrealized appreciation (depreciation) on: Investment securities | 3,839,529 | |
Futures contracts | 122,630 | |
Swap agreements | 3,056,651 | |
Total change in net unrealized appreciation (depreciation) |
| 7,018,810 |
Net gain (loss) | (105,598,056) | |
Net increase (decrease) in net assets resulting from operations | $ (81,768,955) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income | $ 23,829,101 | $ 51,627,290 |
Net realized gain (loss) | (112,616,866) | (1,037,412) |
Change in net unrealized appreciation (depreciation) | 7,018,810 | (20,635,029) |
Net increase (decrease) in net assets resulting | (81,768,955) | 29,954,849 |
Distributions to shareholders from net investment income | (21,041,939) | (51,625,727) |
Distributions to shareholders from return of capital | (2,083,483) | - |
Total distributions | (23,125,422) | (51,625,727) |
Share transactions - net increase (decrease) | (571,462,575) | 161,604,013 |
Redemption fees | 64,200 | 39,619 |
Total increase (decrease) in net assets | (676,292,752) | 139,972,754 |
|
|
|
Net Assets | ||
Beginning of period | 1,001,465,997 | 861,493,243 |
End of period (including distributions in excess of net investment income of $535,314 and undistributed net investment income of $539,837, respectively) | $ 325,173,245 | $ 1,001,465,997 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.82 | $ 10.02 | $ 10.03 | $ 10.05 | $ 10.04 |
Income from Investment Operations |
|
|
|
|
|
Net investment income E | .384 | .493 | .400 | .223 | .013 |
Net realized and unrealized gain (loss) | (1.612) | (.198) | (.009) | (.026) | .011 |
Total from investment operations | (1.228) | .295 | .391 | .197 | .024 |
Distributions from net investment income | (.294) | (.495) | (.401) | (.214) | (.014) |
Distributions from net realized gain | - | - | - | (.003) | - |
Return of capital | (.039) | - | - | - | - |
Total distributions | (.333) | (.495) | (.401) | (.217) | (.014) |
Redemption fees added to paid in capital E | .001 | - J | - J | - J | -J |
Net asset value, end of period | $ 8.26 | $ 9.82 | $ 10.02 | $ 10.03 | $ 10.05 |
Total Return B, C, D | (12.71)% | 2.97% | 3.97% | 1.98% | .24% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | .67% | .66% | .70% | .78% | .85% A |
Expenses net of fee waivers, | .67% | .66% | .70% | .70% | .70% A |
Expenses net of all reductions | .66% | .66% | .70% | .70% | .70% A |
Net investment income | 4.26% | 4.96% | 4.00% | 2.23% | 1.11% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period | $ 6,268 | $ 13,735 | $ 4,553 | $ 2,557 | $ 316 |
Portfolio turnover rate G | 11% | 29% | 39% | 33% | 53% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period June 16, 2004 (commencement of sale of shares) to July 31, 2004.
I Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
J Amount represents less than $.001 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.82 | $ 10.02 | $ 10.03 | $ 10.05 | $ 10.04 |
Income from Investment Operations |
|
|
|
|
|
Net investment income E | .377 | .491 | .404 | .222 | .013 |
Net realized and unrealized gain (loss) | (1.607) | (.199) | (.011) | (.025) | .010 |
Total from investment operations | (1.230) | .292 | .393 | .197 | .023 |
Distributions from net investment income | (.292) | (.492) | (.403) | (.214) | (.013) |
Distributions from net realized gain | - | - | - | (.003) | - |
Return of capital | (.039) | - | - | - | - |
Total distributions | (.331) | (.492) | (.403) | (.217) | (.013) |
Redemption fees added to paid in capital E | .001 | - J | - J | - J | - J |
Net asset value, end of period | $ 8.26 | $ 9.82 | $ 10.02 | $ 10.03 | $ 10.05 |
Total Return B, C, D | (12.72)% | 2.95% | 4.00% | 1.98% | .23% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | .69% | .69% | .68% | .77% | .86% A |
Expenses net of fee waivers, | .69% | .69% | .68% | .70% | .70% A |
Expenses net of all reductions | .69% | .69% | .68% | .70% | .70% A |
Net investment income | 4.23% | 4.93% | 4.03% | 2.23% | 1.11% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period | $ 2,910 | $ 4,818 | $ 4,624 | $ 4,044 | $ 356 |
Portfolio turnover rate G | 11% | 29% | 39% | 33% | 53% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period June 16, 2004 (commencement of sale of shares) to July 31, 2004.
I Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
J Amount represents less than $.001 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Ultra-Short Bond
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.81 | $ 10.02 | $ 10.03 | $ 10.05 | $ 10.02 |
Income from Investment Operations |
|
|
|
|
|
Net investment income C | .404 | .516 | .427 | .241 | .122 |
Net realized and unrealized gain (loss) | (1.603) | (.210) | (.011) | (.026) | .029 |
Total from investment operations | (1.199) | .306 | .416 | .215 | .151 |
Distributions from net investment income | (.310) | (.516) | (.426) | (.232) | (.122) |
Distributions from net realized gain | - | - | - | (.003) | - |
Return of capital | (.042) | - | - | - | - |
Total distributions | (.352) | (.516) | (.426) | (.235) | (.122) |
Redemption fees added to paid in capital C | .001 | - G | - G | - G | .001 |
Net asset value, end of period | $ 8.26 | $ 9.81 | $ 10.02 | $ 10.03 | $ 10.05 |
Total Return A, B | (12.42)% | 3.09% | 4.23% | 2.16% | 1.52% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | .45% | .45% | .45% | .58% | .62% |
Expenses net of fee waivers, | .45% | .45% | .45% | .53% | .55% |
Expenses net of all reductions | .45% | .45% | .45% | .53% | .55% |
Net investment income | 4.47% | 5.17% | 4.26% | 2.41% | 1.21% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period | $ 315,401 | $ 974,602 | $ 850,329 | $ 906,644 | $ 580,174 |
Portfolio turnover rate E | 11% | 29% | 39% | 33% | 53% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount represents less than $.001 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Institutional Class
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.81 | $ 10.02 | $ 10.03 | $ 10.05 | $ 10.04 |
Income from Investment Operations |
|
|
|
|
|
Net investment income D | .416 | .510 | .420 | .240 | .015 |
Net realized and unrealized gain (loss) | (1.619) | (.206) | (.008) | (.026) | .010 |
Total from investment operations | (1.203) | .304 | .412 | .214 | .025 |
Distributions from net investment income | (.306) | (.514) | (.422) | (.231) | (.015) |
Distributions from net realized gain | - | - | - | (.003) | - |
Return of capital | (.042) | - | - | - | - |
Total distributions | (.348) | (.514) | (.422) | (.234) | (.015) |
Redemption fees added to paid in capital D | .001 | - I | - I | - I | - I |
Net asset value, end of period | $ 8.26 | $ 9.81 | $ 10.02 | $ 10.03 | $ 10.05 |
Total Return B, C | (12.46)% | 3.06% | 4.19% | 2.15% | .25% |
Ratios to Average Net Assets E, H |
|
|
|
|
|
Expenses before reductions | .48% | .48% | .49% | .58% | .67% A |
Expenses net of fee waivers, | .48% | .48% | .49% | .55% | .55% A |
Expenses net of all reductions | .48% | .48% | .49% | .55% | .55% A |
Net investment income | 4.44% | 5.14% | 4.22% | 2.38% | 1.26% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period | $ 594 | $ 8,312 | $ 1,987 | $ 509 | $ 376 |
Portfolio turnover rate F | 11% | 29% | 39% | 33% | 53% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period June 16, 2004 (commencement of sale of shares) to July 31, 2004.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount represents less than $.001 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended July 31, 2008
1. Organization.
Fidelity Ultra-Short Bond 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, Ultra-Short Bond 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. 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. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
Based on their investment objective, each Fidelity Central Fund may invest or participate in various investment vehicles or strategies that are similar to those of the Fund. These strategies are consistent with the investment objectives of the Fund and may involve certain economic risks which may cause a decline in value of each of the Fidelity Central Funds and thus a decline in the value of the Fund. The following summarizes the Fund's investment in each Fidelity Central Fund.
Fidelity Central Fund | Investment Manager | Investment Objective | Investment Practices |
Fidelity Ultra-Short | Fidelity Investments Money Management, Inc. (FIMM) | Seeks to obtain a high level of current income consistent with preservation of capital by investing in U.S. dollar denominated money market and investment-grade debt securities. | Futures Repurchase Agreements Restricted Securities Swap Agreements |
Annual Report
2. Investments in Fidelity Central Funds - continued
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. 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. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Debt securities, including restricted securities, 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. Investments in open-end mutual funds, including the Fidelity Central 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. Actual prices received at disposition may differ.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
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 per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE) normally 4:00 pm Eastern time and 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.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities.
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.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service.
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.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. Certain adjustments have been made to the accounts relating to prior periods. Collectively, 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 futures transactions, swap agreements, market discount, capital loss carryforwards and losses deferred due to excise tax regulations.
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 10,957 |
Unrealized depreciation | (14,125,882) |
Net unrealized appreciation (depreciation) | (14,114,925) |
Capital loss carryforward | $ (14,622,425) |
|
|
Cost for federal income tax purposes | $ 339,869,734 |
The tax character of distributions paid was as follows:
| July 31, 2008 | July 31, 2007 |
Ordinary Income | $ 21,041,939 | $ 51,625,727 |
Tax Return of Capital | 2,083,483 | - |
Total | $ 23,125,422 | $ 51,625,727 |
For the period ended July 31, 2008, the Fund's distributions exceeded the aggregate amount of taxable income and net realized gains resulting in a return of capital for tax purposes. This was due to reductions in taxable income available for distribution after certain distributions had been made. The tax treatment of distributions for the 2008 calendar year will be reported to shareholders prior to February 1, 2009.
Short-Term Trading (Redemption) Fees. Shares held in the Fund less than 60 days are subject to a redemption fee equal to .25% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncements. 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 results in expanded disclosures about fair value measurements.
In addition, in March 2008, Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (SFAS 161), was issued and is effective for fiscal years beginning after November 15, 2008. SFAS 161 requires enhanced disclosures to provide information about the reasons the Fund invests in derivative instruments, the accounting treatment and the effect derivatives have on financial performance. Management is currently evaluating the impact the adoption of SFAS 161 will have on the Fund's financial statement disclosures.
Annual Report
Notes to Financial Statements - continued
4. Operating Policies.
Repurchase Agreements. 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.
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. Losses may arise from changes in the value of the underlying instruments or if the counterparties do not perform under the contract's terms.
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.
Swap Agreements. The Fund may invest in swaps for the purpose of managing its exposure to interest rate, credit or market risk.
Total return swaps are agreements to exchange the return generated by one instrument or index for the return generated by another instrument, for example, the agreement to pay interest in exchange for a market-linked return based on a notional amount. To the
Annual Report
4. Operating Policies - continued
Swap Agreements - continued
extent the total return of the index exceeds the offsetting interest obligation, a fund will receive a payment from the counterparty. To the extent it is less, a fund will make a payment to the counterparty.
Credit default swaps involve the exchange of a fixed rate premium for protection against the loss in value of an underlying debt instrument in the event of a defined credit event (such as payment default or bankruptcy). Under the terms of the swap, one party acts as a "guarantor" receiving a periodic payment that is a fixed percentage applied to a notional principal amount. In return the party agrees to purchase the notional amount of the underlying instrument, at par, if a credit event occurs during the term of the swap. The Fund may enter into credit default swaps in which either it or its counterparty act as guarantors. By acting as the guarantor of a swap, a fund assumes the market and credit risk of the underlying instrument including liquidity and loss of value.
Swaps are marked-to-market daily based on dealer-supplied valuations and changes in value are recorded as unrealized appreciation (depreciation). Periodic payments and premiums received or made by the Fund are recorded in the accompanying Statement of Operations as realized gains or losses, respectively. 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.
5. Purchases and Sales of Investments.
Purchases and sales of securities (including the Fixed-Income Central Funds), other than short-term securities and U.S. government securities, aggregated $19,743,713 and $711,838,309, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. 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 .31% of the Fund's average net assets.
Annual Report
Notes to Financial Statements - continued
6. Fees and Other Transactions with Affiliates - continued
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 | Service | Paid to | Retained |
Class A | 0% | .15% | $ 14,235 | $ 3,550 |
Class T | 0% | .15% | 5,535 | 129 |
|
|
| $ 19,770 | $ 3,679 |
Sales Load. FDC receives a front-end sales charge of up to 1.50% for selling Class A and Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of a contingent deferred sales charges levied on Class A and Class T redemptions. These charges depend on the holding period. The deferred sales charges range from .75% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 2,706 |
Class T | 2,709 |
| $ 5,415 |
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. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of each respective class of the Fund. FIIOC receives an asset-based fee of .10% of Ultra Short Bond's average net assets. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. Prior to January 1, 2008, Fidelity Service
Annual Report
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees - continued
Company, Inc. (FSC), also an affiliate of FMR, was the transfer agent for Ultra-Short Bond shares. For the period, each class paid the following transfer agent fees:
| Amount | % of |
Class A | $ 15,878 | .17 |
Class T | 7,026 | .19 |
Ultra-Short Bond | 516,453 | .10 |
Institutional Class | 3,289 | .13 |
| $ 542,646 |
|
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.
7. 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 $1,577 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. 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 expenses by $11,801. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent | |
Ultra-Short Bond | $ 3,071 |
Annual Report
Notes to Financial Statements - continued
9. Credit Risk.
The Fund invests a portion of its assets, directly or indirectly, in structured securities of issuers that hold mortgage securities, including securities backed by subprime mortgage loans. The value and related income of these securities is sensitive to changes in economic conditions, including delinquencies and/or defaults. Continuing shifts in the market's perception of credit quality on securities backed by subprime mortgage loans have resulted in increased volatility of market price and periods of illiquidity that have adversely impacted the valuation of certain issuers of the Fund.
10. 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.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2008 | 2007 |
From net investment income |
|
|
Class A | $ 359,417 | $ 470,241 |
Class T | 130,879 | 210,443 |
Ultra-Short Bond | 20,438,784 | 50,639,843 |
Institutional Class | 112,859 | 305,200 |
Total | $ 21,041,939 | $ 51,625,727 |
Tax Return of Capital |
|
|
Class A | $ 32,925 | $ - |
Class T | 14,892 | - |
Ultra-Short Bond | 2,029,576 | - |
Institutional Class | 6,090 | - |
Total | $ 2,083,483 | $ - |
Annual Report
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
| Years ended July 31, | Years ended July 31, | ||
| 2008 | 2007 | 2008 | 2007 |
Class A |
|
|
|
|
Shares sold | 716,050 | 1,247,732 | $ 6,452,492 | $ 12,475,671 |
Reinvestment of distributions | 25,165 | 37,250 | 225,078 | 371,847 |
Shares redeemed | (1,381,271) | (340,215) | (12,368,618) | (3,395,610) |
Net increase (decrease) | (640,056) | 944,767 | $ (5,691,048) | $ 9,451,908 |
Class T |
|
|
|
|
Shares sold | 400,564 | 388,444 | $ 3,634,901 | $ 3,878,571 |
Reinvestment of distributions | 14,754 | 19,812 | 132,908 | 197,787 |
Shares redeemed | (553,763) | (378,796) | (5,029,354) | (3,788,237) |
Net increase (decrease) | (138,445) | 29,460 | $ (1,261,545) | $ 288,121 |
Ultra-Short Bond |
|
|
|
|
Shares sold | 14,463,915 | 59,380,876 | $ 130,144,280 | $ 593,653,669 |
Reinvestment of distributions | 2,308,926 | 4,599,590 | 20,889,307 | 45,902,034 |
Shares redeemed | (77,883,469) | (49,556,665) | (708,372,416) | (494,187,803) |
Net increase (decrease) | (61,110,628) | 14,423,801 | $ (557,338,829) | $ 145,367,900 |
Institutional Class |
|
|
|
|
Shares sold | 60,495 | 970,636 | $ 554,201 | $ 9,707,468 |
Reinvestment of distributions | 5,295 | 8,301 | 48,480 | 82,674 |
Shares redeemed | (840,939) | (330,344) | (7,773,834) | (3,294,058) |
Net increase (decrease) | (775,149) | 648,593 | $ (7,171,153) | $ 6,496,084 |
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Income Fund and the Shareholders of Fidelity Ultra-Short Bond 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 Ultra-Short Bond Fund (a fund of Fidelity Income Fund) at July 31, 2008, 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 periods indicated, 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 Ultra-Short Bond 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, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
September 24, 2008
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the 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 Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 159 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 377 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 Member 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.
Interested Trustees*:
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.
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 (78) | |
| Year of Election or Appointment: 1984 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; 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 and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). Mr. Edward C. Johnson 3d and Mr. Arthur E. Johnson are not related. |
James C. Curvey (73) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
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 | |
Albert R. Gamper, Jr. (66) | |
| 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), a member of the Board of Governors, Rutgers University (2004-present), and Chairman of the Board of Saint Barnabas Health Care System. Previously, Mr. Gamper served as Chairman of the Board of Governors, Rutgers University (2004-2007). |
George H. Heilmeier (72) | |
| 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), Compaq, Automatic Data Processing, Inc. (ADP) (technology-based business outsourcing), 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. |
Arthur E. Johnson (61) | |
| Year of Election or Appointment: 2008 Mr. Johnson serves as Senior Vice President of Corporate Strategic Development of Lockheed Martin Corporation (defense contractor). In addition, Mr. Johnson serves as a member of the Board of Directors of AGL Resources, Inc. (holding company), and IKON Office Solutions, Inc. (document management systems and services). Mr. Arthur E. Johnson and Mr. Edward C. Johnson 3d are not related. |
James H. Keyes (67) | |
| 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 Navistar International Corporation (manufacture and sale of trucks, buses, and diesel engines) and Pitney Bowes, Inc. (integrated mail, messaging, and document management solutions). Previously, Mr. Keyes served as a member of the Board of LSI Logic Corporation (semiconductor technologies, 1984-2008). |
Marie L. Knowles (61) | |
| 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 McKesson Corporation (healthcare service). 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. Previously, Ms. Knowles served as a Director of Phelps Dodge Corporation (copper mining and manufacturing, 1994-2007). |
Kenneth L. Wolfe (69) | |
| Year of Election or Appointment: 2005 Mr. Wolfe is Chairman and a Director of Hershey Foods Corporation (2007-present), where prior to his retirement in 2001, he was Chairman and Chief Executive Officer. Mr. Wolfe currently serves as a member of the board of Revlon Inc. (2004-present). Previously, Mr. Wolfe served as a member of the boards of Adelphia Communications Corporation (2003-2006) and Bausch & Lomb, Inc. (1993-2007). |
Advisory Board Member and Executive Officers**:
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 (64) | |
| 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. |
John R. Hebble (50) | |
| Year of Election or Appointment: 2008 President and Treasurer of Ultra-Short Bond. Mr. Hebble also serves as President and Treasurer of Fidelity's Fixed Income and Asset Allocation Funds (2008-present) and is an employee of FMR (2003-present). Before joining Fidelity Investments, Mr. Hebble worked at Deutsche Asset Management where he served as Director of Fund Accounting (2002-2003) and Assistant Treasurer of the Scudder Funds. |
Boyce I. Greer (52) | |
| Year of Election or Appointment: 2006 Vice President of Ultra-Short Bond. Mr. Greer also serves as Vice President of 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- |
Dwight D. Churchill (46) | |
| Year of Election or Appointment: 2008 Vice President of Ultra-Short Bond. Mr. Churchill also serves as Vice President of Fidelity's Bond Funds (2008-present). Mr. Churchill is Executive Vice President of FMR (2005-present), FMR Co., Inc. (2005-present) and Fidelity Investments Money Management, Inc. (2008-present). Previously, Mr. Churchill served as Senior Vice President of FMR (1997-2005) and Senior Vice President of Fidelity Investments Money Management, Inc. (2000-2006). |
Scott C. Goebel (40) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of Ultra-Short Bond. Mr. Goebel also serves as Secretary and CLO of other Fidelity funds (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008- |
Nancy D. Prior (41) | |
| Year of Election or Appointment: 2008 Assistant Secretary of Ultra-Short Bond. Ms. Prior also serves as Assistant Secretary of Fidelity's Fixed Income and Asset Allocation Funds (2008-present) and is an employee of FMR (2002-present). |
Holly C. Laurent (54) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) officer of Ultra-Short Bond. Ms. Laurent also serves as AML officer of other Fidelity funds (2008-present) and is an employee of FMR LLC. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (49) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of Ultra-Short Bond. Ms. Reynolds also serves as Chief Financial Officer of other Fidelity funds (2008-present). Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was an audit partner with PwC's investment management practice. |
Michael H. Whitaker (41) | |
| Year of Election or Appointment: 2008 Chief Compliance Officer of Ultra-Short Bond. Mr. Whitaker also serves as Chief Compliance Officer of Fidelity's Fixed Income and Asset Allocation Funds (2008-present) and is an employee of FMR (2007-present). Prior to joining Fidelity Investments, Mr. Whitaker worked at MFS Investment Management where he served as Senior Vice President and Chief Compliance Officer (2004-2006), and Assistant General Counsel. |
Bryan A. Mehrmann (47) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of Ultra-Short Bond. 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). |
Robert G. Byrnes (41) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of Ultra-Short Bond. 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 Fidelity Pricing and Cash Management Services (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 (54) | |
| Year of Election or Appointment: 2004 Assistant Treasurer of Ultra-Short Bond. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004-present) and is an employee of FMR. |
Paul M. Murphy (61) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of Ultra-Short Bond. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (49) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of Ultra-Short Bond. 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 Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Distributions (Unaudited)
A total of 0.08% 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 $6,943,561 of distributions paid during the period January 1, 2008 to July 31, 2008 as qualifying to be taxed as interest-related dividends for nonresident alien shareholders.
The fund will notify shareholders in January 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Ultra-Short Bond 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 and, acting directly and through its separate committees, requests and receives information concerning, and considers at each of its meetings factors that are relevant to, its annual consideration of the 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 a written charter outlining the structure and purposes of the committee. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts.
At its June 2008 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the fund's Advisory Contracts. 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 fund's management fee and total expenses; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its 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 agreements with foreign sub-advisers Fidelity Management & Research (U.K.) Inc., Fidelity Management & Research (Japan) Inc., and Fidelity Management & Research (Hong Kong) Limited.
In considering 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 and through the exercise of its business judgment, 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. The Board's decision to renew the Advisory Contracts was not based on any single factor noted above, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, 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
Board Approval of Investment Advisory Contracts and
Management Fees - continued
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 fund's investment personnel 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.
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 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 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 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 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.
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
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 Fidelity has taken a number of actions over the previous year 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 fees on Fidelity's Institutional Money Market Funds and launching Class IV and Institutional Class of certain of these funds; (iii) reducing the transfer agent fees for the Fidelity Select Portfolios and Investor Class of the VIP funds; and (iv) launching Class K of 29 equity funds as a lower-fee class available to certain employer-sponsored retirement plans.
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 each class, as well as the fund's relative investment performance for each class 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. The following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2007, as available, the cumulative total returns of Fidelity Ultra-Short Bond (retail class) and Class T of the fund, 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 returns of Fidelity Ultra-Short Bond (retail class) and Class T show the performance of the highest and lowest performing classes, respectively (based on three-year performance). 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 numbers noted below each chart correspond to the percentile box and represent the percentage of funds in the peer group whose performance was equal to or lower than that of the class indicated.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Fidelity Ultra-Short Bond Fund
The Board reviewed the fund's relative investment performance against its peer group and stated that the performance of Fidelity Ultra-Short Bond (retail class) of the fund was in the fourth quartile for all the periods shown. The Board also stated that the investment performance of the fund was lower than its benchmark for all the periods shown. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes. The Board discussed with FMR actions that may be taken by FMR to improve the fund's disappointing performance and how investment personnel evaluate potential for incremental return against the risks involved in obtaining that incremental return. The Board considered the steps that FMR has taken to strengthen and refine its risk management processes in light of recent credit events that have affected various sectors of the fixed-income markets. The Board will continue to closely monitor the performance of the fund in the coming year.
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
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 21% means that 79% 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 Ultra-Short Bond Fund
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
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 2007.
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 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 Ultra-Short Bond (retail class) to 10 basis points, and (iii) limit the total expenses for Fidelity Ultra-Short Bond (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 each class's total expenses ranked below its competitive median for 2007.
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. 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.
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 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.
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 fund's business.
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.
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. The Board concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
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 certain topics, including (i) fund performance trends and actions to be taken by FMR to improve certain funds' overall performance; (ii) portfolio manager changes that have occurred during the past year; (iii) Fidelity's fund profitability methodology, the profitability of certain fund service providers, and profitability trends for certain funds; (iv) Fidelity's compensation structure for portfolio managers and key personnel, including its effects on fund profitability and the extent to which portfolio manager compensation is linked to fund performance; (v) Fidelity's fee structures; (vi) the funds' sub-advisory arrangements; and (vii) accounts managed by Fidelity other than the Fidelity funds.
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 the fund's Advisory Contracts should be renewed.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
Fidelity Investments
Money Management, Inc.
Fidelity International Investment Advisors
Fidelity International Investment Advisors
(U.K.) Limited
Fidelity Research & Analysis Company
Fidelity Management & Research
Company (U.K.)
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Citibank, N.A.
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®) 1-800-544-5555
Automated line for quickest service
ULB-UANN-0908 1.789713.105
(Fidelity Investment logo)(registered trademark)
Fidelity Advisor
Ultra-Short Bond
Fund - Class A and Class T
Annual Report
July 31, 2008
Class A and Class T
are classes of
Fidelity® Ultra-Short Bond Fund
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
Performance | How the fund has done over time. | |
Management's Discussion | The managers' review of fund performance, strategy and outlook. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, | |
Notes | Notes to the financial statements. | |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Board Approval of Investment Advisory Contracts and Management Fees |
|
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 LLC 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.
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 fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Domestic and international securities markets have struggled thus far in 2008. High-grade fixed-income investments produced modestly positive results, but many stock benchmarks suffered double-digit losses through the first half of this year. Financial markets are always unpredictable, but 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
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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, 2008 |
| Past 1 | Past 5 | Life of |
Class A (incl. 1.50% sales charge) B |
| -14.02% | -0.96% | -0.49% |
Class T (incl. 1.50% sales charge) C |
| -14.03% | -0.97% | -0.49% |
A Since August 29, 2002
B Class A shares bear a 0.15% 12b-1 fee. The initial offering of Class A shares took place on June 16, 2004. Returns prior to June 16, 2004 are those of Ultra-Short Bond, the original retail class of the fund, which does not bear a 12b-1 fee. Had Class A shares' 12b-1 fee been reflected, returns prior to June 16, 2004 would have been lower.
C Class T shares bear a 0.15% 12b-1 fee. The initial offering of Class T shares took place on June 16, 2004. Returns prior to June 16, 2004 are those of Ultra-Short Bond, 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 June 16, 2004 would have been lower.
Annual Report
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Ultra-Short Bond Fund - Class A on August 29, 2002, when the fund started, and the current 1.50% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the Lehman Brothers® 6 Month Swap Index performed over the same period. The initial offering of Class A took place on June 16, 2004. See the previous page for additional information regarding the performance of Class A.
In prior years, the performance from year to year was represented by the performance of Class T. Going forward, the fund's performance will be represented by Class A for consistency with other fund materials.
Annual Report
Management's Discussion of Fund Performance
Comments from Robert Galusza, who became sole Portfolio Manager of Fidelity Advisor Ultra-Short Bond Fund on July 1, 2008
Bonds with less credit risk generally produced higher returns for investment-grade debt during the 12 months ending July 31, 2008. In that span, the Lehman Brothers® U.S. Aggregate Index - a proxy for high-quality, fixed-rate, taxable bonds - returned 6.15%. Treasuries did the best, buoyed by their reputation as the safest haven in turbulent times, with the Lehman Brothers U.S. Treasury Index up 8.99% during the period. Agency bonds, with their perceived "implicit" government backing, also did well, as the Lehman Brothers U.S. Agency Index rose 7.79%. Mortgage-backed securities ended the period with a gain of 6.96%, according to the Lehman Brothers U.S. Mortgage-Backed Securities Index, while the Lehman Brothers U.S. Credit Index - a measure of high-quality corporate debt - finished with a modest 2.85% increase. The asset-backed sector - home to weak-performing subprime debt - had negative results, as reflected in the 2.69% loss of the Lehman Brothers U.S. Fixed-Rate Asset-Backed Securities Index.
During the past year, the fund's Class A and Class T shares returned -12.71% and -12.72%, respectively (excluding sales charges), and the Lehman Brothers 6 Month Swap Index gained 4.62%. Throughout much of the reporting period, the fund held positions in a number of sectors that were hurt the worst by an expanding host of worries related to the credit crunch. Specifically, the bulk of the fund's underperformance stemmed from its exposure to asset-backed securities (ABS) - particularly those backed by subprime mortgages - commercial mortgage-backed securities (CMBS), collateralized mortgage obligations (CMOs) and corporate securities. Though these short-duration instruments - held both directly and also through Fidelity® Ultra-Short Central Fund - were mostly highly rated (AA or AAA), their market values dropped significantly during the period. In an attempt to reduce the fund's overall volatility, manage anticipated shareholder redemptions and position the fund based on our view of future market risk, we undertook a number of initiatives in accordance with the principal investment strategies of the fund. We considerably reduced our stake in subprime mortgage securities and other types of securitized investments. We achieved this by initially reducing and ultimately liquidating the fund's underlying stake in Fidelity Ultra-Short Central Fund and by selling some holdings we believed would continue to experience extreme volatility. At the end of the period, the fund's stake in cash and cash-like instruments stood at roughly 82% of net assets, with the remainder invested in ABS, CMBS, CMOs, commercial paper, corporate bonds and mortgage pass-through securities.
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
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees, 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, 2008 to July 31, 2008).
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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
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. In addition, if these transactional costs were included, your costs would have been higher.
Annual Report
| Beginning | Ending | Expenses Paid |
Class A |
|
|
|
Actual | $ 1,000.00 | $ 945.60 | $ 3.29 |
HypotheticalA | $ 1,000.00 | $ 1,021.48 | $ 3.42 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 945.50 | $ 3.43 |
HypotheticalA | $ 1,000.00 | $ 1,021.33 | $ 3.57 |
Ultra-Short Bond |
|
|
|
Actual | $ 1,000.00 | $ 946.70 | $ 2.18 |
HypotheticalA | $ 1,000.00 | $ 1,022.63 | $ 2.26 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 946.40 | $ 2.56 |
HypotheticalA | $ 1,000.00 | $ 1,022.23 | $ 2.66 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). The fees and expenses of the underlying Fidelity Central Funds in which the Fund invests are not included in the Fund's annualized expense ratio.
| Annualized |
Class A | .68% |
Class T | .71% |
Ultra-Short Bond | .45% |
Institutional Class | .53% |
Annual Report
Investment Changes (Unaudited)
The information in the following tables is based on the combined investments of the Fund and its pro-rata share of its investments in each Fidelity Central Fund. |
Quality Diversification (% of fund's net assets) | |||||||
As of July 31, 2008* | As of January 31, 2008* | ||||||
![]() | U.S. Government and |
| ![]() | U.S. Government and |
| ||
![]() | AAA 7.5% |
| ![]() | AAA 27.8% |
| ||
![]() | AA 2.1% |
| ![]() | AA 13.2% |
| ||
![]() | A 0.8% |
| ![]() | A 13.1% |
| ||
![]() | BBB 1.6% |
| ![]() | BBB 18.1% |
| ||
![]() | BB and Below 0.2% |
| ![]() | BB and Below 0.1% |
| ||
![]() | Not Rated 0.2% |
| ![]() | Not Rated 0.9% |
| ||
![]() | Short-Term |
| ![]() | Short-Term |
|
We have used ratings from Moody's® Investors Services, Inc. Where Moody's ratings are not available, we have used S&P® ratings. All ratings are as of the report date and do not reflect subsequent downgrades. Securities rated BB or below were rated investment grade at the time of acquisition. |
Weighted Average Maturity as of July 31, 2008 | ||
|
| 6 months ago |
Years | 0.3 | 1.6 |
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, 2008 | ||
|
| 6 months ago |
Years | 0.2 | 0.5 |
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, 2008* | As of January 31, 2008** | ||||||
![]() | Corporate Bonds 1.8% |
| ![]() | Corporate Bonds 11.0% |
| ||
![]() | U.S. Government and |
| ![]() | U.S. Government and |
| ||
![]() | Asset-Backed |
| ![]() | Asset-Backed |
| ||
![]() | CMOs and Other Mortgage Related |
| ![]() | CMOs and Other Mortgage Related |
| ||
![]() | Short-Term |
| ![]() | Short-Term |
| ||
* Foreign investments | 2.4% |
| ** Foreign investments | 14.5% |
| ||
* Futures and Swaps | 0.0% |
| ** Futures and Swaps | 27.0% |
|
A holdings listing for the Fund, which presents direct holdings as well as the pro rata share of any securities and other investments held indirectly through its investment in underlying non-money market Fidelity Central Funds is available at fidelity.com and/or advisor.fidelity.com, as applicable. |
Annual Report
Investments July 31, 2008
Showing Percentage of Net Assets
Nonconvertible Bonds - 1.8% | |||
| Principal Amount | Value | |
FINANCIALS - 1.8% | |||
Capital Markets - 0.4% | |||
Bear Stearns Companies, Inc. 2.7281% 2/23/10 (b) | $ 1,500,000 | $ 1,476,080 | |
Commercial Banks - 0.1% | |||
Sovereign Bank 4.375% 8/1/13 (b) | 500,000 | 383,978 | |
Consumer Finance - 0.6% | |||
General Electric Capital Corp. 2.8763% 6/15/09 (b) | 1,900,000 | 1,899,937 | |
Insurance - 0.5% | |||
Metropolitan Life Global Funding I 3.5513% 6/25/10 (a)(b) | 1,500,000 | 1,498,622 | |
Thrifts & Mortgage Finance - 0.2% | |||
Independence Community Bank Corp. 4.8625% 6/20/13 (b) | 735,000 | 547,708 | |
TOTAL NONCONVERTIBLE BONDS (Cost $6,086,888) | 5,806,325 | ||
U.S. Government Agency - Mortgage Securities - 0.5% | |||
| |||
Freddie Mac - 0.5% | |||
4.482% 6/1/35 (b) | 1,500,000 | 1,499,025 | |
Asset-Backed Securities - 6.4% | |||
| |||
ACE Securities Corp. Home Equity Loan Trust: | |||
Series 2003-HE1 Class M1, 3.4363% 11/25/33 (b)(c) | 113,099 | 90,057 | |
Series 2003-HS1: | |||
Class M1, 3.2113% 6/25/33 (b)(c) | 6,004 | 5,884 | |
Class M2, 4.2113% 6/25/33 (b)(c) | 50,000 | 42,437 | |
Series 2004-HE1 Class M1, 2.9613% 2/25/34 (b)(c) | 56,106 | 55,186 | |
Series 2006-HE2: | |||
Class M3, 2.8013% 5/25/36 (b)(c) | 240,000 | 16,800 | |
Class M4, 2.8613% 5/25/36 (b)(c) | 200,000 | 15,960 | |
Class M5, 2.9013% 5/25/36 (b)(c) | 295,000 | 15,316 | |
Ameriquest Mortgage Securities, Inc.: | |||
Series 2004-R11 Class M1, 3.1213% 11/25/34 (b)(c) | 560,000 | 434,203 | |
Series 2004-R9 Class M2, 3.1113% 10/25/34 (b)(c) | 720,000 | 534,346 | |
Argent Securities, Inc. Series 2004-W7 Class M1, 3.0113% 5/25/34 (b)(c) | 305,000 | 226,942 | |
Asset-Backed Securities - continued | |||
| Principal Amount | Value | |
Capital One Master Trust Series 2001-6 Class A, 2.65% 6/15/11 (b) | $ 2,000,000 | $ 1,999,987 | |
Capital Trust Ltd. Series 2004-1: | |||
Class A2, 3.2363% 7/20/39 (a)(b) | 265,000 | 204,050 | |
Class B, 3.5363% 7/20/39 (a)(b) | 140,000 | 93,800 | |
Class C, 3.5581% 7/20/39 (a)(b) | 180,000 | 93,600 | |
Cendant Timeshare Receivables Funding LLC Series 2005 1A Class 2A2, 2.6381% 5/20/17 (a)(b) | 329,520 | 276,381 | |
Chase Issuance Trust Series 2007-14 Class A, 2.7075% 9/15/11 (b) | 2,000,000 | 1,993,462 | |
Citibank Credit Card Issuance Trust Series 2003-A8 Class A8, 3.5% 8/16/10 | 3,000,000 | 3,000,690 | |
Countrywide Home Loans, Inc. Series 2002-6 Class AV1, 3.3213% 5/25/33 (b)(c) | 16,267 | 11,262 | |
Fannie Mae subordinate REMIC pass-thru certificates | |||
Class AB1, 2.5544% 5/28/35 (b) | 80,751 | 58,715 | |
Class AB3, 2.6976% 5/28/35 (b) | 32,052 | 21,558 | |
First Franklin Mortgage Loan Trust Series 2004-FF2 | 7,718 | 7,145 | |
Fremont Home Loan Trust: | |||
Series 2005-A: | |||
Class M1, 2.8913% 1/25/35 (b)(c) | 150,843 | 132,504 | |
Class M2, 2.9213% 1/25/35 (b)(c) | 325,000 | 276,937 | |
Class M4, 3.1413% 1/25/35 (b)(c) | 125,000 | 56,640 | |
Series 2006-A: | |||
Class M4, 2.8613% 5/25/36 (b)(c) | 685,000 | 34,654 | |
Class M5, 2.9613% 5/25/36 (b)(c) | 365,000 | 16,228 | |
GSAMP Trust: | |||
Series 2003-FM1 Class M1, 3.6881% 3/20/33 (b)(c) | 445,890 | 344,452 | |
Series 2006-NC2 Class M4, 2.8113% 6/25/36 (b)(c) | 1,541,000 | 79,130 | |
Series 2007-HE1 Class M1, 2.7113% 3/25/47 (b)(c) | 335,000 | 68,625 | |
GSR Mortgage Loan Trust Series 2005-9 Class 2A1, 2.5813% 8/25/35 (b) | 50,343 | 49,367 | |
Guggenheim Structured Real Estate Funding Ltd. | 650,741 | 475,041 | |
Home Equity Asset Trust: | |||
Series 2002-3 Class A5, 3.3413% 2/25/33 (b)(c) | 14 | 9 | |
Series 2003-5: | |||
Class A2, 3.1613% 12/25/33 (b)(c) | 10,566 | 8,443 | |
Class M1, 3.5113% 12/25/33 (b)(c) | 129,805 | 114,092 | |
Series 2003-7 Class A2, 3.2213% 3/25/34 (b)(c) | 2,079 | 1,382 | |
Household Home Equity Loan Trust Series 2004-1 | 83,635 | 65,943 | |
Asset-Backed Securities - continued | |||
| Principal Amount | Value | |
MBNA Credit Card Master Note Trust: | |||
Series 2003-A11 Class A11, 3.65% 3/15/11 | $ 2,000,000 | $ 2,002,753 | |
Series 2003-A9 Class A9, 2.59% 2/15/11 (b) | 2,000,000 | 1,999,821 | |
Meritage Mortgage Loan Trust Series 2004-1 Class M2, 3.2863% 7/25/34 (b)(c) | 3,764 | 1,102 | |
Merrill Lynch Mortgage Investors Trust Series 2004-HE2 | 39,863 | 30,477 | |
Morgan Stanley ABS Capital I Trust Series 2004-HE6 | 65,756 | 42,925 | |
Morgan Stanley Dean Witter Capital I Trust Series 2002-AM3 Class A3, 3.4413% 2/25/33 (b)(c) | 14,114 | 10,912 | |
NovaStar Mortgage Funding Trust Series 2003-3 Class A3, 2.9113% 12/25/33 (b)(c) | 41,200 | 35,503 | |
Ocala Funding LLC Series 2006-1A Class A, 4.1863% 3/20/11 (a)(b) | 965,000 | 675,500 | |
Park Place Securities, Inc.: | |||
Series 2004-WCW1 Class M4, 3.9113% 9/25/34 (b)(c) | 435,000 | 99,889 | |
Series 2004-WWF1: | |||
Class A5, 2.9313% 1/25/35 (b)(c) | 3 | 2 | |
Class M4, 3.5613% 1/25/35 (b)(c) | 945,000 | 546,440 | |
Series 2005-WCH1 Class M3, 3.0213% 1/25/35 (b)(c) | 425,000 | 265,819 | |
Providian Master Note Trust Series 2006-C1A Class C1, 3.01% 3/16/15 (a)(b) | 2,465,000 | 1,553,320 | |
Salomon Brothers Mortgage Securities VII, Inc. Series 2003-HE1 Class A, 3.2613% 4/25/33 (b)(c) | 1,451 | 1,110 | |
SLMA Student Loan Trust Series 2004-10 Class A3, 2.89% 10/25/16 (b) | 1,384,181 | 1,381,370 | |
Terwin Mortgage Trust: | |||
Series 2003-4HE Class A1, 2.8913% 9/25/34 (b)(c) | 21,802 | 16,147 | |
Series 2003-6HE Class A1, 2.9313% 11/25/33 (b)(c) | 17,086 | 13,322 | |
WaMu Master Note Trust Series 2007-C1 Class C1, 2.86% 5/15/14 (a)(b) | 1,595,000 | 1,194,614 | |
TOTAL ASSET-BACKED SECURITIES (Cost $27,915,513) | 20,792,254 | ||
Collateralized Mortgage Obligations - 3.4% | |||
| Principal Amount | Value | |
Private Sponsor - 3.4% | |||
Bear Stearns Alt-A Trust floater Series 2005-2 | $ 443,807 | $ 282,148 | |
Credit Suisse First Boston Adjustable Rate Mortgage Trust floater: | |||
Series 2004-2 Class 7A3, 2.8613% 2/25/35 (b) | 165,734 | 135,206 | |
Series 2004-4 Class 5A2, 2.8613% 3/25/35 (b) | 35,547 | 26,661 | |
Series 2005-1 Class 5A2, 2.7913% 5/25/35 (b) | 112,713 | 80,277 | |
Series 2005-10 Class 5A2, 2.7813% 1/25/36 (b) | 768,241 | 400,519 | |
Series 2005-2: | |||
Class 6A2, 2.7413% 6/25/35 (b) | 34,993 | 23,901 | |
Class 6M2, 2.9413% 6/25/35 (b) | 1,375,000 | 550,641 | |
Series 2005-3 Class 8A2, 2.7013% 7/25/35 (b) | 532,040 | 341,583 | |
Series 2005-5 Class 6A2, 2.6913% 9/25/35 (b) | 450,934 | 307,111 | |
Series 2005-8 Class 7A2, 2.7413% 11/25/35 (b) | 342,138 | 236,074 | |
Credit Suisse First Boston Mortgage Securities Corp. floater: | |||
Series 2004-AR2 Class 6A1, 2.8613% 3/25/34 (b) | 337 | 248 | |
Series 2004-AR3 Class 6A2, 3.2013% 4/25/34 (b) | 1,132 | 813 | |
Series 2004-AR5 Class 11A2, 3.2013% 6/25/34 (b) | 22,645 | 18,755 | |
Series 2004-AR6 Class 9A2, 3.2013% 10/25/34 (b) | 28,271 | 23,233 | |
Series 2004-AR7 Class 6A2, 2.8413% 8/25/34 (b) | 42,794 | 37,911 | |
Series 2004-AR8 Class 8A2, 2.8413% 9/25/34 (b) | 29,976 | 25,865 | |
Deutsche Alt-A Securities Mortgage Loan Trust floater | 1,375,000 | 726,659 | |
First Horizon Mortgage pass-thru Trust floater | 53,760 | 45,262 | |
GSR Mortgage Loan Trust floater Series 2004-11 | 462,326 | 425,344 | |
Homestar Mortgage Acceptance Corp. floater Series 2004-5 Class A1, 2.9113% 10/25/34 (b) | 321,101 | 254,478 | |
Impac CMB Trust floater: | |||
Series 2004-11 Class 2A2, 2.8313% 3/25/35 (b) | 231,100 | 174,772 | |
Series 2005-1: | |||
Class M4, 3.2113% 4/25/35 (b) | 32,297 | 6,847 | |
Class M5, 3.2313% 4/25/35 (b) | 32,297 | 5,711 | |
Class M6, 3.2813% 4/25/35 (b) | 50,384 | 7,641 | |
Series 2005-4 Class 1B1, 3.7613% 5/25/35 (b) | 212,658 | 27,131 | |
Lehman Structured Securities Corp. floater Series 2005-1 | 391,371 | 211,233 | |
MASTR Adjustable Rate Mortgages Trust floater: | |||
Series 2004-11: | |||
Class 1A4, 2.9513% 11/25/34 (b) | 28,840 | 22,294 | |
Collateralized Mortgage Obligations - continued | |||
| Principal Amount | Value | |
Private Sponsor - continued | |||
MASTR Adjustable Rate Mortgages Trust floater: - continued | |||
Series 2004-11: | |||
Class 2A1, 2.8413% 11/25/34 (b) | $ 10,577 | $ 8,598 | |
Class 2A2, 2.9013% 11/25/34 (b) | 2,329 | 1,822 | |
Series 2005-1 Class 1A1, 2.7313% 3/25/35 (b) | 57,000 | 39,337 | |
MASTR Seasoned Securitization Trust Series 2004-1 | 304,908 | 292,680 | |
Merrill Lynch Mortgage Investors Trust floater: | |||
Series 2003-A Class 2A2, 3.4806% 3/25/28 (b) | 21,616 | 19,312 | |
Series 2003-D Class A, 2.7713% 8/25/28 (b) | 276,715 | 257,793 | |
Series 2003-E Class A2, 3.4006% 10/25/28 (b) | 99,121 | 92,524 | |
Series 2003-F Class A2, 5.7613% 10/25/28 (b) | 114,742 | 107,030 | |
Series 2004-A Class A2, 2.7475% 4/25/29 (b) | 156,213 | 143,132 | |
Series 2004-B Class A2, 5.125% 6/25/29 (b) | 116,103 | 107,829 | |
Series 2004-C Class A2, 5.155% 7/25/29 (b) | 173,715 | 164,511 | |
Series 2004-D Class A2, 2.8575% 9/25/29 (b) | 201,634 | 186,903 | |
Series 2005-A Class A2, 3.3206% 2/25/30 (b) | 184,239 | 174,838 | |
Series 2005-B Class A2, 3.0388% 7/25/30 (b) | 197,010 | 164,913 | |
Series 2006-MLN1 Class M4, 2.8213% 7/25/37 (b)(c) | 1,015,000 | 62,905 | |
MortgageIT Trust floater Series 2004-2: | |||
Class A1, 2.8313% 12/25/34 (b) | 258,088 | 227,720 | |
Class A2, 2.9113% 12/25/34 (b) | 348,611 | 304,044 | |
Provident Funding Mortgage Loan Trust Series 2005-2 | 531,721 | 499,893 | |
Residential Asset Mortgage Products, Inc. Series 2005-AR5 Class 1A1, 4.7612% 9/19/35 (b) | 290,235 | 274,044 | |
Sequoia Mortgage Trust floater: | |||
Series 2003-5 Class A2, 3.31% 9/20/33 (b) | 101,851 | 82,714 | |
Series 2004-1 Class A, 4.1113% 2/20/34 (b) | 80,404 | 65,066 | |
Series 2004-10 Class A4, 4.0938% 11/20/34 (b) | 201,822 | 162,199 | |
Series 2004-12 Class 1A2, 5.115% 1/20/35 (b) | 354,352 | 292,726 | |
Series 2004-4 Class A, 4.0713% 5/20/34 (b) | 255,030 | 206,144 | |
Series 2004-5 Class A3, 3.1663% 6/20/34 (b) | 94,561 | 76,399 | |
Series 2004-6 Class A3A, 3.4913% 6/20/35 (b) | 100,524 | 80,999 | |
Series 2004-7: | |||
Class A3A, 4.1363% 8/20/34 (b) | 120,849 | 97,408 | |
Class A3B, 4.3613% 7/20/34 (b) | 234,657 | 191,658 | |
Series 2004-8 Class A2, 3.35% 9/20/34 (b) | 389,887 | 314,377 | |
Series 2005-1 Class A2, 4.0613% 2/20/35 (b) | 211,159 | 164,603 | |
Series 2005-2 Class A2, 3.23% 3/20/35 (b) | 288,345 | 209,897 | |
Soundview Home Equity Loan Trust floater Series 2006-EQ1 Class M7, 3.2613% 9/25/36 (b)(c) | 330,000 | 20,549 | |
Collateralized Mortgage Obligations - continued | |||
| Principal Amount | Value | |
Private Sponsor - continued | |||
Structured Asset Securities Corp. floater: | |||
Series 2004-NP1 Class A, 2.8613% 9/25/33 (a)(b) | $ 65,323 | $ 58,967 | |
Series 2007-GEL1 Class A2, 2.6513% 1/25/37 (a)(b)(c) | 1,000,000 | 559,500 | |
TBW Mortgage-Backed pass-thru certificates floater | 1,000,000 | 650,000 | |
WaMu Mortgage pass-thru certificates: | |||
floater Series 2006-AR11 Class C1B1, 2.5413% 9/25/46 (b) | 214,577 | 207,861 | |
sequential payer Series 2002-S6 Class A25, 6% 10/25/32 | 75,719 | 75,823 | |
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $17,063,644) | 11,045,036 | ||
Commercial Mortgage Securities - 0.8% | |||
| |||
Morgan Stanley Capital I Trust: | |||
floater: | |||
Series 2005-XLF Class K, 3.11% 8/15/19 (a)(b) | 420,000 | 361,200 | |
Series 2006-XLF Class C, 3.66% 7/15/19 (a)(b) | 570,000 | 478,800 | |
Series 2007-XLFA Class B, 2.59% 10/15/20 (a)(b) | 440,000 | 402,600 | |
Series 2007-XLC1: | |||
Class C, 3.0575% 7/17/17 (a)(b) | 843,811 | 607,544 | |
Class D, 3.1575% 7/17/17 (a)(b) | 397,088 | 266,049 | |
Class E, 3.2575% 7/17/17 (a)(b) | 320,725 | 205,264 | |
STRIPS III Ltd./STRIPS III Corp. floater Series 2004-1A Class A, 2.9419% 3/24/18 (a)(b) | 150,156 | 135,141 | |
TOTAL COMMERCIAL MORTGAGE SECURITIES (Cost $3,142,315) | 2,456,598 | ||
Commercial Paper - 4.9% | |||
| |||
Australia & New Zealand Banking Group Ltd. yankee 2.72% 10/15/08 | 2,000,000 | 1,988,389 | |
Barclays U.S. Funding Corp. yankee 2.78% 10/29/08 | 2,000,000 | 1,985,900 | |
BNP Paribas Finance, Inc. yankee 2.779% 11/3/08 | 2,000,000 | 1,985,001 | |
CBA Finance, Inc. yankee: | |||
2.72% 10/7/08 | 1,132,000 | 1,126,205 | |
2.72% 10/8/08 | 1,000,000 | 994,796 | |
Natexis Banques Populaires US Finance Co. LLC yankee 2.995% 11/4/08 | 2,000,000 | 1,984,821 | |
Commercial Paper - continued | |||
| Principal Amount | Value | |
Royal Bank of Scotland PLC yankee 2.82% 9/8/08 | $ 2,000,000 | $ 1,994,557 | |
Societe Generale North America, Inc. yankee 2.85% | 2,000,000 | 1,994,242 | |
UniCredito Italiano Bank (Ireland) PLC yankee 2.935% 10/24/08 | 2,000,000 | 1,986,660 | |
TOTAL COMMERCIAL PAPER (Cost $16,038,485) | 16,040,571 | ||
Cash Equivalents - 82.4% | |||
Maturity |
| ||
Investments in repurchase agreements in a joint trading account at 2.19%, dated 7/31/08 due 8/1/08 (Collateralized by U.S. Government Obligations) # | $ 182,126,086 | 182,115,000 | |
With: | |||
Banc of America Securities LLC at: | |||
2.37%, dated 7/31/08 due 8/1/08 (Collateralized by Corporate Obligations valued at $13,650,898, 2.73% - 6.63%, 11/28/08 - 7/15/18) | 13,000,855 | 13,000,000 | |
2.39%, dated 7/31/08 due 8/1/08 (Collateralized by Corporate Obligations valued at $2,100,139, 6.5%, 11/1/17) | 2,000,133 | 2,000,000 | |
Barclays Capital, Inc. at 2.34%, dated 7/31/08 due 8/1/08 (Collateralized by Corporate Obligations | 13,000,844 | 13,000,000 | |
J.P. Morgan Securities, Inc. at 2.39%, dated 7/31/08 | 13,000,862 | 13,000,000 | |
Lehman Brothers, Inc. at 2.41%, dated 7/31/08 | 15,001,003 | 15,000,000 | |
Cash Equivalents - 82.4% | |||
Maturity | Value | ||
With: - continued | |||
Merrill Lynch, Pierce, Fenner & Smith at 2.34%, dated 7/31/08 due 8/1/08 (Collateralized by Mortgage Loan Obligations valued at $15,752,629, 2.58%, 2/15/20) | $ 15,000,974 | $ 15,000,000 | |
Wachovia Securities, Inc. at 2.39%, dated 7/31/08 due 8/1/08 (Collateralized by Commercial Paper Obligations valued at $15,451,025, 8/12/08) | 15,000,995 | 15,000,000 | |
TOTAL CASH EQUIVALENTS (Cost $268,115,000) | 268,115,000 | ||
TOTAL INVESTMENT PORTFOLIO - 100.2% (Cost $339,871,220) | 325,754,809 | ||
NET OTHER ASSETS - (0.2)% | (581,564) | ||
NET ASSETS - 100% | $ 325,173,245 |
Legend |
(a) 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 $9,351,226 or 2.9% of net assets. |
(b) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. |
(c) Security or a portion of the security backed by subprime mortgage loans. At period end, the value of these securities amounted to $4,361,179 or 1.4% of net assets. |
# Additional Information on each counterparty to the repurchase agreement is as follows: |
Repurchase Agreement / Counterparty | Value |
$182,115,000 due 8/01/08 at 2.19% | |
BNP Paribas Securities Corp. | $ 13,614,591 |
Banc of America Securities LLC | 21,116,508 |
Bank of America, NA | 20,437,101 |
Barclays Capital, Inc. | 88,908,134 |
Greenwich Capital Markets, Inc. | 3,334,185 |
ING Financial Markets | 18,893,718 |
J.P. Morgan Securities, | 10,253,787 |
RBC Capital Markets Corp. | 2,778,488 |
WestLB AG | 2,778,488 |
| $ 182,115,000 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Ultra-Short Central Fund | $ 4,105,565 |
Additional information regarding the Fund's fiscal year to date purchases and sales, including the ownership percentage, of the non Money Market Central Funds is as follows: |
Fund | Value, | Purchases | Sales Proceeds | Value, end of period | % ownership, end of period |
Fidelity Ultra-Short Central Fund | $ 255,014,810 | $ - | $ 235,895,358 | $ - | 0.0% |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 97.6% |
Others (individually less than 1%) | 2.4% |
| 100.0% |
Income Tax Information |
At July 31, 2008, the fund had a capital loss carryforward of approximately $14,622,425 of which $1,917,431, $518,690 and $12,186,304 will expire on July 31, 2014, 2015 and 2016, respectively. |
The fund intends to elect to defer to its fiscal year ending July 31, 2009 approximately $97,399,166 of losses recognized during the period November 1, 2007 to July 31, 2008. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including repurchase agreements of $268,115,000) - See accompanying schedule: Unaffiliated issuers (cost $339,871,220) |
| $ 325,754,809 |
Receivable for fund shares sold | 140,581 | |
Interest receivable | 140,677 | |
Other receivables | 95,900 | |
Total assets | 326,131,967 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 395 | |
Payable for fund shares redeemed | 809,883 | |
Distributions payable | 22,945 | |
Accrued management fee | 86,493 | |
Distribution fees payable | 1,053 | |
Other affiliated payables | 37,953 | |
Total liabilities | 958,722 | |
|
|
|
Net Assets | $ 325,173,245 | |
Net Assets consist of: |
| |
Paid in capital | $ 451,846,561 | |
Distributions in excess of net investment income | (535,314) | |
Accumulated undistributed net realized gain (loss) on investments | (112,021,591) | |
Net unrealized appreciation (depreciation) on investments | (14,116,411) | |
Net Assets | $ 325,173,245 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Assets and Liabilities - continued
| July 31, 2008 | |
|
|
|
Calculation of Maximum Offering Price | $ 8.26 | |
|
|
|
Maximum offering price per share (100/98.50 of $8.26) | $ 8.39 | |
Class T: | $ 8.26 | |
|
|
|
Maximum offering price per share (100/98.50 of $8.26) | $ 8.39 | |
Ultra-Short Bond: | $ 8.26 | |
|
|
|
Institutional Class: | $ 8.26 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Operations
| Year ended July 31, 2008 | |
|
|
|
Investment Income |
|
|
Interest |
| $ 22,134,827 |
Income from Fidelity Central Funds |
| 4,105,565 |
Total income |
| 26,240,392 |
|
|
|
Expenses | ||
Management fee | $ 1,676,755 | |
Transfer agent fees | 542,646 | |
Distribution fees | 19,770 | |
Fund wide operations fee | 182,891 | |
Independent trustees' compensation | 2,524 | |
Miscellaneous | 1,577 | |
Total expenses before reductions | 2,426,163 | |
Expense reductions | (14,872) | 2,411,291 |
Net investment income | 23,829,101 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (83,363,462) | |
Fidelity Central Funds | (23,922,089) |
|
Futures contracts | 1,456,351 | |
Swap agreements | (6,787,666) |
|
Total net realized gain (loss) |
| (112,616,866) |
Change in net unrealized appreciation (depreciation) on: Investment securities | 3,839,529 | |
Futures contracts | 122,630 | |
Swap agreements | 3,056,651 | |
Total change in net unrealized appreciation (depreciation) |
| 7,018,810 |
Net gain (loss) | (105,598,056) | |
Net increase (decrease) in net assets resulting from operations | $ (81,768,955) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income | $ 23,829,101 | $ 51,627,290 |
Net realized gain (loss) | (112,616,866) | (1,037,412) |
Change in net unrealized appreciation (depreciation) | 7,018,810 | (20,635,029) |
Net increase (decrease) in net assets resulting | (81,768,955) | 29,954,849 |
Distributions to shareholders from net investment income | (21,041,939) | (51,625,727) |
Distributions to shareholders from return of capital | (2,083,483) | - |
Total distributions | (23,125,422) | (51,625,727) |
Share transactions - net increase (decrease) | (571,462,575) | 161,604,013 |
Redemption fees | 64,200 | 39,619 |
Total increase (decrease) in net assets | (676,292,752) | 139,972,754 |
|
|
|
Net Assets | ||
Beginning of period | 1,001,465,997 | 861,493,243 |
End of period (including distributions in excess of net investment income of $535,314 and undistributed net investment income of $539,837, respectively) | $ 325,173,245 | $ 1,001,465,997 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.82 | $ 10.02 | $ 10.03 | $ 10.05 | $ 10.04 |
Income from Investment Operations |
|
|
|
|
|
Net investment income E | .384 | .493 | .400 | .223 | .013 |
Net realized and unrealized gain (loss) | (1.612) | (.198) | (.009) | (.026) | .011 |
Total from investment operations | (1.228) | .295 | .391 | .197 | .024 |
Distributions from net investment income | (.294) | (.495) | (.401) | (.214) | (.014) |
Distributions from net realized gain | - | - | - | (.003) | - |
Return of capital | (.039) | - | - | - | - |
Total distributions | (.333) | (.495) | (.401) | (.217) | (.014) |
Redemption fees added to paid in capital E | .001 | - J | - J | - J | -J |
Net asset value, end of period | $ 8.26 | $ 9.82 | $ 10.02 | $ 10.03 | $ 10.05 |
Total Return B, C, D | (12.71)% | 2.97% | 3.97% | 1.98% | .24% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | .67% | .66% | .70% | .78% | .85% A |
Expenses net of fee waivers, | .67% | .66% | .70% | .70% | .70% A |
Expenses net of all reductions | .66% | .66% | .70% | .70% | .70% A |
Net investment income | 4.26% | 4.96% | 4.00% | 2.23% | 1.11% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period | $ 6,268 | $ 13,735 | $ 4,553 | $ 2,557 | $ 316 |
Portfolio turnover rate G | 11% | 29% | 39% | 33% | 53% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period June 16, 2004 (commencement of sale of shares) to July 31, 2004.
I Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
J Amount represents less than $.001 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.82 | $ 10.02 | $ 10.03 | $ 10.05 | $ 10.04 |
Income from Investment Operations |
|
|
|
|
|
Net investment income E | .377 | .491 | .404 | .222 | .013 |
Net realized and unrealized gain (loss) | (1.607) | (.199) | (.011) | (.025) | .010 |
Total from investment operations | (1.230) | .292 | .393 | .197 | .023 |
Distributions from net investment income | (.292) | (.492) | (.403) | (.214) | (.013) |
Distributions from net realized gain | - | - | - | (.003) | - |
Return of capital | (.039) | - | - | - | - |
Total distributions | (.331) | (.492) | (.403) | (.217) | (.013) |
Redemption fees added to paid in capital E | .001 | - J | - J | - J | - J |
Net asset value, end of period | $ 8.26 | $ 9.82 | $ 10.02 | $ 10.03 | $ 10.05 |
Total Return B, C, D | (12.72)% | 2.95% | 4.00% | 1.98% | .23% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | .69% | .69% | .68% | .77% | .86% A |
Expenses net of fee waivers, | .69% | .69% | .68% | .70% | .70% A |
Expenses net of all reductions | .69% | .69% | .68% | .70% | .70% A |
Net investment income | 4.23% | 4.93% | 4.03% | 2.23% | 1.11% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period | $ 2,910 | $ 4,818 | $ 4,624 | $ 4,044 | $ 356 |
Portfolio turnover rate G | 11% | 29% | 39% | 33% | 53% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period June 16, 2004 (commencement of sale of shares) to July 31, 2004.
I Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
J Amount represents less than $.001 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Ultra-Short Bond
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.81 | $ 10.02 | $ 10.03 | $ 10.05 | $ 10.02 |
Income from Investment Operations |
|
|
|
|
|
Net investment income C | .404 | .516 | .427 | .241 | .122 |
Net realized and unrealized gain (loss) | (1.603) | (.210) | (.011) | (.026) | .029 |
Total from investment operations | (1.199) | .306 | .416 | .215 | .151 |
Distributions from net investment income | (.310) | (.516) | (.426) | (.232) | (.122) |
Distributions from net realized gain | - | - | - | (.003) | - |
Return of capital | (.042) | - | - | - | - |
Total distributions | (.352) | (.516) | (.426) | (.235) | (.122) |
Redemption fees added to paid in capital C | .001 | - G | - G | - G | .001 |
Net asset value, end of period | $ 8.26 | $ 9.81 | $ 10.02 | $ 10.03 | $ 10.05 |
Total Return A, B | (12.42)% | 3.09% | 4.23% | 2.16% | 1.52% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | .45% | .45% | .45% | .58% | .62% |
Expenses net of fee waivers, | .45% | .45% | .45% | .53% | .55% |
Expenses net of all reductions | .45% | .45% | .45% | .53% | .55% |
Net investment income | 4.47% | 5.17% | 4.26% | 2.41% | 1.21% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period | $ 315,401 | $ 974,602 | $ 850,329 | $ 906,644 | $ 580,174 |
Portfolio turnover rate E | 11% | 29% | 39% | 33% | 53% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount represents less than $.001 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Institutional Class
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.81 | $ 10.02 | $ 10.03 | $ 10.05 | $ 10.04 |
Income from Investment Operations |
|
|
|
|
|
Net investment income D | .416 | .510 | .420 | .240 | .015 |
Net realized and unrealized gain (loss) | (1.619) | (.206) | (.008) | (.026) | .010 |
Total from investment operations | (1.203) | .304 | .412 | .214 | .025 |
Distributions from net investment income | (.306) | (.514) | (.422) | (.231) | (.015) |
Distributions from net realized gain | - | - | - | (.003) | - |
Return of capital | (.042) | - | - | - | - |
Total distributions | (.348) | (.514) | (.422) | (.234) | (.015) |
Redemption fees added to paid in capital D | .001 | - I | - I | - I | - I |
Net asset value, end of period | $ 8.26 | $ 9.81 | $ 10.02 | $ 10.03 | $ 10.05 |
Total Return B, C | (12.46)% | 3.06% | 4.19% | 2.15% | .25% |
Ratios to Average Net Assets E, H |
|
|
|
|
|
Expenses before reductions | .48% | .48% | .49% | .58% | .67% A |
Expenses net of fee waivers, | .48% | .48% | .49% | .55% | .55% A |
Expenses net of all reductions | .48% | .48% | .49% | .55% | .55% A |
Net investment income | 4.44% | 5.14% | 4.22% | 2.38% | 1.26% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period | $ 594 | $ 8,312 | $ 1,987 | $ 509 | $ 376 |
Portfolio turnover rate F | 11% | 29% | 39% | 33% | 53% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period June 16, 2004 (commencement of sale of shares) to July 31, 2004.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount represents less than $.001 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended July 31, 2008
1. Organization.
Fidelity Ultra-Short Bond 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, Ultra-Short Bond 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. 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. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
Based on their investment objective, each Fidelity Central Fund may invest or participate in various investment vehicles or strategies that are similar to those of the Fund. These strategies are consistent with the investment objectives of the Fund and may involve certain economic risks which may cause a decline in value of each of the Fidelity Central Funds and thus a decline in the value of the Fund. The following summarizes the Fund's investment in each Fidelity Central Fund.
Fidelity Central Fund | Investment Manager | Investment Objective | Investment Practices |
Fidelity Ultra-Short | Fidelity Investments Money Management, Inc. (FIMM) | Seeks to obtain a high level of current income consistent with preservation of capital by investing in U.S. dollar denominated money market and investment-grade debt securities. | Futures Repurchase Agreements Restricted Securities Swap Agreements |
Annual Report
Notes to Financial Statements - continued
2. Investments in Fidelity Central Funds - continued
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. 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. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Debt securities, including restricted securities, 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. Investments in open-end mutual funds, including the Fidelity Central 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. Actual prices received at disposition may differ.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
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 per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE) normally 4:00 pm Eastern time and 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.
Annual Report
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities.
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.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service.
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.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. Certain adjustments have been made to the accounts relating to prior periods. Collectively, 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 futures transactions, swap agreements, market discount, capital loss carryforwards and losses deferred due to excise tax regulations.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 10,957 |
Unrealized depreciation | (14,125,882) |
Net unrealized appreciation (depreciation) | (14,114,925) |
Capital loss carryforward | $ (14,622,425) |
|
|
Cost for federal income tax purposes | $ 339,869,734 |
The tax character of distributions paid was as follows:
| July 31, 2008 | July 31, 2007 |
Ordinary Income | $ 21,041,939 | $ 51,625,727 |
Tax Return of Capital | 2,083,483 | - |
Total | $ 23,125,422 | $ 51,625,727 |
For the period ended July 31, 2008, the Fund's distributions exceeded the aggregate amount of taxable income and net realized gains resulting in a return of capital for tax purposes. This was due to reductions in taxable income available for distribution after certain distributions had been made. The tax treatment of distributions for the 2008 calendar year will be reported to shareholders prior to February 1, 2009.
Short-Term Trading (Redemption) Fees. Shares held in the Fund less than 60 days are subject to a redemption fee equal to .25% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncements. 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 results in expanded disclosures about fair value measurements.
In addition, in March 2008, Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (SFAS 161), was issued and is effective for fiscal years beginning after November 15, 2008. SFAS 161 requires enhanced disclosures to provide information about the reasons the Fund invests in derivative instruments, the accounting treatment and the effect derivatives have on financial performance. Management is currently evaluating the impact the adoption of SFAS 161 will have on the Fund's financial statement disclosures.
Annual Report
4. Operating Policies.
Repurchase Agreements. 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.
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. Losses may arise from changes in the value of the underlying instruments or if the counterparties do not perform under the contract's terms.
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.
Swap Agreements. The Fund may invest in swaps for the purpose of managing its exposure to interest rate, credit or market risk.
Total return swaps are agreements to exchange the return generated by one instrument or index for the return generated by another instrument, for example, the agreement to pay interest in exchange for a market-linked return based on a notional amount. To the
Annual Report
Notes to Financial Statements - continued
4. Operating Policies - continued
Swap Agreements - continued
extent the total return of the index exceeds the offsetting interest obligation, a fund will receive a payment from the counterparty. To the extent it is less, a fund will make a payment to the counterparty.
Credit default swaps involve the exchange of a fixed rate premium for protection against the loss in value of an underlying debt instrument in the event of a defined credit event (such as payment default or bankruptcy). Under the terms of the swap, one party acts as a "guarantor" receiving a periodic payment that is a fixed percentage applied to a notional principal amount. In return the party agrees to purchase the notional amount of the underlying instrument, at par, if a credit event occurs during the term of the swap. The Fund may enter into credit default swaps in which either it or its counterparty act as guarantors. By acting as the guarantor of a swap, a fund assumes the market and credit risk of the underlying instrument including liquidity and loss of value.
Swaps are marked-to-market daily based on dealer-supplied valuations and changes in value are recorded as unrealized appreciation (depreciation). Periodic payments and premiums received or made by the Fund are recorded in the accompanying Statement of Operations as realized gains or losses, respectively. 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.
5. Purchases and Sales of Investments.
Purchases and sales of securities (including the Fixed-Income Central Funds), other than short-term securities and U.S. government securities, aggregated $19,743,713 and $711,838,309, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. 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 .31% of the Fund's average net assets.
Annual Report
6. Fees and Other Transactions with Affiliates - continued
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 | Service | Paid to | Retained |
Class A | 0% | .15% | $ 14,235 | $ 3,550 |
Class T | 0% | .15% | 5,535 | 129 |
|
|
| $ 19,770 | $ 3,679 |
Sales Load. FDC receives a front-end sales charge of up to 1.50% for selling Class A and Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of a contingent deferred sales charges levied on Class A and Class T redemptions. These charges depend on the holding period. The deferred sales charges range from .75% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 2,706 |
Class T | 2,709 |
| $ 5,415 |
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. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of each respective class of the Fund. FIIOC receives an asset-based fee of .10% of Ultra Short Bond's average net assets. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. Prior to January 1, 2008, Fidelity Service
Annual Report
Notes to Financial Statements - continued
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees - continued
Company, Inc. (FSC), also an affiliate of FMR, was the transfer agent for Ultra-Short Bond shares. For the period, each class paid the following transfer agent fees:
| Amount | % of |
Class A | $ 15,878 | .17 |
Class T | 7,026 | .19 |
Ultra-Short Bond | 516,453 | .10 |
Institutional Class | 3,289 | .13 |
| $ 542,646 |
|
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.
7. 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 $1,577 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. 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 expenses by $11,801. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent | |
Ultra-Short Bond | $ 3,071 |
Annual Report
9. Credit Risk.
The Fund invests a portion of its assets, directly or indirectly, in structured securities of issuers that hold mortgage securities, including securities backed by subprime mortgage loans. The value and related income of these securities is sensitive to changes in economic conditions, including delinquencies and/or defaults. Continuing shifts in the market's perception of credit quality on securities backed by subprime mortgage loans have resulted in increased volatility of market price and periods of illiquidity that have adversely impacted the valuation of certain issuers of the Fund.
10. 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.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2008 | 2007 |
From net investment income |
|
|
Class A | $ 359,417 | $ 470,241 |
Class T | 130,879 | 210,443 |
Ultra-Short Bond | 20,438,784 | 50,639,843 |
Institutional Class | 112,859 | 305,200 |
Total | $ 21,041,939 | $ 51,625,727 |
Tax Return of Capital |
|
|
Class A | $ 32,925 | $ - |
Class T | 14,892 | - |
Ultra-Short Bond | 2,029,576 | - |
Institutional Class | 6,090 | - |
Total | $ 2,083,483 | $ - |
Annual Report
Notes to Financial Statements - continued
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
| Years ended July 31, | Years ended July 31, | ||
| 2008 | 2007 | 2008 | 2007 |
Class A |
|
|
|
|
Shares sold | 716,050 | 1,247,732 | $ 6,452,492 | $ 12,475,671 |
Reinvestment of distributions | 25,165 | 37,250 | 225,078 | 371,847 |
Shares redeemed | (1,381,271) | (340,215) | (12,368,618) | (3,395,610) |
Net increase (decrease) | (640,056) | 944,767 | $ (5,691,048) | $ 9,451,908 |
Class T |
|
|
|
|
Shares sold | 400,564 | 388,444 | $ 3,634,901 | $ 3,878,571 |
Reinvestment of distributions | 14,754 | 19,812 | 132,908 | 197,787 |
Shares redeemed | (553,763) | (378,796) | (5,029,354) | (3,788,237) |
Net increase (decrease) | (138,445) | 29,460 | $ (1,261,545) | $ 288,121 |
Ultra-Short Bond |
|
|
|
|
Shares sold | 14,463,915 | 59,380,876 | $ 130,144,280 | $ 593,653,669 |
Reinvestment of distributions | 2,308,926 | 4,599,590 | 20,889,307 | 45,902,034 |
Shares redeemed | (77,883,469) | (49,556,665) | (708,372,416) | (494,187,803) |
Net increase (decrease) | (61,110,628) | 14,423,801 | $ (557,338,829) | $ 145,367,900 |
Institutional Class |
|
|
|
|
Shares sold | 60,495 | 970,636 | $ 554,201 | $ 9,707,468 |
Reinvestment of distributions | 5,295 | 8,301 | 48,480 | 82,674 |
Shares redeemed | (840,939) | (330,344) | (7,773,834) | (3,294,058) |
Net increase (decrease) | (775,149) | 648,593 | $ (7,171,153) | $ 6,496,084 |
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Income Fund and the Shareholders of Fidelity Ultra-Short Bond 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 Ultra-Short Bond Fund (a fund of Fidelity Income Fund) at July 31, 2008, 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 periods indicated, 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 Ultra-Short Bond 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, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
September 24, 2008
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the 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 Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 159 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 377 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 Member 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 1-877-208-0098.
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 (78) | |
| Year of Election or Appointment: 1984 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; 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 and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). Mr. Edward C. Johnson 3d and Mr. Arthur E. Johnson are not related. |
James C. Curvey (73) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006- present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
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 | |
Albert R. Gamper, Jr. (66) | |
| 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), a member of the Board of Governors, Rutgers University (2004-present), and Chairman of the Board of Saint Barnabas Health Care System. Previously, Mr. Gamper served as Chairman of the Board of Governors, Rutgers University (2004-2007). |
George H. Heilmeier (72) | |
| 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), Compaq, Automatic Data Processing, Inc. (ADP) (technology-based business outsourcing), 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. |
Arthur E. Johnson (61) | |
| Year of Election or Appointment: 2008 Mr. Johnson serves as Senior Vice President of Corporate Strategic Development of Lockheed Martin Corporation (defense contractor). In addition, Mr. Johnson serves as a member of the Board of Directors of AGL Resources, Inc. (holding company), and IKON Office Solutions, Inc. (document management systems and services). Mr. Arthur E. Johnson and Mr. Edward C. Johnson 3d are not related. |
James H. Keyes (67) | |
| 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 Navistar International Corporation (manufacture and sale of trucks, buses, and diesel engines) and Pitney Bowes, Inc. (integrated mail, messaging, and document management solutions). Previously, Mr. Keyes served as a member of the Board of LSI Logic Corporation (semiconductor technologies, 1984-2008). |
Marie L. Knowles (61) | |
| 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 McKesson Corporation (healthcare service). 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. Previously, Ms. Knowles served as a Director of Phelps Dodge Corporation (copper mining and manufacturing, 1994-2007). |
Kenneth L. Wolfe (69) | |
| Year of Election or Appointment: 2005 Mr. Wolfe is Chairman and a Director of Hershey Foods Corporation (2007-present), where prior to his retirement in 2001, he was Chairman and Chief Executive Officer. Mr. Wolfe currently serves as a member of the board of Revlon Inc. (2004-present). Previously, Mr. Wolfe served as a member of the boards of Adelphia Communications Corporation (2003-2006) and Bausch & Lomb, Inc. (1993-2007). |
Advisory Board Member and Executive Officers**:
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 (64) | |
| 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. |
John R. Hebble (50) | |
| Year of Election or Appointment: 2008 President and Treasurer of the fund. Mr. Hebble also serves as President and Treasurer of Fidelity's Fixed Income and Asset Allocation Funds (2008-present) and is an employee of FMR (2003-present). Before joining Fidelity Investments, Mr. Hebble worked at Deutsche Asset Management where he served as Director of Fund Accounting (2002-2003) and Assistant Treasurer of the Scudder Funds. |
Boyce I. Greer (52) | |
| Year of Election or Appointment: 2005 Vice President of the fund. Mr. Greer also serves as Vice President of 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). Mr. Greer is President and a Director of Fidelity Investments Money Management, Inc. (2007-present), and an Executive Vice President of FMR and FMR Co., Inc. (2005-present). Previously, Mr. Greer served as a Director and Managing Director of Strategic Advisers, Inc. (2002-2005). |
Dwight D. Churchill (46) | |
| Year of Election or Appointment: 2008 Vice President of the fund. Mr. Churchill also serves as Vice President of Fidelity's Bond Funds (2008-present). Mr. Churchill is Executive Vice President of FMR (2005-present), FMR Co., Inc. (2005-present) and Fidelity Investments Money Management, Inc. (2008-present). Previously, Mr. Churchill served as Senior Vice President of FMR (1997-2005) and Senior Vice President of Fidelity Investments Money Management, Inc. (2000-2006). |
Scott C. Goebel (40) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the fund. Mr. Goebel also serves as Secretary and CLO of other Fidelity funds (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present); and Deputy General Counsel of FMR LLC. Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
Nancy D. Prior (41) | |
| Year of Election or Appointment: 2008 Assistant Secretary of the fund. Ms. Prior also serves as Assistant Secretary of Fidelity's Fixed Income and Asset Allocation Funds (2008- present) and is an employee of FMR (2002-present). |
Holly C. Laurent (54) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) officer of the fund. Ms. Laurent also serves as AML officer of other Fidelity funds (2008-present) and is an employee of FMR LLC. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006- 2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (49) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the fund. Ms. Reynolds also serves as Chief Financial Officer of other Fidelity funds (2008-present). Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980- 2002), where she was an audit partner with PwC's investment management practice. |
Michael H. Whitaker (41) | |
| Year of Election or Appointment: 2008 Chief Compliance Officer of the fund. Mr. Whitaker also serves as Chief Compliance Officer of Fidelity's Fixed Income and Asset Allocation Funds (2008-present) and is an employee of FMR (2007-present). Prior to joining Fidelity Investments, Mr. Whitaker worked at MFS Investment Management where he served as Senior Vice President and Chief Compliance Officer (2004-2006), and Assistant General Counsel. |
Bryan A. Mehrmann (47) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the fund. 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). |
Robert G. Byrnes (41) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the fund. 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 Fidelity Pricing and Cash Management Services (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 (54) | |
| Year of Election or Appointment: 2004 Assistant Treasurer of the fund. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004-present) and is an employee of FMR. |
Paul M. Murphy (61) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of the fund. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (49) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the fund. 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 Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Distributions (Unaudited)
A total of 0.08% 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 $6,943,561 of distributions paid during the period January 1, 2008 to July 31, 2008 as qualifying to be taxed as interest-related dividends for nonresident alien shareholders.
The fund will notify shareholders in January 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Ultra-Short Bond 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 and, acting directly and through its separate committees, requests and receives information concerning, and considers at each of its meetings factors that are relevant to, its annual consideration of the 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 a written charter outlining the structure and purposes of the committee. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts.
At its June 2008 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the fund's Advisory Contracts. 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 fund's management fee and total expenses; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its 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 agreements with foreign sub-advisers Fidelity Management & Research (U.K.) Inc., Fidelity Management & Research (Japan) Inc., and Fidelity Management & Research (Hong Kong) Limited.
In considering 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 and through the exercise of its business judgment, 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. The Board's decision to renew the Advisory Contracts was not based on any single factor noted above, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, 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 backgrounds of the fund's investment personnel 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.
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 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 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 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 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.
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 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 Fidelity has taken a number of actions over the previous year 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 fees on Fidelity's Institutional Money Market Funds and launching Class IV and Institutional Class of certain of these funds; (iii) reducing the transfer agent fees for the Fidelity Select Portfolios and Investor Class of the VIP funds; and (iv) launching Class K of 29 equity funds as a lower-fee class available to certain employer-sponsored retirement plans.
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 each class, as well as the fund's relative investment performance for each class 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. The following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2007, as available, the cumulative total returns of Fidelity Ultra-Short Bond (retail class) and Class T of the fund, 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 returns of Fidelity Ultra-Short Bond (retail class) and Class T show the performance of the highest and lowest performing classes, respectively (based on three-year performance). 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 numbers noted below each chart correspond to the percentile box and represent the percentage of funds in the peer group whose performance was equal to or lower than that of the class indicated.
Annual Report
Fidelity Ultra-Short Bond Fund
The Board reviewed the fund's relative investment performance against its peer group and stated that the performance of Fidelity Ultra-Short Bond (retail class) of the fund was in the fourth quartile for all the periods shown. The Board also stated that the investment performance of the fund was lower than its benchmark for all the periods shown. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes. The Board discussed with FMR actions that may be taken by FMR to improve the fund's disappointing performance and how investment personnel evaluate potential for incremental return against the risks involved in obtaining that incremental return. The Board considered the steps that FMR has taken to strengthen and refine its risk management processes in light of recent credit events that have affected various sectors of the fixed-income markets. The Board will continue to closely monitor the performance of the fund in the coming year.
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 21% means that 79% 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 Ultra-Short Bond Fund
Annual Report
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 2007.
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 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 Ultra-Short Bond (retail class) to 10 basis points, and (iii) limit the total expenses for Fidelity Ultra-Short Bond (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 each class's total expenses ranked below its competitive median for 2007.
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. 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.
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
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.
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 fund's business.
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.
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. The Board concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Annual Report
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 certain topics, including (i) fund performance trends and actions to be taken by FMR to improve certain funds' overall performance; (ii) portfolio manager changes that have occurred during the past year; (iii) Fidelity's fund profitability methodology, the profitability of certain fund service providers, and profitability trends for certain funds; (iv) Fidelity's compensation structure for portfolio managers and key personnel, including its effects on fund profitability and the extent to which portfolio manager compensation is linked to fund performance; (v) Fidelity's fee structures; (vi) the funds' sub-advisory arrangements; and (vii) accounts managed by Fidelity other than the Fidelity funds.
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 the fund's Advisory Contracts should be renewed.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
Fidelity Investments
Money Management, Inc.
Fidelity International Investment Advisors
Fidelity International Investment Advisors
(U.K.) Limited
Fidelity Research & Analysis Company
Fidelity Management & Research
(U.K.) Inc.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Citibank, N.A.
New York, NY
AUSB-UANN-0908 1.804587.104
(Fidelity Investment logo)(registered trademark)
Fidelity Advisor
Ultra-Short Bond
Fund - Institutional Class
Annual Report
July 31, 2008
Institutional Class
is a class of
Fidelity® Ultra-Short Bond Fund
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
Performance | How the fund has done over time. | |
Management's Discussion | The manager's review of fund performance, strategy and outlook. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, | |
Notes | Notes to the financial statements. | |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Board Approval of Investment Advisory Contracts and Management Fees |
|
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 LLC 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.
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 fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Domestic and international securities markets have struggled thus far in 2008. High-grade fixed-income investments produced modestly positive results, but many stock benchmarks suffered double-digit losses through the first half of this year. Financial markets are always unpredictable, but 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
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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, 2008 |
| Past 1 | Past 5 | Life of |
Institutional Class B |
| -12.46% | -0.51% | -0.11% |
A From August 29, 2002
B Institutional Class shares are sold to eligible investors without a sales load or 12b-1 fee. The initial offering of Institutional Class shares took place on June 16, 2004. Returns prior to June 16, 2004 are those of Ultra-Short Bond, the original retail class of the fund.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Ultra-Short Bond Fund - Institutional Class on August 29, 2002, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the Lehman Brothers® 6 Month Swap Index performed over the same period. The initial offering of Institutional Class took place on June 16, 2004. See the previous page for additional information regarding the performance of Institutional Class.
Annual Report
Management's Discussion of Fund Performance
Comments from Robert Galusza, who became sole Portfolio Manager of Fidelity Advisor Ultra-Short Bond Fund on July 1, 2008
Bonds with less credit risk generally produced higher returns for investment-grade debt during the 12 months ending July 31, 2008. In that span, the Lehman Brothers® U.S. Aggregate Index - a proxy for high-quality, fixed-rate, taxable bonds - returned 6.15%. Treasuries did the best, buoyed by their reputation as the safest haven in turbulent times, with the Lehman Brothers U.S. Treasury Index up 8.99% during the period. Agency bonds, with their perceived "implicit" government backing, also did well, as the Lehman Brothers U.S. Agency Index rose 7.79%. Mortgage-backed securities ended the period with a gain of 6.96%, according to the Lehman Brothers U.S. Mortgage-Backed Securities Index, while the Lehman Brothers U.S. Credit Index - a measure of high-quality corporate debt - finished with a modest 2.85% increase. The asset-backed sector - home to weak-performing subprime debt - had negative results, as reflected in the 2.69% loss of the Lehman Brothers U.S. Fixed-Rate Asset-Backed Securities Index.
During the past year, the fund's Institutional Class shares returned -12.46% and the Lehman Brothers 6 Month Swap Index gained 4.62%. Throughout much of the reporting period, the fund held positions in a number of sectors that were hurt the worst by an expanding host of worries related to the credit crunch. Specifically, the bulk of the fund's underperformance stemmed from its exposure to asset-backed securities (ABS) - particularly those backed by subprime mortgages - commercial mortgage-backed securities (CMBS), collateralized mortgage obligations (CMOs) and corporate securities. Though these short-duration instruments - held both directly and also through Fidelity® Ultra-Short Central Fund - were mostly highly rated (AA or AAA), their market values dropped significantly during the period. In an attempt to reduce the fund's overall volatility, manage anticipated shareholder redemptions and position the fund based on our view of future market risk, we undertook a number of initiatives in accordance with the principal investment strategies of the fund. We considerably reduced our stake in subprime mortgage securities and other types of securitized investments. We achieved this by initially reducing and ultimately liquidating the fund's underlying stake in Ultra-Short Central Fund and by selling some holdings we believed would continue to experience extreme volatility. At the end of the period, the fund's stake in cash and cash-like instruments stood at roughly 82% of net assets, with the remainder invested in ABS, CMBS, CMOs, commercial paper, corporate bonds and mortgage pass-through securities.
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
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees, 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, 2008 to July 31, 2008).
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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
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. In addition, if these transactional costs were included, your costs would have been higher.
Annual Report
| Beginning | Ending | Expenses Paid |
Class A |
|
|
|
Actual | $ 1,000.00 | $ 945.60 | $ 3.29 |
HypotheticalA | $ 1,000.00 | $ 1,021.48 | $ 3.42 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 945.50 | $ 3.43 |
HypotheticalA | $ 1,000.00 | $ 1,021.33 | $ 3.57 |
Ultra-Short Bond |
|
|
|
Actual | $ 1,000.00 | $ 946.70 | $ 2.18 |
HypotheticalA | $ 1,000.00 | $ 1,022.63 | $ 2.26 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 946.40 | $ 2.56 |
HypotheticalA | $ 1,000.00 | $ 1,022.23 | $ 2.66 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). The fees and expenses of the underlying Fidelity Central Funds in which the Fund invests are not included in the Fund's annualized expense ratio.
| Annualized |
Class A | .68% |
Class T | .71% |
Ultra-Short Bond | .45% |
Institutional Class | .53% |
Annual Report
Investment Changes (Unaudited)
The information in the following tables is based on the combined investments of the Fund and its pro-rata share of its investments in each Fidelity Central Fund. |
Quality Diversification (% of fund's net assets) | |||||||
As of July 31, 2008* | As of January 31, 2008* | ||||||
![]() | U.S. Government and |
| ![]() | U.S. Government and |
| ||
![]() | AAA 7.5% |
| ![]() | AAA 27.8% |
| ||
![]() | AA 2.1% |
| ![]() | AA 13.2% |
| ||
![]() | A 0.8% |
| ![]() | A 13.1% |
| ||
![]() | BBB 1.6% |
| ![]() | BBB 18.1% |
| ||
![]() | BB and Below 0.2% |
| ![]() | BB and Below 0.1% |
| ||
![]() | Not Rated 0.2% |
| ![]() | Not Rated 0.9% |
| ||
![]() | Short-Term |
| ![]() | Short-Term |
|
We have used ratings from Moody's® Investors Services, Inc. Where Moody's ratings are not available, we have used S&P® ratings. All ratings are as of the report date and do not reflect subsequent downgrades. Securities rated BB or below were rated investment grade at the time of acquisition. |
Weighted Average Maturity as of July 31, 2008 | ||
|
| 6 months ago |
Years | 0.3 | 1.6 |
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, 2008 | ||
|
| 6 months ago |
Years | 0.2 | 0.5 |
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, 2008* | As of January 31, 2008** | ||||||
![]() | Corporate Bonds 1.8% |
| ![]() | Corporate Bonds 11.0% |
| ||
![]() | U.S. Government and |
| ![]() | U.S. Government and |
| ||
![]() | Asset-Backed |
| ![]() | Asset-Backed |
| ||
![]() | CMOs and Other Mortgage Related |
| ![]() | CMOs and Other Mortgage Related |
| ||
![]() | Short-Term |
| ![]() | Short-Term |
| ||
* Foreign investments | 2.4% |
| ** Foreign investments | 14.5% |
| ||
* Futures and Swaps | 0.0% |
| ** Futures and Swaps | 27.0% |
|
A holdings listing for the Fund, which presents direct holdings as well as the pro rata share of any securities and other investments held indirectly through its investment in underlying non-money market Fidelity Central Funds is available at fidelity.com and/or advisor.fidelity.com, as applicable. |
Annual Report
Investments July 31, 2008
Showing Percentage of Net Assets
Nonconvertible Bonds - 1.8% | |||
| Principal Amount | Value | |
FINANCIALS - 1.8% | |||
Capital Markets - 0.4% | |||
Bear Stearns Companies, Inc. 2.7281% 2/23/10 (b) | $ 1,500,000 | $ 1,476,080 | |
Commercial Banks - 0.1% | |||
Sovereign Bank 4.375% 8/1/13 (b) | 500,000 | 383,978 | |
Consumer Finance - 0.6% | |||
General Electric Capital Corp. 2.8763% 6/15/09 (b) | 1,900,000 | 1,899,937 | |
Insurance - 0.5% | |||
Metropolitan Life Global Funding I 3.5513% 6/25/10 (a)(b) | 1,500,000 | 1,498,622 | |
Thrifts & Mortgage Finance - 0.2% | |||
Independence Community Bank Corp. 4.8625% 6/20/13 (b) | 735,000 | 547,708 | |
TOTAL NONCONVERTIBLE BONDS (Cost $6,086,888) | 5,806,325 | ||
U.S. Government Agency - Mortgage Securities - 0.5% | |||
| |||
Freddie Mac - 0.5% | |||
4.482% 6/1/35 (b) | 1,500,000 | 1,499,025 | |
Asset-Backed Securities - 6.4% | |||
| |||
ACE Securities Corp. Home Equity Loan Trust: | |||
Series 2003-HE1 Class M1, 3.4363% 11/25/33 (b)(c) | 113,099 | 90,057 | |
Series 2003-HS1: | |||
Class M1, 3.2113% 6/25/33 (b)(c) | 6,004 | 5,884 | |
Class M2, 4.2113% 6/25/33 (b)(c) | 50,000 | 42,437 | |
Series 2004-HE1 Class M1, 2.9613% 2/25/34 (b)(c) | 56,106 | 55,186 | |
Series 2006-HE2: | |||
Class M3, 2.8013% 5/25/36 (b)(c) | 240,000 | 16,800 | |
Class M4, 2.8613% 5/25/36 (b)(c) | 200,000 | 15,960 | |
Class M5, 2.9013% 5/25/36 (b)(c) | 295,000 | 15,316 | |
Ameriquest Mortgage Securities, Inc.: | |||
Series 2004-R11 Class M1, 3.1213% 11/25/34 (b)(c) | 560,000 | 434,203 | |
Series 2004-R9 Class M2, 3.1113% 10/25/34 (b)(c) | 720,000 | 534,346 | |
Argent Securities, Inc. Series 2004-W7 Class M1, 3.0113% 5/25/34 (b)(c) | 305,000 | 226,942 | |
Asset-Backed Securities - continued | |||
| Principal Amount | Value | |
Capital One Master Trust Series 2001-6 Class A, 2.65% 6/15/11 (b) | $ 2,000,000 | $ 1,999,987 | |
Capital Trust Ltd. Series 2004-1: | |||
Class A2, 3.2363% 7/20/39 (a)(b) | 265,000 | 204,050 | |
Class B, 3.5363% 7/20/39 (a)(b) | 140,000 | 93,800 | |
Class C, 3.5581% 7/20/39 (a)(b) | 180,000 | 93,600 | |
Cendant Timeshare Receivables Funding LLC Series 2005 1A Class 2A2, 2.6381% 5/20/17 (a)(b) | 329,520 | 276,381 | |
Chase Issuance Trust Series 2007-14 Class A, 2.7075% 9/15/11 (b) | 2,000,000 | 1,993,462 | |
Citibank Credit Card Issuance Trust Series 2003-A8 Class A8, 3.5% 8/16/10 | 3,000,000 | 3,000,690 | |
Countrywide Home Loans, Inc. Series 2002-6 Class AV1, 3.3213% 5/25/33 (b)(c) | 16,267 | 11,262 | |
Fannie Mae subordinate REMIC pass-thru certificates | |||
Class AB1, 2.5544% 5/28/35 (b) | 80,751 | 58,715 | |
Class AB3, 2.6976% 5/28/35 (b) | 32,052 | 21,558 | |
First Franklin Mortgage Loan Trust Series 2004-FF2 | 7,718 | 7,145 | |
Fremont Home Loan Trust: | |||
Series 2005-A: | |||
Class M1, 2.8913% 1/25/35 (b)(c) | 150,843 | 132,504 | |
Class M2, 2.9213% 1/25/35 (b)(c) | 325,000 | 276,937 | |
Class M4, 3.1413% 1/25/35 (b)(c) | 125,000 | 56,640 | |
Series 2006-A: | |||
Class M4, 2.8613% 5/25/36 (b)(c) | 685,000 | 34,654 | |
Class M5, 2.9613% 5/25/36 (b)(c) | 365,000 | 16,228 | |
GSAMP Trust: | |||
Series 2003-FM1 Class M1, 3.6881% 3/20/33 (b)(c) | 445,890 | 344,452 | |
Series 2006-NC2 Class M4, 2.8113% 6/25/36 (b)(c) | 1,541,000 | 79,130 | |
Series 2007-HE1 Class M1, 2.7113% 3/25/47 (b)(c) | 335,000 | 68,625 | |
GSR Mortgage Loan Trust Series 2005-9 Class 2A1, 2.5813% 8/25/35 (b) | 50,343 | 49,367 | |
Guggenheim Structured Real Estate Funding Ltd. | 650,741 | 475,041 | |
Home Equity Asset Trust: | |||
Series 2002-3 Class A5, 3.3413% 2/25/33 (b)(c) | 14 | 9 | |
Series 2003-5: | |||
Class A2, 3.1613% 12/25/33 (b)(c) | 10,566 | 8,443 | |
Class M1, 3.5113% 12/25/33 (b)(c) | 129,805 | 114,092 | |
Series 2003-7 Class A2, 3.2213% 3/25/34 (b)(c) | 2,079 | 1,382 | |
Household Home Equity Loan Trust Series 2004-1 | 83,635 | 65,943 | |
Asset-Backed Securities - continued | |||
| Principal Amount | Value | |
MBNA Credit Card Master Note Trust: | |||
Series 2003-A11 Class A11, 3.65% 3/15/11 | $ 2,000,000 | $ 2,002,753 | |
Series 2003-A9 Class A9, 2.59% 2/15/11 (b) | 2,000,000 | 1,999,821 | |
Meritage Mortgage Loan Trust Series 2004-1 Class M2, 3.2863% 7/25/34 (b)(c) | 3,764 | 1,102 | |
Merrill Lynch Mortgage Investors Trust Series 2004-HE2 | 39,863 | 30,477 | |
Morgan Stanley ABS Capital I Trust Series 2004-HE6 | 65,756 | 42,925 | |
Morgan Stanley Dean Witter Capital I Trust Series 2002-AM3 Class A3, 3.4413% 2/25/33 (b)(c) | 14,114 | 10,912 | |
NovaStar Mortgage Funding Trust Series 2003-3 Class A3, 2.9113% 12/25/33 (b)(c) | 41,200 | 35,503 | |
Ocala Funding LLC Series 2006-1A Class A, 4.1863% 3/20/11 (a)(b) | 965,000 | 675,500 | |
Park Place Securities, Inc.: | |||
Series 2004-WCW1 Class M4, 3.9113% 9/25/34 (b)(c) | 435,000 | 99,889 | |
Series 2004-WWF1: | |||
Class A5, 2.9313% 1/25/35 (b)(c) | 3 | 2 | |
Class M4, 3.5613% 1/25/35 (b)(c) | 945,000 | 546,440 | |
Series 2005-WCH1 Class M3, 3.0213% 1/25/35 (b)(c) | 425,000 | 265,819 | |
Providian Master Note Trust Series 2006-C1A Class C1, 3.01% 3/16/15 (a)(b) | 2,465,000 | 1,553,320 | |
Salomon Brothers Mortgage Securities VII, Inc. Series 2003-HE1 Class A, 3.2613% 4/25/33 (b)(c) | 1,451 | 1,110 | |
SLMA Student Loan Trust Series 2004-10 Class A3, 2.89% 10/25/16 (b) | 1,384,181 | 1,381,370 | |
Terwin Mortgage Trust: | |||
Series 2003-4HE Class A1, 2.8913% 9/25/34 (b)(c) | 21,802 | 16,147 | |
Series 2003-6HE Class A1, 2.9313% 11/25/33 (b)(c) | 17,086 | 13,322 | |
WaMu Master Note Trust Series 2007-C1 Class C1, 2.86% 5/15/14 (a)(b) | 1,595,000 | 1,194,614 | |
TOTAL ASSET-BACKED SECURITIES (Cost $27,915,513) | 20,792,254 | ||
Collateralized Mortgage Obligations - 3.4% | |||
| Principal Amount | Value | |
Private Sponsor - 3.4% | |||
Bear Stearns Alt-A Trust floater Series 2005-2 | $ 443,807 | $ 282,148 | |
Credit Suisse First Boston Adjustable Rate Mortgage Trust floater: | |||
Series 2004-2 Class 7A3, 2.8613% 2/25/35 (b) | 165,734 | 135,206 | |
Series 2004-4 Class 5A2, 2.8613% 3/25/35 (b) | 35,547 | 26,661 | |
Series 2005-1 Class 5A2, 2.7913% 5/25/35 (b) | 112,713 | 80,277 | |
Series 2005-10 Class 5A2, 2.7813% 1/25/36 (b) | 768,241 | 400,519 | |
Series 2005-2: | |||
Class 6A2, 2.7413% 6/25/35 (b) | 34,993 | 23,901 | |
Class 6M2, 2.9413% 6/25/35 (b) | 1,375,000 | 550,641 | |
Series 2005-3 Class 8A2, 2.7013% 7/25/35 (b) | 532,040 | 341,583 | |
Series 2005-5 Class 6A2, 2.6913% 9/25/35 (b) | 450,934 | 307,111 | |
Series 2005-8 Class 7A2, 2.7413% 11/25/35 (b) | 342,138 | 236,074 | |
Credit Suisse First Boston Mortgage Securities Corp. floater: | |||
Series 2004-AR2 Class 6A1, 2.8613% 3/25/34 (b) | 337 | 248 | |
Series 2004-AR3 Class 6A2, 3.2013% 4/25/34 (b) | 1,132 | 813 | |
Series 2004-AR5 Class 11A2, 3.2013% 6/25/34 (b) | 22,645 | 18,755 | |
Series 2004-AR6 Class 9A2, 3.2013% 10/25/34 (b) | 28,271 | 23,233 | |
Series 2004-AR7 Class 6A2, 2.8413% 8/25/34 (b) | 42,794 | 37,911 | |
Series 2004-AR8 Class 8A2, 2.8413% 9/25/34 (b) | 29,976 | 25,865 | |
Deutsche Alt-A Securities Mortgage Loan Trust floater | 1,375,000 | 726,659 | |
First Horizon Mortgage pass-thru Trust floater | 53,760 | 45,262 | |
GSR Mortgage Loan Trust floater Series 2004-11 | 462,326 | 425,344 | |
Homestar Mortgage Acceptance Corp. floater Series 2004-5 Class A1, 2.9113% 10/25/34 (b) | 321,101 | 254,478 | |
Impac CMB Trust floater: | |||
Series 2004-11 Class 2A2, 2.8313% 3/25/35 (b) | 231,100 | 174,772 | |
Series 2005-1: | |||
Class M4, 3.2113% 4/25/35 (b) | 32,297 | 6,847 | |
Class M5, 3.2313% 4/25/35 (b) | 32,297 | 5,711 | |
Class M6, 3.2813% 4/25/35 (b) | 50,384 | 7,641 | |
Series 2005-4 Class 1B1, 3.7613% 5/25/35 (b) | 212,658 | 27,131 | |
Lehman Structured Securities Corp. floater Series 2005-1 | 391,371 | 211,233 | |
MASTR Adjustable Rate Mortgages Trust floater: | |||
Series 2004-11: | |||
Class 1A4, 2.9513% 11/25/34 (b) | 28,840 | 22,294 | |
Collateralized Mortgage Obligations - continued | |||
| Principal Amount | Value | |
Private Sponsor - continued | |||
MASTR Adjustable Rate Mortgages Trust floater: - continued | |||
Series 2004-11: | |||
Class 2A1, 2.8413% 11/25/34 (b) | $ 10,577 | $ 8,598 | |
Class 2A2, 2.9013% 11/25/34 (b) | 2,329 | 1,822 | |
Series 2005-1 Class 1A1, 2.7313% 3/25/35 (b) | 57,000 | 39,337 | |
MASTR Seasoned Securitization Trust Series 2004-1 | 304,908 | 292,680 | |
Merrill Lynch Mortgage Investors Trust floater: | |||
Series 2003-A Class 2A2, 3.4806% 3/25/28 (b) | 21,616 | 19,312 | |
Series 2003-D Class A, 2.7713% 8/25/28 (b) | 276,715 | 257,793 | |
Series 2003-E Class A2, 3.4006% 10/25/28 (b) | 99,121 | 92,524 | |
Series 2003-F Class A2, 5.7613% 10/25/28 (b) | 114,742 | 107,030 | |
Series 2004-A Class A2, 2.7475% 4/25/29 (b) | 156,213 | 143,132 | |
Series 2004-B Class A2, 5.125% 6/25/29 (b) | 116,103 | 107,829 | |
Series 2004-C Class A2, 5.155% 7/25/29 (b) | 173,715 | 164,511 | |
Series 2004-D Class A2, 2.8575% 9/25/29 (b) | 201,634 | 186,903 | |
Series 2005-A Class A2, 3.3206% 2/25/30 (b) | 184,239 | 174,838 | |
Series 2005-B Class A2, 3.0388% 7/25/30 (b) | 197,010 | 164,913 | |
Series 2006-MLN1 Class M4, 2.8213% 7/25/37 (b)(c) | 1,015,000 | 62,905 | |
MortgageIT Trust floater Series 2004-2: | |||
Class A1, 2.8313% 12/25/34 (b) | 258,088 | 227,720 | |
Class A2, 2.9113% 12/25/34 (b) | 348,611 | 304,044 | |
Provident Funding Mortgage Loan Trust Series 2005-2 | 531,721 | 499,893 | |
Residential Asset Mortgage Products, Inc. Series 2005-AR5 Class 1A1, 4.7612% 9/19/35 (b) | 290,235 | 274,044 | |
Sequoia Mortgage Trust floater: | |||
Series 2003-5 Class A2, 3.31% 9/20/33 (b) | 101,851 | 82,714 | |
Series 2004-1 Class A, 4.1113% 2/20/34 (b) | 80,404 | 65,066 | |
Series 2004-10 Class A4, 4.0938% 11/20/34 (b) | 201,822 | 162,199 | |
Series 2004-12 Class 1A2, 5.115% 1/20/35 (b) | 354,352 | 292,726 | |
Series 2004-4 Class A, 4.0713% 5/20/34 (b) | 255,030 | 206,144 | |
Series 2004-5 Class A3, 3.1663% 6/20/34 (b) | 94,561 | 76,399 | |
Series 2004-6 Class A3A, 3.4913% 6/20/35 (b) | 100,524 | 80,999 | |
Series 2004-7: | |||
Class A3A, 4.1363% 8/20/34 (b) | 120,849 | 97,408 | |
Class A3B, 4.3613% 7/20/34 (b) | 234,657 | 191,658 | |
Series 2004-8 Class A2, 3.35% 9/20/34 (b) | 389,887 | 314,377 | |
Series 2005-1 Class A2, 4.0613% 2/20/35 (b) | 211,159 | 164,603 | |
Series 2005-2 Class A2, 3.23% 3/20/35 (b) | 288,345 | 209,897 | |
Soundview Home Equity Loan Trust floater Series 2006-EQ1 Class M7, 3.2613% 9/25/36 (b)(c) | 330,000 | 20,549 | |
Collateralized Mortgage Obligations - continued | |||
| Principal Amount | Value | |
Private Sponsor - continued | |||
Structured Asset Securities Corp. floater: | |||
Series 2004-NP1 Class A, 2.8613% 9/25/33 (a)(b) | $ 65,323 | $ 58,967 | |
Series 2007-GEL1 Class A2, 2.6513% 1/25/37 (a)(b)(c) | 1,000,000 | 559,500 | |
TBW Mortgage-Backed pass-thru certificates floater | 1,000,000 | 650,000 | |
WaMu Mortgage pass-thru certificates: | |||
floater Series 2006-AR11 Class C1B1, 2.5413% 9/25/46 (b) | 214,577 | 207,861 | |
sequential payer Series 2002-S6 Class A25, 6% 10/25/32 | 75,719 | 75,823 | |
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $17,063,644) | 11,045,036 | ||
Commercial Mortgage Securities - 0.8% | |||
| |||
Morgan Stanley Capital I Trust: | |||
floater: | |||
Series 2005-XLF Class K, 3.11% 8/15/19 (a)(b) | 420,000 | 361,200 | |
Series 2006-XLF Class C, 3.66% 7/15/19 (a)(b) | 570,000 | 478,800 | |
Series 2007-XLFA Class B, 2.59% 10/15/20 (a)(b) | 440,000 | 402,600 | |
Series 2007-XLC1: | |||
Class C, 3.0575% 7/17/17 (a)(b) | 843,811 | 607,544 | |
Class D, 3.1575% 7/17/17 (a)(b) | 397,088 | 266,049 | |
Class E, 3.2575% 7/17/17 (a)(b) | 320,725 | 205,264 | |
STRIPS III Ltd./STRIPS III Corp. floater Series 2004-1A Class A, 2.9419% 3/24/18 (a)(b) | 150,156 | 135,141 | |
TOTAL COMMERCIAL MORTGAGE SECURITIES (Cost $3,142,315) | 2,456,598 | ||
Commercial Paper - 4.9% | |||
| |||
Australia & New Zealand Banking Group Ltd. yankee 2.72% 10/15/08 | 2,000,000 | 1,988,389 | |
Barclays U.S. Funding Corp. yankee 2.78% 10/29/08 | 2,000,000 | 1,985,900 | |
BNP Paribas Finance, Inc. yankee 2.779% 11/3/08 | 2,000,000 | 1,985,001 | |
CBA Finance, Inc. yankee: | |||
2.72% 10/7/08 | 1,132,000 | 1,126,205 | |
2.72% 10/8/08 | 1,000,000 | 994,796 | |
Natexis Banques Populaires US Finance Co. LLC yankee 2.995% 11/4/08 | 2,000,000 | 1,984,821 | |
Commercial Paper - continued | |||
| Principal Amount | Value | |
Royal Bank of Scotland PLC yankee 2.82% 9/8/08 | $ 2,000,000 | $ 1,994,557 | |
Societe Generale North America, Inc. yankee 2.85% | 2,000,000 | 1,994,242 | |
UniCredito Italiano Bank (Ireland) PLC yankee 2.935% 10/24/08 | 2,000,000 | 1,986,660 | |
TOTAL COMMERCIAL PAPER (Cost $16,038,485) | 16,040,571 | ||
Cash Equivalents - 82.4% | |||
Maturity |
| ||
Investments in repurchase agreements in a joint trading account at 2.19%, dated 7/31/08 due 8/1/08 (Collateralized by U.S. Government Obligations) # | $ 182,126,086 | 182,115,000 | |
With: | |||
Banc of America Securities LLC at: | |||
2.37%, dated 7/31/08 due 8/1/08 (Collateralized by Corporate Obligations valued at $13,650,898, 2.73% - 6.63%, 11/28/08 - 7/15/18) | 13,000,855 | 13,000,000 | |
2.39%, dated 7/31/08 due 8/1/08 (Collateralized by Corporate Obligations valued at $2,100,139, 6.5%, 11/1/17) | 2,000,133 | 2,000,000 | |
Barclays Capital, Inc. at 2.34%, dated 7/31/08 due 8/1/08 (Collateralized by Corporate Obligations | 13,000,844 | 13,000,000 | |
J.P. Morgan Securities, Inc. at 2.39%, dated 7/31/08 | 13,000,862 | 13,000,000 | |
Lehman Brothers, Inc. at 2.41%, dated 7/31/08 | 15,001,003 | 15,000,000 | |
Cash Equivalents - 82.4% | |||
Maturity | Value | ||
With: - continued | |||
Merrill Lynch, Pierce, Fenner & Smith at 2.34%, dated 7/31/08 due 8/1/08 (Collateralized by Mortgage Loan Obligations valued at $15,752,629, 2.58%, 2/15/20) | $ 15,000,974 | $ 15,000,000 | |
Wachovia Securities, Inc. at 2.39%, dated 7/31/08 due 8/1/08 (Collateralized by Commercial Paper Obligations valued at $15,451,025, 8/12/08) | 15,000,995 | 15,000,000 | |
TOTAL CASH EQUIVALENTS (Cost $268,115,000) | 268,115,000 | ||
TOTAL INVESTMENT PORTFOLIO - 100.2% (Cost $339,871,220) | 325,754,809 | ||
NET OTHER ASSETS - (0.2)% | (581,564) | ||
NET ASSETS - 100% | $ 325,173,245 |
Legend |
(a) 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 $9,351,226 or 2.9% of net assets. |
(b) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. |
(c) Security or a portion of the security backed by subprime mortgage loans. At period end, the value of these securities amounted to $4,361,179 or 1.4% of net assets. |
# Additional Information on each counterparty to the repurchase agreement is as follows: |
Repurchase Agreement / Counterparty | Value |
$182,115,000 due 8/01/08 at 2.19% | |
BNP Paribas Securities Corp. | $ 13,614,591 |
Banc of America Securities LLC | 21,116,508 |
Bank of America, NA | 20,437,101 |
Barclays Capital, Inc. | 88,908,134 |
Greenwich Capital Markets, Inc. | 3,334,185 |
ING Financial Markets | 18,893,718 |
J.P. Morgan Securities, | 10,253,787 |
RBC Capital Markets Corp. | 2,778,488 |
WestLB AG | 2,778,488 |
| $ 182,115,000 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Ultra-Short Central Fund | $ 4,105,565 |
Additional information regarding the Fund's fiscal year to date purchases and sales, including the ownership percentage, of the non Money Market Central Funds is as follows: |
Fund | Value, | Purchases | Sales Proceeds | Value, end of period | % ownership, end of period |
Fidelity Ultra-Short Central Fund | $ 255,014,810 | $ - | $ 235,895,358 | $ - | 0.0% |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 97.6% |
Others (individually less than 1%) | 2.4% |
| 100.0% |
Income Tax Information |
At July 31, 2008, the fund had a capital loss carryforward of approximately $14,622,425 of which $1,917,431, $518,690 and $12,186,304 will expire on July 31, 2014, 2015 and 2016, respectively. |
The fund intends to elect to defer to its fiscal year ending July 31, 2009 approximately $97,399,166 of losses recognized during the period November 1, 2007 to July 31, 2008. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including repurchase agreements of $268,115,000) - See accompanying schedule: Unaffiliated issuers (cost $339,871,220) |
| $ 325,754,809 |
Receivable for fund shares sold | 140,581 | |
Interest receivable | 140,677 | |
Other receivables | 95,900 | |
Total assets | 326,131,967 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 395 | |
Payable for fund shares redeemed | 809,883 | |
Distributions payable | 22,945 | |
Accrued management fee | 86,493 | |
Distribution fees payable | 1,053 | |
Other affiliated payables | 37,953 | |
Total liabilities | 958,722 | |
|
|
|
Net Assets | $ 325,173,245 | |
Net Assets consist of: |
| |
Paid in capital | $ 451,846,561 | |
Distributions in excess of net investment income | (535,314) | |
Accumulated undistributed net realized gain (loss) on investments | (112,021,591) | |
Net unrealized appreciation (depreciation) on investments | (14,116,411) | |
Net Assets | $ 325,173,245 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Assets and Liabilities - continued
| July 31, 2008 | |
|
|
|
Calculation of Maximum Offering Price | $ 8.26 | |
|
|
|
Maximum offering price per share (100/98.50 of $8.26) | $ 8.39 | |
Class T: | $ 8.26 | |
|
|
|
Maximum offering price per share (100/98.50 of $8.26) | $ 8.39 | |
Ultra-Short Bond: | $ 8.26 | |
|
|
|
Institutional Class: | $ 8.26 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Operations
| Year ended July 31, 2008 | |
|
|
|
Investment Income |
|
|
Interest |
| $ 22,134,827 |
Income from Fidelity Central Funds |
| 4,105,565 |
Total income |
| 26,240,392 |
|
|
|
Expenses | ||
Management fee | $ 1,676,755 | |
Transfer agent fees | 542,646 | |
Distribution fees | 19,770 | |
Fund wide operations fee | 182,891 | |
Independent trustees' compensation | 2,524 | |
Miscellaneous | 1,577 | |
Total expenses before reductions | 2,426,163 | |
Expense reductions | (14,872) | 2,411,291 |
Net investment income | 23,829,101 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (83,363,462) | |
Fidelity Central Funds | (23,922,089) |
|
Futures contracts | 1,456,351 | |
Swap agreements | (6,787,666) |
|
Total net realized gain (loss) |
| (112,616,866) |
Change in net unrealized appreciation (depreciation) on: Investment securities | 3,839,529 | |
Futures contracts | 122,630 | |
Swap agreements | 3,056,651 | |
Total change in net unrealized appreciation (depreciation) |
| 7,018,810 |
Net gain (loss) | (105,598,056) | |
Net increase (decrease) in net assets resulting from operations | $ (81,768,955) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income | $ 23,829,101 | $ 51,627,290 |
Net realized gain (loss) | (112,616,866) | (1,037,412) |
Change in net unrealized appreciation (depreciation) | 7,018,810 | (20,635,029) |
Net increase (decrease) in net assets resulting | (81,768,955) | 29,954,849 |
Distributions to shareholders from net investment income | (21,041,939) | (51,625,727) |
Distributions to shareholders from return of capital | (2,083,483) | - |
Total distributions | (23,125,422) | (51,625,727) |
Share transactions - net increase (decrease) | (571,462,575) | 161,604,013 |
Redemption fees | 64,200 | 39,619 |
Total increase (decrease) in net assets | (676,292,752) | 139,972,754 |
|
|
|
Net Assets | ||
Beginning of period | 1,001,465,997 | 861,493,243 |
End of period (including distributions in excess of net investment income of $535,314 and undistributed net investment income of $539,837, respectively) | $ 325,173,245 | $ 1,001,465,997 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.82 | $ 10.02 | $ 10.03 | $ 10.05 | $ 10.04 |
Income from Investment Operations |
|
|
|
|
|
Net investment income E | .384 | .493 | .400 | .223 | .013 |
Net realized and unrealized gain (loss) | (1.612) | (.198) | (.009) | (.026) | .011 |
Total from investment operations | (1.228) | .295 | .391 | .197 | .024 |
Distributions from net investment income | (.294) | (.495) | (.401) | (.214) | (.014) |
Distributions from net realized gain | - | - | - | (.003) | - |
Return of capital | (.039) | - | - | - | - |
Total distributions | (.333) | (.495) | (.401) | (.217) | (.014) |
Redemption fees added to paid in capital E | .001 | - J | - J | - J | -J |
Net asset value, end of period | $ 8.26 | $ 9.82 | $ 10.02 | $ 10.03 | $ 10.05 |
Total Return B, C, D | (12.71)% | 2.97% | 3.97% | 1.98% | .24% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | .67% | .66% | .70% | .78% | .85% A |
Expenses net of fee waivers, | .67% | .66% | .70% | .70% | .70% A |
Expenses net of all reductions | .66% | .66% | .70% | .70% | .70% A |
Net investment income | 4.26% | 4.96% | 4.00% | 2.23% | 1.11% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period | $ 6,268 | $ 13,735 | $ 4,553 | $ 2,557 | $ 316 |
Portfolio turnover rate G | 11% | 29% | 39% | 33% | 53% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period June 16, 2004 (commencement of sale of shares) to July 31, 2004.
I Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
J Amount represents less than $.001 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.82 | $ 10.02 | $ 10.03 | $ 10.05 | $ 10.04 |
Income from Investment Operations |
|
|
|
|
|
Net investment income E | .377 | .491 | .404 | .222 | .013 |
Net realized and unrealized gain (loss) | (1.607) | (.199) | (.011) | (.025) | .010 |
Total from investment operations | (1.230) | .292 | .393 | .197 | .023 |
Distributions from net investment income | (.292) | (.492) | (.403) | (.214) | (.013) |
Distributions from net realized gain | - | - | - | (.003) | - |
Return of capital | (.039) | - | - | - | - |
Total distributions | (.331) | (.492) | (.403) | (.217) | (.013) |
Redemption fees added to paid in capital E | .001 | - J | - J | - J | - J |
Net asset value, end of period | $ 8.26 | $ 9.82 | $ 10.02 | $ 10.03 | $ 10.05 |
Total Return B, C, D | (12.72)% | 2.95% | 4.00% | 1.98% | .23% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | .69% | .69% | .68% | .77% | .86% A |
Expenses net of fee waivers, | .69% | .69% | .68% | .70% | .70% A |
Expenses net of all reductions | .69% | .69% | .68% | .70% | .70% A |
Net investment income | 4.23% | 4.93% | 4.03% | 2.23% | 1.11% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period | $ 2,910 | $ 4,818 | $ 4,624 | $ 4,044 | $ 356 |
Portfolio turnover rate G | 11% | 29% | 39% | 33% | 53% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period June 16, 2004 (commencement of sale of shares) to July 31, 2004.
I Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
J Amount represents less than $.001 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Ultra-Short Bond
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.81 | $ 10.02 | $ 10.03 | $ 10.05 | $ 10.02 |
Income from Investment Operations |
|
|
|
|
|
Net investment income C | .404 | .516 | .427 | .241 | .122 |
Net realized and unrealized gain (loss) | (1.603) | (.210) | (.011) | (.026) | .029 |
Total from investment operations | (1.199) | .306 | .416 | .215 | .151 |
Distributions from net investment income | (.310) | (.516) | (.426) | (.232) | (.122) |
Distributions from net realized gain | - | - | - | (.003) | - |
Return of capital | (.042) | - | - | - | - |
Total distributions | (.352) | (.516) | (.426) | (.235) | (.122) |
Redemption fees added to paid in capital C | .001 | - G | - G | - G | .001 |
Net asset value, end of period | $ 8.26 | $ 9.81 | $ 10.02 | $ 10.03 | $ 10.05 |
Total Return A, B | (12.42)% | 3.09% | 4.23% | 2.16% | 1.52% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | .45% | .45% | .45% | .58% | .62% |
Expenses net of fee waivers, | .45% | .45% | .45% | .53% | .55% |
Expenses net of all reductions | .45% | .45% | .45% | .53% | .55% |
Net investment income | 4.47% | 5.17% | 4.26% | 2.41% | 1.21% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period | $ 315,401 | $ 974,602 | $ 850,329 | $ 906,644 | $ 580,174 |
Portfolio turnover rate E | 11% | 29% | 39% | 33% | 53% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount represents less than $.001 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Institutional Class
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.81 | $ 10.02 | $ 10.03 | $ 10.05 | $ 10.04 |
Income from Investment Operations |
|
|
|
|
|
Net investment income D | .416 | .510 | .420 | .240 | .015 |
Net realized and unrealized gain (loss) | (1.619) | (.206) | (.008) | (.026) | .010 |
Total from investment operations | (1.203) | .304 | .412 | .214 | .025 |
Distributions from net investment income | (.306) | (.514) | (.422) | (.231) | (.015) |
Distributions from net realized gain | - | - | - | (.003) | - |
Return of capital | (.042) | - | - | - | - |
Total distributions | (.348) | (.514) | (.422) | (.234) | (.015) |
Redemption fees added to paid in capital D | .001 | - I | - I | - I | - I |
Net asset value, end of period | $ 8.26 | $ 9.81 | $ 10.02 | $ 10.03 | $ 10.05 |
Total Return B, C | (12.46)% | 3.06% | 4.19% | 2.15% | .25% |
Ratios to Average Net Assets E, H |
|
|
|
|
|
Expenses before reductions | .48% | .48% | .49% | .58% | .67% A |
Expenses net of fee waivers, | .48% | .48% | .49% | .55% | .55% A |
Expenses net of all reductions | .48% | .48% | .49% | .55% | .55% A |
Net investment income | 4.44% | 5.14% | 4.22% | 2.38% | 1.26% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period | $ 594 | $ 8,312 | $ 1,987 | $ 509 | $ 376 |
Portfolio turnover rate F | 11% | 29% | 39% | 33% | 53% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period June 16, 2004 (commencement of sale of shares) to July 31, 2004.
H Expense ratios reflect operating expenses of the class. 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 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount represents less than $.001 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended July 31, 2008
1. Organization.
Fidelity Ultra-Short Bond 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, Ultra-Short Bond 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. 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. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
Based on their investment objective, each Fidelity Central Fund may invest or participate in various investment vehicles or strategies that are similar to those of the Fund. These strategies are consistent with the investment objectives of the Fund and may involve certain economic risks which may cause a decline in value of each of the Fidelity Central Funds and thus a decline in the value of the Fund. The following summarizes the Fund's investment in each Fidelity Central Fund.
Fidelity Central Fund | Investment Manager | Investment Objective | Investment Practices |
Fidelity Ultra-Short | Fidelity Investments Money Management, Inc. (FIMM) | Seeks to obtain a high level of current income consistent with preservation of capital by investing in U.S. dollar denominated money market and investment-grade debt securities. | Futures Repurchase Agreements Restricted Securities Swap Agreements |
Annual Report
Notes to Financial Statements - continued
2. Investments in Fidelity Central Funds - continued
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. 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. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Debt securities, including restricted securities, 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. Investments in open-end mutual funds, including the Fidelity Central 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. Actual prices received at disposition may differ.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
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 per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE) normally 4:00 pm Eastern time and 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.
Annual Report
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities.
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.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service.
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.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. Certain adjustments have been made to the accounts relating to prior periods. Collectively, 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 futures transactions, swap agreements, market discount, capital loss carryforwards and losses deferred due to excise tax regulations.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 10,957 |
Unrealized depreciation | (14,125,882) |
Net unrealized appreciation (depreciation) | (14,114,925) |
Capital loss carryforward | $ (14,622,425) |
|
|
Cost for federal income tax purposes | $ 339,869,734 |
The tax character of distributions paid was as follows:
| July 31, 2008 | July 31, 2007 |
Ordinary Income | $ 21,041,939 | $ 51,625,727 |
Tax Return of Capital | 2,083,483 | - |
Total | $ 23,125,422 | $ 51,625,727 |
For the period ended July 31, 2008, the Fund's distributions exceeded the aggregate amount of taxable income and net realized gains resulting in a return of capital for tax purposes. This was due to reductions in taxable income available for distribution after certain distributions had been made. The tax treatment of distributions for the 2008 calendar year will be reported to shareholders prior to February 1, 2009.
Short-Term Trading (Redemption) Fees. Shares held in the Fund less than 60 days are subject to a redemption fee equal to .25% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncements. 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 results in expanded disclosures about fair value measurements.
In addition, in March 2008, Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (SFAS 161), was issued and is effective for fiscal years beginning after November 15, 2008. SFAS 161 requires enhanced disclosures to provide information about the reasons the Fund invests in derivative instruments, the accounting treatment and the effect derivatives have on financial performance. Management is currently evaluating the impact the adoption of SFAS 161 will have on the Fund's financial statement disclosures.
Annual Report
4. Operating Policies.
Repurchase Agreements. 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.
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. Losses may arise from changes in the value of the underlying instruments or if the counterparties do not perform under the contract's terms.
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.
Swap Agreements. The Fund may invest in swaps for the purpose of managing its exposure to interest rate, credit or market risk.
Total return swaps are agreements to exchange the return generated by one instrument or index for the return generated by another instrument, for example, the agreement to pay interest in exchange for a market-linked return based on a notional amount. To the
Annual Report
Notes to Financial Statements - continued
4. Operating Policies - continued
Swap Agreements - continued
extent the total return of the index exceeds the offsetting interest obligation, a fund will receive a payment from the counterparty. To the extent it is less, a fund will make a payment to the counterparty.
Credit default swaps involve the exchange of a fixed rate premium for protection against the loss in value of an underlying debt instrument in the event of a defined credit event (such as payment default or bankruptcy). Under the terms of the swap, one party acts as a "guarantor" receiving a periodic payment that is a fixed percentage applied to a notional principal amount. In return the party agrees to purchase the notional amount of the underlying instrument, at par, if a credit event occurs during the term of the swap. The Fund may enter into credit default swaps in which either it or its counterparty act as guarantors. By acting as the guarantor of a swap, a fund assumes the market and credit risk of the underlying instrument including liquidity and loss of value.
Swaps are marked-to-market daily based on dealer-supplied valuations and changes in value are recorded as unrealized appreciation (depreciation). Periodic payments and premiums received or made by the Fund are recorded in the accompanying Statement of Operations as realized gains or losses, respectively. 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.
5. Purchases and Sales of Investments.
Purchases and sales of securities (including the Fixed-Income Central Funds), other than short-term securities and U.S. government securities, aggregated $19,743,713 and $711,838,309, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. 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 .31% of the Fund's average net assets.
Annual Report
6. Fees and Other Transactions with Affiliates - continued
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 | Service | Paid to | Retained |
Class A | 0% | .15% | $ 14,235 | $ 3,550 |
Class T | 0% | .15% | 5,535 | 129 |
|
|
| $ 19,770 | $ 3,679 |
Sales Load. FDC receives a front-end sales charge of up to 1.50% for selling Class A and Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of a contingent deferred sales charges levied on Class A and Class T redemptions. These charges depend on the holding period. The deferred sales charges range from .75% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 2,706 |
Class T | 2,709 |
| $ 5,415 |
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. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of each respective class of the Fund. FIIOC receives an asset-based fee of .10% of Ultra Short Bond's average net assets. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. Prior to January 1, 2008, Fidelity Service
Annual Report
Notes to Financial Statements - continued
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees - continued
Company, Inc. (FSC), also an affiliate of FMR, was the transfer agent for Ultra-Short Bond shares. For the period, each class paid the following transfer agent fees:
| Amount | % of |
Class A | $ 15,878 | .17 |
Class T | 7,026 | .19 |
Ultra-Short Bond | 516,453 | .10 |
Institutional Class | 3,289 | .13 |
| $ 542,646 |
|
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.
7. 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 $1,577 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. 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 expenses by $11,801. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent | |
Ultra-Short Bond | $ 3,071 |
Annual Report
9. Credit Risk.
The Fund invests a portion of its assets, directly or indirectly, in structured securities of issuers that hold mortgage securities, including securities backed by subprime mortgage loans. The value and related income of these securities is sensitive to changes in economic conditions, including delinquencies and/or defaults. Continuing shifts in the market's perception of credit quality on securities backed by subprime mortgage loans have resulted in increased volatility of market price and periods of illiquidity that have adversely impacted the valuation of certain issuers of the Fund.
10. 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.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2008 | 2007 |
From net investment income |
|
|
Class A | $ 359,417 | $ 470,241 |
Class T | 130,879 | 210,443 |
Ultra-Short Bond | 20,438,784 | 50,639,843 |
Institutional Class | 112,859 | 305,200 |
Total | $ 21,041,939 | $ 51,625,727 |
Tax Return of Capital |
|
|
Class A | $ 32,925 | $ - |
Class T | 14,892 | - |
Ultra-Short Bond | 2,029,576 | - |
Institutional Class | 6,090 | - |
Total | $ 2,083,483 | $ - |
Annual Report
Notes to Financial Statements - continued
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
| Years ended July 31, | Years ended July 31, | ||
| 2008 | 2007 | 2008 | 2007 |
Class A |
|
|
|
|
Shares sold | 716,050 | 1,247,732 | $ 6,452,492 | $ 12,475,671 |
Reinvestment of distributions | 25,165 | 37,250 | 225,078 | 371,847 |
Shares redeemed | (1,381,271) | (340,215) | (12,368,618) | (3,395,610) |
Net increase (decrease) | (640,056) | 944,767 | $ (5,691,048) | $ 9,451,908 |
Class T |
|
|
|
|
Shares sold | 400,564 | 388,444 | $ 3,634,901 | $ 3,878,571 |
Reinvestment of distributions | 14,754 | 19,812 | 132,908 | 197,787 |
Shares redeemed | (553,763) | (378,796) | (5,029,354) | (3,788,237) |
Net increase (decrease) | (138,445) | 29,460 | $ (1,261,545) | $ 288,121 |
Ultra-Short Bond |
|
|
|
|
Shares sold | 14,463,915 | 59,380,876 | $ 130,144,280 | $ 593,653,669 |
Reinvestment of distributions | 2,308,926 | 4,599,590 | 20,889,307 | 45,902,034 |
Shares redeemed | (77,883,469) | (49,556,665) | (708,372,416) | (494,187,803) |
Net increase (decrease) | (61,110,628) | 14,423,801 | $ (557,338,829) | $ 145,367,900 |
Institutional Class |
|
|
|
|
Shares sold | 60,495 | 970,636 | $ 554,201 | $ 9,707,468 |
Reinvestment of distributions | 5,295 | 8,301 | 48,480 | 82,674 |
Shares redeemed | (840,939) | (330,344) | (7,773,834) | (3,294,058) |
Net increase (decrease) | (775,149) | 648,593 | $ (7,171,153) | $ 6,496,084 |
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Income Fund and the Shareholders of Fidelity Ultra-Short Bond 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 Ultra-Short Bond Fund (a fund of Fidelity Income Fund) at July 31, 2008, 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 periods indicated, 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 Ultra-Short Bond 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, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
September 24, 2008
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the 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 Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 159 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 377 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 Member 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 1-877-208-0098.
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 (78) | |
| Year of Election or Appointment: 1984 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; 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 and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). Mr. Edward C. Johnson 3d and Mr. Arthur E. Johnson are not related. |
James C. Curvey (73) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006- present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
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 | |
Albert R. Gamper, Jr. (66) | |
| 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), a member of the Board of Governors, Rutgers University (2004-present), and Chairman of the Board of Saint Barnabas Health Care System. Previously, Mr. Gamper served as Chairman of the Board of Governors, Rutgers University (2004-2007). |
George H. Heilmeier (72) | |
| 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), Compaq, Automatic Data Processing, Inc. (ADP) (technology-based business outsourcing), 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. |
Arthur E. Johnson (61) | |
| Year of Election or Appointment: 2008 Mr. Johnson serves as Senior Vice President of Corporate Strategic Development of Lockheed Martin Corporation (defense contractor). In addition, Mr. Johnson serves as a member of the Board of Directors of AGL Resources, Inc. (holding company), and IKON Office Solutions, Inc. (document management systems and services). Mr. Arthur E. Johnson and Mr. Edward C. Johnson 3d are not related. |
James H. Keyes (67) | |
| 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 Navistar International Corporation (manufacture and sale of trucks, buses, and diesel engines) and Pitney Bowes, Inc. (integrated mail, messaging, and document management solutions). Previously, Mr. Keyes served as a member of the Board of LSI Logic Corporation (semiconductor technologies, 1984-2008). |
Marie L. Knowles (61) | |
| 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 McKesson Corporation (healthcare service). 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. Previously, Ms. Knowles served as a Director of Phelps Dodge Corporation (copper mining and manufacturing, 1994-2007). |
Kenneth L. Wolfe (69) | |
| Year of Election or Appointment: 2005 Mr. Wolfe is Chairman and a Director of Hershey Foods Corporation (2007-present), where prior to his retirement in 2001, he was Chairman and Chief Executive Officer. Mr. Wolfe currently serves as a member of the board of Revlon Inc. (2004-present). Previously, Mr. Wolfe served as a member of the boards of Adelphia Communications Corporation (2003-2006) and Bausch & Lomb, Inc. (1993-2007). |
Advisory Board Member and Executive Officers**:
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 (64) | |
| 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. |
John R. Hebble (50) | |
| Year of Election or Appointment: 2008 President and Treasurer of the fund. Mr. Hebble also serves as President and Treasurer of Fidelity's Fixed Income and Asset Allocation Funds (2008-present) and is an employee of FMR (2003-present). Before joining Fidelity Investments, Mr. Hebble worked at Deutsche Asset Management where he served as Director of Fund Accounting (2002-2003) and Assistant Treasurer of the Scudder Funds. |
Boyce I. Greer (52) | |
| Year of Election or Appointment: 2005 Vice President of the fund. Mr. Greer also serves as Vice President of 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). Mr. Greer is President and a Director of Fidelity Investments Money Management, Inc. (2007-present), and an Executive Vice President of FMR and FMR Co., Inc. (2005-present). Previously, Mr. Greer served as a Director and Managing Director of Strategic Advisers, Inc. (2002-2005). |
Dwight D. Churchill (46) | |
| Year of Election or Appointment: 2008 Vice President of the fund. Mr. Churchill also serves as Vice President of Fidelity's Bond Funds (2008-present). Mr. Churchill is Executive Vice President of FMR (2005-present), FMR Co., Inc. (2005-present) and Fidelity Investments Money Management, Inc. (2008-present). Previously, Mr. Churchill served as Senior Vice President of FMR (1997-2005) and Senior Vice President of Fidelity Investments Money Management, Inc. (2000-2006). |
Scott C. Goebel (40) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the fund. Mr. Goebel also serves as Secretary and CLO of other Fidelity funds (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present); and Deputy General Counsel of FMR LLC. Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
Nancy D. Prior (41) | |
| Year of Election or Appointment: 2008 Assistant Secretary of the fund. Ms. Prior also serves as Assistant Secretary of Fidelity's Fixed Income and Asset Allocation Funds (2008- present) and is an employee of FMR (2002-present). |
Holly C. Laurent (54) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) officer of the fund. Ms. Laurent also serves as AML officer of other Fidelity funds (2008-present) and is an employee of FMR LLC. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006- 2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (49) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the fund. Ms. Reynolds also serves as Chief Financial Officer of other Fidelity funds (2008-present). Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980- 2002), where she was an audit partner with PwC's investment management practice. |
Michael H. Whitaker (41) | |
| Year of Election or Appointment: 2008 Chief Compliance Officer of the fund. Mr. Whitaker also serves as Chief Compliance Officer of Fidelity's Fixed Income and Asset Allocation Funds (2008-present) and is an employee of FMR (2007-present). Prior to joining Fidelity Investments, Mr. Whitaker worked at MFS Investment Management where he served as Senior Vice President and Chief Compliance Officer (2004-2006), and Assistant General Counsel. |
Bryan A. Mehrmann (47) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the fund. 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). |
Robert G. Byrnes (41) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the fund. 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 Fidelity Pricing and Cash Management Services (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 (54) | |
| Year of Election or Appointment: 2004 Assistant Treasurer of the fund. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004-present) and is an employee of FMR. |
Paul M. Murphy (61) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of the fund. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (49) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the fund. 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 Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Distributions (Unaudited)
A total of 0.08% 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 $6,943,561 of distributions paid during the period January 1, 2008 to July 31, 2008 as qualifying to be taxed as interest-related dividends for nonresident alien shareholders.
The fund will notify shareholders in January 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Ultra-Short Bond 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 and, acting directly and through its separate committees, requests and receives information concerning, and considers at each of its meetings factors that are relevant to, its annual consideration of the 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 a written charter outlining the structure and purposes of the committee. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts.
At its June 2008 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the fund's Advisory Contracts. 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 fund's management fee and total expenses; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its 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 agreements with foreign sub-advisers Fidelity Management & Research (U.K.) Inc., Fidelity Management & Research (Japan) Inc., and Fidelity Management & Research (Hong Kong) Limited.
In considering 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 and through the exercise of its business judgment, 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. The Board's decision to renew the Advisory Contracts was not based on any single factor noted above, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, 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 backgrounds of the fund's investment personnel 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.
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 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 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 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 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.
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 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 Fidelity has taken a number of actions over the previous year 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 fees on Fidelity's Institutional Money Market Funds and launching Class IV and Institutional Class of certain of these funds; (iii) reducing the transfer agent fees for the Fidelity Select Portfolios and Investor Class of the VIP funds; and (iv) launching Class K of 29 equity funds as a lower-fee class available to certain employer-sponsored retirement plans.
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 each class, as well as the fund's relative investment performance for each class 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. The following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2007, as available, the cumulative total returns of Fidelity Ultra-Short Bond (retail class) and Class T of the fund, 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 returns of Fidelity Ultra-Short Bond (retail class) and Class T show the performance of the highest and lowest performing classes, respectively (based on three-year performance). 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 numbers noted below each chart correspond to the percentile box and represent the percentage of funds in the peer group whose performance was equal to or lower than that of the class indicated.
Annual Report
Fidelity Ultra-Short Bond Fund
The Board reviewed the fund's relative investment performance against its peer group and stated that the performance of Fidelity Ultra-Short Bond (retail class) of the fund was in the fourth quartile for all the periods shown. The Board also stated that the investment performance of the fund was lower than its benchmark for all the periods shown. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes. The Board discussed with FMR actions that may be taken by FMR to improve the fund's disappointing performance and how investment personnel evaluate potential for incremental return against the risks involved in obtaining that incremental return. The Board considered the steps that FMR has taken to strengthen and refine its risk management processes in light of recent credit events that have affected various sectors of the fixed-income markets. The Board will continue to closely monitor the performance of the fund in the coming year.
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 21% means that 79% 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 Ultra-Short Bond Fund
Annual Report
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 2007.
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 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 Ultra-Short Bond (retail class) to 10 basis points, and (iii) limit the total expenses for Fidelity Ultra-Short Bond (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 each class's total expenses ranked below its competitive median for 2007.
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. 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.
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
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.
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 fund's business.
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.
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. The Board concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Annual Report
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 certain topics, including (i) fund performance trends and actions to be taken by FMR to improve certain funds' overall performance; (ii) portfolio manager changes that have occurred during the past year; (iii) Fidelity's fund profitability methodology, the profitability of certain fund service providers, and profitability trends for certain funds; (iv) Fidelity's compensation structure for portfolio managers and key personnel, including its effects on fund profitability and the extent to which portfolio manager compensation is linked to fund performance; (v) Fidelity's fee structures; (vi) the funds' sub-advisory arrangements; and (vii) accounts managed by Fidelity other than the Fidelity funds.
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 the fund's Advisory Contracts should be renewed.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
Fidelity Investments
Money Management, Inc.
Fidelity International Investment Advisors
Fidelity International Investment Advisors
(U.K.) Limited
Fidelity Research & Analysis Company
Fidelity Management & Research
(U.K.) Inc.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Citibank, N.A.
New York, NY
AUSBI-UANN-0908 1.804593.104
Item 2. Code of Ethics
As of the end of the period, July 31, 2008, Fidelity Income Fund (the trust) has adopted a code of ethics, as defined in Item 2 of Form N-CSR, that applies to its President and Treasurer and its Chief Financial Officer. A copy of the code of ethics is filed as an exhibit to this Form N-CSR.
Item 3. Audit Committee Financial Expert
The Board of Trustees of the trust has determined that Marie L. Knowles is an audit committee financial expert, as defined in Item 3 of Form N-CSR. Ms. Knowles is independent for purposes of Item 3 of Form N-CSR.
Item 4. Principal Accountant Fees and Services
(a) Audit Fees.
For the fiscal years ended July 31, 2008 and July 31, 2007, the aggregate Audit Fees billed by PricewaterhouseCoopers LLP (PwC) for professional services rendered for the audits of the financial statements, or services that are normally provided in connection with statutory and regulatory filings or engagements for those fiscal years, for the Fidelity Ginnie Mae Fund, Fidelity Government Income Fund, Fidelity Intermediate Government Income Fund, and Fidelity Ultra-Short Bond Fund (the funds) and for all funds in the Fidelity Group of Funds are shown in the table below.
Fund | 2008A | 2007A |
Fidelity Ginnie Mae Fund | $91,000 | $93,000 |
Fidelity Government Income Fund | $74,000 | $73,000 |
Fidelity Intermediate Government Income Fund | $68,000 | $64,000 |
Fidelity Ultra-Short Bond Fund | $92,000 | $68,000 |
All funds in the Fidelity Group of Funds audited by PwC |
$14,000,000 |
$13,800,000 |
A | Aggregate amounts may reflect rounding. |
For the fiscal years ended July 31, 2008 and July 31, 2007, the aggregate Audit Fees billed by Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates (collectively, "Deloitte Entities") for professional services rendered for the audits of the financial statements, or services that are normally provided in connection with statutory and regulatory filings or engagements for those fiscal years, for Fidelity Income Replacement 2016 Fund, Fidelity Income Replacement 2018 Fund, Fidelity Income Replacement 2020 Fund, Fidelity Income Replacement 2022 Fund, Fidelity Income Replacement 2024 Fund, Fidelity Income Replacement 2026 Fund, Fidelity Income Replacement 2028 Fund, Fidelity Income Replacement 2030 Fund, Fidelity Income Replacement 2032 Fund, Fidelity Income Replacement 2034 Fund, Fidelity Income Replacement 2036 Fund, Fidelity Income Replacement 2038 Fund, Fidelity Income Replacement 2040 Fund and Fidelity Income Replacement 2042 Fund (the funds) and for all funds in the Fidelity Group of Funds are shown in the table below.
Fund | 2008A | 2007A,B |
Fidelity Income Replacement 2016 Fund | $21,000 | $0 |
Fidelity Income Replacement 2018 Fund | $21,000 | $0 |
Fidelity Income Replacement 2020 Fund | $21,000 | $0 |
Fidelity Income Replacement 2022 Fund | $21,000 | $0 |
Fidelity Income Replacement 2024 Fund | $21,000 | $0 |
Fidelity Income Replacement 2026 Fund | $21,000 | $0 |
Fidelity Income Replacement 2028 Fund | $21,000 | $0 |
Fidelity Income Replacement 2030 Fund | $21,000 | $0 |
Fidelity Income Replacement 2032 Fund | $21,000 | $0 |
Fidelity Income Replacement 2034 Fund | $21,000 | $0 |
Fidelity Income Replacement 2036 Fund | $21,000 | $0 |
Fidelity Income Replacement 2038 Fund | $19,000 | $0 |
Fidelity Income Replacement 2040 Fund | $19,000 | $0 |
Fidelity Income Replacement 2042 Fund | $19,000 | $0 |
All funds in the Fidelity Group of Funds audited by Deloitte Entities |
$6,800,000 |
$7,100,000 |
A | Aggregate amounts may reflect rounding. |
B | Fidelity Income Replacement 2016 Fund, Fidelity Income Replacement 2018 Fund, Fidelity Income Replacement 2020 Fund, Fidelity Income Replacement 2022 Fund, Fidelity Income Replacement 2024 Fund, Fidelity Income Replacement 2026 Fund, Fidelity Income Replacement 2028 Fund, Fidelity Income Replacement 2030 Fund, Fidelity Income Replacement 2032 Fund, Fidelity Income Replacement 2034 Fund and Fidelity Income Replacement 2036 Fund commenced operations on August 30, 2007. Fidelity Income Replacement 2038 Fund, Fidelity Income Replacement 2040 Fund and Fidelity Income Replacement 2042 Fund commenced operations on December 31, 2007.
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(b) Audit-Related Fees.
In each of the fiscal years ended July 31, 2008 and July 31, 2007, the aggregate Audit-Related Fees billed by PwC for services rendered for assurance and related services to each fund that are reasonably related to the performance of the audit or review of the fund's financial statements, but not reported as Audit Fees, are shown in the table below.
Fund | 2008A | 2007A |
Fidelity Ginnie Mae Fund | $0 | $0 |
Fidelity Government Income Fund | $0 | $0 |
Fidelity Intermediate Government Income Fund | $0 | $0 |
Fidelity Ultra-Short Bond Fund | $0 | $0 |
A | Aggregate amounts may reflect rounding. |
In each of the fiscal years ended July 31, 2008 and July 31, 2007, the aggregate Audit-Related Fees billed by Deloitte Entities for services rendered for assurance and related services to each fund that are reasonably related to the performance of the audit or review of the fund's financial statements, but not reported as Audit Fees, are shown in the table below.
Fund | 2008A | 2007 A,B | |
Fidelity Income Replacement 2016 Fund | $0 | $0 | |
Fidelity Income Replacement 2018 Fund | $0 | $0 | |
Fidelity Income Replacement 2020 Fund | $0 | $0 | |
Fidelity Income Replacement 2022 Fund | $0 | $0 | |
Fidelity Income Replacement 2024 Fund | $0 | $0 | |
Fidelity Income Replacement 2026 Fund | $0 | $0 | |
Fidelity Income Replacement 2028 Fund | $0 | $0 | |
Fidelity Income Replacement 2030 Fund | $0 | $0 | |
Fidelity Income Replacement 2032 Fund | $0 | $0 | |
Fidelity Income Replacement 2034 Fund | $0 | $0 | |
Fidelity Income Replacement 2036 Fund | $0 | $0 | |
Fidelity Income Replacement 2038 Fund | $0 | $0 | |
Fidelity Income Replacement 2040 Fund | $0 | $0 | |
Fidelity Income Replacement 2042 Fund | $0 | $0 | |
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A | Aggregate amounts may reflect rounding. | ||
B | Fidelity Income Replacement 2016 Fund, Fidelity Income Replacement 2018 Fund, Fidelity Income Replacement 2020 Fund, Fidelity Income Replacement 2022 Fund, Fidelity Income Replacement 2024 Fund, Fidelity Income Replacement 2026 Fund, Fidelity Income Replacement 2028 Fund, Fidelity Income Replacement 2030 Fund, Fidelity Income Replacement 2032 Fund, Fidelity Income Replacement 2034 Fund and Fidelity Income Replacement 2036 Fund commenced operations on August 30, 2007. Fidelity Income Replacement 2038 Fund, Fidelity Income Replacement 2040 Fund and Fidelity Income Replacement 2042 Fund commenced operations on December 31, 2007.
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In each of the fiscal years ended July 31, 2008 and July 31, 2007, the aggregate Audit-Related Fees that were billed by PwC and Deloitte Entities that were required to be approved by the Audit Committee for services rendered on behalf of Fidelity Management & Research Company (FMR) and entities controlling, controlled by, or under common control with FMR (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) that provide ongoing services to the funds ("Fund Service Providers") for assurance and related services that relate directly to the operations and financial reporting of each fund that are reasonably related to the performance of the audit or review of the fund's financial statements, but not reported as Audit Fees, are shown in the table below.
Billed By | 2008 A | 2007A |
PwC | $1,010,000 | $0 |
Deloitte Entities | $410,000B | $0 B |
A | Aggregate amounts may reflect rounding. |
B | May include amounts billed prior to the funds' commencement of operations |
Fees included in the audit-related category comprise assurance and related services (e.g., due diligence services) that are traditionally performed by the independent registered public accounting firm. These audit-related services include due diligence related to mergers and acquisitions, accounting consultations and audits in connection with acquisitions, internal control reviews, attest services that are not required by statute or regulation and consultation concerning financial accounting and reporting standards.
(c) Tax Fees.
In each of the fiscal years ended July 31, 2008 and July 31, 2007, the aggregate Tax Fees billed by PwC for professional services rendered for tax compliance, tax advice, and tax planning for each fund is shown in the table below.
Fund | 2008A | 2007A |
Fidelity Ginnie Mae Fund | $3,900 | $2,900 |
Fidelity Government Income Fund | $6,000 | $2,900 |
Fidelity Intermediate Government Income Fund | $5,100 | $2,900 |
Fidelity Ultra-Short Bond Fund | $3,000 | $2,900 |
A | Aggregate amounts may reflect rounding. |
In each of the fiscal years ended July 31, 2008 and July 31, 2007, the aggregate Tax Fees billed by Deloitte Entities for professional services rendered for tax compliance, tax advice, and tax planning for each fund is shown in the table below.
Fund | 2008A | 2007A,B |
Fidelity Income Replacement 2016 Fund | $4,400 | $0 |
Fidelity Income Replacement 2018 Fund | $4,400 | $0 |
Fidelity Income Replacement 2020 Fund | $4,400 | $0 |
Fidelity Income Replacement 2022 Fund | $4,400 | $0 |
Fidelity Income Replacement 2024 Fund | $4,400 | $0 |
Fidelity Income Replacement 2026 Fund | $4,400 | $0 |
Fidelity Income Replacement 2028 Fund | $4,400 | $0 |
Fidelity Income Replacement 2030 Fund | $4,400 | $0 |
Fidelity Income Replacement 2032 Fund | $4,400 | $0 |
Fidelity Income Replacement 2034 Fund | $4,400 | $0 |
Fidelity Income Replacement 2036 Fund | $4,400 | $0 |
Fidelity Income Replacement 2038 Fund | $4,400 | $0 |
Fidelity Income Replacement 2040 Fund | $4,400 | $0 |
Fidelity Income Replacement 2042 Fund | $4,400 | $0 |
A | Aggregate amounts may reflect rounding. |
B | Fidelity Income Replacement 2016 Fund, Fidelity Income Replacement 2018 Fund, Fidelity Income Replacement 2020 Fund, Fidelity Income Replacement 2022 Fund, Fidelity Income Replacement 2024 Fund, Fidelity Income Replacement 2026 Fund, Fidelity Income Replacement 2028 Fund, Fidelity Income Replacement 2030 Fund, Fidelity Income Replacement 2032 Fund, Fidelity Income Replacement 2034 Fund and Fidelity Income Replacement 2036 Fund commenced operations on August 30, 2007. Fidelity Income Replacement 2038 Fund, Fidelity Income Replacement 2040 Fund and Fidelity Income Replacement 2042 Fund commenced operations on December 31, 2007.
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In each of the fiscal years ended July 31, 2008 and July 31, 2007, the aggregate Tax Fees billed by PwC and Deloitte Entities that were required to be approved by the Audit Committee for professional services rendered on behalf of the Fund Service Providers for tax compliance, tax advice, and tax planning that relate directly to the operations and financial reporting of each fund is shown in the table below.
Billed By | 2008A | 2007A |
PwC | $0 | $0 |
Deloitte Entities | $0B | $0B |
A | Aggregate amounts may reflect rounding. |
B | May include amounts billed prior to the funds' commencement of operations |
Fees included in the Tax Fees category comprise all services performed by professional staff in the independent registered public accounting firm's tax division except those services related to the audit. Typically, this category would include fees for tax compliance, tax planning, and tax advice. Tax compliance, tax advice, and tax planning services include preparation of original and amended tax returns, claims for refund and tax payment-planning services, assistance with tax audits and appeals, tax advice related to mergers and acquisitions and requests for rulings or technical advice from taxing authorities.
(d) All Other Fees.
In each of the fiscal years ended July 31, 2008 and July 31, 2007, the aggregate Other Fees billed by PwC for all other non-audit services rendered to the funds is shown in the table below.
Fund | 2008 | 2007A |
Fidelity Ginnie Mae Fund | $3,000 | $3,200 |
Fidelity Government Income Fund | $5,700 | $5,500 |
Fidelity Intermediate Government Income Fund | $1,600 | $1,600 |
Fidelity Ultra-Short Bond Fund | $1,400 | $1,800 |
A | Aggregate amounts may reflect rounding. |
In each of the fiscal years ended July 31, 2008 and July 31, 2007, the aggregate Other Fees billed by Deloitte Entities for all other non-audit services rendered to the funds is shown in the table below.
Fund | 2008A | 2007A,B |
Fidelity Income Replacement 2016 Fund | $0 | $0 |
Fidelity Income Replacement 2018 Fund | $0 | $0 |
Fidelity Income Replacement 2020 Fund | $0 | $0 |
Fidelity Income Replacement 2022 Fund | $0 | $0 |
Fidelity Income Replacement 2024 Fund | $0 | $0 |
Fidelity Income Replacement 2026 Fund | $0 | $0 |
Fidelity Income Replacement 2028 Fund | $0 | $0 |
Fidelity Income Replacement 2030 Fund | $0 | $0 |
Fidelity Income Replacement 2032 Fund | $0 | $0 |
Fidelity Income Replacement 2034 Fund | $0 | $0 |
Fidelity Income Replacement 2036 Fund | $0 | $0 |
Fidelity Income Replacement 2038 Fund | $0 | $0 |
Fidelity Income Replacement 2040 Fund | $0 | $0 |
Fidelity Income Replacement 2042 Fund | $0 | $0 |
A | Aggregate amounts may reflect rounding. |
B | Fidelity Income Replacement 2016 Fund, Fidelity Income Replacement 2018 Fund, Fidelity Income Replacement 2020 Fund, Fidelity Income Replacement 2022 Fund, Fidelity Income Replacement 2024 Fund, Fidelity Income Replacement 2026 Fund, Fidelity Income Replacement 2028 Fund, Fidelity Income Replacement 2030 Fund, Fidelity Income Replacement 2032 Fund, Fidelity Income Replacement 2034 Fund and Fidelity Income Replacement 2036 Fund commenced operations on August 30, 2007. Fidelity Income Replacement 2038 Fund, Fidelity Income Replacement 2040 Fund and Fidelity Income Replacement 2042 Fund commenced operations on December 31, 2007.
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In each of the fiscal years ended July 31, 2008 and July 31, 2007, the aggregate Other Fees billed by PwC and Deloitte Entities that were required to be approved by the Audit Committee for all other non-audit services rendered on behalf of the Fund Service Providers that relate directly to the operations and financial reporting of each fund is shown in the table below.
Billed By | 2008A | 2007A |
PwC | $235,000 | $225,000 |
Deloitte Entities | $0B | $0B |
A | Aggregate amounts may reflect rounding. |
B | May include amounts billed prior to the funds' commencement of operations |
Fees included in the All Other Fees category include services related to internal control reviews, strategy and other consulting, financial information systems design and implementation, consulting on other information systems, and other tax services unrelated to the fund.
(e) (1) | Audit Committee Pre-Approval Policies and Procedures: |
The trust's Audit Committee must pre-approve all audit and non-audit services provided by the independent registered public accounting firm relating to the operations or financial reporting of the funds. Prior to the commencement of any audit or non-audit services to a fund, the Audit Committee reviews the services to determine whether they are appropriate and permissible under applicable law.
The trust's Audit Committee has adopted policies and procedures to, among other purposes, provide a framework for the Committee's consideration of non-audit services by the audit firms that audit the Fidelity funds. The policies and procedures require that any non-audit service provided by a fund audit firm to a Fidelity Fund and any non-audit service provided by a fund auditor to a Fund Service Provider that relates directly to the operations and financial reporting of a Fidelity fund (Covered Service) are subject to approval by the Audit Committee before such service is provided. Non-audit services provided by a fund audit firm for a Fund Service Provider that do not relate directly to the operations and financial reporting of a Fidelity fund (Non-Covered Service) but that are expected to exceed $50,000 are also subject to pre-approval by the Audit Committee.
All Covered Services, as well as Non-Covered Services that are expected to exceed $50,000, must be approved in advance of provision of the service either: (i) by formal resolution of the Audit Committee, or (ii) by oral or written approval of the service by the Chair of the Audit Committee (or if the Chair is unavailable, such other member of the Audit Committee as may be designated by the Chair to act in the Chair's absence). The approval contemplated by (ii) above is permitted where the Treasurer determines that action on such an engagement is necessary before the next meeting of the Audit Committee. Neither pre-approval nor advance notice of Non-Covered Service engagements for which fees are not expected to exceed $50,000 is required; such engagements are to be reported to the Audit Committee monthly.
(e) (2) | Services approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X:
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Audit-Related Fees:
There were no amounts that were approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended July 31, 2008 and July 31, 2007 on behalf of each fund.
There were no amounts that were required to be approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended July 31, 2008 and July 31, 2007 on behalf of the Fund Service Providers that relate directly to the operations and financial reporting of each fund.
Tax Fees:
There were no amounts that were approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended July 31, 2008 and July 31, 2007 on behalf of each fund.
There were no amounts that were required to be approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended July 31, 2008 and July 31, 2007 on behalf of the Fund Service Providers that relate directly to the operations and financial reporting of each fund.
All Other Fees:
There were no amounts that were approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended July 31, 2008 and July 31, 2007 on behalf of each fund.
There were no amounts that were required to be approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended July 31, 2008 and July 31, 2007 on behalf of the Fund Service Providers that relate directly to the operations and financial reporting of each fund.
(f) Not applicable.
(g) For the fiscal years ended July 31, 2008 and July 31, 2007, the aggregate fees billed by PwC of $2,250,000A and $1,350,000A for non-audit services rendered on behalf of the funds, FMR (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) and Fund Service Providers relating to Covered Services and Non-Covered Services are shown in the table below.
| 2008A | 2007A |
Covered Services | $1,275,000 | $250,000 |
Non-Covered Services | $975,000 | $1,100,000 |
A | Aggregate amounts may reflect rounding. |
For the fiscal years ended July 31, 2008 and July 31, 2007, the aggregate fees billed by Deloitte Entities of $1,135,000A,B and $555,000A,B for non-audit services rendered on behalf of the fund, FMR (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) and Fund Service Providers relating to Covered Services and Non-Covered Services are shown in the table below.
| 2008A,B | 2007A,B |
Covered Services | $475,000 | $0 |
Non-Covered Services | $660,000 | $555,000 |
A | Aggregate amounts may reflect rounding. |
B | May include amounts billed prior to the funds' commencement of operations |
(h) The trust's Audit Committee has considered Non-Covered Services that were not pre-approved that were provided by PwC and Deloitte Entities to Fund Service Providers to be compatible with maintaining the independence of PwC and Deloitte Entities in their audit of the funds, taking into account representations from PwC and Deloitte Entities, in accordance with Independence Standards Board Standard No.1, regarding their independence from the funds and their related entities.
Item 5. Audit Committee of Listed Registrants
Not applicable.
Item 6. Investments
(a) Not applicable.
(b) Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Not applicable.
Item 9. Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders
There were no material changes to the procedures by which shareholders may recommend nominees to the trust's Board of Trustees.
Item 11. Controls and Procedures
(a)(i) The President and Treasurer and the Chief Financial Officer have concluded that the trust's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act) provide reasonable assurances that material information relating to the trust is made known to them by the appropriate persons, based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report.
(a)(ii) There was no change in the trust's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the trust's internal control over financial reporting.
Item 12. Exhibits
(a) | (1) | Code of Ethics pursuant to Item 2 of Form N-CSR is filed and attached hereto as EX-99.CODE ETH. |
(a) | (2) | Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT. |
(a) | (3) | Not applicable. |
(b) |
| Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) is furnished and attached hereto as Exhibit 99.906CERT. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Fidelity Income Fund
By: | /s/ John R. Hebble |
| John R. Hebble |
| President and Treasurer |
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Date: | September 29, 2008 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ John R. Hebble |
| John R. Hebble |
| President and Treasurer |
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Date: | September 29, 2008 |
By: | /s/Jeffrey Christian |
| Jeffrey Christian |
| Chief Financial Officer |
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Date: | September 29, 2008 |