N-CSRS 1 main.htm

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 811-2105

Fidelity Fixed-Income Trust
 (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:

April 30

 

 

Date of reporting period:

October 31, 2009

Item 1. Reports to Stockholders

Fidelity®
Inflation-Protected Bond
Fund

Semiannual Report

October 31, 2009

(2_fidelity_logos) (Registered_Trademark)

Contents

Chairman's Message

<Click Here>

The Chairman's message to shareholders.

Shareholder Expense Example

<Click Here>

An example of shareholder expenses.

Investment Changes

<Click Here>

A summary of major shifts in the fund's investments over the past six months.

Investments

<Click Here>

A complete list of the fund's investments with their market values.

Financial Statements

<Click Here>

Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights.

Notes

<Click Here>

Notes to the financial statements.

Proxy Voting Results

<Click Here>

 

Board Approval of Investment Advisory Contracts and Management Fees

<Click Here>

 

To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults 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.

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.

Semiannual Report

Chairman's Message

(photo_of_Abigail_P_Johnson)

Dear Shareholder:

We've seen a strong upswing in the global equity markets since last March, as signs of improvement in some economic indicators have brought many investors back into the marketplace. But there remain other key measures - notably high unemployment and slack consumer spending - that suggest the road back to economic health could still be a bumpy ride. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help 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 can be tax advantages and cost benefits to consider as well. 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 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 "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 by phone. It is our privilege to provide you the information you need to make the investments that are right for you.

Sincerely,

/s/Abigail P. Johnson

Abigail P. Johnson

Semiannual 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 (May 1, 2009 to October 31, 2009).

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.

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.

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.

Semiannual Report

 

Annualized
Expense Ratio

Beginning
Account Value
May 1, 2009

Ending
Account Value
October 31, 2009

Expenses Paid
During Period*
May 1, 2009
to October 31, 2009

Class A

.75%

 

 

 

Actual

 

$ 1,000.00

$ 1,066.50

$ 3.91

HypotheticalA

 

$ 1,000.00

$ 1,021.42

$ 3.82

Class T

.75%

 

 

 

Actual

 

$ 1,000.00

$ 1,065.40

$ 3.90

HypotheticalA

 

$ 1,000.00

$ 1,021.42

$ 3.82

Class B

1.40%

 

 

 

Actual

 

$ 1,000.00

$ 1,062.10

$ 7.28

HypotheticalA

 

$ 1,000.00

$ 1,018.15

$ 7.12

Class C

1.50%

 

 

 

Actual

 

$ 1,000.00

$ 1,062.70

$ 7.80

HypotheticalA

 

$ 1,000.00

$ 1,017.64

$ 7.63

Inflation-Protected Bond

.45%

 

 

 

Actual

 

$ 1,000.00

$ 1,066.80

$ 2.34

HypotheticalA

 

$ 1,000.00

$ 1,022.94

$ 2.29

Institutional Class

.50%

 

 

 

Actual

 

$ 1,000.00

$ 1,067.70

$ 2.61

HypotheticalA

 

$ 1,000.00

$ 1,022.68

$ 2.55

A 5% return per year before expenses

* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

Semiannual Report

Investment Changes (Unaudited)

Coupon Distribution as of October 31, 2009

 

% of fund's investments

% of fund's investments
6 months ago

Less than 1%

2.9

4.8

1 - 1.99%

25.4

24.1

2 - 2.99%

52.6

51.3

3 - 3.99%

18.9

18.1

4% and over

0.1

0.1

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

The coupon rates on inflation-protected bends tend to be lower than their nominal bond counterparts since inflation-protected bonds get adjusted for actual inflation, while nominal bond coupon rates include a component for expected inflation. Please refer to the fund's prospectus for more information.

Weighted Average Maturity as of October 31, 2009

 

 

6 months ago

Years

8.9

9.0

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 October 31, 2009

 

 

6 months ago

Years

6.2

6.0

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 October 31, 2009*

As of April 30, 2009**

fid63

U.S. Government and
U.S. Government
Agency Obligations 99.1%

 

fid63

U.S. Government and
U.S. Government
Agency Obligations 99.0%

 

fid66

Asset-Backed
Securities 0.1%

 

fid66

Asset-Backed
Securities 0.3%

 

fid69

CMOs and Other Mortgage Related Securities 0.1%

 

fid69

CMOs and Other Mortgage Related Securities 0.1%

 

fid72

Short-Term
Investments and
Net Other Assets 0.7%

 

fid72

Short-Term
Investments and
Net Other Assets 0.6%

 

* Futures and Swaps

0.0%

 

** Futures and Swaps

0.0%

 

* Inflation Protected

99.1%

 

** Inflation Protected

99.0%

 


fid75

Semiannual Report

Investments October 31, 2009 (Unaudited)

Showing Percentage of Net Assets

U.S. Treasury Inflation Protected Obligations - 99.1%

 

Principal Amount

Value

U.S. Treasury Inflation-Indexed Bonds:

1.75% 1/15/28

$ 87,690,982

$ 84,449,523

2% 1/15/26

65,785,885

66,294,683

2.375% 1/15/25

114,127,619

121,251,869

2.5% 1/15/29

69,460,011

74,750,424

3.375% 4/15/32

1,216

1,509

3.625% 4/15/28

118,023,258

146,434,175

3.875% 4/15/29

106,600,984

137,358,381

U.S. Treasury Inflation-Indexed Notes:

0.625% 4/15/13

70,243,823

70,984,833

1.25% 4/15/14

43,850,540

45,100,741

1.375% 7/15/18

49,212,813

49,531,730

1.625% 1/15/15

106,504,400

110,223,787

1.625% 1/15/18

99,501,996

102,120,871

1.875% 7/15/13

122,853,569

128,793,712

1.875% 7/15/15

67,682,550

70,987,191

1.875% 7/15/19

47,202,959

49,390,003

2% 4/15/12

116,636,371

121,966,510

2% 1/15/14

117,075,482

123,121,375

2% 7/15/14

108,722,357

114,728,500

2% 1/15/16

94,601,190

99,722,675

2.125% 1/15/19

78,245,546

83,422,599

2.375% 4/15/11

100,011,694

103,519,717

2.375% 1/15/17

90,538,074

97,773,026

2.375% 1/15/27

109,587,456

116,152,774

2.5% 7/15/16

84,958,470

92,412,849

2.625% 7/15/17

99,966,801

110,190,869

3% 7/15/12

77,822,747

83,617,473

3.375% 1/15/12

33,667,688

36,100,536

3.5% 1/15/11

70,680,570

73,822,732

TOTAL U.S. TREASURY INFLATION PROTECTED OBLIGATIONS

(Cost $2,441,891,520)

2,514,225,067

Asset-Backed Securities - 0.1%

 

Countrywide Asset-Backed Certificates Trust Series 2007-11 Class 2A1, 0.3038% 6/25/47 (c)

2,116,474

2,045,505

Park Place Securities, Inc. Series 2005-WHQ2 Class M7, 1.4938% 5/25/35 (c)

569,000

9,058

TOTAL ASSET-BACKED SECURITIES

(Cost $2,081,691)

2,054,563

Collateralized Mortgage Obligations - 0.1%

 

Principal Amount

Value

Private Sponsor - 0.1%

Chase Mortgage Finance Trust Series 2007-A1 Class 1A5, 4.369% 2/25/37 (c)

$ 8,777

$ 7,934

Wachovia Bank Commercial Mortgage Trust Series 2004-C14 Class PP, 5.3117% 8/15/41 (a)(c)

2,463,442

2,226,935

TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS

(Cost $2,392,286)

2,234,869

Cash Equivalents - 0.1%

Maturity Amount

 

Investments in repurchase agreements in a joint trading account at 0.07%, dated 10/30/09 due 11/2/09 (Collateralized by U.S. Government Obligations) #
(Cost $2,205,000)

$ 2,205,013

2,205,000

TOTAL INVESTMENT PORTFOLIO - 99.4%

(Cost $2,448,570,497)

2,520,719,499

NET OTHER ASSETS - 0.6%

16,484,972

NET ASSETS - 100%

$ 2,537,204,471

Swap Agreements

 

Expiration Date

Notional Amount

 

Credit Default Swaps

Receive monthly notional amount multiplied by 3.05% and pay Merrill Lynch upon credit event of Morgan Stanley ABS Capital I, Inc., par value of the notional amount of Morgan Stanley ABS Capital I, Inc. Series 2004-NC8, Class B3, 7.2913% 9/25/34 (Rating-B1) (b)

Oct. 2034

$ 188,108

(150,150)

Receive monthly notional amount multiplied by 3.35% and pay Morgan Stanley, Inc. upon credit event of Morgan Stanley ABS Capital I, Inc., par value of the notional amount of Morgan Stanley ABS Capital I, Inc. Series 2004-HE7, Class B3, 9.01% 8/25/34 (Rating-C) (b)

Sept. 2034

166,315

(157,038)

Swap Agreements - continued

 

Expiration Date

Notional Amount

Value

Credit Default Swaps - continued

Receive monthly notional amount multiplied by .82% and pay UBS upon credit event of Morgan Stanley ABS Capital I, Inc., par value of the notional amount of Morgan Stanley ABS Capital I, Inc. Series 2004-NC6 Class M3, 5.6413% 7/25/34 (b)

August 2034

$ 125,582

$ (93,965)

Receive monthly notional amount multiplied by .85% and pay UBS upon credit event of Morgan Stanley ABS Capital I, Inc., par value of the notional amount of Morgan Stanley ABS Capital I, Inc. Series 2004-NC8 Class M6, 5.4413% 9/25/34 (b)

Oct. 2034

152,915

(112,812)

Receive monthly notional amount multiplied by 2.54% and pay Merrill Lynch upon credit event of Countrywide Home Loans, Inc., par value of the notional amount of Countrywide Home Loans, Inc. Series 2003-BC1 Class B1, 7.6913% 3/25/32 (Rating-Ba1) (b)

April 2032

50,104

(29,398)

Receive monthly notional amount multiplied by 2.61% and pay Goldman Sachs upon credit event of Fremont Home Loan Trust, par value of the notional amount of Fremont Home Loan Trust Series 2004-1 Class M9, 7.3913% 2/25/34 (Rating-Baa3) (b)

March 2034

6,291

(219)

Receive monthly notional amount multiplied by 2.61% and pay Goldman Sachs upon credit event of Fremont Home Loan Trust, par value of the notional amount of Fremont Home Loan Trust Series 2004-A Class B3, 7.0413% 1/25/34 (Rating-C) (b)

Feb. 2034

1,089

(1,003)

 

$ 690,404

$ (544,585)

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 $2,226,935 or 0.1% of net assets.

(b) Represents a credit default swap contract in which the fund has sold protection on the underlying reference entity. The value of each credit default swap and the credit rating can be measures of the current payment/performance risk. For the underlying reference entity, ratings disclosed are from Moody's Investors Service, Inc. Where Moody's ratings are not available, S&P ratings are disclosed and are indicated as such. All ratings are as of the report date and do not reflect subsequent changes. Where a credit rating is not disclosed, the value is used as the measure of the payment/performance risk.

(c) 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

$2,205,000 due 11/02/09 at 0.07%

Banc of America Securities LLC

$ 242,416

Goldman, Sachs & Co.

444,808

HSBC Securities (USA), Inc.

309,750

ING Financial Markets LLC

410,419

J.P. Morgan Securities, Inc.

154,875

Mizuho Securities USA, Inc.

472,369

RBC Capital Markets Corp.

61,950

Wachovia Bank NA

108,413

 

$ 2,205,000

Other Information

The following is a summary of the inputs used, as of October 31, 2009, involving the Fund's assets and liabilities carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements.

Valuation Inputs at Reporting Date:

Description

Total

Level 1

Level 2

Level 3

Investments in Securities:

U.S. Government and Government Agency Obligations

$ 2,514,225,067

$ -

$ 2,514,225,067

$ -

Asset-Backed Securities

2,054,563

-

2,045,505

9,058

Collateralized Mortgage Obligations

2,234,869

-

2,234,869

-

Cash Equivalents

2,205,000

-

2,205,000

-

Total Investments in Securities:

$ 2,520,719,499

$ -

$ 2,520,710,441

$ 9,058

Derivative Instruments:

Liabilities

Swap Agreements

$ (544,585)

$ -

$ (93,965)

$ (450,620)

The following is a reconciliation of Investments in Securities and Derivative Instruments for which Level 3 inputs were used in determining value:

Investments in Securities:

Beginning Balance

$ 2,967,444

Total Realized Gain (Loss)

(568,480)

Total Unrealized Gain (Loss)

1,153,273

Cost of Purchases

-

Proceeds of Sales

(3,537,594)

Amortization/Accretion

(5,585)

Transfers in/out of Level 3

-

Ending Balance

$ 9,058

The change in unrealized gain (loss) attributable to Level 3 securities at
October 31, 2009

$ (6,216)

Derivative Instruments:

Swap Agreements

Beginning Balance

$ (424,275)

Total Unrealized Gain (Loss)

10,982

Transfers in/out of Level 3

(37,327)

Ending Balance

$ (450,620)

Realized gain (loss) on Swap Agreements for the period

$ -

The change in unrealized gain (loss) attributable to Level 3 Swap Agreements at October 31, 2009

$ 1,284

The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities and Derivative Instruments identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represents either the beginning value (for transfers in), or the ending value (for transfers out) of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations.

Value of Derivative Instruments

The following table is a summary of the Fund's value of derivative instruments by risk exposure as of October 31, 2009. For additional information on derivative instruments, please refer to the Derivative Instruments section in the accompanying Notes to Financial Statements.

Risk Exposure /
 Derivative Type

Value

 

Asset

Liability

Credit Risk

Swap Agreements (a)

$ -

$ (544,585)

Total Value of Derivatives

$ -

$ (544,585)

(a) Value is disclosed on the Statement of Assets and Liabilities in the Unrealized Appreciation and Unrealized Depreciation on Swap Agreements line-items.

Other Information

The composition of credit quality ratings as a percentage of net assets is as follows (ratings are unaudited):

U.S. Government and U.S. Government Agency Obligations

99.1%

AAA,AA,A

0.1%

BB

0.1%

Short-Term Investments and Net Other Assets

0.7%

 

100.0%

We have used ratings from Moody's® Investors Service, 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.

Income Tax Information

At March 31, 2009, the fund had a capital loss carryforward of approximately $85,667,969 of which $5,092,858, $53,211,771, $4,603,298 and $22,760,042 will expire on March 31, 2011, 2012, 2014 and 2015, respectively.

The fund intends to elect to defer to its fiscal year ending March 31, 2010 approximately $31,554,631 of losses recognized during the period November 1, 2008 to March 31, 2009.

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

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

  

October 31, 2009 (Unaudited)

 

 

 

Assets

Investment in securities, at value (including repurchase agreements of $2,205,000) -
See accompanying schedule:

Unaffiliated issuers (cost $2,448,570,497)

 

$ 2,520,719,499

Cash

4

Receivable for investments sold

16,384,409

Receivable for swap agreements

1,401

Receivable for fund shares sold

8,859,510

Interest receivable

12,162,715

Receivable from investment adviser for expense reductions

4,385

Total assets

2,558,131,923

 

 

 

Liabilities

Payable for investments purchased

$ 15,938,407

Payable for fund shares redeemed

3,130,019

Distributions payable

174,783

Unrealized depreciation on swap agreements

544,585

Accrued management fee

654,603

Distribution fees payable

174,435

Other affiliated payables

310,620

Total liabilities

20,927,452

 

 

 

Net Assets

$ 2,537,204,471

Net Assets consist of:

 

Paid in capital

$ 2,545,986,370

Undistributed net investment income

47,743,169

Accumulated undistributed net realized gain (loss) on investments

(128,129,485)

Net unrealized appreciation (depreciation) on investments

71,604,417

Net Assets

$ 2,537,204,471

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

Semiannual Report

Financial Statements - continued

Statement of Assets and Liabilities - continued

  

October 31, 2009 (Unaudited)

 

 

 

Calculation of Maximum Offering Price
Class A:
Net Asset Value and redemption price per share
($185,240,435 ÷ 16,310,724 shares)

$ 11.36

 

 

 

Maximum offering price per share (100/96.00 of $11.36)

$ 11.83

Class T:
Net Asset Value and redemption price per share ($64,177,948 ÷ 5,643,381 shares)

$ 11.37

 

 

 

Maximum offering price per share (100/96.00 of $11.37)

$ 11.84

Class B:
Net Asset Value and offering price per share ($42,913,766 ÷ 3,783,960 shares)A

$ 11.34

 

 

 

Class C:
Net Asset Value and offering price per share ($113,565,015 ÷ 10,027,268 shares)A

$ 11.33

 

 

 

Inflation-Protected Bond:
Net Asset Value, offering price and redemption price per share ($2,056,204,941 ÷ 180,333,332 shares)

$ 11.40

 

 

 

Institutional Class:
Net Asset Value, offering price and redemption price per share ($75,102,366 ÷ 6,602,393 shares)

$ 11.38

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.

Semiannual Report

Statement of Operations

Six months ended October 31, 2009 (Unaudited)

 

  

  

Investment Income

  

  

Interest

 

$ 12,998,857

Inflation principal income

 

39,849,174

Total income

 

52,848,031

 

 

 

Expenses

Management fee

$ 3,686,472

Transfer agent fees

1,344,154

Distribution fees

1,002,359

Fund wide operations fee

375,908

Independent trustees' compensation

3,823

Miscellaneous

5,071

Total expenses before reductions

6,417,787

Expense reductions

(51,942)

6,365,845

Net investment income

46,482,186

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities:

 

 

Unaffiliated issuers

48,053

Swap agreements

10,122

 

Total net realized gain (loss)

 

58,175

Change in net unrealized appreciation (depreciation) on:

Investment securities

105,784,898

Swap agreements

10,983

Total change in net unrealized appreciation (depreciation)

 

105,795,881

Net gain (loss)

105,854,056

Net increase (decrease) in net assets resulting from operations

$ 152,336,242

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

Semiannual Report

Financial Statements - continued

Statement of Changes in Net Assets

  

Six months ended October 31, 2009 (Unaudited)

Year ended
April 30,
2009

Increase (Decrease) in Net Assets

 

 

Operations

 

 

Net investment income

$ 46,482,186

$ 42,795,088

Net realized gain (loss)

58,175

(51,504,575)

Change in net unrealized appreciation (depreciation)

105,795,881

(91,588,360)

Net increase (decrease) in net assets resulting
from operations

152,336,242

(100,297,847)

Distributions to shareholders from net investment income

(12,900,565)

(21,051,158)

Distributions to shareholders from net realized gain

-

(33,701,568)

Total distributions

(12,900,565)

(54,752,726)

Share transactions - net increase (decrease)

197,106,172

(110,070,130)

Total increase (decrease) in net assets

336,541,849

(265,120,703)

 

 

 

Net Assets

Beginning of period

2,200,662,622

2,465,783,325

End of period (including undistributed net investment income of $47,743,169 and undistributed net investment income of $14,161,558, respectively)

$ 2,537,204,471

$ 2,200,662,622

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

Semiannual Report

Financial Highlights - Class A

 

Six months ended October 31, 2009
Years ended April 30,
 
(Unaudited)
2009
2008
2007
2006
2005

Selected Per-Share Data

 

 

 

 

 

Net asset value, beginning of period

$ 10.70

$ 11.22

$ 10.92

$ 10.65

$ 11.48

$ 10.92

Income from Investment Operations

 

 

 

 

 

 

Net investment income E

  .208

  .171

  .538

  .434

  .500

  .407

Net realized and unrealized gain (loss)

  .502

  (.456)

  .306

  .137

  (.676)

  .620

Total from investment operations

  .710

  (.285)

  .844

  .571

  (.176)

  1.027

Distributions from net investment income

  (.050)

  (.077)

  (.194)

  (.209)

  (.154)

  (.132)

Distributions from net realized gain

  -

  (.158)

  (.350)

  (.092)

  (.453)

  (.335)

Return of capital

  -

  -

  -

  -

  (.047)

  -

Total distributions

  (.050)

  (.235)

  (.544)

  (.301)

  (.654)

  (.467)

Net asset value,
end of period

$ 11.36

$ 10.70

$ 11.22

$ 10.92

$ 10.65

$ 11.48

Total Return B, C, D

  6.65%

  (2.57)%

  7.96%

  5.43%

  (1.62)%

  9.58%

Ratios to Average Net Assets F, H

 

 

 

 

 

Expenses before reductions

  .77% A

  .78%

  .80%

  .71%

  .70%

  .81%

Expenses net of fee waivers, if any

  .75% A

  .75%

  .75%

  .66%

  .65%

  .65%

Expenses net of all reductions

  .75% A

  .75%

  .75%

  .65%

  .65%

  .65%

Net investment income

  3.76% A

  1.59%

  4.87%

  4.02%

  4.50%

  3.63%

Supplemental Data

 

 

 

 

 

 

Net assets,
end of period
(000 omitted)

$ 185,240

$ 158,700

$ 142,814

$ 68,710

$ 86,364

$ 75,422

Portfolio turnover rate G

  11% A

  43%

  35%

  34%

  71%

  117%

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 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.

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

Semiannual Report

Financial Highlights - Class T

 

Six months ended October 31, 2009
Years ended April 30,
 
(Unaudited)
2009
2008
2007
2006
2005

Selected Per-Share Data

 

 

 

 

 

Net asset value, beginning of period

$ 10.72

$ 11.24

$ 10.93

$ 10.66

$ 11.49

$ 10.93

Income from Investment Operations

 

 

 

 

 

 

Net investment income E

  .208

  .172

  .538

  .424

  .489

  .397

Net realized and unrealized gain (loss)

  .492

  (.457)

  .316

  .137

  (.676)

  .619

Total from investment operations

  .700

  (.285)

  .854

  .561

  (.187)

  1.016

Distributions from net investment income

  (.050)

  (.077)

  (.194)

  (.199)

  (.143)

  (.121)

Distributions from net realized gain

  -

  (.158)

  (.350)

  (.092)

  (.453)

  (.335)

Return of capital

  -

  -

  -

  -

  (.047)

  -

Total distributions

  (.050)

  (.235)

  (.544)

  (.291)

  (.643)

  (.456)

Net asset value,
end of period

$ 11.37

$ 10.72

$ 11.24

$ 10.93

$ 10.66

$ 11.49

Total Return B, C, D

  6.54%

  (2.56)%

  8.05%

  5.32%

  (1.71)%

  9.47%

Ratios to Average Net Assets F, H

 

 

 

 

 

Expenses before reductions

  .79% A

  .80%

  .79%

  .78%

  .78%

  .90%

Expenses net of fee waivers, if any

  .75% A

  .75%

  .75%

  .75%

  .75%

  .75%

Expenses net of all reductions

  .75% A

  .75%

  .75%

  .75%

  .75%

  .75%

Net investment income

  3.76% A

  1.59%

  4.86%

  3.92%

  4.40%

  3.53%

Supplemental Data

 

 

 

 

 

 

Net assets,
end of period
(000 omitted)

$ 64,178

$ 61,847

$ 77,332

$ 65,833

$ 86,613

$ 84,596

Portfolio turnover rate G

  11% A

  43%

  35%

  34%

  71%

  117%

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 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.

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

Semiannual Report

Financial Highlights - Class B

 

Six months ended October 31, 2009
Years ended April 30,
 
(Unaudited)
2009
2008
2007
2006
2005

Selected Per-Share Data

 

 

 

 

 

Net asset value, beginning of period

$ 10.69

$ 11.23

$ 10.92

$ 10.65

$ 11.48

$ 10.92

Income from Investment Operations

 

 

 

 

 

 

Net investment income E

  .172

  .101

  .466

  .354

  .418

  .324

Net realized and unrealized gain (loss)

  .492

  (.453)

  .316

  .137

  (.678)

  .619

Total from investment operations

  .664

  (.352)

  .782

  .491

  (.260)

  .943

Distributions from net investment income

  (.014)

  (.030)

  (.122)

  (.129)

  (.070)

  (.048)

Distributions from net realized gain

  -

  (.158)

  (.350)

  (.092)

  (.453)

  (.335)

Return of capital

  -

  -

  -

  -

  (.047)

  -

Total distributions

  (.014)

  (.188)

  (.472)

  (.221)

  (.570)

  (.383)

Net asset value,
end of period

$ 11.34

$ 10.69

$ 11.23

$ 10.92

$ 10.65

$ 11.48

Total Return B, C, D

  6.21%

  (3.17)%

  7.36%

  4.65%

  (2.36)%

  8.76%

Ratios to Average Net Assets F, H

 

 

 

 

 

Expenses before reductions

  1.47% A

  1.49%

  1.50%

  1.49%

  1.49%

  1.61%

Expenses net of fee waivers, if any

  1.40% A

  1.40%

  1.40%

  1.40%

  1.40%

  1.40%

Expenses net of all reductions

  1.40% A

  1.40%

  1.40%

  1.40%

  1.40%

  1.40%

Net investment income

  3.11% A

  .94%

  4.21%

  3.27%

  3.75%

  2.88%

Supplemental Data

 

 

 

 

 

 

Net assets,
end of period
(000 omitted)

$ 42,914

$ 42,748

$ 44,776

$ 35,826

$ 48,972

$ 56,052

Portfolio turnover rate G

  11% A

  43%

  35%

  34%

  71%

  117%

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 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 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.

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

Semiannual Report

Financial Highlights - Class C

 

Six months ended October 31, 2009
Years ended April 30,
 
(Unaudited)
2009
2008
2007
2006
2005

Selected Per-Share Data

 

 

 

 

 

Net asset value, beginning of period

$ 10.67

$ 11.22

$ 10.91

$ 10.64

$ 11.47

$ 10.91

Income from Investment Operations

 

 

 

 

 

 

Net investment income E

  .166

  .090

  .455

  .343

  .406

  .312

Net realized and unrealized gain (loss)

  .502

  (.459)

  .316

  .137

  (.677)

  .619

Total from investment operations

  .668

  (.369)

  .771

  .480

  (.271)

  .931

Distributions from net investment income

  (.008)

  (.023)

  (.111)

  (.118)

  (.059)

  (.036)

Distributions from net realized gain

  -

  (.158)

  (.350)

  (.092)

  (.453)

  (.335)

Return of capital

  -

  -

  -

  -

  (.047)

  -

Total distributions

  (.008)

  (.181)

  (.461)

  (.210)

  (.559)

  (.371)

Net asset value,
end of period

$ 11.33

$ 10.67

$ 11.22

$ 10.91

$ 10.64

$ 11.47

Total Return B, C, D

  6.27%

  (3.33)%

  7.26%

  4.55%

  (2.46)%

  8.66%

Ratios to Average Net Assets F, H

 

 

 

 

 

Expenses before reductions

  1.51% A

  1.54%

  1.55%

  1.54%

  1.55%

  1.67%

Expenses net of fee waivers, if any

  1.50% A

  1.50%

  1.50%

  1.50%

  1.50%

  1.50%

Expenses net of all reductions

  1.50% A

  1.50%

  1.50%

  1.50%

  1.50%

  1.50%

Net investment income

  3.01% A

  .84%

  4.11%

  3.17%

  3.65%

  2.78%

Supplemental Data

 

 

 

 

 

 

Net assets,
end of period
(000 omitted)

$ 113,565

$ 99,083

$ 90,060

$ 51,205

$ 74,329

$ 71,407

Portfolio turnover rate G

  11% A

  43%

  35%

  34%

  71%

  117%

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 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 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.

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

Semiannual Report

Financial Highlights - Inflation-Protected Bond

 

Six months ended October 31, 2009
Years ended April 30,
 
(Unaudited)
2009
2008
2007
2006
2005

Selected Per-Share Data

 

 

 

 

 

Net asset value, beginning of period

$ 10.75

$ 11.26

$ 10.94

$ 10.67

$ 11.50

$ 10.94

Income from Investment Operations

 

 

 

 

 

 

Net investment income D

  .225

  .205

  .573

  .457

  .525

  .426

Net realized and unrealized gain (loss)

  .491

  (.457)

  .324

  .136

  (.679)

  .618

Total from investment operations

  .716

  (.252)

  .897

  .593

  (.154)

  1.044

Distributions from net investment income

  (.066)

  (.100)

  (.227)

  (.231)

  (.176)

  (.149)

Distributions from net realized gain

  -

  (.158)

  (.350)

  (.092)

  (.453)

  (.335)

Return of capital

  -

  -

  -

  -

  (.047)

  -

Total distributions

  (.066)

  (.258)

  (.577)

  (.323)

  (.676)

  (.484)

Net asset value, end of period

$ 11.40

$ 10.75

$ 11.26

$ 10.94

$ 10.67

$ 11.50

Total Return B, C

  6.68%

  (2.27)%

  8.46%

  5.63%

  (1.42)%

  9.73%

Ratios to Average Net Assets E, G

 

 

 

 

 

Expenses before reductions

  .45% A

  .45%

  .45%

  .45%

  .47%

  .63%

Expenses net of fee waivers,
if any

  .45% A

  .45%

  .45%

  .45%

  .45%

  .50%

Expenses net of all reductions

  .45% A

  .45%

  .45%

  .45%

  .45%

  .50%

Net investment income

  4.06% A

  1.89%

  5.17%

  4.22%

  4.70%

  3.78%

Supplemental Data

 

 

 

 

 

Net assets, end of period
(000 omitted)

$ 2,056,205

$ 1,767,415

$ 2,008,504

$ 1,307,686

$ 1,400,656

$ 1,579,697

Portfolio turnover rate F

  11% A

  43%

  35%

  34%

  71%

  117%

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 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.

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

Semiannual Report

Financial Highlights - Institutional Class

 

Six months ended October 31, 2009
Years ended April 30,
 
(Unaudited)
2009
2008
2007
2006
2005

Selected Per-Share Data

 

 

 

 

 

Net asset value, beginning of period

$ 10.72

$ 11.23

$ 10.92

$ 10.65

$ 11.48

$ 10.92

Income from Investment Operations

 

 

 

 

 

 

Net investment income D

  .222

  .197

  .565

  .452

  .517

  .425

Net realized and unrealized gain (loss)

  .501

  (.452)

  .318

  .137

  (.676)

  .619

Total from investment operations

  .723

  (.255)

  .883

  .589

  (.159)

  1.044

Distributions from net investment income

  (.063)

  (.097)

  (.223)

  (.227)

  (.171)

  (.149)

Distributions from net realized gain

  -

  (.158)

  (.350)

  (.092)

  (.453)

  (.335)

Return of capital

  -

  -

  -

  -

  (.047)

  -

Total distributions

  (.063)

  (.255)

  (.573)

  (.319)

  (.671)

  (.484)

Net asset value,
end of period

$ 11.38

$ 10.72

$ 11.23

$ 10.92

$ 10.65

$ 11.48

Total Return B, C

  6.77%

  (2.30)%

  8.34%

  5.60%

  (1.47)%

  9.74%

Ratios to Average Net Assets E, G

 

 

 

 

 

Expenses before reductions

  .51% A

  .50%

  .49%

  .49%

  .50%

  .61%

Expenses net of fee waivers, if any

  .50% A

  .50%

  .49%

  .49%

  .50%

  .50%

Expenses net of all reductions

  .50% A

  .50%

  .49%

  .49%

  .50%

  .50%

Net investment income

  4.01% A

  1.84%

  5.13%

  4.18%

  4.65%

  3.78%

Supplemental Data

 

 

 

 

 

 

Net assets,
end of period
(000 omitted)

$ 75,102

$ 70,870

$ 102,297

$ 110,863

$ 84,666

$ 78,096

Portfolio turnover rate F

  11% A

  43%

  35%

  34%

  71%

  117%

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 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.

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

Semiannual Report

Notes to Financial Statements

For the period ended October 31, 2009 (Unaudited)

1. Organization.

Fidelity Inflation-Protected Bond Fund (the Fund) is a fund of Fidelity Fixed-Income Trust (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, Inflation-Protected 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. 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. Events or transactions occurring after period end through the date that the financial statements were issued, December 16, 2009, have been evaluated in the preparation of the financial statements. 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. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. Generally Accepted Accounting Principles (GAAP) establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are classified into three levels. Level 1 includes readily available unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes observable inputs other than quoted prices included in Level 1 that are observable either directly or indirectly. Level 3 includes unobservable inputs when market prices are not readily available or reliable. Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy. The aggregate value by input level, as of October 31, 2009, for the Fund's investments, as well as a reconciliation of assets and liabilities for which significant unobservable inputs (Level 3) were used in determining

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

2. Significant Accounting Policies - continued

Security Valuation - continued

value, is included at the end of the Fund's Schedule of Investments. Valuation techniques of the Fund's major categories of assets and liabilities as presented in the Schedule of Investments are as follows.

Debt securities, including restricted securities, are valued based on quotations received from dealers who make markets in such securities or by independent pricing services. For U.S. government and government agency obligations, pricing services generally utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. For asset backed securities and collateralized mortgage obligations, pricing services generally utilize matrix pricing which considers prepayment speed assumptions, attributes of the collateral, yield or price of bonds of comparable quality, coupon, maturity and types as well as dealer supplied prices. Swaps are marked-to-market daily based on valuations from independent pricing services or 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 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.

Semiannual Report

2. Significant Accounting Policies - continued

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

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. There are no unrecognized tax benefits in the accompanying financial statements in connection with the tax positions taken by the Fund. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years.

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. Inflation income is distributed as a short-term capital gain. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.

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

Book-tax differences are primarily due to swap agreements, market discount, capital loss carryforwards, certain losses related to deflation adjustments on U.S. Treasury Inflation-indexed securities, and losses deferred due to wash sales and excise tax regulations.

The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:

Gross unrealized appreciation

$ 81,122,646

Gross unrealized depreciation

(8,550,332)

Net unrealized appreciation (depreciation)

$ 72,572,314

 

 

Tax cost

$ 2,448,147,185

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

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

3. Operating Policies - continued

Repurchase Agreements - continued

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.

Treasury Inflation-Protected Securities. The Fund invests in Treasury Inflation-Protected Securities (TIPS), in which the principal amount is adjusted daily to keep pace with inflation. Interest is accrued based on the adjusted principal amount. The adjustments to principal due to inflation are reflected as increases or decreases to Inflation principal income in the accompanying Statement of Operations. Such adjustments may have a significant impact on the Fund's distributions.

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.

4. Investments in Derivative Instruments.

Objectives and Strategies for Investing in Derivative Instruments. The Fund uses derivative instruments ("derivatives"), including swap agreements, in order to meet its investment objectives. The Fund's strategy is to use derivatives as a risk management tool and as an additional way to gain exposure to certain types of assets. The success of any strategy involving derivatives depends on analysis of numerous economic factors, and if the strategies for investment do not work as intended, the Fund may not achieve its objectives.

While utilizing derivatives in pursuit of its investment objectives, the Fund is exposed to certain financial risk relative to those derivatives. This risk is further explained below:

Credit Risk

Credit risk is the risk that the value of financial instruments will fluctuate as a result of changes in the credit quality of those instruments. Credit risk also includes the risk that the counterparty to a financial instrument will default or be unable to make further principal or interest payments on an obligation or commitment that it has entered into with the Fund.

Semiannual Report

4. Investments in Derivative Instruments - continued

Objectives and Strategies for Investing in Derivative Instruments - continued

The following notes provide more detailed information about each derivative type held by the Fund:

Swap Agreements. The Fund entered into swap agreements, which are contracts between two parties to exchange future cash flows at periodic intervals based on a notional principal amount. Payments are exchanged at specified intervals, accrued daily commencing with the effective date of the contract and recorded as realized gains or losses in the Fund's accompanying Statement of Operations. Gains or losses are realized in the event of an early termination of a swap agreement. Any upfront payments made or received upon entering a swap contract to compensate for differences between stated terms of the agreement and prevailing market conditions (e.g. credit spreads, interest rates or other factors) are recorded as realized gains or losses ratably over the term of the swap in the Fund's accompanying Statement of Operations. Risks of loss may exceed amounts recognized on the Fund's Statement of Assets and Liabilities. In addition, there is the risk of failure by the counterparty to perform under the terms of the agreement and lack of liquidity in the market. Details of swap agreements open at period end are included in the Fund's Schedule of Investments under the caption "Swap Agreements." The total notional amount of all open swap agreements at period end is indicative of the volume of this derivative type. Collateral, in the form of cash or securities, may be required to be held in segregated accounts with a fund's custodian bank in accordance with the swap agreement and, if required, is identified in the Fund's Schedule of Investments. The Fund could experience delays and costs in gaining access to the collateral even though it is held in the Fund's custodian bank.

The Fund entered into credit default swap agreements to provide a measure of protection against defaults of an issuer ("buyer of protection") and/or to gain credit exposure to an issuer to which it is not otherwise exposed ("seller of protection"). The issuer may be either a single issuer or a "basket" of issuers. As a buyer of protection, the Fund does so when it holds bonds of the issuer or without owning the underlying asset or debt issued by the reference entity. Under the terms of a credit default swap the buyer of protection receives credit protection in exchange for making periodic payments to the seller of protection based on a fixed percentage applied to a notional principal amount. In return for these payments, the seller of protection acts as a guarantor of the creditworthiness of a reference obligation. Periodic payments are made over the life of the contract provided that no credit event occurs.

For credit default swaps on most corporate and sovereign issuers, credit events include bankruptcy, failure to pay, obligation acceleration or repudiation/moratorium. If a credit event were to occur during the term of the contract, the contract is typically settled in a

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

4. Investments in Derivative Instruments - continued

Swap Agreements - continued

market auction where the difference between the value of the reference obligation received and the notional amount of the swap is recorded as a realized loss by the seller of protection. For credit default swaps on corporate or sovereign issuers, the obligation that may be put to the seller of protection is not limited to the specific reference obligation described in the Fund's Schedule of Investments.

For credit default swaps on asset-backed securities, a credit event may be triggered by events such as failure to pay principal, maturity extension, rating downgrade or write-down. If a credit event were to occur during the term of the contract, upon notification of the buyer of protection, the seller of protection is obligated to take delivery from the buyer of protection the notional amount of a reference obligation, at par. The difference between the value of the reference obligation received and the notional amount paid is recorded as a realized loss by the seller of protection. For credit default swaps on asset-backed securities, the reference obligation described represents the security that may be put to the seller of protection.

Risks of loss includes credit risk. The Fund's maximum risk of loss from counterparty risk, either as a buyer of protection or as a seller of protection, is the value of the contract. This risk is mitigated by the posting of collateral by the counterparty to the Fund to cover the Fund's exposure to the counterparty. The notional amount of credit default swaps is included in the Fund's Schedule of Investments and approximates the maximum potential amount of future payments that the Fund could be required to make if the Fund is the seller of protection and a credit event were to occur. The total notional amount of all credit default swaps open at period end where the Fund is the seller of protection amounted to $690,404 representing .03% of net assets. Credit default swaps are considered to have credit-risk contingent features since they require payment by the seller of protection to the buyer of protection upon the occurrence of a defined credit event. The total value of credit default swaps in a net liability position as of period end was $(544,585). The value of assets posted as collateral, net of assets received as collateral, for these swaps was $0. If a defined credit event had occurred as of period end for swaps in a net liability position, the swaps' credit-risk-related contingent features would have been triggered and the Fund would have been required to pay $690,404 less the value of the swaps' related reference obligations.

Typically, the value of each credit default swap and credit rating disclosed for each reference obligation in the Fund's Schedule of Investments, where the Fund is the seller of protection, can be used as measures of the current payment/performance risk of the swap. As the value of the swap changes as a positive or negative percentage of the total

Semiannual Report

4. Investments in Derivative Instruments - continued

Swap Agreements - continued

notional amount, the payment/performance risk may decrease or increase, respectively. Any current or future declines in the value of the swap may be partially offset by upfront payments received by the Fund as the seller of protection if applicable. In addition to these measures, FMR monitors a variety of factors including cash flow assumptions, market activity and market sentiment as part of its ongoing process of assessing payment/performance risk.

Realized and Change in Unrealized Gain (Loss) on Derivative Instruments. A summary of the Fund's value of derivatives by primary risk exposure as of period end, if any, is included at the end of the Fund's Schedule of Investments. The table below reflects the Fund's realized gain (loss) and change in unrealized gain (loss) for derivatives during the period.

Risk Exposure / Derivative Type

Realized Gain (Loss)

Change in
Unrealized Gain (Loss)

Credit Risk

 

 

Swap Agreements

$ 10,122

$ 10,983

Total Derivatives Realized and Change in Unrealized Gain (Loss) (a)(b)

$ 10,122

$ 10,983

(a) Total derivatives realized gain (loss) included in the Statement of Operations is comprised of $10,122 for swap agreements.

(b) Total derivatives change in unrealized gain (loss) included in the Statement of Operations is comprised of $10,983 for swap agreements.

5. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities and U.S. government securities, aggregated $0 and $7,108,863, 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 annualized management fee rate was .32% of the Fund's average net assets.

Semiannual Report

Notes to Financial Statements (Unaudited) - 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
Fee

Service
Fee

Paid to
FDC

Retained
by FDC

Class A

-%

.25%

$ 210,499

$ 3,256

Class T

-%

.25%

78,928

-

Class B

.65%

.25%

191,485

139,107

Class C

.75%

.25%

521,447

138,005

 

 

 

$ 1,002,359

$ 280,368

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.

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

 

Retained
by FDC

Class A

$ 30,931

Class T

5,399

Class B*

48,549

Class C*

6,759

 

$ 91,638

* 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 each respective class of the Fund, with the exception of Inflation-Protected Bond. FIIOC

Semiannual Report

6. Fees and Other Transactions with Affiliates - continued

Transfer Agent Fees - continued

receives an asset-based fee of .10% of Inflation-Protected Bond's average net assets. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, each class paid the following transfer agent fees:

 

Amount

% of
Average
Net Assets*

Class A

$ 146,090

.17

Class T

60,712

.19

Class B

49,712

.23

Class C

89,368

.17

Inflation-Protected Bond

936,331

.10

Institutional Class

61,941

.17

 

$ 1,344,154

 

* Annualized

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

7. Committed Line of Credit.

The Fund participates with other funds managed by FMR in a $3.5 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 $5,071 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.

FMR voluntarily agreed to reimburse each class to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, including commitment fees, are excluded from this reimbursement.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

8. Expense Reductions - continued

The following classes were in reimbursement during the period:

 

Expense
Limitations

Reimbursement
from adviser

Class A

.75%

$ 14,675

Class T

.75%

11,428

Class B

1.40%

15,361

Class C

1.50%

4,560

Institutional Class

.50%

5,404

 

 

$ 51,428

In addition, 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 custody expenses by $514.

9. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

 

Six months ended
October 31, 2009

Year ended
April 30, 2009

From net investment income

 

 

Class A

$ 762,552

$ 1,090,782

Class T

285,464

493,218

Class B

53,833

125,569

Class C

78,642

194,211

Inflation-Protected Bond

11,295,780

18,030,846

Institutional Class

424,294

1,116,532

Total

$ 12,900,565

$ 21,051,158

From net realized gain

 

 

Class A

$ -

$ 2,077,368

Class T

-

972,450

Class B

-

628,452

Class C

-

1,281,090

Inflation-Protected Bond

-

27,080,662

Institutional Class

-

1,661,546

Total

$ -

$ 33,701,568

Semiannual Report

10. Share Transactions.

Transactions for each class of shares were as follows:

 

Shares

Dollars

 

Six months ended October 31, 2009

Year ended
April 30,
2009

Six months ended October 31, 2009

Year ended
April 30,
2009

Class A

 

 

 

 

Shares sold

4,536,946

10,628,037

$ 49,956,622

$ 115,683,550

Reinvestment of distributions

58,643

250,030

648,300

2,732,165

Shares redeemed

(3,111,688)

(8,775,155)

(34,097,540)

(93,481,658)

Net increase (decrease)

1,483,901

2,102,912

$ 16,507,382

$ 24,934,057

Class T

 

 

 

 

Shares sold

1,189,091

3,018,881

$ 12,994,907

$ 33,006,827

Reinvestment of distributions

23,650

125,639

261,636

1,378,081

Shares redeemed

(1,339,861)

(4,255,338)

(14,698,092)

(46,025,012)

Net increase (decrease)

(127,120)

(1,110,818)

$ (1,441,549)

$ (11,640,104)

Class B

 

 

 

 

Shares sold

627,772

1,852,668

$ 6,885,944

$ 20,285,159

Reinvestment of distributions

3,829

55,126

42,236

605,567

Shares redeemed

(847,125)

(1,894,895)

(9,285,217)

(20,231,408)

Net increase (decrease)

(215,524)

12,899

$ (2,357,037)

$ 659,318

Class C

 

 

 

 

Shares sold

2,307,138

5,136,305

$ 25,252,428

$ 55,936,441

Reinvestment of distributions

5,386

103,348

59,332

1,134,504

Shares redeemed

(1,567,578)

(3,983,862)

(17,087,805)

(42,664,908)

Net increase (decrease)

744,946

1,255,791

$ 8,223,955

$ 14,406,037

Inflation-Protected Bond

 

 

 

 

Shares sold

44,127,642

113,902,114

$ 486,574,285

$ 1,245,455,216

Reinvestment of distributions

949,578

3,915,470

10,539,383

42,926,789

Shares redeemed

(29,217,901)

(131,783,366)

(320,805,781)

(1,401,272,531)

Net increase (decrease)

15,859,319

(13,965,782)

$ 176,307,887

$ (112,890,526)

Institutional Class

 

 

 

 

Shares sold

1,184,398

11,934,689

$ 12,964,812

$ 128,651,073

Reinvestment of distributions

29,173

85,972

322,877

938,829

Shares redeemed

(1,221,931)

(14,516,794)

(13,422,155)

(155,128,814)

Net increase (decrease)

(8,360)

(2,496,133)

$ (134,466)

$ (25,538,912)

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

11. 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.

Semiannual Report

Proxy Voting Results

A special meeting of the fund's shareholders was held on July 15, 2009. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.

PROPOSAL 1

To elect a Board of Trustees.A

 

# of
Votes

% of
Votes

James C. Curvey

Affirmative

29,535,490,304.51

95.434

Withheld

1,412,983,688.53

4.566

TOTAL

30,948,473,993.04

100.000

Albert R. Gamper, Jr.

Affirmative

29,631,645,146.15

95.745

Withheld

1,316,828,846.89

4.255

TOTAL

30,948,473,993.04

100.000

Abigail P. Johnson

Affirmative

29,481,082,358.76

95.259

Withheld

1,467,391,634.28

4.741

TOTAL

30,948,473,993.04

100.000

Arthur E. Johnson

Affirmative

29,601,580,051.86

95.648

Withheld

1,346,893,941.18

4.352

TOTAL

30,948,473,993.04

100.000

Michael E. Kenneally

Affirmative

29,688,902,929.52

95.930

Withheld

1,259,571,063.52

4.070

TOTAL

30,948,473,993.04

100.000

James H. Keyes

Affirmative

29,647,356,020.99

95.796

Withheld

1,301,117,972.05

4.204

TOTAL

30,948,473,993.04

100.000

Marie L. Knowles

Affirmative

29,665,215,088.51

95.854

Withheld

1,283,258,904.53

4.146

TOTAL

30,948,473,993.04

100.000

Kenneth L. Wolfe

Affirmative

29,580,330,647.68

95.579

Withheld

1,368,143,345.36

4.421

TOTAL

30,948,473,993.04

100.000

PROPOSAL 2

To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A

 

# of
Votes

% of
Votes

Affirmative

22,342,326,668.95

72.192

Against

5,700,226,054.43

18.418

Abstain

2,112,037,717.17

6.825

Broker
Non-Votes

793,883,552.49

2.565

TOTAL

30,948,473,993.04

100.000

A Denotes trust-wide proposal and voting results.

Semiannual Report

Board Approval of Investment Advisory Contracts and Management Fees

Fidelity Inflation-Protected Bond Fund

Each year, 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 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. The Board has established three 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. The Operations Committee meets regularly throughout the year and, among other matters, considers matters specifically related to the annual consideration of the renewal of the fund's Advisory Contracts. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of the fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts.

On May 21, 2009, the Board voted to continue the fund's Advisory Contracts for four months, through September 30, 2009, in connection with the reorganization of the Board's new meeting schedule. The Board considered that the contractual terms of and fees payable under the fund's Advisory Contracts involve no changes in (i) the investment process or strategies employed in the management of the fund's assets; (ii) the nature or level of services provided under the fund's Advisory Contracts; or (iii) the day-to-day management of the fund or the persons primarily responsible for such management. The Board concluded that the fund's Advisory Contracts are fair and reasonable, and that the fund's Advisory Contracts should be renewed, without modification, through September 30, 2009, with the understanding that the Board would consider their renewal in September 2009.

At its September 2009 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.

Semiannual Report

Board Approval of Investment Advisory Contracts and
Management Fees - continued

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.

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. In response to the recent financial crisis, Fidelity took a number of actions intended to cut costs and improve efficiency without weakening the investment teams or resources. The Board specifically noted Fidelity's response to the 2008 credit market crisis. The Board noted that Fidelity's analysts have access to a variety of technological tools and market and securities data 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 integral part of the fixed-income portfolio management investment process.

Semiannual Report

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 over time 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 a large variety of mutual fund investor services. The Board noted that Fidelity had taken a number of actions over the previous year that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure and broaden the focus of the investment research teams; (ii) bolstering the senior management team that oversees asset management; (iii) contractually agreeing to reduce the management fee on Fidelity U.S. Bond Index Fund; and (iv) expanding Class A and Class T load waiver categories to increase rollover retention opportunities and create consistent policies across the classes.

Investment Performance. The Board considered whether the fund has operated in accordance with 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, 2008, the cumulative total returns of Fidelity Inflation-Protected Bond (retail class) and Class C 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 Inflation-Protected Bond (retail class) and Class C show the performance of the highest and lowest performing classes, respectively (based on five-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.

Semiannual Report

Board Approval of Investment Advisory Contracts and
Management Fees - continued

Fidelity Inflation-Protected Bond Fund

fid77

The Board reviewed the fund's relative investment performance against its peer group and stated that the performance of Fidelity Inflation-Protected Bond (retail class) of the fund was in the second quartile for all the periods shown. The Board also stated that the investment performance of the fund was lower than its benchmark for the three- and five-year periods, although the one-year cumulative total return of Fidelity Inflation-Protected Bond (retail class) compared favorably to its benchmark. 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 also reviewed the fund's performance during 2009.

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 and factoring in the unprecedented recent market events, 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.

Semiannual 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 Inflation-Protected Bond Fund

fid79

Semiannual 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 the Total Mapped Group and below the median of its ASPG for 2008.

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 Inflation-Protected Bond (retail class) to 10 basis points, and (iii) limit the total expenses for Fidelity Inflation-Protected Bond (retail class) to 45 basis points. The fees and expenses payable under 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 2008.

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 that varies based on asset class. 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, 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.

Semiannual 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 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.

Semiannual Report

Board Approval of Investment Advisory Contracts and
Management Fees - continued

In February 2009, the Board created an Ad Hoc Committee (the "Committee") to analyze economies of scale. The Committee was formed to consider whether FMR attains economies of scale in respect of the management and servicing of the Fidelity funds, whether the Fidelity funds have appropriately benefited from such economies of scale, and whether there is potential for realization of any further economies of scale.

The Board concluded, considering the findings of the Committee, 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, actions to be taken by FMR to improve certain funds' overall performance and Fidelity's long-term strategies for certain funds; (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 current market conditions have affected retention and recruitment; (v) the selection of and compensation paid by FMR to fund sub-advisers; (vi) Fidelity's fee structures and rationale for recommending different fees among categories of funds; (vii) the rationale for any differences between fund fee structures and fee structures in place for other Fidelity clients; and (viii) explanations for the relative total expenses borne by certain funds and classes, total expense competitive trends, and actions that might be taken by FMR to reduce total expenses for certain funds and classes.

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.

Semiannual 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

fid81For mutual fund and brokerage trading.

fid83For quotes.*

fid85For account balances and holdings.

fid87To review orders and mutual
fund activity.

fid89To change your PIN.

fid91fid93To 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.

Semiannual 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

Semiannual Report

Investment Adviser

Fidelity Management & Research
Company
Boston, MA

Investment Sub-Advisers

Fidelity Research & Analysis Company

Fidelity Investments Money
Management, Inc.

FIL Investment Advisors

FIL Investment Advisors (U.K.) Ltd.

Fidelity Management & Research
(U.K.) Inc.

Fidelity Management & Research
(Hong Kong) Limited

Fidelity Management & Research
(Japan) 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

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®) fid95 1-800-544-5555

fid95 Automated line for quickest service 

IFB-USAN-1209
1.784854.106

fid98

(Fidelity Investment logo)(registered trademark)
Fidelity Advisor
Inflation-Protected Bond
Fund - Class A, Class T, Class B
and Class C

Semiannual Report

October 31, 2009

Class A, Class T, Class B, and Class C are classes of Fidelity ® Inflation-Protected Bond Fund

(2_fidelity_logos) (Registered_Trademark)

Contents

Chairman's Message

<Click Here>

The Chairman's message to shareholders.

Shareholder Expense Example

<Click Here>

An example of shareholder expenses.

Investment Changes

<Click Here>

A summary of major shifts in the fund's investments over the past six months.

Investments

<Click Here>

A complete list of the fund's investments with their market values.

Financial Statements

<Click Here>

Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights.

Notes

<Click Here>

Notes to the financial statements.

Proxy Voting Results

<Click Here>

 

Board Approval of Investment Advisory Contracts and Management Fees

<Click Here>

 

 

 

 

To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults 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.

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.

Semiannual Report

Chairman's Message

(photo_of_Abigail_P_Johnson)

Dear Shareholder:

We've seen a strong upswing in the global equity markets since last March, as signs of improvement in some economic indicators have brought many investors back into the marketplace. But there remain other key measures - notably high unemployment and slack consumer spending - that suggest the road back to economic health could still be a bumpy ride. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help 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 can be tax advantages and cost benefits to consider as well. 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 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 "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 by phone. It is our privilege to provide you the information you need to make the investments that are right for you.

Sincerely,

/s/Abigail P. Johnson

Abigail P. Johnson

Semiannual 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 (May 1, 2009 to October 31, 2009).

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.

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.

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.

Semiannual Report

 

Annualized
Expense Ratio

Beginning
Account Value
May 1, 2009

Ending
Account Value
October 31, 2009

Expenses Paid
During Period*
May 1, 2009
to October 31, 2009

Class A

.75%

 

 

 

Actual

 

$ 1,000.00

$ 1,066.50

$ 3.91

HypotheticalA

 

$ 1,000.00

$ 1,021.42

$ 3.82

Class T

.75%

 

 

 

Actual

 

$ 1,000.00

$ 1,065.40

$ 3.90

HypotheticalA

 

$ 1,000.00

$ 1,021.42

$ 3.82

Class B

1.40%

 

 

 

Actual

 

$ 1,000.00

$ 1,062.10

$ 7.28

HypotheticalA

 

$ 1,000.00

$ 1,018.15

$ 7.12

Class C

1.50%

 

 

 

Actual

 

$ 1,000.00

$ 1,062.70

$ 7.80

HypotheticalA

 

$ 1,000.00

$ 1,017.64

$ 7.63

Inflation-Protected Bond

.45%

 

 

 

Actual

 

$ 1,000.00

$ 1,066.80

$ 2.34

HypotheticalA

 

$ 1,000.00

$ 1,022.94

$ 2.29

Institutional Class

.50%

 

 

 

Actual

 

$ 1,000.00

$ 1,067.70

$ 2.61

HypotheticalA

 

$ 1,000.00

$ 1,022.68

$ 2.55

A 5% return per year before expenses

* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

Semiannual Report

Investment Changes (Unaudited)

Coupon Distribution as of October 31, 2009

 

% of fund's investments

% of fund's investments
6 months ago

Less than 1%

2.9

4.8

1 - 1.99%

25.4

24.1

2 - 2.99%

52.6

51.3

3 - 3.99%

18.9

18.1

4% and over

0.1

0.1

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

The coupon rates on inflation-protected bends tend to be lower than their nominal bond counterparts since inflation-protected bonds get adjusted for actual inflation, while nominal bond coupon rates include a component for expected inflation. Please refer to the fund's prospectus for more information.

Weighted Average Maturity as of October 31, 2009

 

 

6 months ago

Years

8.9

9.0

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 October 31, 2009

 

 

6 months ago

Years

6.2

6.0

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 October 31, 2009*

As of April 30, 2009**

fid63

U.S. Government and
U.S. Government
Agency Obligations 99.1%

 

fid63

U.S. Government and
U.S. Government
Agency Obligations 99.0%

 

fid66

Asset-Backed
Securities 0.1%

 

fid66

Asset-Backed
Securities 0.3%

 

fid69

CMOs and Other Mortgage Related Securities 0.1%

 

fid69

CMOs and Other Mortgage Related Securities 0.1%

 

fid72

Short-Term
Investments and
Net Other Assets 0.7%

 

fid72

Short-Term
Investments and
Net Other Assets 0.6%

 

* Futures and Swaps

0.0%

 

** Futures and Swaps

0.0%

 

* Inflation Protected

99.1%

 

** Inflation Protected

99.0%

 


fid116

Semiannual Report

Investments October 31, 2009 (Unaudited)

Showing Percentage of Net Assets

U.S. Treasury Inflation Protected Obligations - 99.1%

 

Principal Amount

Value

U.S. Treasury Inflation-Indexed Bonds:

1.75% 1/15/28

$ 87,690,982

$ 84,449,523

2% 1/15/26

65,785,885

66,294,683

2.375% 1/15/25

114,127,619

121,251,869

2.5% 1/15/29

69,460,011

74,750,424

3.375% 4/15/32

1,216

1,509

3.625% 4/15/28

118,023,258

146,434,175

3.875% 4/15/29

106,600,984

137,358,381

U.S. Treasury Inflation-Indexed Notes:

0.625% 4/15/13

70,243,823

70,984,833

1.25% 4/15/14

43,850,540

45,100,741

1.375% 7/15/18

49,212,813

49,531,730

1.625% 1/15/15

106,504,400

110,223,787

1.625% 1/15/18

99,501,996

102,120,871

1.875% 7/15/13

122,853,569

128,793,712

1.875% 7/15/15

67,682,550

70,987,191

1.875% 7/15/19

47,202,959

49,390,003

2% 4/15/12

116,636,371

121,966,510

2% 1/15/14

117,075,482

123,121,375

2% 7/15/14

108,722,357

114,728,500

2% 1/15/16

94,601,190

99,722,675

2.125% 1/15/19

78,245,546

83,422,599

2.375% 4/15/11

100,011,694

103,519,717

2.375% 1/15/17

90,538,074

97,773,026

2.375% 1/15/27

109,587,456

116,152,774

2.5% 7/15/16

84,958,470

92,412,849

2.625% 7/15/17

99,966,801

110,190,869

3% 7/15/12

77,822,747

83,617,473

3.375% 1/15/12

33,667,688

36,100,536

3.5% 1/15/11

70,680,570

73,822,732

TOTAL U.S. TREASURY INFLATION PROTECTED OBLIGATIONS

(Cost $2,441,891,520)

2,514,225,067

Asset-Backed Securities - 0.1%

 

Countrywide Asset-Backed Certificates Trust Series 2007-11 Class 2A1, 0.3038% 6/25/47 (c)

2,116,474

2,045,505

Park Place Securities, Inc. Series 2005-WHQ2 Class M7, 1.4938% 5/25/35 (c)

569,000

9,058

TOTAL ASSET-BACKED SECURITIES

(Cost $2,081,691)

2,054,563

Collateralized Mortgage Obligations - 0.1%

 

Principal Amount

Value

Private Sponsor - 0.1%

Chase Mortgage Finance Trust Series 2007-A1 Class 1A5, 4.369% 2/25/37 (c)

$ 8,777

$ 7,934

Wachovia Bank Commercial Mortgage Trust Series 2004-C14 Class PP, 5.3117% 8/15/41 (a)(c)

2,463,442

2,226,935

TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS

(Cost $2,392,286)

2,234,869

Cash Equivalents - 0.1%

Maturity Amount

 

Investments in repurchase agreements in a joint trading account at 0.07%, dated 10/30/09 due 11/2/09 (Collateralized by U.S. Government Obligations) #
(Cost $2,205,000)

$ 2,205,013

2,205,000

TOTAL INVESTMENT PORTFOLIO - 99.4%

(Cost $2,448,570,497)

2,520,719,499

NET OTHER ASSETS - 0.6%

16,484,972

NET ASSETS - 100%

$ 2,537,204,471

Swap Agreements

 

Expiration Date

Notional Amount

 

Credit Default Swaps

Receive monthly notional amount multiplied by 3.05% and pay Merrill Lynch upon credit event of Morgan Stanley ABS Capital I, Inc., par value of the notional amount of Morgan Stanley ABS Capital I, Inc. Series 2004-NC8, Class B3, 7.2913% 9/25/34 (Rating-B1) (b)

Oct. 2034

$ 188,108

(150,150)

Receive monthly notional amount multiplied by 3.35% and pay Morgan Stanley, Inc. upon credit event of Morgan Stanley ABS Capital I, Inc., par value of the notional amount of Morgan Stanley ABS Capital I, Inc. Series 2004-HE7, Class B3, 9.01% 8/25/34 (Rating-C) (b)

Sept. 2034

166,315

(157,038)

Swap Agreements - continued

 

Expiration Date

Notional Amount

Value

Credit Default Swaps - continued

Receive monthly notional amount multiplied by .82% and pay UBS upon credit event of Morgan Stanley ABS Capital I, Inc., par value of the notional amount of Morgan Stanley ABS Capital I, Inc. Series 2004-NC6 Class M3, 5.6413% 7/25/34 (b)

August 2034

$ 125,582

$ (93,965)

Receive monthly notional amount multiplied by .85% and pay UBS upon credit event of Morgan Stanley ABS Capital I, Inc., par value of the notional amount of Morgan Stanley ABS Capital I, Inc. Series 2004-NC8 Class M6, 5.4413% 9/25/34 (b)

Oct. 2034

152,915

(112,812)

Receive monthly notional amount multiplied by 2.54% and pay Merrill Lynch upon credit event of Countrywide Home Loans, Inc., par value of the notional amount of Countrywide Home Loans, Inc. Series 2003-BC1 Class B1, 7.6913% 3/25/32 (Rating-Ba1) (b)

April 2032

50,104

(29,398)

Receive monthly notional amount multiplied by 2.61% and pay Goldman Sachs upon credit event of Fremont Home Loan Trust, par value of the notional amount of Fremont Home Loan Trust Series 2004-1 Class M9, 7.3913% 2/25/34 (Rating-Baa3) (b)

March 2034

6,291

(219)

Receive monthly notional amount multiplied by 2.61% and pay Goldman Sachs upon credit event of Fremont Home Loan Trust, par value of the notional amount of Fremont Home Loan Trust Series 2004-A Class B3, 7.0413% 1/25/34 (Rating-C) (b)

Feb. 2034

1,089

(1,003)

 

$ 690,404

$ (544,585)

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 $2,226,935 or 0.1% of net assets.

(b) Represents a credit default swap contract in which the fund has sold protection on the underlying reference entity. The value of each credit default swap and the credit rating can be measures of the current payment/performance risk. For the underlying reference entity, ratings disclosed are from Moody's Investors Service, Inc. Where Moody's ratings are not available, S&P ratings are disclosed and are indicated as such. All ratings are as of the report date and do not reflect subsequent changes. Where a credit rating is not disclosed, the value is used as the measure of the payment/performance risk.

(c) 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

$2,205,000 due 11/02/09 at 0.07%

Banc of America Securities LLC

$ 242,416

Goldman, Sachs & Co.

444,808

HSBC Securities (USA), Inc.

309,750

ING Financial Markets LLC

410,419

J.P. Morgan Securities, Inc.

154,875

Mizuho Securities USA, Inc.

472,369

RBC Capital Markets Corp.

61,950

Wachovia Bank NA

108,413

 

$ 2,205,000

Other Information

The following is a summary of the inputs used, as of October 31, 2009, involving the Fund's assets and liabilities carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements.

Valuation Inputs at Reporting Date:

Description

Total

Level 1

Level 2

Level 3

Investments in Securities:

U.S. Government and Government Agency Obligations

$ 2,514,225,067

$ -

$ 2,514,225,067

$ -

Asset-Backed Securities

2,054,563

-

2,045,505

9,058

Collateralized Mortgage Obligations

2,234,869

-

2,234,869

-

Cash Equivalents

2,205,000

-

2,205,000

-

Total Investments in Securities:

$ 2,520,719,499

$ -

$ 2,520,710,441

$ 9,058

Derivative Instruments:

Liabilities

Swap Agreements

$ (544,585)

$ -

$ (93,965)

$ (450,620)

The following is a reconciliation of Investments in Securities and Derivative Instruments for which Level 3 inputs were used in determining value:

Investments in Securities:

Beginning Balance

$ 2,967,444

Total Realized Gain (Loss)

(568,480)

Total Unrealized Gain (Loss)

1,153,273

Cost of Purchases

-

Proceeds of Sales

(3,537,594)

Amortization/Accretion

(5,585)

Transfers in/out of Level 3

-

Ending Balance

$ 9,058

The change in unrealized gain (loss) attributable to Level 3 securities at
October 31, 2009

$ (6,216)

Derivative Instruments:

Swap Agreements

Beginning Balance

$ (424,275)

Total Unrealized Gain (Loss)

10,982

Transfers in/out of Level 3

(37,327)

Ending Balance

$ (450,620)

Realized gain (loss) on Swap Agreements for the period

$ -

The change in unrealized gain (loss) attributable to Level 3 Swap Agreements at October 31, 2009

$ 1,284

The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities and Derivative Instruments identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represents either the beginning value (for transfers in), or the ending value (for transfers out) of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations.

Value of Derivative Instruments

The following table is a summary of the Fund's value of derivative instruments by risk exposure as of October 31, 2009. For additional information on derivative instruments, please refer to the Derivative Instruments section in the accompanying Notes to Financial Statements.

Risk Exposure /
 Derivative Type

Value

 

Asset

Liability

Credit Risk

Swap Agreements (a)

$ -

$ (544,585)

Total Value of Derivatives

$ -

$ (544,585)

(a) Value is disclosed on the Statement of Assets and Liabilities in the Unrealized Appreciation and Unrealized Depreciation on Swap Agreements line-items.

Other Information

The composition of credit quality ratings as a percentage of net assets is as follows (ratings are unaudited):

U.S. Government and U.S. Government Agency Obligations

99.1%

AAA,AA,A

0.1%

BB

0.1%

Short-Term Investments and Net Other Assets

0.7%

 

100.0%

We have used ratings from Moody's® Investors Service, 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.

Income Tax Information

At March 31, 2009, the fund had a capital loss carryforward of approximately $85,667,969 of which $5,092,858, $53,211,771, $4,603,298 and $22,760,042 will expire on March 31, 2011, 2012, 2014 and 2015, respectively.

The fund intends to elect to defer to its fiscal year ending March 31, 2010 approximately $31,554,631 of losses recognized during the period November 1, 2008 to March 31, 2009.

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

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

  

October 31, 2009 (Unaudited)

 

 

 

Assets

Investment in securities, at value (including repurchase agreements of $2,205,000) -
See accompanying schedule:

Unaffiliated issuers (cost $2,448,570,497)

 

$ 2,520,719,499

Cash

4

Receivable for investments sold

16,384,409

Receivable for swap agreements

1,401

Receivable for fund shares sold

8,859,510

Interest receivable

12,162,715

Receivable from investment adviser for expense reductions

4,385

Total assets

2,558,131,923

 

 

 

Liabilities

Payable for investments purchased

$ 15,938,407

Payable for fund shares redeemed

3,130,019

Distributions payable

174,783

Unrealized depreciation on swap agreements

544,585

Accrued management fee

654,603

Distribution fees payable

174,435

Other affiliated payables

310,620

Total liabilities

20,927,452

 

 

 

Net Assets

$ 2,537,204,471

Net Assets consist of:

 

Paid in capital

$ 2,545,986,370

Undistributed net investment income

47,743,169

Accumulated undistributed net realized gain (loss) on investments

(128,129,485)

Net unrealized appreciation (depreciation) on investments

71,604,417

Net Assets

$ 2,537,204,471

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

Semiannual Report

Financial Statements - continued

Statement of Assets and Liabilities - continued

  

October 31, 2009 (Unaudited)

 

 

 

Calculation of Maximum Offering Price
Class A:
Net Asset Value and redemption price per share
($185,240,435 ÷ 16,310,724 shares)

$ 11.36

 

 

 

Maximum offering price per share (100/96.00 of $11.36)

$ 11.83

Class T:
Net Asset Value and redemption price per share ($64,177,948 ÷ 5,643,381 shares)

$ 11.37

 

 

 

Maximum offering price per share (100/96.00 of $11.37)

$ 11.84

Class B:
Net Asset Value and offering price per share ($42,913,766 ÷ 3,783,960 shares)A

$ 11.34

 

 

 

Class C:
Net Asset Value and offering price per share ($113,565,015 ÷ 10,027,268 shares)A

$ 11.33

 

 

 

Inflation-Protected Bond:
Net Asset Value, offering price and redemption price per share ($2,056,204,941 ÷ 180,333,332 shares)

$ 11.40

 

 

 

Institutional Class:
Net Asset Value, offering price and redemption price per share ($75,102,366 ÷ 6,602,393 shares)

$ 11.38

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.

Semiannual Report

Statement of Operations

Six months ended October 31, 2009 (Unaudited)

 

  

  

Investment Income

  

  

Interest

 

$ 12,998,857

Inflation principal income

 

39,849,174

Total income

 

52,848,031

 

 

 

Expenses

Management fee

$ 3,686,472

Transfer agent fees

1,344,154

Distribution fees

1,002,359

Fund wide operations fee

375,908

Independent trustees' compensation

3,823

Miscellaneous

5,071

Total expenses before reductions

6,417,787

Expense reductions

(51,942)

6,365,845

Net investment income

46,482,186

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities:

 

 

Unaffiliated issuers

48,053

Swap agreements

10,122

 

Total net realized gain (loss)

 

58,175

Change in net unrealized appreciation (depreciation) on:

Investment securities

105,784,898

Swap agreements

10,983

Total change in net unrealized appreciation (depreciation)

 

105,795,881

Net gain (loss)

105,854,056

Net increase (decrease) in net assets resulting from operations

$ 152,336,242

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

Semiannual Report

Financial Statements - continued

Statement of Changes in Net Assets

  

Six months ended October 31, 2009 (Unaudited)

Year ended
April 30,
2009

Increase (Decrease) in Net Assets

 

 

Operations

 

 

Net investment income

$ 46,482,186

$ 42,795,088

Net realized gain (loss)

58,175

(51,504,575)

Change in net unrealized appreciation (depreciation)

105,795,881

(91,588,360)

Net increase (decrease) in net assets resulting
from operations

152,336,242

(100,297,847)

Distributions to shareholders from net investment income

(12,900,565)

(21,051,158)

Distributions to shareholders from net realized gain

-

(33,701,568)

Total distributions

(12,900,565)

(54,752,726)

Share transactions - net increase (decrease)

197,106,172

(110,070,130)

Total increase (decrease) in net assets

336,541,849

(265,120,703)

 

 

 

Net Assets

Beginning of period

2,200,662,622

2,465,783,325

End of period (including undistributed net investment income of $47,743,169 and undistributed net investment income of $14,161,558, respectively)

$ 2,537,204,471

$ 2,200,662,622

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

Semiannual Report

Financial Highlights - Class A

 

Six months ended October 31, 2009
Years ended April 30,
 
(Unaudited)
2009
2008
2007
2006
2005

Selected Per-Share Data

 

 

 

 

 

Net asset value, beginning of period

$ 10.70

$ 11.22

$ 10.92

$ 10.65

$ 11.48

$ 10.92

Income from Investment Operations

 

 

 

 

 

 

Net investment income E

  .208

  .171

  .538

  .434

  .500

  .407

Net realized and unrealized gain (loss)

  .502

  (.456)

  .306

  .137

  (.676)

  .620

Total from investment operations

  .710

  (.285)

  .844

  .571

  (.176)

  1.027

Distributions from net investment income

  (.050)

  (.077)

  (.194)

  (.209)

  (.154)

  (.132)

Distributions from net realized gain

  -

  (.158)

  (.350)

  (.092)

  (.453)

  (.335)

Return of capital

  -

  -

  -

  -

  (.047)

  -

Total distributions

  (.050)

  (.235)

  (.544)

  (.301)

  (.654)

  (.467)

Net asset value,
end of period

$ 11.36

$ 10.70

$ 11.22

$ 10.92

$ 10.65

$ 11.48

Total Return B, C, D

  6.65%

  (2.57)%

  7.96%

  5.43%

  (1.62)%

  9.58%

Ratios to Average Net Assets F, H

 

 

 

 

 

Expenses before reductions

  .77% A

  .78%

  .80%

  .71%

  .70%

  .81%

Expenses net of fee waivers, if any

  .75% A

  .75%

  .75%

  .66%

  .65%

  .65%

Expenses net of all reductions

  .75% A

  .75%

  .75%

  .65%

  .65%

  .65%

Net investment income

  3.76% A

  1.59%

  4.87%

  4.02%

  4.50%

  3.63%

Supplemental Data

 

 

 

 

 

 

Net assets,
end of period
(000 omitted)

$ 185,240

$ 158,700

$ 142,814

$ 68,710

$ 86,364

$ 75,422

Portfolio turnover rate G

  11% A

  43%

  35%

  34%

  71%

  117%

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 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.

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

Semiannual Report

Financial Highlights - Class T

 

Six months ended October 31, 2009
Years ended April 30,
 
(Unaudited)
2009
2008
2007
2006
2005

Selected Per-Share Data

 

 

 

 

 

Net asset value, beginning of period

$ 10.72

$ 11.24

$ 10.93

$ 10.66

$ 11.49

$ 10.93

Income from Investment Operations

 

 

 

 

 

 

Net investment income E

  .208

  .172

  .538

  .424

  .489

  .397

Net realized and unrealized gain (loss)

  .492

  (.457)

  .316

  .137

  (.676)

  .619

Total from investment operations

  .700

  (.285)

  .854

  .561

  (.187)

  1.016

Distributions from net investment income

  (.050)

  (.077)

  (.194)

  (.199)

  (.143)

  (.121)

Distributions from net realized gain

  -

  (.158)

  (.350)

  (.092)

  (.453)

  (.335)

Return of capital

  -

  -

  -

  -

  (.047)

  -

Total distributions

  (.050)

  (.235)

  (.544)

  (.291)

  (.643)

  (.456)

Net asset value,
end of period

$ 11.37

$ 10.72

$ 11.24

$ 10.93

$ 10.66

$ 11.49

Total Return B, C, D

  6.54%

  (2.56)%

  8.05%

  5.32%

  (1.71)%

  9.47%

Ratios to Average Net Assets F, H

 

 

 

 

 

Expenses before reductions

  .79% A

  .80%

  .79%

  .78%

  .78%

  .90%

Expenses net of fee waivers, if any

  .75% A

  .75%

  .75%

  .75%

  .75%

  .75%

Expenses net of all reductions

  .75% A

  .75%

  .75%

  .75%

  .75%

  .75%

Net investment income

  3.76% A

  1.59%

  4.86%

  3.92%

  4.40%

  3.53%

Supplemental Data

 

 

 

 

 

 

Net assets,
end of period
(000 omitted)

$ 64,178

$ 61,847

$ 77,332

$ 65,833

$ 86,613

$ 84,596

Portfolio turnover rate G

  11% A

  43%

  35%

  34%

  71%

  117%

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 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.

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

Semiannual Report

Financial Highlights - Class B

 

Six months ended October 31, 2009
Years ended April 30,
 
(Unaudited)
2009
2008
2007
2006
2005

Selected Per-Share Data

 

 

 

 

 

Net asset value, beginning of period

$ 10.69

$ 11.23

$ 10.92

$ 10.65

$ 11.48

$ 10.92

Income from Investment Operations

 

 

 

 

 

 

Net investment income E

  .172

  .101

  .466

  .354

  .418

  .324

Net realized and unrealized gain (loss)

  .492

  (.453)

  .316

  .137

  (.678)

  .619

Total from investment operations

  .664

  (.352)

  .782

  .491

  (.260)

  .943

Distributions from net investment income

  (.014)

  (.030)

  (.122)

  (.129)

  (.070)

  (.048)

Distributions from net realized gain

  -

  (.158)

  (.350)

  (.092)

  (.453)

  (.335)

Return of capital

  -

  -

  -

  -

  (.047)

  -

Total distributions

  (.014)

  (.188)

  (.472)

  (.221)

  (.570)

  (.383)

Net asset value,
end of period

$ 11.34

$ 10.69

$ 11.23

$ 10.92

$ 10.65

$ 11.48

Total Return B, C, D

  6.21%

  (3.17)%

  7.36%

  4.65%

  (2.36)%

  8.76%

Ratios to Average Net Assets F, H

 

 

 

 

 

Expenses before reductions

  1.47% A

  1.49%

  1.50%

  1.49%

  1.49%

  1.61%

Expenses net of fee waivers, if any

  1.40% A

  1.40%

  1.40%

  1.40%

  1.40%

  1.40%

Expenses net of all reductions

  1.40% A

  1.40%

  1.40%

  1.40%

  1.40%

  1.40%

Net investment income

  3.11% A

  .94%

  4.21%

  3.27%

  3.75%

  2.88%

Supplemental Data

 

 

 

 

 

 

Net assets,
end of period
(000 omitted)

$ 42,914

$ 42,748

$ 44,776

$ 35,826

$ 48,972

$ 56,052

Portfolio turnover rate G

  11% A

  43%

  35%

  34%

  71%

  117%

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 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 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.

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

Semiannual Report

Financial Highlights - Class C

 

Six months ended October 31, 2009
Years ended April 30,
 
(Unaudited)
2009
2008
2007
2006
2005

Selected Per-Share Data

 

 

 

 

 

Net asset value, beginning of period

$ 10.67

$ 11.22

$ 10.91

$ 10.64

$ 11.47

$ 10.91

Income from Investment Operations

 

 

 

 

 

 

Net investment income E

  .166

  .090

  .455

  .343

  .406

  .312

Net realized and unrealized gain (loss)

  .502

  (.459)

  .316

  .137

  (.677)

  .619

Total from investment operations

  .668

  (.369)

  .771

  .480

  (.271)

  .931

Distributions from net investment income

  (.008)

  (.023)

  (.111)

  (.118)

  (.059)

  (.036)

Distributions from net realized gain

  -

  (.158)

  (.350)

  (.092)

  (.453)

  (.335)

Return of capital

  -

  -

  -

  -

  (.047)

  -

Total distributions

  (.008)

  (.181)

  (.461)

  (.210)

  (.559)

  (.371)

Net asset value,
end of period

$ 11.33

$ 10.67

$ 11.22

$ 10.91

$ 10.64

$ 11.47

Total Return B, C, D

  6.27%

  (3.33)%

  7.26%

  4.55%

  (2.46)%

  8.66%

Ratios to Average Net Assets F, H

 

 

 

 

 

Expenses before reductions

  1.51% A

  1.54%

  1.55%

  1.54%

  1.55%

  1.67%

Expenses net of fee waivers, if any

  1.50% A

  1.50%

  1.50%

  1.50%

  1.50%

  1.50%

Expenses net of all reductions

  1.50% A

  1.50%

  1.50%

  1.50%

  1.50%

  1.50%

Net investment income

  3.01% A

  .84%

  4.11%

  3.17%

  3.65%

  2.78%

Supplemental Data

 

 

 

 

 

 

Net assets,
end of period
(000 omitted)

$ 113,565

$ 99,083

$ 90,060

$ 51,205

$ 74,329

$ 71,407

Portfolio turnover rate G

  11% A

  43%

  35%

  34%

  71%

  117%

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 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 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.

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

Semiannual Report

Financial Highlights - Inflation-Protected Bond

 

Six months ended October 31, 2009
Years ended April 30,
 
(Unaudited)
2009
2008
2007
2006
2005

Selected Per-Share Data

 

 

 

 

 

Net asset value, beginning of period

$ 10.75

$ 11.26

$ 10.94

$ 10.67

$ 11.50

$ 10.94

Income from Investment Operations

 

 

 

 

 

 

Net investment income D

  .225

  .205

  .573

  .457

  .525

  .426

Net realized and unrealized gain (loss)

  .491

  (.457)

  .324

  .136

  (.679)

  .618

Total from investment operations

  .716

  (.252)

  .897

  .593

  (.154)

  1.044

Distributions from net investment income

  (.066)

  (.100)

  (.227)

  (.231)

  (.176)

  (.149)

Distributions from net realized gain

  -

  (.158)

  (.350)

  (.092)

  (.453)

  (.335)

Return of capital

  -

  -

  -

  -

  (.047)

  -

Total distributions

  (.066)

  (.258)

  (.577)

  (.323)

  (.676)

  (.484)

Net asset value, end of period

$ 11.40

$ 10.75

$ 11.26

$ 10.94

$ 10.67

$ 11.50

Total Return B, C

  6.68%

  (2.27)%

  8.46%

  5.63%

  (1.42)%

  9.73%

Ratios to Average Net Assets E, G

 

 

 

 

 

Expenses before reductions

  .45% A

  .45%

  .45%

  .45%

  .47%

  .63%

Expenses net of fee waivers,
if any

  .45% A

  .45%

  .45%

  .45%

  .45%

  .50%

Expenses net of all reductions

  .45% A

  .45%

  .45%

  .45%

  .45%

  .50%

Net investment income

  4.06% A

  1.89%

  5.17%

  4.22%

  4.70%

  3.78%

Supplemental Data

 

 

 

 

 

Net assets, end of period
(000 omitted)

$ 2,056,205

$ 1,767,415

$ 2,008,504

$ 1,307,686

$ 1,400,656

$ 1,579,697

Portfolio turnover rate F

  11% A

  43%

  35%

  34%

  71%

  117%

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 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.

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

Semiannual Report

Financial Highlights - Institutional Class

 

Six months ended October 31, 2009
Years ended April 30,
 
(Unaudited)
2009
2008
2007
2006
2005

Selected Per-Share Data

 

 

 

 

 

Net asset value, beginning of period

$ 10.72

$ 11.23

$ 10.92

$ 10.65

$ 11.48

$ 10.92

Income from Investment Operations

 

 

 

 

 

 

Net investment income D

  .222

  .197

  .565

  .452

  .517

  .425

Net realized and unrealized gain (loss)

  .501

  (.452)

  .318

  .137

  (.676)

  .619

Total from investment operations

  .723

  (.255)

  .883

  .589

  (.159)

  1.044

Distributions from net investment income

  (.063)

  (.097)

  (.223)

  (.227)

  (.171)

  (.149)

Distributions from net realized gain

  -

  (.158)

  (.350)

  (.092)

  (.453)

  (.335)

Return of capital

  -

  -

  -

  -

  (.047)

  -

Total distributions

  (.063)

  (.255)

  (.573)

  (.319)

  (.671)

  (.484)

Net asset value,
end of period

$ 11.38

$ 10.72

$ 11.23

$ 10.92

$ 10.65

$ 11.48

Total Return B, C

  6.77%

  (2.30)%

  8.34%

  5.60%

  (1.47)%

  9.74%

Ratios to Average Net Assets E, G

 

 

 

 

 

Expenses before reductions

  .51% A

  .50%

  .49%

  .49%

  .50%

  .61%

Expenses net of fee waivers, if any

  .50% A

  .50%

  .49%

  .49%

  .50%

  .50%

Expenses net of all reductions

  .50% A

  .50%

  .49%

  .49%

  .50%

  .50%

Net investment income

  4.01% A

  1.84%

  5.13%

  4.18%

  4.65%

  3.78%

Supplemental Data

 

 

 

 

 

 

Net assets,
end of period
(000 omitted)

$ 75,102

$ 70,870

$ 102,297

$ 110,863

$ 84,666

$ 78,096

Portfolio turnover rate F

  11% A

  43%

  35%

  34%

  71%

  117%

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 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.

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

Semiannual Report

Notes to Financial Statements

For the period ended October 31, 2009 (Unaudited)

1. Organization.

Fidelity Inflation-Protected Bond Fund (the Fund) is a fund of Fidelity Fixed-Income Trust (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, Inflation-Protected 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. 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. Events or transactions occurring after period end through the date that the financial statements were issued, December 16, 2009, have been evaluated in the preparation of the financial statements. 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. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. Generally Accepted Accounting Principles (GAAP) establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are classified into three levels. Level 1 includes readily available unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes observable inputs other than quoted prices included in Level 1 that are observable either directly or indirectly. Level 3 includes unobservable inputs when market prices are not readily available or reliable. Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy. The aggregate value by input level, as of October 31, 2009, for the Fund's investments, as well as a reconciliation of assets and liabilities for which significant unobservable inputs (Level 3) were used in determining

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

2. Significant Accounting Policies - continued

Security Valuation - continued

value, is included at the end of the Fund's Schedule of Investments. Valuation techniques of the Fund's major categories of assets and liabilities as presented in the Schedule of Investments are as follows.

Debt securities, including restricted securities, are valued based on quotations received from dealers who make markets in such securities or by independent pricing services. For U.S. government and government agency obligations, pricing services generally utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. For asset backed securities and collateralized mortgage obligations, pricing services generally utilize matrix pricing which considers prepayment speed assumptions, attributes of the collateral, yield or price of bonds of comparable quality, coupon, maturity and types as well as dealer supplied prices. Swaps are marked-to-market daily based on valuations from independent pricing services or 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 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.

Semiannual Report

2. Significant Accounting Policies - continued

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

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. There are no unrecognized tax benefits in the accompanying financial statements in connection with the tax positions taken by the Fund. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years.

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. Inflation income is distributed as a short-term capital gain. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.

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

Book-tax differences are primarily due to swap agreements, market discount, capital loss carryforwards, certain losses related to deflation adjustments on U.S. Treasury Inflation-indexed securities, and losses deferred due to wash sales and excise tax regulations.

The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:

Gross unrealized appreciation

$ 81,122,646

Gross unrealized depreciation

(8,550,332)

Net unrealized appreciation (depreciation)

$ 72,572,314

 

 

Tax cost

$ 2,448,147,185

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

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

3. Operating Policies - continued

Repurchase Agreements - continued

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.

Treasury Inflation-Protected Securities. The Fund invests in Treasury Inflation-Protected Securities (TIPS), in which the principal amount is adjusted daily to keep pace with inflation. Interest is accrued based on the adjusted principal amount. The adjustments to principal due to inflation are reflected as increases or decreases to Inflation principal income in the accompanying Statement of Operations. Such adjustments may have a significant impact on the Fund's distributions.

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.

4. Investments in Derivative Instruments.

Objectives and Strategies for Investing in Derivative Instruments. The Fund uses derivative instruments ("derivatives"), including swap agreements, in order to meet its investment objectives. The Fund's strategy is to use derivatives as a risk management tool and as an additional way to gain exposure to certain types of assets. The success of any strategy involving derivatives depends on analysis of numerous economic factors, and if the strategies for investment do not work as intended, the Fund may not achieve its objectives.

While utilizing derivatives in pursuit of its investment objectives, the Fund is exposed to certain financial risk relative to those derivatives. This risk is further explained below:

Credit Risk

Credit risk is the risk that the value of financial instruments will fluctuate as a result of changes in the credit quality of those instruments. Credit risk also includes the risk that the counterparty to a financial instrument will default or be unable to make further principal or interest payments on an obligation or commitment that it has entered into with the Fund.

Semiannual Report

4. Investments in Derivative Instruments - continued

Objectives and Strategies for Investing in Derivative Instruments - continued

The following notes provide more detailed information about each derivative type held by the Fund:

Swap Agreements. The Fund entered into swap agreements, which are contracts between two parties to exchange future cash flows at periodic intervals based on a notional principal amount. Payments are exchanged at specified intervals, accrued daily commencing with the effective date of the contract and recorded as realized gains or losses in the Fund's accompanying Statement of Operations. Gains or losses are realized in the event of an early termination of a swap agreement. Any upfront payments made or received upon entering a swap contract to compensate for differences between stated terms of the agreement and prevailing market conditions (e.g. credit spreads, interest rates or other factors) are recorded as realized gains or losses ratably over the term of the swap in the Fund's accompanying Statement of Operations. Risks of loss may exceed amounts recognized on the Fund's Statement of Assets and Liabilities. In addition, there is the risk of failure by the counterparty to perform under the terms of the agreement and lack of liquidity in the market. Details of swap agreements open at period end are included in the Fund's Schedule of Investments under the caption "Swap Agreements." The total notional amount of all open swap agreements at period end is indicative of the volume of this derivative type. Collateral, in the form of cash or securities, may be required to be held in segregated accounts with a fund's custodian bank in accordance with the swap agreement and, if required, is identified in the Fund's Schedule of Investments. The Fund could experience delays and costs in gaining access to the collateral even though it is held in the Fund's custodian bank.

The Fund entered into credit default swap agreements to provide a measure of protection against defaults of an issuer ("buyer of protection") and/or to gain credit exposure to an issuer to which it is not otherwise exposed ("seller of protection"). The issuer may be either a single issuer or a "basket" of issuers. As a buyer of protection, the Fund does so when it holds bonds of the issuer or without owning the underlying asset or debt issued by the reference entity. Under the terms of a credit default swap the buyer of protection receives credit protection in exchange for making periodic payments to the seller of protection based on a fixed percentage applied to a notional principal amount. In return for these payments, the seller of protection acts as a guarantor of the creditworthiness of a reference obligation. Periodic payments are made over the life of the contract provided that no credit event occurs.

For credit default swaps on most corporate and sovereign issuers, credit events include bankruptcy, failure to pay, obligation acceleration or repudiation/moratorium. If a credit event were to occur during the term of the contract, the contract is typically settled in a

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

4. Investments in Derivative Instruments - continued

Swap Agreements - continued

market auction where the difference between the value of the reference obligation received and the notional amount of the swap is recorded as a realized loss by the seller of protection. For credit default swaps on corporate or sovereign issuers, the obligation that may be put to the seller of protection is not limited to the specific reference obligation described in the Fund's Schedule of Investments.

For credit default swaps on asset-backed securities, a credit event may be triggered by events such as failure to pay principal, maturity extension, rating downgrade or write-down. If a credit event were to occur during the term of the contract, upon notification of the buyer of protection, the seller of protection is obligated to take delivery from the buyer of protection the notional amount of a reference obligation, at par. The difference between the value of the reference obligation received and the notional amount paid is recorded as a realized loss by the seller of protection. For credit default swaps on asset-backed securities, the reference obligation described represents the security that may be put to the seller of protection.

Risks of loss includes credit risk. The Fund's maximum risk of loss from counterparty risk, either as a buyer of protection or as a seller of protection, is the value of the contract. This risk is mitigated by the posting of collateral by the counterparty to the Fund to cover the Fund's exposure to the counterparty. The notional amount of credit default swaps is included in the Fund's Schedule of Investments and approximates the maximum potential amount of future payments that the Fund could be required to make if the Fund is the seller of protection and a credit event were to occur. The total notional amount of all credit default swaps open at period end where the Fund is the seller of protection amounted to $690,404 representing .03% of net assets. Credit default swaps are considered to have credit-risk contingent features since they require payment by the seller of protection to the buyer of protection upon the occurrence of a defined credit event. The total value of credit default swaps in a net liability position as of period end was $(544,585). The value of assets posted as collateral, net of assets received as collateral, for these swaps was $0. If a defined credit event had occurred as of period end for swaps in a net liability position, the swaps' credit-risk-related contingent features would have been triggered and the Fund would have been required to pay $690,404 less the value of the swaps' related reference obligations.

Typically, the value of each credit default swap and credit rating disclosed for each reference obligation in the Fund's Schedule of Investments, where the Fund is the seller of protection, can be used as measures of the current payment/performance risk of the swap. As the value of the swap changes as a positive or negative percentage of the total

Semiannual Report

4. Investments in Derivative Instruments - continued

Swap Agreements - continued

notional amount, the payment/performance risk may decrease or increase, respectively. Any current or future declines in the value of the swap may be partially offset by upfront payments received by the Fund as the seller of protection if applicable. In addition to these measures, FMR monitors a variety of factors including cash flow assumptions, market activity and market sentiment as part of its ongoing process of assessing payment/performance risk.

Realized and Change in Unrealized Gain (Loss) on Derivative Instruments. A summary of the Fund's value of derivatives by primary risk exposure as of period end, if any, is included at the end of the Fund's Schedule of Investments. The table below reflects the Fund's realized gain (loss) and change in unrealized gain (loss) for derivatives during the period.

Risk Exposure / Derivative Type

Realized Gain (Loss)

Change in
Unrealized Gain (Loss)

Credit Risk

 

 

Swap Agreements

$ 10,122

$ 10,983

Total Derivatives Realized and Change in Unrealized Gain (Loss) (a)(b)

$ 10,122

$ 10,983

(a) Total derivatives realized gain (loss) included in the Statement of Operations is comprised of $10,122 for swap agreements.

(b) Total derivatives change in unrealized gain (loss) included in the Statement of Operations is comprised of $10,983 for swap agreements.

5. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities and U.S. government securities, aggregated $0 and $7,108,863, 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 annualized management fee rate was .32% of the Fund's average net assets.

Semiannual Report

Notes to Financial Statements (Unaudited) - 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
Fee

Service
Fee

Paid to
FDC

Retained
by FDC

Class A

-%

.25%

$ 210,499

$ 3,256

Class T

-%

.25%

78,928

-

Class B

.65%

.25%

191,485

139,107

Class C

.75%

.25%

521,447

138,005

 

 

 

$ 1,002,359

$ 280,368

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.

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

 

Retained
by FDC

Class A

$ 30,931

Class T

5,399

Class B*

48,549

Class C*

6,759

 

$ 91,638

* 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 each respective class of the Fund, with the exception of Inflation-Protected Bond. FIIOC

Semiannual Report

6. Fees and Other Transactions with Affiliates - continued

Transfer Agent Fees - continued

receives an asset-based fee of .10% of Inflation-Protected Bond's average net assets. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, each class paid the following transfer agent fees:

 

Amount

% of
Average
Net Assets*

Class A

$ 146,090

.17

Class T

60,712

.19

Class B

49,712

.23

Class C

89,368

.17

Inflation-Protected Bond

936,331

.10

Institutional Class

61,941

.17

 

$ 1,344,154

 

* Annualized

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

7. Committed Line of Credit.

The Fund participates with other funds managed by FMR in a $3.5 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 $5,071 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.

FMR voluntarily agreed to reimburse each class to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, including commitment fees, are excluded from this reimbursement.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

8. Expense Reductions - continued

The following classes were in reimbursement during the period:

 

Expense
Limitations

Reimbursement
from adviser

Class A

.75%

$ 14,675

Class T

.75%

11,428

Class B

1.40%

15,361

Class C

1.50%

4,560

Institutional Class

.50%

5,404

 

 

$ 51,428

In addition, 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 custody expenses by $514.

9. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

 

Six months ended
October 31, 2009

Year ended
April 30, 2009

From net investment income

 

 

Class A

$ 762,552

$ 1,090,782

Class T

285,464

493,218

Class B

53,833

125,569

Class C

78,642

194,211

Inflation-Protected Bond

11,295,780

18,030,846

Institutional Class

424,294

1,116,532

Total

$ 12,900,565

$ 21,051,158

From net realized gain

 

 

Class A

$ -

$ 2,077,368

Class T

-

972,450

Class B

-

628,452

Class C

-

1,281,090

Inflation-Protected Bond

-

27,080,662

Institutional Class

-

1,661,546

Total

$ -

$ 33,701,568

Semiannual Report

10. Share Transactions.

Transactions for each class of shares were as follows:

 

Shares

Dollars

 

Six months ended October 31, 2009

Year ended
April 30,
2009

Six months ended October 31, 2009

Year ended
April 30,
2009

Class A

 

 

 

 

Shares sold

4,536,946

10,628,037

$ 49,956,622

$ 115,683,550

Reinvestment of distributions

58,643

250,030

648,300

2,732,165

Shares redeemed

(3,111,688)

(8,775,155)

(34,097,540)

(93,481,658)

Net increase (decrease)

1,483,901

2,102,912

$ 16,507,382

$ 24,934,057

Class T

 

 

 

 

Shares sold

1,189,091

3,018,881

$ 12,994,907

$ 33,006,827

Reinvestment of distributions

23,650

125,639

261,636

1,378,081

Shares redeemed

(1,339,861)

(4,255,338)

(14,698,092)

(46,025,012)

Net increase (decrease)

(127,120)

(1,110,818)

$ (1,441,549)

$ (11,640,104)

Class B

 

 

 

 

Shares sold

627,772

1,852,668

$ 6,885,944

$ 20,285,159

Reinvestment of distributions

3,829

55,126

42,236

605,567

Shares redeemed

(847,125)

(1,894,895)

(9,285,217)

(20,231,408)

Net increase (decrease)

(215,524)

12,899

$ (2,357,037)

$ 659,318

Class C

 

 

 

 

Shares sold

2,307,138

5,136,305

$ 25,252,428

$ 55,936,441

Reinvestment of distributions

5,386

103,348

59,332

1,134,504

Shares redeemed

(1,567,578)

(3,983,862)

(17,087,805)

(42,664,908)

Net increase (decrease)

744,946

1,255,791

$ 8,223,955

$ 14,406,037

Inflation-Protected Bond

 

 

 

 

Shares sold

44,127,642

113,902,114

$ 486,574,285

$ 1,245,455,216

Reinvestment of distributions

949,578

3,915,470

10,539,383

42,926,789

Shares redeemed

(29,217,901)

(131,783,366)

(320,805,781)

(1,401,272,531)

Net increase (decrease)

15,859,319

(13,965,782)

$ 176,307,887

$ (112,890,526)

Institutional Class

 

 

 

 

Shares sold

1,184,398

11,934,689

$ 12,964,812

$ 128,651,073

Reinvestment of distributions

29,173

85,972

322,877

938,829

Shares redeemed

(1,221,931)

(14,516,794)

(13,422,155)

(155,128,814)

Net increase (decrease)

(8,360)

(2,496,133)

$ (134,466)

$ (25,538,912)

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

11. 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.

Semiannual Report

Proxy Voting Results

A special meeting of the fund's shareholders was held on July 15, 2009. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.

PROPOSAL 1

To elect a Board of Trustees.A

 

# of
Votes

% of
Votes

James C. Curvey

Affirmative

29,535,490,304.51

95.434

Withheld

1,412,983,688.53

4.566

TOTAL

30,948,473,993.04

100.000

Albert R. Gamper, Jr.

Affirmative

29,631,645,146.15

95.745

Withheld

1,316,828,846.89

4.255

TOTAL

30,948,473,993.04

100.000

Abigail P. Johnson

Affirmative

29,481,082,358.76

95.259

Withheld

1,467,391,634.28

4.741

TOTAL

30,948,473,993.04

100.000

Arthur E. Johnson

Affirmative

29,601,580,051.86

95.648

Withheld

1,346,893,941.18

4.352

TOTAL

30,948,473,993.04

100.000

Michael E. Kenneally

Affirmative

29,688,902,929.52

95.930

Withheld

1,259,571,063.52

4.070

TOTAL

30,948,473,993.04

100.000

James H. Keyes

Affirmative

29,647,356,020.99

95.796

Withheld

1,301,117,972.05

4.204

TOTAL

30,948,473,993.04

100.000

Marie L. Knowles

Affirmative

29,665,215,088.51

95.854

Withheld

1,283,258,904.53

4.146

TOTAL

30,948,473,993.04

100.000

Kenneth L. Wolfe

Affirmative

29,580,330,647.68

95.579

Withheld

1,368,143,345.36

4.421

TOTAL

30,948,473,993.04

100.000

PROPOSAL 2

To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A

 

# of
Votes

% of
Votes

Affirmative

22,342,326,668.95

72.192

Against

5,700,226,054.43

18.418

Abstain

2,112,037,717.17

6.825

Broker
Non-Votes

793,883,552.49

2.565

TOTAL

30,948,473,993.04

100.000

A Denotes trust-wide proposal and voting results.

Semiannual Report

Board Approval of Investment Advisory Contracts and Management Fees

Fidelity Inflation-Protected Bond Fund

Each year, 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 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. The Board has established three 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. The Operations Committee meets regularly throughout the year and, among other matters, considers matters specifically related to the annual consideration of the renewal of the fund's Advisory Contracts. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of the fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts.

On May 21, 2009, the Board voted to continue the fund's Advisory Contracts for four months, through September 30, 2009, in connection with the reorganization of the Board's new meeting schedule. The Board considered that the contractual terms of and fees payable under the fund's Advisory Contracts involve no changes in (i) the investment process or strategies employed in the management of the fund's assets; (ii) the nature or level of services provided under the fund's Advisory Contracts; or (iii) the day-to-day management of the fund or the persons primarily responsible for such management. The Board concluded that the fund's Advisory Contracts are fair and reasonable, and that the fund's Advisory Contracts should be renewed, without modification, through September 30, 2009, with the understanding that the Board would consider their renewal in September 2009.

At its September 2009 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.

Semiannual Report

Board Approval of Investment Advisory Contracts and
Management Fees - continued

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.

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. In response to the recent financial crisis, Fidelity took a number of actions intended to cut costs and improve efficiency without weakening the investment teams or resources. The Board specifically noted Fidelity's response to the 2008 credit market crisis. The Board noted that Fidelity's analysts have access to a variety of technological tools and market and securities data 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 integral part of the fixed-income portfolio management investment process.

Semiannual Report

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 over time 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 a large variety of mutual fund investor services. The Board noted that Fidelity had taken a number of actions over the previous year that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure and broaden the focus of the investment research teams; (ii) bolstering the senior management team that oversees asset management; (iii) contractually agreeing to reduce the management fee on Fidelity U.S. Bond Index Fund; and (iv) expanding Class A and Class T load waiver categories to increase rollover retention opportunities and create consistent policies across the classes.

Investment Performance. The Board considered whether the fund has operated in accordance with 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, 2008, the cumulative total returns of Fidelity Inflation-Protected Bond (retail class) and Class C 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 Inflation-Protected Bond (retail class) and Class C show the performance of the highest and lowest performing classes, respectively (based on five-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.

Semiannual Report

Board Approval of Investment Advisory Contracts and
Management Fees - continued

Fidelity Inflation-Protected Bond Fund

fid77

The Board reviewed the fund's relative investment performance against its peer group and stated that the performance of Fidelity Inflation-Protected Bond (retail class) of the fund was in the second quartile for all the periods shown. The Board also stated that the investment performance of the fund was lower than its benchmark for the three- and five-year periods, although the one-year cumulative total return of Fidelity Inflation-Protected Bond (retail class) compared favorably to its benchmark. 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 also reviewed the fund's performance during 2009.

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 and factoring in the unprecedented recent market events, 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.

Semiannual 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 Inflation-Protected Bond Fund

fid79

Semiannual 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 the Total Mapped Group and below the median of its ASPG for 2008.

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 Inflation-Protected Bond (retail class) to 10 basis points, and (iii) limit the total expenses for Fidelity Inflation-Protected Bond (retail class) to 45 basis points. The fees and expenses payable under 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 2008.

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 that varies based on asset class. 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, 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.

Semiannual 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 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.

Semiannual Report

Board Approval of Investment Advisory Contracts and
Management Fees - continued

In February 2009, the Board created an Ad Hoc Committee (the "Committee") to analyze economies of scale. The Committee was formed to consider whether FMR attains economies of scale in respect of the management and servicing of the Fidelity funds, whether the Fidelity funds have appropriately benefited from such economies of scale, and whether there is potential for realization of any further economies of scale.

The Board concluded, considering the findings of the Committee, 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, actions to be taken by FMR to improve certain funds' overall performance and Fidelity's long-term strategies for certain funds; (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 current market conditions have affected retention and recruitment; (v) the selection of and compensation paid by FMR to fund sub-advisers; (vi) Fidelity's fee structures and rationale for recommending different fees among categories of funds; (vii) the rationale for any differences between fund fee structures and fee structures in place for other Fidelity clients; and (viii) explanations for the relative total expenses borne by certain funds and classes, total expense competitive trends, and actions that might be taken by FMR to reduce total expenses for certain funds and classes.

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.

Semiannual Report

Investment Adviser

Fidelity Management & Research Company

Boston, MA

Investment Sub-Advisers

Fidelity Research & Analysis Company

Fidelity Investments Money
Management, Inc.

FIL Investment Advisors

FIL Investment Advisors (U.K.) Ltd.

Fidelity Management & Research
(U.K.) Inc.

Fidelity Management & Research
(Hong Kong) Limited

Fidelity Management & Research
(Japan) 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 

AIFB-USAN-1209
1.784855.106

fid120

(Fidelity Investment logo)(registered trademark)
Fidelity Advisor
Inflation-Protected Bond
Fund - Institutional Class

Semiannual Report

October 31, 2009

Institutional Class is a class of Fidelity® Inflation-Protected Bond Fund

(2_fidelity_logos) (Registered_Trademark)

Contents

Chairman's Message

<Click Here>

The Chairman's message to shareholders.

Shareholder Expense Example

<Click Here>

An example of shareholder expenses.

Investment Changes

<Click Here>

A summary of major shifts in the fund's investments over the past six months.

Investments

<Click Here>

A complete list of the fund's investments with their market values.

Financial Statements

<Click Here>

Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights.

Notes

<Click Here>

Notes to the financial statements.

Proxy Voting Results

<Click Here>

 

Board Approval of Investment Advisory Contracts and Management Fees

<Click Here>

 

 

 

 

To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults 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.

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.

Semiannual Report

Chairman's Message

(photo_of_Abigail_P_Johnson)

Dear Shareholder:

We've seen a strong upswing in the global equity markets since last March, as signs of improvement in some economic indicators have brought many investors back into the marketplace. But there remain other key measures - notably high unemployment and slack consumer spending - that suggest the road back to economic health could still be a bumpy ride. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help 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 can be tax advantages and cost benefits to consider as well. 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 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 "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 by phone. It is our privilege to provide you the information you need to make the investments that are right for you.

Sincerely,

/s/Abigail P. Johnson

Abigail P. Johnson

Semiannual 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 (May 1, 2009 to October 31, 2009).

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.

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.

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.

Semiannual Report

Shareholder Expense Example - continued

 

Annualized
Expense Ratio

Beginning
Account Value
May 1, 2009

Ending
Account Value
October 31, 2009

Expenses Paid
During Period*
May 1, 2009
to October 31, 2009

Class A

.75%

 

 

 

Actual

 

$ 1,000.00

$ 1,066.50

$ 3.91

HypotheticalA

 

$ 1,000.00

$ 1,021.42

$ 3.82

Class T

.75%

 

 

 

Actual

 

$ 1,000.00

$ 1,065.40

$ 3.90

HypotheticalA

 

$ 1,000.00

$ 1,021.42

$ 3.82

Class B

1.40%

 

 

 

Actual

 

$ 1,000.00

$ 1,062.10

$ 7.28

HypotheticalA

 

$ 1,000.00

$ 1,018.15

$ 7.12

Class C

1.50%

 

 

 

Actual

 

$ 1,000.00

$ 1,062.70

$ 7.80

HypotheticalA

 

$ 1,000.00

$ 1,017.64

$ 7.63

Inflation-Protected Bond

.45%

 

 

 

Actual

 

$ 1,000.00

$ 1,066.80

$ 2.34

HypotheticalA

 

$ 1,000.00

$ 1,022.94

$ 2.29

Institutional Class

.50%

 

 

 

Actual

 

$ 1,000.00

$ 1,067.70

$ 2.61

HypotheticalA

 

$ 1,000.00

$ 1,022.68

$ 2.55

A 5% return per year before expenses

* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

Semiannual Report

Investment Changes (Unaudited)

Coupon Distribution as of October 31, 2009

 

% of fund's investments

% of fund's investments
6 months ago

Less than 1%

2.9

4.8

1 - 1.99%

25.4

24.1

2 - 2.99%

52.6

51.3

3 - 3.99%

18.9

18.1

4% and over

0.1

0.1

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

The coupon rates on inflation-protected bends tend to be lower than their nominal bond counterparts since inflation-protected bonds get adjusted for actual inflation, while nominal bond coupon rates include a component for expected inflation. Please refer to the fund's prospectus for more information.

Weighted Average Maturity as of October 31, 2009

 

 

6 months ago

Years

8.9

9.0

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 October 31, 2009

 

 

6 months ago

Years

6.2

6.0

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 October 31, 2009*

As of April 30, 2009**

fid63

U.S. Government and
U.S. Government
Agency Obligations 99.1%

 

fid63

U.S. Government and
U.S. Government
Agency Obligations 99.0%

 

fid66

Asset-Backed
Securities 0.1%

 

fid66

Asset-Backed
Securities 0.3%

 

fid69

CMOs and Other Mortgage Related Securities 0.1%

 

fid69

CMOs and Other Mortgage Related Securities 0.1%

 

fid72

Short-Term
Investments and
Net Other Assets 0.7%

 

fid72

Short-Term
Investments and
Net Other Assets 0.6%

 

* Futures and Swaps

0.0%

 

** Futures and Swaps

0.0%

 

* Inflation Protected

99.1%

 

** Inflation Protected

99.0%

 


fid138

Semiannual Report

Investments October 31, 2009 (Unaudited)

Showing Percentage of Net Assets

U.S. Treasury Inflation Protected Obligations - 99.1%

 

Principal Amount

Value

U.S. Treasury Inflation-Indexed Bonds:

1.75% 1/15/28

$ 87,690,982

$ 84,449,523

2% 1/15/26

65,785,885

66,294,683

2.375% 1/15/25

114,127,619

121,251,869

2.5% 1/15/29

69,460,011

74,750,424

3.375% 4/15/32

1,216

1,509

3.625% 4/15/28

118,023,258

146,434,175

3.875% 4/15/29

106,600,984

137,358,381

U.S. Treasury Inflation-Indexed Notes:

0.625% 4/15/13

70,243,823

70,984,833

1.25% 4/15/14

43,850,540

45,100,741

1.375% 7/15/18

49,212,813

49,531,730

1.625% 1/15/15

106,504,400

110,223,787

1.625% 1/15/18

99,501,996

102,120,871

1.875% 7/15/13

122,853,569

128,793,712

1.875% 7/15/15

67,682,550

70,987,191

1.875% 7/15/19

47,202,959

49,390,003

2% 4/15/12

116,636,371

121,966,510

2% 1/15/14

117,075,482

123,121,375

2% 7/15/14

108,722,357

114,728,500

2% 1/15/16

94,601,190

99,722,675

2.125% 1/15/19

78,245,546

83,422,599

2.375% 4/15/11

100,011,694

103,519,717

2.375% 1/15/17

90,538,074

97,773,026

2.375% 1/15/27

109,587,456

116,152,774

2.5% 7/15/16

84,958,470

92,412,849

2.625% 7/15/17

99,966,801

110,190,869

3% 7/15/12

77,822,747

83,617,473

3.375% 1/15/12

33,667,688

36,100,536

3.5% 1/15/11

70,680,570

73,822,732

TOTAL U.S. TREASURY INFLATION PROTECTED OBLIGATIONS

(Cost $2,441,891,520)

2,514,225,067

Asset-Backed Securities - 0.1%

 

Countrywide Asset-Backed Certificates Trust Series 2007-11 Class 2A1, 0.3038% 6/25/47 (c)

2,116,474

2,045,505

Park Place Securities, Inc. Series 2005-WHQ2 Class M7, 1.4938% 5/25/35 (c)

569,000

9,058

TOTAL ASSET-BACKED SECURITIES

(Cost $2,081,691)

2,054,563

Collateralized Mortgage Obligations - 0.1%

 

Principal Amount

Value

Private Sponsor - 0.1%

Chase Mortgage Finance Trust Series 2007-A1 Class 1A5, 4.369% 2/25/37 (c)

$ 8,777

$ 7,934

Wachovia Bank Commercial Mortgage Trust Series 2004-C14 Class PP, 5.3117% 8/15/41 (a)(c)

2,463,442

2,226,935

TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS

(Cost $2,392,286)

2,234,869

Cash Equivalents - 0.1%

Maturity Amount

 

Investments in repurchase agreements in a joint trading account at 0.07%, dated 10/30/09 due 11/2/09 (Collateralized by U.S. Government Obligations) #
(Cost $2,205,000)

$ 2,205,013

2,205,000

TOTAL INVESTMENT PORTFOLIO - 99.4%

(Cost $2,448,570,497)

2,520,719,499

NET OTHER ASSETS - 0.6%

16,484,972

NET ASSETS - 100%

$ 2,537,204,471

Swap Agreements

 

Expiration Date

Notional Amount

 

Credit Default Swaps

Receive monthly notional amount multiplied by 3.05% and pay Merrill Lynch upon credit event of Morgan Stanley ABS Capital I, Inc., par value of the notional amount of Morgan Stanley ABS Capital I, Inc. Series 2004-NC8, Class B3, 7.2913% 9/25/34 (Rating-B1) (b)

Oct. 2034

$ 188,108

(150,150)

Receive monthly notional amount multiplied by 3.35% and pay Morgan Stanley, Inc. upon credit event of Morgan Stanley ABS Capital I, Inc., par value of the notional amount of Morgan Stanley ABS Capital I, Inc. Series 2004-HE7, Class B3, 9.01% 8/25/34 (Rating-C) (b)

Sept. 2034

166,315

(157,038)

Swap Agreements - continued

 

Expiration Date

Notional Amount

Value

Credit Default Swaps - continued

Receive monthly notional amount multiplied by .82% and pay UBS upon credit event of Morgan Stanley ABS Capital I, Inc., par value of the notional amount of Morgan Stanley ABS Capital I, Inc. Series 2004-NC6 Class M3, 5.6413% 7/25/34 (b)

August 2034

$ 125,582

$ (93,965)

Receive monthly notional amount multiplied by .85% and pay UBS upon credit event of Morgan Stanley ABS Capital I, Inc., par value of the notional amount of Morgan Stanley ABS Capital I, Inc. Series 2004-NC8 Class M6, 5.4413% 9/25/34 (b)

Oct. 2034

152,915

(112,812)

Receive monthly notional amount multiplied by 2.54% and pay Merrill Lynch upon credit event of Countrywide Home Loans, Inc., par value of the notional amount of Countrywide Home Loans, Inc. Series 2003-BC1 Class B1, 7.6913% 3/25/32 (Rating-Ba1) (b)

April 2032

50,104

(29,398)

Receive monthly notional amount multiplied by 2.61% and pay Goldman Sachs upon credit event of Fremont Home Loan Trust, par value of the notional amount of Fremont Home Loan Trust Series 2004-1 Class M9, 7.3913% 2/25/34 (Rating-Baa3) (b)

March 2034

6,291

(219)

Receive monthly notional amount multiplied by 2.61% and pay Goldman Sachs upon credit event of Fremont Home Loan Trust, par value of the notional amount of Fremont Home Loan Trust Series 2004-A Class B3, 7.0413% 1/25/34 (Rating-C) (b)

Feb. 2034

1,089

(1,003)

 

$ 690,404

$ (544,585)

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 $2,226,935 or 0.1% of net assets.

(b) Represents a credit default swap contract in which the fund has sold protection on the underlying reference entity. The value of each credit default swap and the credit rating can be measures of the current payment/performance risk. For the underlying reference entity, ratings disclosed are from Moody's Investors Service, Inc. Where Moody's ratings are not available, S&P ratings are disclosed and are indicated as such. All ratings are as of the report date and do not reflect subsequent changes. Where a credit rating is not disclosed, the value is used as the measure of the payment/performance risk.

(c) 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

$2,205,000 due 11/02/09 at 0.07%

Banc of America Securities LLC

$ 242,416

Goldman, Sachs & Co.

444,808

HSBC Securities (USA), Inc.

309,750

ING Financial Markets LLC

410,419

J.P. Morgan Securities, Inc.

154,875

Mizuho Securities USA, Inc.

472,369

RBC Capital Markets Corp.

61,950

Wachovia Bank NA

108,413

 

$ 2,205,000

Other Information

The following is a summary of the inputs used, as of October 31, 2009, involving the Fund's assets and liabilities carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements.

Valuation Inputs at Reporting Date:

Description

Total

Level 1

Level 2

Level 3

Investments in Securities:

U.S. Government and Government Agency Obligations

$ 2,514,225,067

$ -

$ 2,514,225,067

$ -

Asset-Backed Securities

2,054,563

-

2,045,505

9,058

Collateralized Mortgage Obligations

2,234,869

-

2,234,869

-

Cash Equivalents

2,205,000

-

2,205,000

-

Total Investments in Securities:

$ 2,520,719,499

$ -

$ 2,520,710,441

$ 9,058

Derivative Instruments:

Liabilities

Swap Agreements

$ (544,585)

$ -

$ (93,965)

$ (450,620)

The following is a reconciliation of Investments in Securities and Derivative Instruments for which Level 3 inputs were used in determining value:

Investments in Securities:

Beginning Balance

$ 2,967,444

Total Realized Gain (Loss)

(568,480)

Total Unrealized Gain (Loss)

1,153,273

Cost of Purchases

-

Proceeds of Sales

(3,537,594)

Amortization/Accretion

(5,585)

Transfers in/out of Level 3

-

Ending Balance

$ 9,058

The change in unrealized gain (loss) attributable to Level 3 securities at
October 31, 2009

$ (6,216)

Derivative Instruments:

Swap Agreements

Beginning Balance

$ (424,275)

Total Unrealized Gain (Loss)

10,982

Transfers in/out of Level 3

(37,327)

Ending Balance

$ (450,620)

Realized gain (loss) on Swap Agreements for the period

$ -

The change in unrealized gain (loss) attributable to Level 3 Swap Agreements at October 31, 2009

$ 1,284

The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities and Derivative Instruments identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represents either the beginning value (for transfers in), or the ending value (for transfers out) of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations.

Value of Derivative Instruments

The following table is a summary of the Fund's value of derivative instruments by risk exposure as of October 31, 2009. For additional information on derivative instruments, please refer to the Derivative Instruments section in the accompanying Notes to Financial Statements.

Risk Exposure /
 Derivative Type

Value

 

Asset

Liability

Credit Risk

Swap Agreements (a)

$ -

$ (544,585)

Total Value of Derivatives

$ -

$ (544,585)

(a) Value is disclosed on the Statement of Assets and Liabilities in the Unrealized Appreciation and Unrealized Depreciation on Swap Agreements line-items.

Other Information

The composition of credit quality ratings as a percentage of net assets is as follows (ratings are unaudited):

U.S. Government and U.S. Government Agency Obligations

99.1%

AAA,AA,A

0.1%

BB

0.1%

Short-Term Investments and Net Other Assets

0.7%

 

100.0%

We have used ratings from Moody's® Investors Service, 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.

Income Tax Information

At March 31, 2009, the fund had a capital loss carryforward of approximately $85,667,969 of which $5,092,858, $53,211,771, $4,603,298 and $22,760,042 will expire on March 31, 2011, 2012, 2014 and 2015, respectively.

The fund intends to elect to defer to its fiscal year ending March 31, 2010 approximately $31,554,631 of losses recognized during the period November 1, 2008 to March 31, 2009.

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

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

  

October 31, 2009 (Unaudited)

 

 

 

Assets

Investment in securities, at value (including repurchase agreements of $2,205,000) -
See accompanying schedule:

Unaffiliated issuers (cost $2,448,570,497)

 

$ 2,520,719,499

Cash

4

Receivable for investments sold

16,384,409

Receivable for swap agreements

1,401

Receivable for fund shares sold

8,859,510

Interest receivable

12,162,715

Receivable from investment adviser for expense reductions

4,385

Total assets

2,558,131,923

 

 

 

Liabilities

Payable for investments purchased

$ 15,938,407

Payable for fund shares redeemed

3,130,019

Distributions payable

174,783

Unrealized depreciation on swap agreements

544,585

Accrued management fee

654,603

Distribution fees payable

174,435

Other affiliated payables

310,620

Total liabilities

20,927,452

 

 

 

Net Assets

$ 2,537,204,471

Net Assets consist of:

 

Paid in capital

$ 2,545,986,370

Undistributed net investment income

47,743,169

Accumulated undistributed net realized gain (loss) on investments

(128,129,485)

Net unrealized appreciation (depreciation) on investments

71,604,417

Net Assets

$ 2,537,204,471

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

Semiannual Report

Statement of Assets and Liabilities - continued

  

October 31, 2009 (Unaudited)

 

 

 

Calculation of Maximum Offering Price
Class A:
Net Asset Value and redemption price per share
($185,240,435 ÷ 16,310,724 shares)

$ 11.36

 

 

 

Maximum offering price per share (100/96.00 of $11.36)

$ 11.83

Class T:
Net Asset Value and redemption price per share ($64,177,948 ÷ 5,643,381 shares)

$ 11.37

 

 

 

Maximum offering price per share (100/96.00 of $11.37)

$ 11.84

Class B:
Net Asset Value and offering price per share ($42,913,766 ÷ 3,783,960 shares)A

$ 11.34

 

 

 

Class C:
Net Asset Value and offering price per share ($113,565,015 ÷ 10,027,268 shares)A

$ 11.33

 

 

 

Inflation-Protected Bond:
Net Asset Value, offering price and redemption price per share ($2,056,204,941 ÷ 180,333,332 shares)

$ 11.40

 

 

 

Institutional Class:
Net Asset Value, offering price and redemption price per share ($75,102,366 ÷ 6,602,393 shares)

$ 11.38

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.

Semiannual Report

Financial Statements - continued

Statement of Operations

Six months ended October 31, 2009 (Unaudited)

 

  

  

Investment Income

  

  

Interest

 

$ 12,998,857

Inflation principal income

 

39,849,174

Total income

 

52,848,031

 

 

 

Expenses

Management fee

$ 3,686,472

Transfer agent fees

1,344,154

Distribution fees

1,002,359

Fund wide operations fee

375,908

Independent trustees' compensation

3,823

Miscellaneous

5,071

Total expenses before reductions

6,417,787

Expense reductions

(51,942)

6,365,845

Net investment income

46,482,186

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities:

 

 

Unaffiliated issuers

48,053

Swap agreements

10,122

 

Total net realized gain (loss)

 

58,175

Change in net unrealized appreciation (depreciation) on:

Investment securities

105,784,898

Swap agreements

10,983

Total change in net unrealized appreciation (depreciation)

 

105,795,881

Net gain (loss)

105,854,056

Net increase (decrease) in net assets resulting from operations

$ 152,336,242

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

Semiannual Report

Statement of Changes in Net Assets

  

Six months ended October 31, 2009 (Unaudited)

Year ended
April 30,
2009

Increase (Decrease) in Net Assets

 

 

Operations

 

 

Net investment income

$ 46,482,186

$ 42,795,088

Net realized gain (loss)

58,175

(51,504,575)

Change in net unrealized appreciation (depreciation)

105,795,881

(91,588,360)

Net increase (decrease) in net assets resulting
from operations

152,336,242

(100,297,847)

Distributions to shareholders from net investment income

(12,900,565)

(21,051,158)

Distributions to shareholders from net realized gain

-

(33,701,568)

Total distributions

(12,900,565)

(54,752,726)

Share transactions - net increase (decrease)

197,106,172

(110,070,130)

Total increase (decrease) in net assets

336,541,849

(265,120,703)

 

 

 

Net Assets

Beginning of period

2,200,662,622

2,465,783,325

End of period (including undistributed net investment income of $47,743,169 and undistributed net investment income of $14,161,558, respectively)

$ 2,537,204,471

$ 2,200,662,622

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

Semiannual Report

Financial Highlights - Class A

 

Six months ended October 31, 2009
Years ended April 30,
 
(Unaudited)
2009
2008
2007
2006
2005

Selected Per-Share Data

 

 

 

 

 

Net asset value, beginning of period

$ 10.70

$ 11.22

$ 10.92

$ 10.65

$ 11.48

$ 10.92

Income from Investment Operations

 

 

 

 

 

 

Net investment income E

  .208

  .171

  .538

  .434

  .500

  .407

Net realized and unrealized gain (loss)

  .502

  (.456)

  .306

  .137

  (.676)

  .620

Total from investment operations

  .710

  (.285)

  .844

  .571

  (.176)

  1.027

Distributions from net investment income

  (.050)

  (.077)

  (.194)

  (.209)

  (.154)

  (.132)

Distributions from net realized gain

  -

  (.158)

  (.350)

  (.092)

  (.453)

  (.335)

Return of capital

  -

  -

  -

  -

  (.047)

  -

Total distributions

  (.050)

  (.235)

  (.544)

  (.301)

  (.654)

  (.467)

Net asset value,
end of period

$ 11.36

$ 10.70

$ 11.22

$ 10.92

$ 10.65

$ 11.48

Total Return B, C, D

  6.65%

  (2.57)%

  7.96%

  5.43%

  (1.62)%

  9.58%

Ratios to Average Net Assets F, H

 

 

 

 

 

Expenses before reductions

  .77% A

  .78%

  .80%

  .71%

  .70%

  .81%

Expenses net of fee waivers, if any

  .75% A

  .75%

  .75%

  .66%

  .65%

  .65%

Expenses net of all reductions

  .75% A

  .75%

  .75%

  .65%

  .65%

  .65%

Net investment income

  3.76% A

  1.59%

  4.87%

  4.02%

  4.50%

  3.63%

Supplemental Data

 

 

 

 

 

 

Net assets,
end of period
(000 omitted)

$ 185,240

$ 158,700

$ 142,814

$ 68,710

$ 86,364

$ 75,422

Portfolio turnover rate G

  11% A

  43%

  35%

  34%

  71%

  117%

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 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.

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

Semiannual Report

Financial Highlights - Class T

 

Six months ended October 31, 2009
Years ended April 30,
 
(Unaudited)
2009
2008
2007
2006
2005

Selected Per-Share Data

 

 

 

 

 

Net asset value, beginning of period

$ 10.72

$ 11.24

$ 10.93

$ 10.66

$ 11.49

$ 10.93

Income from Investment Operations

 

 

 

 

 

 

Net investment income E

  .208

  .172

  .538

  .424

  .489

  .397

Net realized and unrealized gain (loss)

  .492

  (.457)

  .316

  .137

  (.676)

  .619

Total from investment operations

  .700

  (.285)

  .854

  .561

  (.187)

  1.016

Distributions from net investment income

  (.050)

  (.077)

  (.194)

  (.199)

  (.143)

  (.121)

Distributions from net realized gain

  -

  (.158)

  (.350)

  (.092)

  (.453)

  (.335)

Return of capital

  -

  -

  -

  -

  (.047)

  -

Total distributions

  (.050)

  (.235)

  (.544)

  (.291)

  (.643)

  (.456)

Net asset value,
end of period

$ 11.37

$ 10.72

$ 11.24

$ 10.93

$ 10.66

$ 11.49

Total Return B, C, D

  6.54%

  (2.56)%

  8.05%

  5.32%

  (1.71)%

  9.47%

Ratios to Average Net Assets F, H

 

 

 

 

 

Expenses before reductions

  .79% A

  .80%

  .79%

  .78%

  .78%

  .90%

Expenses net of fee waivers, if any

  .75% A

  .75%

  .75%

  .75%

  .75%

  .75%

Expenses net of all reductions

  .75% A

  .75%

  .75%

  .75%

  .75%

  .75%

Net investment income

  3.76% A

  1.59%

  4.86%

  3.92%

  4.40%

  3.53%

Supplemental Data

 

 

 

 

 

 

Net assets,
end of period
(000 omitted)

$ 64,178

$ 61,847

$ 77,332

$ 65,833

$ 86,613

$ 84,596

Portfolio turnover rate G

  11% A

  43%

  35%

  34%

  71%

  117%

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 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.

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

Semiannual Report

Financial Highlights - Class B

 

Six months ended October 31, 2009
Years ended April 30,
 
(Unaudited)
2009
2008
2007
2006
2005

Selected Per-Share Data

 

 

 

 

 

Net asset value, beginning of period

$ 10.69

$ 11.23

$ 10.92

$ 10.65

$ 11.48

$ 10.92

Income from Investment Operations

 

 

 

 

 

 

Net investment income E

  .172

  .101

  .466

  .354

  .418

  .324

Net realized and unrealized gain (loss)

  .492

  (.453)

  .316

  .137

  (.678)

  .619

Total from investment operations

  .664

  (.352)

  .782

  .491

  (.260)

  .943

Distributions from net investment income

  (.014)

  (.030)

  (.122)

  (.129)

  (.070)

  (.048)

Distributions from net realized gain

  -

  (.158)

  (.350)

  (.092)

  (.453)

  (.335)

Return of capital

  -

  -

  -

  -

  (.047)

  -

Total distributions

  (.014)

  (.188)

  (.472)

  (.221)

  (.570)

  (.383)

Net asset value,
end of period

$ 11.34

$ 10.69

$ 11.23

$ 10.92

$ 10.65

$ 11.48

Total Return B, C, D

  6.21%

  (3.17)%

  7.36%

  4.65%

  (2.36)%

  8.76%

Ratios to Average Net Assets F, H

 

 

 

 

 

Expenses before reductions

  1.47% A

  1.49%

  1.50%

  1.49%

  1.49%

  1.61%

Expenses net of fee waivers, if any

  1.40% A

  1.40%

  1.40%

  1.40%

  1.40%

  1.40%

Expenses net of all reductions

  1.40% A

  1.40%

  1.40%

  1.40%

  1.40%

  1.40%

Net investment income

  3.11% A

  .94%

  4.21%

  3.27%

  3.75%

  2.88%

Supplemental Data

 

 

 

 

 

 

Net assets,
end of period
(000 omitted)

$ 42,914

$ 42,748

$ 44,776

$ 35,826

$ 48,972

$ 56,052

Portfolio turnover rate G

  11% A

  43%

  35%

  34%

  71%

  117%

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 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 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.

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

Semiannual Report

Financial Highlights - Class C

 

Six months ended October 31, 2009
Years ended April 30,
 
(Unaudited)
2009
2008
2007
2006
2005

Selected Per-Share Data

 

 

 

 

 

Net asset value, beginning of period

$ 10.67

$ 11.22

$ 10.91

$ 10.64

$ 11.47

$ 10.91

Income from Investment Operations

 

 

 

 

 

 

Net investment income E

  .166

  .090

  .455

  .343

  .406

  .312

Net realized and unrealized gain (loss)

  .502

  (.459)

  .316

  .137

  (.677)

  .619

Total from investment operations

  .668

  (.369)

  .771

  .480

  (.271)

  .931

Distributions from net investment income

  (.008)

  (.023)

  (.111)

  (.118)

  (.059)

  (.036)

Distributions from net realized gain

  -

  (.158)

  (.350)

  (.092)

  (.453)

  (.335)

Return of capital

  -

  -

  -

  -

  (.047)

  -

Total distributions

  (.008)

  (.181)

  (.461)

  (.210)

  (.559)

  (.371)

Net asset value,
end of period

$ 11.33

$ 10.67

$ 11.22

$ 10.91

$ 10.64

$ 11.47

Total Return B, C, D

  6.27%

  (3.33)%

  7.26%

  4.55%

  (2.46)%

  8.66%

Ratios to Average Net Assets F, H

 

 

 

 

 

Expenses before reductions

  1.51% A

  1.54%

  1.55%

  1.54%

  1.55%

  1.67%

Expenses net of fee waivers, if any

  1.50% A

  1.50%

  1.50%

  1.50%

  1.50%

  1.50%

Expenses net of all reductions

  1.50% A

  1.50%

  1.50%

  1.50%

  1.50%

  1.50%

Net investment income

  3.01% A

  .84%

  4.11%

  3.17%

  3.65%

  2.78%

Supplemental Data

 

 

 

 

 

 

Net assets,
end of period
(000 omitted)

$ 113,565

$ 99,083

$ 90,060

$ 51,205

$ 74,329

$ 71,407

Portfolio turnover rate G

  11% A

  43%

  35%

  34%

  71%

  117%

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 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 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.

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

Semiannual Report

Financial Highlights - Inflation-Protected Bond

 

Six months ended October 31, 2009
Years ended April 30,
 
(Unaudited)
2009
2008
2007
2006
2005

Selected Per-Share Data

 

 

 

 

 

Net asset value, beginning of period

$ 10.75

$ 11.26

$ 10.94

$ 10.67

$ 11.50

$ 10.94

Income from Investment Operations

 

 

 

 

 

 

Net investment income D

  .225

  .205

  .573

  .457

  .525

  .426

Net realized and unrealized gain (loss)

  .491

  (.457)

  .324

  .136

  (.679)

  .618

Total from investment operations

  .716

  (.252)

  .897

  .593

  (.154)

  1.044

Distributions from net investment income

  (.066)

  (.100)

  (.227)

  (.231)

  (.176)

  (.149)

Distributions from net realized gain

  -

  (.158)

  (.350)

  (.092)

  (.453)

  (.335)

Return of capital

  -

  -

  -

  -

  (.047)

  -

Total distributions

  (.066)

  (.258)

  (.577)

  (.323)

  (.676)

  (.484)

Net asset value, end of period

$ 11.40

$ 10.75

$ 11.26

$ 10.94

$ 10.67

$ 11.50

Total Return B, C

  6.68%

  (2.27)%

  8.46%

  5.63%

  (1.42)%

  9.73%

Ratios to Average Net Assets E, G

 

 

 

 

 

Expenses before reductions

  .45% A

  .45%

  .45%

  .45%

  .47%

  .63%

Expenses net of fee waivers,
if any

  .45% A

  .45%

  .45%

  .45%

  .45%

  .50%

Expenses net of all reductions

  .45% A

  .45%

  .45%

  .45%

  .45%

  .50%

Net investment income

  4.06% A

  1.89%

  5.17%

  4.22%

  4.70%

  3.78%

Supplemental Data

 

 

 

 

 

Net assets, end of period
(000 omitted)

$ 2,056,205

$ 1,767,415

$ 2,008,504

$ 1,307,686

$ 1,400,656

$ 1,579,697

Portfolio turnover rate F

  11% A

  43%

  35%

  34%

  71%

  117%

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 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.

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

Semiannual Report

Financial Highlights - Institutional Class

 

Six months ended October 31, 2009
Years ended April 30,
 
(Unaudited)
2009
2008
2007
2006
2005

Selected Per-Share Data

 

 

 

 

 

Net asset value, beginning of period

$ 10.72

$ 11.23

$ 10.92

$ 10.65

$ 11.48

$ 10.92

Income from Investment Operations

 

 

 

 

 

 

Net investment income D

  .222

  .197

  .565

  .452

  .517

  .425

Net realized and unrealized gain (loss)

  .501

  (.452)

  .318

  .137

  (.676)

  .619

Total from investment operations

  .723

  (.255)

  .883

  .589

  (.159)

  1.044

Distributions from net investment income

  (.063)

  (.097)

  (.223)

  (.227)

  (.171)

  (.149)

Distributions from net realized gain

  -

  (.158)

  (.350)

  (.092)

  (.453)

  (.335)

Return of capital

  -

  -

  -

  -

  (.047)

  -

Total distributions

  (.063)

  (.255)

  (.573)

  (.319)

  (.671)

  (.484)

Net asset value,
end of period

$ 11.38

$ 10.72

$ 11.23

$ 10.92

$ 10.65

$ 11.48

Total Return B, C

  6.77%

  (2.30)%

  8.34%

  5.60%

  (1.47)%

  9.74%

Ratios to Average Net Assets E, G

 

 

 

 

 

Expenses before reductions

  .51% A

  .50%

  .49%

  .49%

  .50%

  .61%

Expenses net of fee waivers, if any

  .50% A

  .50%

  .49%

  .49%

  .50%

  .50%

Expenses net of all reductions

  .50% A

  .50%

  .49%

  .49%

  .50%

  .50%

Net investment income

  4.01% A

  1.84%

  5.13%

  4.18%

  4.65%

  3.78%

Supplemental Data

 

 

 

 

 

 

Net assets,
end of period
(000 omitted)

$ 75,102

$ 70,870

$ 102,297

$ 110,863

$ 84,666

$ 78,096

Portfolio turnover rate F

  11% A

  43%

  35%

  34%

  71%

  117%

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 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.

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

Semiannual Report

Notes to Financial Statements

For the period ended October 31, 2009 (Unaudited)

1. Organization.

Fidelity Inflation-Protected Bond Fund (the Fund) is a fund of Fidelity Fixed-Income Trust (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, Inflation-Protected 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. 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. Events or transactions occurring after period end through the date that the financial statements were issued, December 16, 2009, have been evaluated in the preparation of the financial statements. 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. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. Generally Accepted Accounting Principles (GAAP) establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are classified into three levels. Level 1 includes readily available unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes observable inputs other than quoted prices included in Level 1 that are observable either directly or indirectly. Level 3 includes unobservable inputs when market prices are not readily available or reliable. Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy. The aggregate value by input level, as of October 31, 2009, for the Fund's investments, as well as a reconciliation of assets and liabilities for which significant unobservable inputs (Level 3) were used in determining

Semiannual Report

2. Significant Accounting Policies - continued

Security Valuation - continued

value, is included at the end of the Fund's Schedule of Investments. Valuation techniques of the Fund's major categories of assets and liabilities as presented in the Schedule of Investments are as follows.

Debt securities, including restricted securities, are valued based on quotations received from dealers who make markets in such securities or by independent pricing services. For U.S. government and government agency obligations, pricing services generally utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. For asset backed securities and collateralized mortgage obligations, pricing services generally utilize matrix pricing which considers prepayment speed assumptions, attributes of the collateral, yield or price of bonds of comparable quality, coupon, maturity and types as well as dealer supplied prices. Swaps are marked-to-market daily based on valuations from independent pricing services or 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 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.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

2. Significant Accounting Policies - continued

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

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. There are no unrecognized tax benefits in the accompanying financial statements in connection with the tax positions taken by the Fund. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years.

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. Inflation income is distributed as a short-term capital gain. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.

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

Book-tax differences are primarily due to swap agreements, market discount, capital loss carryforwards, certain losses related to deflation adjustments on U.S. Treasury Inflation-indexed securities, and losses deferred due to wash sales and excise tax regulations.

The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:

Gross unrealized appreciation

$ 81,122,646

Gross unrealized depreciation

(8,550,332)

Net unrealized appreciation (depreciation)

$ 72,572,314

 

 

Tax cost

$ 2,448,147,185

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

Semiannual Report

3. Operating Policies - continued

Repurchase Agreements - continued

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.

Treasury Inflation-Protected Securities. The Fund invests in Treasury Inflation-Protected Securities (TIPS), in which the principal amount is adjusted daily to keep pace with inflation. Interest is accrued based on the adjusted principal amount. The adjustments to principal due to inflation are reflected as increases or decreases to Inflation principal income in the accompanying Statement of Operations. Such adjustments may have a significant impact on the Fund's distributions.

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.

4. Investments in Derivative Instruments.

Objectives and Strategies for Investing in Derivative Instruments. The Fund uses derivative instruments ("derivatives"), including swap agreements, in order to meet its investment objectives. The Fund's strategy is to use derivatives as a risk management tool and as an additional way to gain exposure to certain types of assets. The success of any strategy involving derivatives depends on analysis of numerous economic factors, and if the strategies for investment do not work as intended, the Fund may not achieve its objectives.

While utilizing derivatives in pursuit of its investment objectives, the Fund is exposed to certain financial risk relative to those derivatives. This risk is further explained below:

Credit Risk

Credit risk is the risk that the value of financial instruments will fluctuate as a result of changes in the credit quality of those instruments. Credit risk also includes the risk that the counterparty to a financial instrument will default or be unable to make further principal or interest payments on an obligation or commitment that it has entered into with the Fund.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

4. Investments in Derivative Instruments - continued

Objectives and Strategies for Investing in Derivative Instruments - continued

The following notes provide more detailed information about each derivative type held by the Fund:

Swap Agreements. The Fund entered into swap agreements, which are contracts between two parties to exchange future cash flows at periodic intervals based on a notional principal amount. Payments are exchanged at specified intervals, accrued daily commencing with the effective date of the contract and recorded as realized gains or losses in the Fund's accompanying Statement of Operations. Gains or losses are realized in the event of an early termination of a swap agreement. Any upfront payments made or received upon entering a swap contract to compensate for differences between stated terms of the agreement and prevailing market conditions (e.g. credit spreads, interest rates or other factors) are recorded as realized gains or losses ratably over the term of the swap in the Fund's accompanying Statement of Operations. Risks of loss may exceed amounts recognized on the Fund's Statement of Assets and Liabilities. In addition, there is the risk of failure by the counterparty to perform under the terms of the agreement and lack of liquidity in the market. Details of swap agreements open at period end are included in the Fund's Schedule of Investments under the caption "Swap Agreements." The total notional amount of all open swap agreements at period end is indicative of the volume of this derivative type. Collateral, in the form of cash or securities, may be required to be held in segregated accounts with a fund's custodian bank in accordance with the swap agreement and, if required, is identified in the Fund's Schedule of Investments. The Fund could experience delays and costs in gaining access to the collateral even though it is held in the Fund's custodian bank.

The Fund entered into credit default swap agreements to provide a measure of protection against defaults of an issuer ("buyer of protection") and/or to gain credit exposure to an issuer to which it is not otherwise exposed ("seller of protection"). The issuer may be either a single issuer or a "basket" of issuers. As a buyer of protection, the Fund does so when it holds bonds of the issuer or without owning the underlying asset or debt issued by the reference entity. Under the terms of a credit default swap the buyer of protection receives credit protection in exchange for making periodic payments to the seller of protection based on a fixed percentage applied to a notional principal amount. In return for these payments, the seller of protection acts as a guarantor of the creditworthiness of a reference obligation. Periodic payments are made over the life of the contract provided that no credit event occurs.

For credit default swaps on most corporate and sovereign issuers, credit events include bankruptcy, failure to pay, obligation acceleration or repudiation/moratorium. If a credit event were to occur during the term of the contract, the contract is typically settled in a

Semiannual Report

4. Investments in Derivative Instruments - continued

Swap Agreements - continued

market auction where the difference between the value of the reference obligation received and the notional amount of the swap is recorded as a realized loss by the seller of protection. For credit default swaps on corporate or sovereign issuers, the obligation that may be put to the seller of protection is not limited to the specific reference obligation described in the Fund's Schedule of Investments.

For credit default swaps on asset-backed securities, a credit event may be triggered by events such as failure to pay principal, maturity extension, rating downgrade or write-down. If a credit event were to occur during the term of the contract, upon notification of the buyer of protection, the seller of protection is obligated to take delivery from the buyer of protection the notional amount of a reference obligation, at par. The difference between the value of the reference obligation received and the notional amount paid is recorded as a realized loss by the seller of protection. For credit default swaps on asset-backed securities, the reference obligation described represents the security that may be put to the seller of protection.

Risks of loss includes credit risk. The Fund's maximum risk of loss from counterparty risk, either as a buyer of protection or as a seller of protection, is the value of the contract. This risk is mitigated by the posting of collateral by the counterparty to the Fund to cover the Fund's exposure to the counterparty. The notional amount of credit default swaps is included in the Fund's Schedule of Investments and approximates the maximum potential amount of future payments that the Fund could be required to make if the Fund is the seller of protection and a credit event were to occur. The total notional amount of all credit default swaps open at period end where the Fund is the seller of protection amounted to $690,404 representing .03% of net assets. Credit default swaps are considered to have credit-risk contingent features since they require payment by the seller of protection to the buyer of protection upon the occurrence of a defined credit event. The total value of credit default swaps in a net liability position as of period end was $(544,585). The value of assets posted as collateral, net of assets received as collateral, for these swaps was $0. If a defined credit event had occurred as of period end for swaps in a net liability position, the swaps' credit-risk-related contingent features would have been triggered and the Fund would have been required to pay $690,404 less the value of the swaps' related reference obligations.

Typically, the value of each credit default swap and credit rating disclosed for each reference obligation in the Fund's Schedule of Investments, where the Fund is the seller of protection, can be used as measures of the current payment/performance risk of the swap. As the value of the swap changes as a positive or negative percentage of the total

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

4. Investments in Derivative Instruments - continued

Swap Agreements - continued

notional amount, the payment/performance risk may decrease or increase, respectively. Any current or future declines in the value of the swap may be partially offset by upfront payments received by the Fund as the seller of protection if applicable. In addition to these measures, FMR monitors a variety of factors including cash flow assumptions, market activity and market sentiment as part of its ongoing process of assessing payment/performance risk.

Realized and Change in Unrealized Gain (Loss) on Derivative Instruments. A summary of the Fund's value of derivatives by primary risk exposure as of period end, if any, is included at the end of the Fund's Schedule of Investments. The table below reflects the Fund's realized gain (loss) and change in unrealized gain (loss) for derivatives during the period.

Risk Exposure / Derivative Type

Realized Gain (Loss)

Change in
Unrealized Gain (Loss)

Credit Risk

 

 

Swap Agreements

$ 10,122

$ 10,983

Total Derivatives Realized and Change in Unrealized Gain (Loss) (a)(b)

$ 10,122

$ 10,983

(a) Total derivatives realized gain (loss) included in the Statement of Operations is comprised of $10,122 for swap agreements.

(b) Total derivatives change in unrealized gain (loss) included in the Statement of Operations is comprised of $10,983 for swap agreements.

5. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities and U.S. government securities, aggregated $0 and $7,108,863, 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 annualized management fee rate was .32% of the Fund's average net assets.

Semiannual 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
Fee

Service
Fee

Paid to
FDC

Retained
by FDC

Class A

-%

.25%

$ 210,499

$ 3,256

Class T

-%

.25%

78,928

-

Class B

.65%

.25%

191,485

139,107

Class C

.75%

.25%

521,447

138,005

 

 

 

$ 1,002,359

$ 280,368

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.

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

 

Retained
by FDC

Class A

$ 30,931

Class T

5,399

Class B*

48,549

Class C*

6,759

 

$ 91,638

* 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 each respective class of the Fund, with the exception of Inflation-Protected Bond. FIIOC

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

6. Fees and Other Transactions with Affiliates - continued

Transfer Agent Fees - continued

receives an asset-based fee of .10% of Inflation-Protected Bond's average net assets. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, each class paid the following transfer agent fees:

 

Amount

% of
Average
Net Assets*

Class A

$ 146,090

.17

Class T

60,712

.19

Class B

49,712

.23

Class C

89,368

.17

Inflation-Protected Bond

936,331

.10

Institutional Class

61,941

.17

 

$ 1,344,154

 

* Annualized

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

7. Committed Line of Credit.

The Fund participates with other funds managed by FMR in a $3.5 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 $5,071 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.

FMR voluntarily agreed to reimburse each class to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, including commitment fees, are excluded from this reimbursement.

Semiannual Report

8. Expense Reductions - continued

The following classes were in reimbursement during the period:

 

Expense
Limitations

Reimbursement
from adviser

Class A

.75%

$ 14,675

Class T

.75%

11,428

Class B

1.40%

15,361

Class C

1.50%

4,560

Institutional Class

.50%

5,404

 

 

$ 51,428

In addition, 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 custody expenses by $514.

9. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

 

Six months ended
October 31, 2009

Year ended
April 30, 2009

From net investment income

 

 

Class A

$ 762,552

$ 1,090,782

Class T

285,464

493,218

Class B

53,833

125,569

Class C

78,642

194,211

Inflation-Protected Bond

11,295,780

18,030,846

Institutional Class

424,294

1,116,532

Total

$ 12,900,565

$ 21,051,158

From net realized gain

 

 

Class A

$ -

$ 2,077,368

Class T

-

972,450

Class B

-

628,452

Class C

-

1,281,090

Inflation-Protected Bond

-

27,080,662

Institutional Class

-

1,661,546

Total

$ -

$ 33,701,568

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

10. Share Transactions.

Transactions for each class of shares were as follows:

 

Shares

Dollars

 

Six months ended October 31, 2009

Year ended
April 30,
2009

Six months ended October 31, 2009

Year ended
April 30,
2009

Class A

 

 

 

 

Shares sold

4,536,946

10,628,037

$ 49,956,622

$ 115,683,550

Reinvestment of distributions

58,643

250,030

648,300

2,732,165

Shares redeemed

(3,111,688)

(8,775,155)

(34,097,540)

(93,481,658)

Net increase (decrease)

1,483,901

2,102,912

$ 16,507,382

$ 24,934,057

Class T

 

 

 

 

Shares sold

1,189,091

3,018,881

$ 12,994,907

$ 33,006,827

Reinvestment of distributions

23,650

125,639

261,636

1,378,081

Shares redeemed

(1,339,861)

(4,255,338)

(14,698,092)

(46,025,012)

Net increase (decrease)

(127,120)

(1,110,818)

$ (1,441,549)

$ (11,640,104)

Class B

 

 

 

 

Shares sold

627,772

1,852,668

$ 6,885,944

$ 20,285,159

Reinvestment of distributions

3,829

55,126

42,236

605,567

Shares redeemed

(847,125)

(1,894,895)

(9,285,217)

(20,231,408)

Net increase (decrease)

(215,524)

12,899

$ (2,357,037)

$ 659,318

Class C

 

 

 

 

Shares sold

2,307,138

5,136,305

$ 25,252,428

$ 55,936,441

Reinvestment of distributions

5,386

103,348

59,332

1,134,504

Shares redeemed

(1,567,578)

(3,983,862)

(17,087,805)

(42,664,908)

Net increase (decrease)

744,946

1,255,791

$ 8,223,955

$ 14,406,037

Inflation-Protected Bond

 

 

 

 

Shares sold

44,127,642

113,902,114

$ 486,574,285

$ 1,245,455,216

Reinvestment of distributions

949,578

3,915,470

10,539,383

42,926,789

Shares redeemed

(29,217,901)

(131,783,366)

(320,805,781)

(1,401,272,531)

Net increase (decrease)

15,859,319

(13,965,782)

$ 176,307,887

$ (112,890,526)

Institutional Class

 

 

 

 

Shares sold

1,184,398

11,934,689

$ 12,964,812

$ 128,651,073

Reinvestment of distributions

29,173

85,972

322,877

938,829

Shares redeemed

(1,221,931)

(14,516,794)

(13,422,155)

(155,128,814)

Net increase (decrease)

(8,360)

(2,496,133)

$ (134,466)

$ (25,538,912)

Semiannual Report

11. 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.

Semiannual Report

Proxy Voting Results

A special meeting of the fund's shareholders was held on July 15, 2009. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.

PROPOSAL 1

To elect a Board of Trustees.A

 

# of
Votes

% of
Votes

James C. Curvey

Affirmative

29,535,490,304.51

95.434

Withheld

1,412,983,688.53

4.566

TOTAL

30,948,473,993.04

100.000

Albert R. Gamper, Jr.

Affirmative

29,631,645,146.15

95.745

Withheld

1,316,828,846.89

4.255

TOTAL

30,948,473,993.04

100.000

Abigail P. Johnson

Affirmative

29,481,082,358.76

95.259

Withheld

1,467,391,634.28

4.741

TOTAL

30,948,473,993.04

100.000

Arthur E. Johnson

Affirmative

29,601,580,051.86

95.648

Withheld

1,346,893,941.18

4.352

TOTAL

30,948,473,993.04

100.000

Michael E. Kenneally

Affirmative

29,688,902,929.52

95.930

Withheld

1,259,571,063.52

4.070

TOTAL

30,948,473,993.04

100.000

James H. Keyes

Affirmative

29,647,356,020.99

95.796

Withheld

1,301,117,972.05

4.204

TOTAL

30,948,473,993.04

100.000

Marie L. Knowles

Affirmative

29,665,215,088.51

95.854

Withheld

1,283,258,904.53

4.146

TOTAL

30,948,473,993.04

100.000

Kenneth L. Wolfe

Affirmative

29,580,330,647.68

95.579

Withheld

1,368,143,345.36

4.421

TOTAL

30,948,473,993.04

100.000

PROPOSAL 2

To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A

 

# of
Votes

% of
Votes

Affirmative

22,342,326,668.95

72.192

Against

5,700,226,054.43

18.418

Abstain

2,112,037,717.17

6.825

Broker
Non-Votes

793,883,552.49

2.565

TOTAL

30,948,473,993.04

100.000

A Denotes trust-wide proposal and voting results.

Semiannual Report

Board Approval of Investment Advisory Contracts and Management Fees

Fidelity Inflation-Protected Bond Fund

Each year, 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 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. The Board has established three 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. The Operations Committee meets regularly throughout the year and, among other matters, considers matters specifically related to the annual consideration of the renewal of the fund's Advisory Contracts. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of the fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts.

On May 21, 2009, the Board voted to continue the fund's Advisory Contracts for four months, through September 30, 2009, in connection with the reorganization of the Board's new meeting schedule. The Board considered that the contractual terms of and fees payable under the fund's Advisory Contracts involve no changes in (i) the investment process or strategies employed in the management of the fund's assets; (ii) the nature or level of services provided under the fund's Advisory Contracts; or (iii) the day-to-day management of the fund or the persons primarily responsible for such management. The Board concluded that the fund's Advisory Contracts are fair and reasonable, and that the fund's Advisory Contracts should be renewed, without modification, through September 30, 2009, with the understanding that the Board would consider their renewal in September 2009.

At its September 2009 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.

Semiannual Report

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.

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. In response to the recent financial crisis, Fidelity took a number of actions intended to cut costs and improve efficiency without weakening the investment teams or resources. The Board specifically noted Fidelity's response to the 2008 credit market crisis. The Board noted that Fidelity's analysts have access to a variety of technological tools and market and securities data 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 integral part of the fixed-income portfolio management investment process.

Semiannual Report

Board Approval of Investment Advisory Contracts and
Management Fees - continued

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 over time 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 a large variety of mutual fund investor services. The Board noted that Fidelity had taken a number of actions over the previous year that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure and broaden the focus of the investment research teams; (ii) bolstering the senior management team that oversees asset management; (iii) contractually agreeing to reduce the management fee on Fidelity U.S. Bond Index Fund; and (iv) expanding Class A and Class T load waiver categories to increase rollover retention opportunities and create consistent policies across the classes.

Investment Performance. The Board considered whether the fund has operated in accordance with 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, 2008, the cumulative total returns of Fidelity Inflation-Protected Bond (retail class) and Class C 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 Inflation-Protected Bond (retail class) and Class C show the performance of the highest and lowest performing classes, respectively (based on five-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.

Semiannual Report

Fidelity Inflation-Protected Bond Fund

fid77

The Board reviewed the fund's relative investment performance against its peer group and stated that the performance of Fidelity Inflation-Protected Bond (retail class) of the fund was in the second quartile for all the periods shown. The Board also stated that the investment performance of the fund was lower than its benchmark for the three- and five-year periods, although the one-year cumulative total return of Fidelity Inflation-Protected Bond (retail class) compared favorably to its benchmark. 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 also reviewed the fund's performance during 2009.

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 and factoring in the unprecedented recent market events, 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.

Semiannual 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 Inflation-Protected Bond Fund

fid79

Semiannual Report

The Board noted that the fund's management fee ranked below the median of the Total Mapped Group and below the median of its ASPG for 2008.

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 Inflation-Protected Bond (retail class) to 10 basis points, and (iii) limit the total expenses for Fidelity Inflation-Protected Bond (retail class) to 45 basis points. The fees and expenses payable under 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 2008.

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 that varies based on asset class. 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, 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.

Semiannual 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 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.

Semiannual Report

In February 2009, the Board created an Ad Hoc Committee (the "Committee") to analyze economies of scale. The Committee was formed to consider whether FMR attains economies of scale in respect of the management and servicing of the Fidelity funds, whether the Fidelity funds have appropriately benefited from such economies of scale, and whether there is potential for realization of any further economies of scale.

The Board concluded, considering the findings of the Committee, 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, actions to be taken by FMR to improve certain funds' overall performance and Fidelity's long-term strategies for certain funds; (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 current market conditions have affected retention and recruitment; (v) the selection of and compensation paid by FMR to fund sub-advisers; (vi) Fidelity's fee structures and rationale for recommending different fees among categories of funds; (vii) the rationale for any differences between fund fee structures and fee structures in place for other Fidelity clients; and (viii) explanations for the relative total expenses borne by certain funds and classes, total expense competitive trends, and actions that might be taken by FMR to reduce total expenses for certain funds and classes.

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.

Semiannual Report

Investment Adviser

Fidelity Management & Research Company

Boston, MA

Investment Sub-Advisers

Fidelity Research & Analysis Company

Fidelity Investments Money
Management, Inc.

FIL Investment Advisors

FIL Investment Advisors (U.K.) Ltd.

Fidelity Management & Research
(U.K.) Inc.

Fidelity Management & Research
(Hong Kong) Limited

Fidelity Management & Research
(Japan) 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 

AIFBI-USAN-1209
1.784856.106

fid120

Item 2. Code of Ethics

Not applicable.

Item 3. Audit Committee Financial Expert

Not applicable.

Item 4. Principal Accountant Fees and Services

Not applicable.

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 Fidelity Fixed-Income 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 Fidelity Fixed-Income Trust's (the "Trust") 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)

Not applicable.

(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 Fixed-Income Trust

By:

/s/ John R. Hebble

 

John R. Hebble

 

President and Treasurer

 

 

Date:

December 31, 2009

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

 

 

Date:

December 31, 2009

By:

/s/ Christine Reynolds

 

Christine Reynolds

 

Chief Financial Officer

 

 

Date:

December 31, 2009