Lifted the following from the net, as I was also having to create animated fading text also - managed to do so with the following:
Flash Text Effect - Fade
A Basic Flash tutorial on how to apply a fade to Flash text
Step1:
First we will add some text and set the properties of the text.
To do this click on the Text Tool in the Tools bar.
Then left click on your mouse in the work area where you want to put the text.
Step2:
To set the properties Right Click in the Text field, a small popup menu will appear. Now Select Properties.
The Properties window will appear below the work area. For our Fade effect set the font to Arial and the size to 30, and select any color except white.
Step3:
Now we will be creating the Flash Text fade in effect. To do this go to the timeline and right click on frame 20. A small popup menu will appear. From this popup menu select insert keyframe. After you have done this right calico on the keyframe again and select create motion tween. Now go to the first key frame, again right mouse click on it, and select create motion tween.
Step4:
Now we have arrived at the final step to create the basic fade in text effect. To finalize it all we need to do is to set the alpha channel of the first text to 0. To do this go to the workarea and click on top of the text you already entered in Step1. Below the work area the frame properties window will appear. In this window you can set several properties such as the color and alpha channel (fade) of the selected frame. To set the color of the text effect to transparent, go to the color drop down menu and select alpha. If needed set the alpha amount to 0 by dragging the slider downwards.
Step5:
To preview what we have created. Enter Ctrl Key and the Enter Key on your keyboard.
Good luck
^o^