SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT (No. 2-50318)
UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 98 [X]
and
REGISTRATION STATEMENT (No. 811-2460)
UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 98 [X]
Fidelity Union Street Trust
(Exact Name of Registrant as Specified in Charter)
82 Devonshire St., Boston, Massachusetts 02109
(Address Of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number: 617-570-7000
Arthur S. Loring, Secretary
82 Devonshire Street
Boston, Massachusetts 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
( ) immediately upon filing pursuant to paragraph (b).
( X ) on (October 21, 1997) pursuant to paragraph (b).
( ) 60 days after filing pursuant to paragraph (a)(1).
( ) on ( ) pursuant to paragraph (a)(1) of Rule 485.
( ) 75 days after filing pursuant to paragraph (a)(2).
( ) on ( ) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
( ) this post-effective amendment designates a new effective date
for a previously filed
post-effective amendment.
SPARTAN INTERMEDIATE MUNICIPAL INCOME FUND
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER PROSPECTUS SECTION
<TABLE>
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<S> <C> <C> <C>
1 ................................ Cover Page
2 a ................................ Expenses
b, c ................................ Contents; The Funds at a Glance; Who May Want
to Invest
3 a ................................ Financial Highlights
b ................................ *
c, d ................................ Performance
4 a i............................... Charter
ii.............................. The Funds at a Glance; Investment Principles and
Risks
b ................................ Investment Principles and Risks
c ................................ Who May Want to Invest; Investment Principles
and Risks
5 a ................................ Charter
b i............................... Cover Page: The Funds at a Glance; Charter;
Doing Business with Fidelity
ii.............................. Charter
iii............................. Expenses; Breakdown of Expenses
c ................................ Charter
d ................................ Charter; Breakdown of Expenses
e ................................ Cover Page; Charter
f ................................ Expenses
g i............................... Charter
ii.............................. *
</TABLE>
<TABLE>
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5A ................................ Performance
6 a i............................... Charter
ii.............................. How to Buy Shares; How to Sell Shares;
Transaction Details; Exchange Restrictions
iii............................. Charter
b ................................ Charter
c ................................ Transaction Details; Exchange Restrictions
d ................................ *
e ................................ Doing Business with Fidelity; How to Buy Shares;
How to Sell Shares; Investor Services
f, g ................................ Dividends, Capital Gains, and Taxes
h ................................ *
7 a ................................ Cover Page; Charter
b ................................ Expenses; How to Buy Shares; Transaction Details
c ................................ *
d ................................ How to Buy Shares
e ................................ *
f ................................ Breakdown of Expenses
8 ................................ How to Sell Shares; Investor Services; Transaction
Details; Exchange Restrictions
9 ................................ *
</TABLE>
* Not Applicable
SPARTAN INTERMEDIATE MUNICIPAL INCOME FUND
CROSS REFERENCE SHEET
(CONTINUED)
FORM N-1A
ITEM NUMBER STATEMENT OF ADDITIONAL INFORMATION SECTION
<TABLE>
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10, 11 ............................... Cover Page
12 ............................... Descrption of the Trusts
13 a - c ............................... Investment Policies and Limitations
d ............................... Portfolio Transactions
14 a - c ............................... Trustees and Officers
15 a, b ............................... *
c ............................... Trustees and Officers
16 a i ............................... FMR, Portfolio Transactions
ii ............................... Trustees and Officers
iii ............................... Management Contracts
b ............................... Management Contracts
c, d ............................... Contracts with FMR Affiliates
e ............................... *
f ............................... Distribution and Service Plans
g ............................... *
h ............................... Description of the Trusts
i ............................... Contracts with FMR Affiliates
17 a ............................... Portfolio Transactions
b ............................... *
c ............................... Portfolio Transactions
d, e ............................... *
18 a ............................... Description of the Trusts
b ............................... *
19 a ............................... Additional Purchase and Redemption Information
b ............................... Additional Purchase and Redemption Information;
Valuation of Portfolio Securities
c ............................... *
20 ............................... Distributions and Taxes
21 a, b ............................... Contracts with FMR Affiliates
c ............................... *
22 a ............................... *
b ............................... Performance
23 ............................... Financial Statements
</TABLE>
* Not Applicable
SPARTAN(REGISTERED TRADEMARK)
INTERMEDIATE
MUNICIPAL INCOME
FUND
Please read this prospectus before investing, and keep it on file for
future reference. It contains imp ortant info rmation, including
how the fund invests and the services available to shareholders.
To learn more about the fund and its investments, yo u can
obtain a copy of the fund's most recent financial report and portfolio
listing, or a copy of the Statement of Additional In formation
(SAI) dated October 21, 1997. The SAI has been filed with the
Securities and Exchange Commission (SEC) and is available along with
other related materials on the SEC's Internet Web site
(http://www.sec.gov). The SAI is incorporated herein by reference
(legally forms a part of the prospectus). For a free copy of either
document, call Fidelity at 1-800-544-8888.
Mutual fund shares are not deposits or obligations of, or guaranteed
by, any depository institution. Shares are not insured by the FDIC,
Federal Reserve Board, or any other agency, and are subject to
investment risks, including possible loss of principal amount
invested.
(fund n umber 443, trad ing symbol FSIMX)
The fund seeks a high level of income free from federal income tax.
The fund invests normally in investment grade municipal securities
while maintaining an average maturity of between three and 10
years.
LIKE ALL MUTUAL FUNDS, THESE
SECURITIES HAVE NOT BEEN APPROVED
OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE
COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
SIM-P RO -1097
PROSPECTUS
OCTOBER 21, 1997(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON,
MA 02109
CONTENTS
<TABLE>
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KEY FACTS THE FUND AT A GLANCE
WHO MAY WANT TO INVEST
EXPENSES The fund's yearly operating
expenses.
FINANCIAL HIGHLIGHTS A summary of
the fund's financial data.
PERFORMANCE How the fund has done
over time.
THE FUND IN DETAIL CHARTER How the fund is organized.
INVESTMENT PRINCIPLES AND RISKS The
fund's overall approach to investing.
BREAKDOWN OF EXPENSES How
operating costs are calculated and
what they include.
YOUR ACCOUNT DOING BUSINESS WITH FIDELITY
TYPES OF ACCOUNTS Different ways to
set up your account.
HOW TO BUY SHARES Opening an
account and making additional
investments.
HOW TO SELL SHARES Taking money out
and closing your account.
INVESTOR SERVICES Services to help you
manage your account.
SHAREHOLDER AND DIVIDENDS, CAPITAL GAINS,
ACCOUNT POLICIES AND TAXES
TRANSACTION DETAILS Share price
calculations and the timing of
purchases and redemptions.
EXCHANGE RESTRICTIONS
</TABLE>
KEY FACTS
TH E FUND AT A GLANCE
GOAL: High current income free from federal income tax. As with any
mutual fund, there is no assurance that the fund will achieve its
goal.
STRATEGY: Normally invests in investment-grade municipal securities
while maintaining an average maturity of between thre e and 10
years. Managed to generally react to changes in interest rates
similarly to municipal bonds with maturities between seven and 10
years.
MANAGEMENT: Fidelity Management & Research Company (FMR) is the
management arm of Fidelity Investments, which was established in 1946
and is now America's largest mutual fund manager.
SIZE: As of August 31, 1997, the fund had over $ 203
million in assets.
WHO MAY WANT TO INVEST
The Board of Trustees of Fidelity Union Street Trust has
unanimously approved an Agreement and Plan of Reorganization
("Agreement") between Spartan Intermediate Municipal Income Fund and
Fidelity Limited Term Municipal Income Fund, a fund of Fidelity School
Street Trust. The Agreement will be presented to Spartan Intermediate
Municipal Income Fund shareholders for their vote of approval or
disapproval at a special meeting to be held on February 18, 1998. If
the proposal is approved by a majority of the fund's shareholders and
certain conditions required by the Agreement are satisfied, the
reorganization is expected to become effective on or about February
26, 1998.
Effective the close of business April 1, 1997, Spartan Intermediate
Municipal Income was closed to new accounts pending the
Reorganization. Only shareholders of the fund on or prior to that
date, including participants in an employee benefit plan which offered
the fund on or prior to that date (except participants in an employee
benefit plan for which an affiliate of FMR maintains the accounts at
the participant level other than pursuant to a recordkeeping
agreement), can continue to purchase shares of the fund.
This non-div ersified fund may be appropriate for investors in
higher tax brackets who seek high current income that is free from
federal income taxes. With its focus on investment grade securities of
intermediate maturity, the fund has a moderate risk level and yield
potential.
The value of the fund's investments and the income they generate will
vary from day to day, and generally reflect interest rates, market
conditions, and other economic and political news. When you sell your
shares, they may be worth more or less than what you paid for them. By
itself, the fund does not constitute a balanced investment plan.
THE SPECTRUM OF
FIDELITY FUNDS
BROAD CATEGORIES OF FIDELITY
FUNDS ARE PRESENTED HERE IN
ORDER OF ASCENDING RISK.
GENERALLY, INVESTORS SEEKING TO
MAXIMIZE RETURN MUST ASSUME
GREATER R I SK. SPARTAN
INTERMEDIATE MUNICIPAL
INCOME IS IN THE INCOME
CATEGORY.
(SOLID BULLET) MONEY MARKET SEEKS
I NCOME AND STABILITY BY
INVESTING IN HIGH-QUALITY,
SHORT-TERM INVESTMENTS.
(RIGHT ARROW) INCOME SEEKS INCOME B Y
INVESTING IN BONDS.
(SOLID BULLET) GROWTH AND INCOME SEEK S
LONG-TERM GROWTH AND INCOME
BY INVESTING IN STOCKS AND
BONDS.
(SOLID BULLET) GROWTH SEEKS L ONG-T ERM
GROWTH BY INVESTING MAINLY IN
STOCKS.
(CHECKMARK)
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you may pay when you buy
or sell shares of the fund. In addition, you may be charged an
annual account maintenance fee if your account balance falls below
$2,500. See "Transaction Details," page , for an explanation of how
an d when these charges apply.
Sales charge on purchases None
and reinvested distributions
Deferred sales charge on redemptions None
Annual account maintenance fee $12.00
(for accounts under $2,500)
ANNUAL FUND OPERATING EXPENSES are paid out of the fund's
assets. The fund pays a management fee to FMR. FMR is responsible
for the payment of all other fund expenses with certain limit ed
exceptions. Expenses are fac tored int o the fund's share price
or dividends and are not charged directly to shareholder accounts
(see "Breakdown of E xpenses" page ).
The following figures are based on historical expenses and are
calculated as a percentage of average net assets. FMR has entered
into arrangements on behalf of the fund with the fund's custodian and
transfer agent whereby credits realized as a result of uninvested cash
balances are used to reduce fund expenses.
Management fee 0.55%
12b-1 fee None
Other expenses 0.00%
Total fund operating expenses 0.55%
EXAMPLES: Let's say, hypothetically, that the fund's annual return is
5% and that your shareholder transaction expenses and the fund's
annual operating expenses are exactly as just described. For
e very $1,000 you invested, here's how much you would pay in total
expenses if you close your account after the number of years
indicate d:
UNDERSTANDING
EXPENSES
Operating a mutual fund
involves a variety of expenses
for portfolio management,
shareholder statements, tax
reporting , and other services.
The management fee is paid
from the fund's assets, and its
effect is already factored into
any quoted share price or
return. Other expenses are
paid by FMR out of the fund's
management fee. Also as an
investor, you may pay certain
expenses directly.
(checkmark)
After 1 year $ 6
After 3 years $ 18
After 5 years $ 31
After 10 years $ 69
These examples illustrate the effect of expenses, but are not meant to
suggest actual or expected expenses or returns, all of which
may vary.
FINANCIAL HIGHLIGHTS
The financial highlights table that follows has b een audited by
Coopers & Lybrand L.L.P., independent accountants. The fund's
financial highlights, f inancial statements, and report of the
auditor are included in the fund's Annual Report, and are
incorporated by reference into (are legally a part of) the fund' s
SAI. Contact Fidelity for a free copy of th e Annual Report or the
SAI.
SELECTED PER-SHARE DATA
<TABLE>
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Years ended August
31 1997 1996 1995 1994E 1993D
Net asset value, beginning
of period $ 10.050 $ 10.060 $ 9.840 $ 10.340 $ 10.000
Income from Investment
Operations .484 .486 .490 .514 .177
Net interest income
Net realized and
unrealized .310 (.010) .220 (.460) .340
gain (loss)
Total from investment
operations .794 .476 .710 .054 .517
Less Distributions (.484) (.486) (.490) (.514) (.177)
From net interest income
From net realized
gain -- -- -- (.010) --
In excess of net realized
gain -- -- -- (.030) --
Total distributions (.484) (.486) (.490) (.554) (.177)
Net asset value, end of
period $ 10.360 $ 10.050 $ 10.060 $ 9.840 $ 10.340
Total returnB,C 8.07% 4.80% 7.50% .52% 5.22%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of
period $ 203,035 $ 216,121 $ 219,711 $ 256,269 $ 219,400
(000 omitted)
Ratio of expenses to
average .55% .50%F .42%F .20%F .00%F
net assets
Ratio of net interest
income to average net
assets 4.72% 4.81% 5.04% 5.09% 5.20%A
Portfolio turnover
rate 20% 64% 44% 69% 95%A
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE FORMER ACCOUNT CLOSEOUT FEE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
D FOR THE PERIOD APRIL 26, 1993 (COMMENCEMENT OF SALE OF SHARES) TO
AUGUST 31, 1993.
E EFFECTIVE SEPTEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF
POSITION 93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT
PRESENTATION OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL
DISTRIBUTIONS BY INVESTMENT COMPANIES." AS A RESULT, NET INTEREST
INCOME PER SHARE MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
TO TAX DIFFERENCES.
F FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING
THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
PERFORMANCE
Bo nd fun d performance can be measured as TOTAL RETURN or YIELD.
The total returns that follow are based on historical fund results.
The fund's fiscal yea r runs from September 1 through August 31.
The ta bles bel ow show the fund's performance over past fiscal
years compared to different measures, including a comparative index
and a competitive funds aver age. Data for the comparative index
is available only from June 30, 1993 t o the present. The chart on
page presents calendar year performance.
AVERAGE ANNUAL TOTAL RETURNS
Fiscal periods ended Past 1 Life of
August 31, 1997 year fundA
Spartan Intermediate Municipal Income 8.07% 5.98%
Lehman Brothers 1-17 Year Municipal Bond Index 8.22% n/a
Lipper Intermediate Municipal Debt Funds Average 7.03% n/a
CUMULATIVE TOTAL RETURNS
Fiscal periods ended Past 1 Life of
August 31, 1997 year fundA
Spartan Intermediate Municipal Income 8.07% 28.76%
Lehman Brothers 1-17 Year Municipal Bond Index 8.22% n/a
Lipper Intermediate Municipal Debt Funds Average 7.03% n/a
A FROM APRIL 26, 1993 (COMMENCEMENT OF OPERATIONS)
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated
period of time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate
of return that, if achieved annually, would have produced the same
cumulative total return if performance had been constant over the
entire period. Average annual total returns smooth out variations in
performance; they are not the same as actual year-by-year results.
UNDERSTANDING
PERFORMANCE
YIELD illustrates the income
earned by a fund over a recent
period. 30-day yields are
usually used for bond funds.
Yields change daily, reflecting
changes in interest rates.
TOTAL RETURN reflects both the
reinvestment of income and
capital gain distributions and
any change in a fund's share
price.
(checkmark)
YIELD refers to the income generated by an inv estment in the
fund over a given period of time, expressed as an annual percentage
rate. A TAX-EQUIVALENT YIELD shows what an investor would have to earn
before taxes to equal a tax-free yield. Yields are calculated
according to a standard that is required for all stock and bond funds.
Because this differs from other accounting methods, the quoted yield
may not equal the income actually paid to shareholders.
LEHMAN BROTHERS 1-17 YEAR MUNICIPAL BOND INDEX is a total return
performance benchmark for investment-grade municipal bonds with
maturities between one and 17 years.
Unlike the fund's returns, the total ret urns of t he comparative
index do not include the effect of any brokerage commissions,
transaction fees, or other costs of investing.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. Government.
THE COMPETITIVE FUNDS AVERAGE is th e Lipper Intermediate
Municipal Debt Funds Average. As of August 31, 1997, the average
reflected the performance of 135 mutual funds with similar
inv estment objectives. This average, published by Lipper
Analytical Services, Inc., excludes the effect of sales lo ads.
YEAR-BY-YEAR TOTAL RETURNS
Calendar years 1994 1995 1996
SPARTAN INTERMEDIATE MUNICIPAL INCOME -5.03% 14.44% 4.56%
Lipper Intermediate Municipal Debt Funds Average -3.51% 12.89%
3.89%
Consumer Price Index 2.67% 2.54% 3.32%
Percentage (%)
Row: 1, Col: 1, Value: 0.0
Row: 2, Col: 1, Value: 0.0
Row: 3, Col: 1, Value: 0.0
Row: 4, Col: 1, Value: 0.0
Row: 5, Col: 1, Value: 0.0
Row: 6, Col: 1, Value: 0.0
Row: 7, Col: 1, Value: 0.0
Row: 8, Col: 1, Value: -5.03
Row: 9, Col: 1, Value: 14.44
Row: 10, Col: 1, Value: 4.56
(LARGE SOLID BOX) Spartan Intermediate
Municipal Income
The fund's recent strategies, performance, and holdings are detailed
twice a year in financial reports, which are sent to all shareholders.
For current performance or a free annual report, call 1-800-544-8888.
TOTAL RETURNS AND YIELDS ARE BASED ON PAST RESULTS AND ARE NOT AN
INDICATION OF FUTURE PERFORMANCE.
THE FUND IN DETAIL
CHARTER
SPARTAN INTERMEDIATE MUNICIPAL INCOME IS A MUTUAL FUND:an
inve stment that pools shareholders' money and invests it toward
a specified goal. The fund is a non-diversified fun d of
Fidelity Union Street Trust, an open -end management investment
co mp any organized as a Massachusetts business trust on March 1,
1974.
THE FUND IS GOVERNED BY A BOARD OF TRUSTEES which is
responsible for protecting the interests of shareholders. The trustees
are experienced ex ecutives who meet periodically throughout the
year to oversee the fund's activities, review contractual arrangements
with companies that pro vide services to the fund, and review the
fund's performance. The trustees serve as trustees for other Fidelity
funds. The majority of trustees are not othe rwise affiliated with
Fidelity.
THE FUND MAY HOLD SPECIAL SHAREHOLDER MEETINGS AND MAIL PROXY
MATERIALS. These meetings may be called to elect or remove
trustees, change fundamental policies, approve a management contract,
or for other purposes. Shareholders not attending these meetings are
encouraged to vote by proxy. Fidelity will mail proxy materials in
advance, including a voting card and information about the
propos als to be voted on. The number of votes you are entitled
to is based upon the dollar value of your investment.
FMR AND ITS AFFILIATES
The fund is managed by FMR, which chooses the fund's investments
and handles its business affairs.
Norm Lind is Vice President and manager for Spartan
Intermediate Municipal Income, which he has managed since October
1995. He also manages other Fidelity funds. Since joining Fidelity in
1986, Mr. Lind has worked as an analyst and manager .
Fidelity investment personnel may in vest in securities for
their own accounts pursuant to a code of ethics that establishes
procedures for personal investing and restricts certain transactions.
FIDELITY FACTS
Fidelity offers the broadest
selection of mutual funds
in the world.
(solid bullet) Number of Fidelity mutual
funds: over 228
(solid bullet) Assets in Fidelity mutual
funds: over $498 billion
(solid bullet) Number of shareholder
accounts: over 33 million
(solid bullet) Number of investment
analysts and portfolio
managers: over 273
(checkmark)
Fidelity Distributors Corporation (FDC) distributes and markets
Fidelity's funds and services.
UM B Bank, n.a. ( UMB) is the fund's tra nsfer agent, and is
loca ted at 1010 Grand Avenue, K ansas City, Missouri.
UM B employs Fidelity Service Company , Inc. (FSC) to
perform transfer agent servicing functions for the fund.
FMR Corp. is the ultimate parent company of FMR. Members of the Edward
C. Johnson 3d family are the predominant owners of a class of shares
of common stock representing approximately 49% of the voting power of
FMR Corp. Under the Investment Company Act of 1940 (the 1940 Act),
control of a company is presumed where one individual or group of
individuals owns more than 25% of the voting stock of that company;
therefore, the Johnson family may be deemed under the 1940 Act to form
a controlling group with respect to FMR Corp.
FMR may use its broker-dealer affiliates and other firms that sell
fund shares to carry out the f und's transactions, provided that
the fund receives brokerage services and commission rates comparable
to those of other broker-dealers.
INVESTMENT PRINCIPLES AND RISKS
BOND FUNDS IN GENERAL. The yield and share price of a bond
fund change daily based on changes in interest rates and market
conditions, and in response to other economic, political or financial
events. The types and maturities of the securities a bond fund
purchases and the credit quality of their issuers will impact a bond
fund's reaction to these events.
INTEREST RATE RISK. In general, bond prices rise when
interest rates fall and fall when interest rates rise. Longer-term
bonds are usually more sensitive to interest rate changes. In other
words, the longer the maturity of a bond, the greater the impact a
change in interest rates is likely to have on the bond's price. In
addition, short-term interest rates and long-term interest rates do
not necessarily move in the same amount or in the same direction. A
short-term bond tends to react to changes in short-term interest rates
and a long-term bond tends to react to changes in long-term interest
rates.
ISSUER RISK. The price of a bond is affected by the credit
quality of its issuer. Changes in the financial condition of an
issuer, changes in general economic conditions, and changes in
specific economic conditions that affect a particular type of issuer
can impact the credit quality of an issuer. Lower quality bonds
generally tend to be more sensitive to these changes than higher
quality bonds.
MUNICIPAL MARKET RISK. Municipal securities are backed by
the entity that issued them and/or other revenue streams. Municipal
security values may be significantly affected by political changes as
well as uncertainties in the municipal market related to taxation or
the rights of municipal securities holders.
FIDELITY'S APPROACH TO BOND FUNDS. The total return from a
bond includes both income and price gains or losses. In selecting
investments for a bond fund, FMR considers a bond's expected income
together with its potential for price gains or losses. While income is
the most important component of bond returns over time, a bond fund's
emphasis on income does not mean the fund invests only in the
highest-yielding bonds available, or that it can avoid losses of
principal.
FMR focuses on assembling a portfolio of income-producing bonds
that it believes will provide the best balance between risk and return
within the range of eligible investments for the fund. FMR's
evaluation of a potential investment includes an analysis of the
credit quality of the issuer, its structural features, its current
price compared to FMR's estimate of its long-term value, and any
short-term trading opportunities resulting from market inefficiencies.
In structuring a bond fund, FMR allocates assets among different
market sectors (for example, general obligation bonds of a state or
bonds financing a specific project) and different maturities based on
its view of the relative value of each sector or maturity. The
performance of the fund will depend on how successful FMR is in
pursuing this approach.
SPARTAN INTERMEDIATE MUNICIPAL INCOME seeks high current
income that is free from federal income tax by investing in
investment-grade municipal securities under normal conditions. The
fund normally maintains a dollar-weighted average maturity of between
three and 10 years.
FMR normally invests so that at least 80% of the fund's assets are
invested in municipal securities whose interest is free from federal
income tax. In addition, FMR may invest all of the fund's assets in
municipal securities issued to finance private activities. The
interest from these securities is a tax-preference item for purposes
of the federal alternative minimum tax.
Although the fund can invest in securities of any maturity, FMR
seeks to manage the fund so that it generally reacts to changes in
interest rates similarly to municipal bonds with maturities between
seven and ten years. As of August 31, 1997, the fund's dollar-weighted
average maturity was approximately 7.6 years.
FMR may use various techniques to hedge a portion of a fund's
risks, but there is no guarantee that these strategies will work as
intended. When you sell your shares of a fund, they may be worth more
or less than what you paid for them.
FMR normally invests the fund's assets according to its investment
strategy and does not expect to invest in federally taxable
obligations. The fund also reserves the right to invest without
limitation in short-term instruments, to hold a substantial amount of
uninvested cash, or to invest more than normally permitted in
federally taxable obligations for temporary, defensive purposes.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which the fund may invest, strategies FMR may employ in
pursuit of the fund's investment objective, and a summary of related
risks. Any restrictions listed supplement those discussed earlier in
this section. A co mplete l isting of the fund's limitations and
more detailed information ab out the fund's investments are
contained in the fund's SAI. Policies and limitations are considered
at the time of purchase; the sale of instruments is not required in
the event of a subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these
techniques unless it believes that they are consistent with the fund's
investment objective and policies and that doing so will help the fund
achieve its goal. Fund holdings and recent investment strateg ies
a re detailed in the fund's financial reports, which are sent to
shareholders twice a year. For a free SAI or financial report, call
1-800-544-8888.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers
to borrow money from investors. The issuer generally pays the
investor a fixed, varia ble, or floating rate of interest, and must
repay the amount borrowed at maturity. Some debt securities, such as
zero coupon bonds, do not pay curr ent intere st, but are sold at
a discount from their face values.
Debt securities have varying levels of sensitivity to changes in
interest rates and varying degrees of credit quality. In general,
bond prices rise when interest rates fall, and fall when interest
rates rise. Longer-term bonds and zero coupon bonds are generally more
sensitive to interest rate changes.
In addition, bond prices are also affected by the credit quality of
the issuer. Investment-grade debt securities are medium- and
high-quality securities. Some, however, may possess speculative
characteristics, and may be more sensitive to economic changes and to
changes in the financial condition of issuers.
RESTRICTIONS: The fund normally invests in investment grade
sec urities, but reserves the right to invest up to 5% of its
assets in below investment-grade securities (sometimes called "
junk bonds"). A security is considered to be investment-grade if it is
rated investment-grade by Moody's Investors Services, Standard
& Poor's, Duff & Phelps Credit Rating Co., or Fitch Investors
Service, L.P. , or is unrated but judged by FMR to be of
equivalent quality.
CREDIT AND LIQUIDITY SUPPORT. Issuers may employ various forms
of credit and liquidity enhancement, including letters of credit,
guarantees, puts and demand features, and insurance, provided by
foreign or domestic entities such as banks and other financial
institutions. Th ese arrangements expose the fund to the credit
risk of the entity providing the credit or liquidity support.
Changes in the credit quality of the provider could affec t the
value of the security and the fund's share price. In addition, in
the case of foreign providers of credit or liquidity support,
extensive public information about the provider may not be available,
and unfavorable political, economic or governmental developments could
affect its ability to honor its commitment.
MUNICIPAL SECURITIES are issued to raise money for a variety
of public or private purposes, including general financing for state
and local governments, or financing for specific projects or public
facilities. They may be fully or partially backed by the local
government, or by the credit of a private issuer or the current or
anticipated revenues from specific projects or assets. Because many
municipal securities are issued to finance similar types of projects,
especially those relating to education, health care, housing,
transportation, and utilities, the municipal markets can be affected
by conditions in those sectors. In addition, all municipal securities
may be affected by uncertainties regarding their tax status,
legislative changes, or rights of municipal securities holders. A
municipal security may be owned directly or through a participation
interest.
ASSET-BACKED SECURITIES include interests in pools of purchase
contracts, financing leases, or sales agreements entered into by
municipalities. The value of these securities depends on many factors,
including changes in interest rates, the availability of information
concerning the pool and its structure, the credit quality of the
underlying assets, the market's perception of the servicer of the
pool, and any credit enhancement provided. In addition, these
securities may be subject to prepayment risk.
VARIABLE AND FLOATING RATE SECURITIES have interest rates that are
periodically adjusted either at specific intervals or whenever a
benchmark rate changes. Inverse floaters have interest rates that move
in the opposite direction from a benchmark, making the security's
market value more volatile.
MUNICIPAL LEASE OBLIGATIONS are used by municipalities to acquire
land, equipment, or facilities. If the municipality stops making
payments or transfers its obligations to a private entity, the
obligation could lose value or become taxable.
OTHER MUNICIPAL SECURITIES may include obligations of U.S. territories
and possessions such as Guam, the Virgin Islands, and Puerto Rico, and
their political subdivisions and public corporations.
PUT FEATURES entitle the holder to put (sell back) a security to the
issuer or another party. In exchange for this benefit, the fund may
accept a lower inte rest rate. Demand features and standby
commitments are types of put features.
PRIVATE ENTITIES may be involved in some municipal securities. For
example, industrial revenue bonds are backed by private entities, and
resource recovery bonds often involve private corporations. The
viability of a project or tax incentives could affect the value and
credit quality of these securities.
ADJUSTING INVESTMENT EXPOSURE. The fund can use va rious
techniques to increase or decrease its exposure to changing security
prices, interest rates, commodity prices, or other factors that affect
security values. These techniques may involve derivative transactions
such as buying and selling options and futures contracts, entering
into swap agreements and purchasing indexed securities.
FMR can use these practices to adjust the risk and return
characteristics of the fund's portfolio of investments. If FMR judges
market conditions incorrectly or employs a strategy that does not
correlate well with the fund's investments, these techniques could
result in a loss, regardless of whether the intent was to reduce risk
or increase return. These techniques may increase th e volatility of
the fun d and may involve a small investment of cash relative to
the magnitude of the risk assumed. In addition, these techniques could
result in a loss if the counterparty to the transaction does not
perform as promised.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined
by FMR, under the supervision of the Board of Trustees, to be
illiquid, which means that they may be difficult to sell promptly at
an acceptable price. The sale of some illiquid securities, and some
other securities, may be subject to legal restrictions. Difficulty in
selling securities may result in a loss or may be costly to the
fund.
RESTRICTIONS: The fund may not purchase a security if, as a
result, more than 10 % of its assets would be invested in
illiquid securities.
WHEN-ISSUED AN D FORWARD PURCHASE OR SAL E TRANSACTIONS are
trading practices in which payment and delivery for the security take
place at a later date than is customary for that type of security.
The market value of t he security could change during this period.
CASH MANAG EME NT. The fund may invest in money market securities
and in a money market fund available only to funds and accounts
managed by F MR or i ts affiliates, whose goal is to seek a high
level of current income exempt from federal income tax while
maintaining a stable $1.00 share price. A major change in interest
rates or a default on the money market fund's investments could cause
its share price to change.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce
the risks of investing. This may include limiting the amount of money
invested in any one issuer or, on a broader scale, in any one industry
or type of project. Economic, business, or political changes can
affect all securities of a similar type. A fund that is not
diversified may be more sensitive to changes in the market value of a
single issuer or industry.
RESTRICTIONS: T he fund i s considered non-diversified.
Generally, to meet federa l tax requirements at the close of
e ach quarter, the fund does not invest more than 25% of its total
assets in any one issuer and, with respect to 50% of total assets,
does not invest more than 5% of its total assets in any issuer. These
limitations do not apply to U.S. G overnment s ecurities or to
securities of o ther inv estment companies. The fund may invest
more than 25% of its total assets in tax-free securities that finance
similar types of projects.
BORROWING. The f und may b orrow from banks or from other funds
advised by FMR, or through reverse repurchase agr eements. If
th e fund borrows money, its share price may be subject to greater
fluctuation until the borrowing is paid off . If the fund makes
additional investments while borrowings are outstanding, this may be
considered a form of leverage.
RESTRICTIONS: The fun d may bo rrow only for temporary or
emergency purposes, but not in an amount exceeding 331/3% of its total
assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages
are fundamental, that is, subject to change only by shareholder
approval. The following paragraphs restate all those that are
fundamental. All policies stated throughout this prospectus, other
than those identified in the following paragraphs, can be changed
without shareholder approval.
The fund seeks high current income that is exempt from federal
income tax, by investing in municipal obligations. The fund will
normally invest so that at least 80% of its assets are invested in
municipal securities whose interest is free from federal income tax.
The f und may borrow only for temporary or emergency purposes,
but not in an amount exceeding 33 1/3 % of its total assets.
BREAKDOWN OF EXPENSES
Like all mutual funds, the fund pays fees related to its daily
operations. Expense s paid out of the fund's assets are reflected
in its share price or dividends; they are neither billed directly to
shareholders nor deducted from shareholder accounts.
The fund p ays a MANAGEMENT FEE to FMR for managing its
investments and business affairs.
FMR may, from time to time, agree to reim burse the fund for
management fees above a specified limit. FMR retains the abi lity to
be repaid by the fund if expenses fall below the specified limit
prior to the end of the fiscal year. Reimbursement arrangements, which
may be terminated at any time without notice, can decrease the
fun d's expenses and boost its performance.
MANAGEMENT FEE
The fund's management fee is calculated and paid to FMR every
month. FMR pays all of the other expenses of the fund with
limited exceptions. The fund's annual management fee rate
is 0.55 % of its average net assets.
UMB is the transfer and service agent for the fund. UMB has entered
into sub-agreements with FSC under which FSC performs transfer agency,
dividend disbursing, shareholder servicing, and accounting functions
for the fund. These services include processing shareholder
transactions, valuing the fund's investments, and calculating the
fund's share price and dividends. FMR, not the fund, pays for these
services.
The fund also pays other expenses, su ch as brokerage fees and
commissions, interest on borrowings, taxes, and the compensation of
trustees who are not af filiated with Fidelity.
The fund has adopted a DISTRIBUTION AND SERVICE PLAN. This plan
recognizes that FMR may use its management fee revenues, as well as
its past profits or its resources from any other source, to pay FDC
for expenses incurred in connection with the distribution of fund
shares. FMR directly, or through FDC, may make payments to third
parties, such as banks or broker-deal ers, that engage in the sale
of, or provide shareholder support services for, the fund's shares.
Currently, the Board of Trustees has not authorized such paym ents.
The fund's portfolio turnove r rate for the fiscal year ended
August 19 97 was 20 %. This rate varies from year
to year.
YOUR ACCOUNT
DOING BUSINESS WITH FIDELITY
Fidelity Investments was established in 1946 to manage one of
America's first mutual funds. Today, Fidelity is the largest mutual
fund company in the country, and is known as an innovative provider of
high-quality financial services to individuals and institutions.
In addition to its mutual fund business, the company operates one of
America's leading discount brokerage firms, Fidelity Brokerage
Services, Inc. (FBSI). Fidelity is also a leader in providing
tax-sheltered retirement plans for individuals investing on their own
or through their employer.
Fidelity is committed to providing investors with practical
information to make investment decisions. Based in Boston, Fidelity
provides customers with complete service 24 hours a day, 365 days a
year, through a network of telephone service centers around the
country.
To reach Fidelity for general information, call these numbers:
(small solid bullet) For mutual funds, 1-800-544-8888
(small solid bullet) For brokerage, 1-800-544-7272
If you would prefer to speak with a representative in person, Fidelity
has over 80 walk-in Investor Centers across the country.
TYPES OF ACCOUNTS
You may set up an account directly in the fu nd or, if you own
or intend to purchase individual securities as part of your total
investment portfolio, you may c onsider investing in the fund
through a brokerage account.
You may purchase or sell shares of the fund through an investment
professional, including a broker, who may charge you a transaction fee
for this service. If you invest through FBSI, another financial
institution, or an investment prof essional, read their program
mate rials for any special provisions, additional service features
or fees that may apply to your investment in the fund. Certain
features of the fund, such as the minimum initial or subsequent
inves tment amounts, may be modified.
The different ways to set up (register) your account with Fidelity are
listed in the table that follows.
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have
two or more owners (tenants).
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and
obtain tax benefits. An individual can give up to $10,000 a year per
child without paying federal gift tax. Depending on state laws, you
can set up a custodial account under the Uniform Gifts to Minors Act
(UGMA) or the Uniform Transfers to Minors Act (UTMA).
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR
OTHER GROUPS
Requires a special application.
HOW TO BUY SHARES
THE PRICE TO BUY ONE SHARE of the fund is the fund's net asset
value per share (NAV). The fund's shares are sold without a sales
charge.
Your shares will be purchased at the next NAV calculated after your
investment is received and accepted. The fund's NAV is normally
calculated each business day at 4:00 p.m Eastern time. Shares of
Spartan Intermediate Municipal Income are offered to current
shareholders only.
IF YOU ARE NEW TO FIDELITY, complete and sign an account application
and mail it along with your check. You may also open your account in
person or by wire as described on page . If there is no application
accompanying this prospectus, call 1-800-544-8888.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(small solid bullet) Mail in an application with a check, or
(small solid bullet) Open your account by exchanging from another
Fidelity fund.
If you buy shares by check or Fidelity Money Line(registered
trademark), and then sell those shares by any method other than by
exchange to another Fidelity fund, the payment may be delayed for up
to seven business days to ensure that your previous investment has
cleared.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $ 10,000
TO ADD TO AN ACCOUNT $ 1,000
Through regular investment plans* $ 500
MINIMUM BALANCE $ 5,000
*FOR MORE INFORMATION ABOUT REGULAR INVESTMENT PLANS, PLEASE REFER
TO "INVESTOR SERVICES," PAGE .
These minimums may vary for investments through Fidelity Portfolio
Advisory Services. Refer to the program materials for details.
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TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
PHONE 1-800-544-7777
(PHONE_GRAPHIC) (SMALL SOLID BULLET) EXCHANGE FROM ANOTHER FIDELITY FUND (SMALL SOLID BULLET) EXCHANGE FROM ANOTHER
FIDELITY FUND
ACCOUNT WITH THE SAME REGISTRATION, ACCOUNT WITH THE SAME REGISTRATION,
INCLUDING NAME, ADDRESS, AND INCLUDING NAME, ADDRESS, AND
TAXPAYER ID NUMBER. TAXPAYER ID NUMBER.
(SMALL SOLID BULLET) USE FIDELITY MONEY
LINE TO TRANSFER
FROM YOUR BANK ACCOUNT. CALL BEFORE
YOUR FIRST USE TO VERIFY THAT THIS
SERVICE IS IN PLACE ON YOUR ACCOUNT.
MAXIMUM MONEY LINE: UP TO
$100,000.
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MAIL
(MAIL_GRAPHIC)(SMALL SOLID BULLET) COMPLETE AND SIGN THE APPLICATION. (SMALL SOLID BULLET) MAKE YOUR CHECK PAYABLE TO
MAKE YOUR CHECK PAYABLE TO "SPARTAN INTERMEDIATE MUNICIPAL
"SPART AN INTERMEDIATE MUNICIPAL INCOME FUND." INDICATE Y OUR FUND
INCOME FUND." MAIL TO THE ADDRESS ACCOUNT NUMBER ON YOUR CHECK AND
INDICATED ON TH E APPLICATION. MAIL TO THE ADDRESS PRINTED ON YOUR
ACCOUNT STATEMENT.
(SMALL SOLID BULLET) EXCHANGE BY MAIL: CALL
1-800-544-6666 FOR INSTRUCTIONS.
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IN PERSON
(HAND_GRAPHIC) (SMALL SOLID BULLET) BRING YOUR APPLICATION AND CHECK TO A (SMALL SOLID BULLET) BRING YOUR CHECK TO A
FIDELITY INVESTOR
FIDELITY INVESTOR CENTER. CALL CENTER. CALL 1-800-544-9797 FOR THE
1-800-544-9797 FOR THE CENTER CENTER NEAREST YOU.
NEAREST YOU.
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WIRE (WIRE_GRAPHIC) (SMALL SOLID BULLET) CALL 1-800-544-7777 TO SET UP YOUR (SMALL SOLID BULLET) WIRE TO:
ACCOUNT AND TO ARRANGE A WIRE BANKERS TRUST COMPANY,
TRANSACTION. BANK ROUTING #021001033,
(SMALL SOLID BULLET) WIRE WITHIN 24 HOURS TO: ACCOUNT #00163053.
BANKERS TRUST COMPANY, SPECIFY THE COMPLETE NAME OF THE
BANK ROUTING #021001033, FUND AND INCLUDE YOUR ACCOUNT
ACCOUNT #00163053. NUMBER AND YOUR NAME.
SPECIFY THE COMPLETE NAME OF THE
FUND AND INCLUDE YOUR NEW ACCOUNT
NUMBER AND YOUR NAME.
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AUTOMATICALLY
(AUTOMATIC_GRAPHIC) (SMALL SOLID BULLET) NOT AVAILABLE. (SMALL SOLID BULLET) USE FIDELITY AUTOMATIC ACCOUNT
BUILDER. SIGN UP FOR THIS SERVICE
WHEN OPENING YOUR ACCOUNT, OR CALL
1-800-544-6666 TO ADD IT.
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(TDD_GRAPHIC) TDD - SERVICE FOR THE DEAF AND HEARING IMPAIRED: 1-800-544-0118
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HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time
by selling (redeeming) some or all of your shares.
THE PRICE TO SELL ONE SHARE of the fund is the fund's NAV.
Your shares will be sold at the next NAV calculated after your
order is received and accepted. The fund's NAV is normally calculated
each business day at 4:00 p.m. Eastern time.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least
$ 5 ,000 worth of shares in the account to keep it open.
TO SELL SHARES BY BANK WIRE OR FIDELITY MONEY LINE, you will need to
sign up for these services in advance.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to
protect you and Fidelity from fraud. Your request must be made in
writing and include a signature guarantee if any of the following
situations apply:
(small solid bullet) You wish to redeem more than $100,000 worth of
shares,
(small solid bullet) Your account registration has changed within the
last 30 days,
(small solid bullet) The check is being mailed to a different address
than the one on your account (record address),
(small solid bullet) The check is being made payable to someone other
than the account owner, or
(small solid bullet) The redemption proceeds are being transferred to
a Fidelity account with a different registration.
You should be able to obtain a signature guarantee from a bank, broker
(including Fidelity Investor Centers), dealer, credit union (if
authorized under state law), securities exchange or association,
clearing agency, or savings association. A notary public cannot
provide a signature guarantee.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(small solid bullet) Your name,
(small solid bullet) The fund's name,
(small solid bullet) Your fund account number,
(small solid bullet) The dollar amount or number of shares to be
redeemed, and
(small solid bullet) Any other applicable requirements listed in the
table that follows.
Unless otherwise instructed, Fidelity will send a check to the record
address. Deliver your letter to a Fidelity Investor Center, or mail it
to:
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
CHECKWRITING
If you have a checkbook for your account, you may write an unlimited
number of checks. Do not, however, try to close out your account by
check.
ACCOUNT TYPE SPECIAL REQUIREMENTS
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PHONE 1-800-544-7777
(PHONE_GRAPHIC) ALL ACCOUNT TYPES (SMALL SOLID BULLET) MAXIMUM CHECK REQUEST: $100,000.
(SMALL SOLID BULLET) FOR MONEY LINE TRANSFERS TO YOUR BANK ACCOUNT;
MINIMUM: $10; MAXIMUM: UP TO $100,000.
(SMALL SOLID BULLET) YOU MAY EXCHANGE TO OTHER FIDELITY FUNDS IF
BOTH ACCOUNTS ARE REGISTERED WITH THE SAME
NAME(S), ADDRESS, AND TAXPAYER ID NUMBER.
MAIL OR IN PERSON (MAIL_GRAPHIC)
(HAND_GRAPHIC) INDIVIDUAL, JOINT TENANT, (SMALL SOLID BULLET) THE LETTER OF INSTRUCTION MUST BE SIGNED BY ALL
SOLE PROPRIETORSHIP, PERSONS REQUIRED TO SIGN FOR TRANSACTIONS,
UGMA, UTMA EXACTLY AS THEIR NAMES APPEAR ON THE ACCOUNT.
TRUST (SMALL SOLID BULLET) THE TRUSTEE MUST SIGN THE LETTER INDICATING
CAPACITY AS TRUSTEE. IF THE TRUSTEE'S NAME IS NOT
IN THE ACCOUNT REGISTRATION, PROVIDE A COPY OF THE
TRUST DOCUMENT CERTIFIED WITHIN THE LAST 60 DAYS.
BUSINESS OR ORGANIZATION (SMALL SOLID BULLET) AT LEAST ONE PERSON AUTHORIZED BY CORPORATE
RESOLUTION TO ACT ON THE ACCOUNT MUST SIGN THE
LETTER.
(SMALL SOLID BULLET) INCLUDE A CORPORATE RESOLUTION WITH CORPORATE
SEAL OR A SIGNATURE GUARANTEE.
EXECUTOR, ADMINISTRATOR, (SMALL SOLID BULLET) CALL 1-800-544-6666 FOR INSTRUCTIONS.
CONSERVATOR, GUARDIAN
WIRE (WIRE_GRAPHIC) ALL ACCOUNT TYPES (SMALL SOLID BULLET) YOU MUST SIGN UP FOR THE WIRE FEATURE BEFORE
USING IT. TO VERIFY THAT IT IS IN PLACE, CALL
1-800-544-6666. MINIMUM WIRE: $5,000.
(SMALL SOLID BULLET) YOUR WIRE REDEMPTION REQUEST MUST BE RECEIVED
AND ACCEPTED BY FIDELITY BEFORE 4 P.M. EASTERN
TIME FOR MONEY TO BE WIRED ON THE NEXT
BUSINESS DAY.
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CHECK (CHECK_GRAPHIC) ALL ACCOUNT TYPES (SMALL SOLID BULLET) MINIMUM CHECK: $500.
(SMALL SOLID BULLET) ALL ACCOUNT OWNERS MUST SIGN A SIGNATURE CARD
TO RECEIVE A CHECKBOOK.
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(TDD_GRAPHIC) TDD - SERVICE FOR THE DEAF AND HEARING IMPAIRED: 1-800-544-0118
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INVESTOR SERVICES
Fidelity provides a variety of services to help you manage your
account.
INFORMATION SERVICES
FIDELITY'S TELEPHONE REPRESENTATIVES are available 24 hours a day, 365
days a year. Whenever you call, you can speak with someone equipped to
provide the information or service you need.
24-HOUR SERVICE
ACCOUNT ASSISTANCE
1-800-544-6666
ACCOUNT TRANSACTIONS
1-800-544-7777
PRODUCT INFORMATION
1-800-544-8888
RETIREMENT ACCOUNT ASSISTANCE
1-800-544-4774
TOUCHTONE XPRESSSM
1-800-544-5555
AUTOMATED SERVICE
(checkmark)
STATEMENTS AND REPORTS that Fidelity sends to you include the
following:
(small solid bullet) Confirmation statements (after every transaction,
except reinvestments, that affects your account balance or your
account registration)
(small solid bullet) Account statements (quarterly)
(small solid bullet) Financial reports (every six months)
To reduce expenses, only one copy of most financial reports and
prospectuses will be mailed to your household, even if you have more
than one account in the fund. Call 1-800-544-6666 if you need copies
of financial reports, prospectuses, or historical account information.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your fund shares and buy shares of
other Fidelity funds by telephone or in writing.
Note that exchanges out of the fund are limited to four per calendar
year, and that they may have tax consequences for you. For details on
policies and restrictions governing exchanges, including circumstances
under which a shareholder's exchange privilege may be suspended or
revoked, see page .
SYSTEMATIC WITHDRAWAL PLANS let you set up periodic redemptions from
your account.
FIDELITY MONEY LINE(registered trademark) enables you to transfer
money by phone between your bank account and your fund account. Most
transfers are complete within three business days of your call.
REGULAR INVESTMENT PLANS
One easy way to pursue your financial goals is to invest money
regularly. Fidelity offers convenient services that let you transfer
money into your fund account, or between fund accounts, automatically.
While regular investment plans do not guarantee a profit and will not
protect you against loss in a declining market, they can be an
excellent way to invest for a home, educational expenses, and other
long-term financial goals.
REGULAR INVESTMENT PLANS
FIDELITY AUTOMATIC ACCOUNT BUILDERSM
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY FUND
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MINIMUM FREQUENCY SETTING UP OR CHANGING
$500 MONTHLY OR QUARTERLY (SMALL SOLID BULLET) FOR A NEW ACCOUNT, COMPLETE THE APPROPRIATE SECTION ON THE FUND
APPLICATION.
(SMALL SOLID BULLET) FOR EXISTING ACCOUNTS, CALL 1-800-544-6666 FOR AN APPLICATION.
(SMALL SOLID BULLET) TO CHANGE THE AMOUNT OR FREQUENCY OF YOUR INVESTMENT, CALL
1-800-544-6666 AT LEAST THREE BUSINESS DAYS PRIOR TO YOUR NEXT
SCHEDULED INVESTMENT DATE.
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DIRECT DEPOSIT
TO SEND ALL OR A PORTION OF YOUR PAYCHECK OR GOVERNMENT CHECK TO A
FIDELITY FUNDA
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MINIMUM FREQUENCY SETTING UP OR CHANGING
$500 EVERY PAY PERIOD (SMALL SOLID BULLET) CHECK THE APPROPRIATE BOX ON THE FUND APPLICATION, OR CALL
1-800-544-6666 FOR AN AUTHORIZATION FORM.
(SMALL SOLID BULLET) CHANGES REQUIRE A NEW AUTHORIZATION FORM.
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FIDELITY AUTOMATIC EXCHANGE SERVICE
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND TO ANOTHER FIDELITY
FUND
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MINIMUM FREQUENCY SETTING UP OR CHANGING
$500 Monthly, bimonthly, (small solid bullet) To establish, call 1-800-544-6666 after both accounts are
quarterly, or annually opened.
(small solid bullet) To change the amount or frequency of your investment, call
1-800-544-6666.
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A BECAUSE ITS SHARE PRICE FLUCTUATES, THE FUND MAY NOT BE AN
APPROPRIATE CHOICE FOR DIRECT DEPOSIT OF YOUR ENTIRE CHECK.
SHAREHOLDER AND ACCOUNT POLICIES
DIVIDENDS, CAPITAL GAINS, AND TAXES
The fund distr ibutes su bstantially all of its net investment
income and capital gains to shareholders each year. Income dividends
are declared daily and paid monthly. Capital gains are normally
distributed in October and December.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. If the option you prefer is not listed on
the application, call 1-800-544-6666 for instructio ns. The fund
offers fo ur options:
1. REINVESTMENT OPTION. Your dividend and capital gain distributions
will be automatically reinvested in additional shares of the fund. If
you do not indicate a choice on your application, you will be assigned
this option.
2. INCOME-EARNED OPTION. Your capital gain distributions will be
automatically reinvested, but you will be sent a check for each
dividend distribution.
3. CASH OPTION. You will be sent a check for your dividend and capital
gain distributions.
4. DIRECTED DIVIDENDS(registered trademark) OPTION. Your dividend and
capital gain distributions will be automatically invested in another
identically registered Fidelity fund.
Dividends will be reinvested at the fund's NAV on the last day of the
month. Capital gain distributions will be reinvested at the NAV as of
the date the fund deducts the distribution from its NAV. The mailing
of distribution checks will begin within seven days.
TAXES
As with any investment, you should consider how an investment in a
tax-free fund could affect you. Below are som e of the fu nd's
tax implications.
UNDERSTANDING
DISTRIBUTIONS
As a fund shareholder, you are
entitled to your share of the
fund's net income and gains
on its investments. The fund
passes its earnings along to its
investors as DISTRIBUTIONS.
The fund earns interest from its
investments. These are passed
along as DIVIDEND
DISTRIBUTIONS. The fund may
realize capital gains if it sells
securities for a higher price
than it paid for them. These
are passed along as CAPITAL
GAIN DISTRIBUTIONS.
(checkmark)
TAXES ON DISTRIBUTIONS. Interest in come that the fund earns is
distributed to shareholders as income dividends. Interest that is
federally tax-free remains tax-free when it is distributed.
However, gain on the sale of tax-free bonds results in taxable
distributions. Short-term capital gains and a portion of the gain on
bonds purchased at a discount are distributed as dividends and
taxed as ordinary income. Capital gain distributions are
taxed as long-term capital gains. These distributions are taxable when
they are paid, whether you take them in cash or reinvest them.
However, distributions declared in December and paid in January are
taxable as if they were paid on December 31. Fidelity will send you a
statement showing the tax status of distributions and will report
to the IRS the amount of any taxable distributions paid to you in
the previous year.
The interest from some municipal securities is subject to the federal
alternative minimum tax. The fund may invest up to 100% of its assets
in these securities. Individuals who are subject to the tax must
report this interest on their tax returns.
A p ortion of the fund's dividends may be free from state or
local taxes. Income from investments in your state are often tax-free
to you. Each year, Fidelity will send you a breakdown of the fund's
income from each state to help you calculate your taxes.
During the fiscal year ended August 1997 , 100% of the fund's
income dividends was free from federal income t ax. 28.38 % of
the fund's income dividends was subject to the federal alternative
minimum tax.
TAXES ON TRANSACTIONS. Your redemptions - including exchanges to other
Fidelity funds - are subject to capital gains tax. A capital gain or
loss is the difference between the cost of your shares and the price
you receive when you sell them.
Whenever you sell sh ares of the fund, Fidelity will send you a
confirmation statement showing how many shares you sold and at what
price. You will also receive a consolidated transaction statement
every January. However, it is up to you or your tax preparer to
determine whether this sale resulted in a capital gain and, if so, the
amount of tax to be paid. Be sure to keep your regular account
statements; the information they contain will be essential in
calculating the amount of your capital gains.
"BUYING A DIVIDEND." If you buy shares when the fund has realized
but no t yet distributed income or capital gains, you will pay the
full price for the shares and then receive a portion of the price back
in the form of a taxable distribution.
TRANSACTION DETAILS
THE FUND IS OPEN FOR BUSINESS each day the New York Stock Exchange
(NYSE) is open. FSC normally calcu lates the fund's NAV as of the
close of busin ess of the NYSE, normally 4:00 p.m. Eastern time.
THE FUND'S NAV is the value of a single share. The NAV is
computed by adding the value of the fund's investments, cash, and
other assets, subtracting its liabilities, and then dividing the
result by the number of shares outstanding.
The fund's assets are valued primarily on the basis of information
furnished by a pricing service or market quotations, if available,
or by another method that the Board of Trustees believes accurately
reflects fair value.
THE FUND'S OFFERING PRICE (price to buy one share) is its NAV. The
fund's REDEMPTION PRICE (price to sell one share) is its NAV.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify
that your s ocial s ecurity or taxpayer identification
number is correct and that you are not subject to 31% backup
withholding for failing to report income to the IRS. If you violate
IRS regulations, the IRS can require the fund to withhold 31%
of your taxable distributions and redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Fidelity may only be
liable for losses resulting from unauthorized transactions if it does
not follow reasonable procedures designed to verify the identity of
the caller. Fidelity will request personalized security codes or other
information, and may also record calls. You should verify the accuracy
of your confirmation statements immediately after you receive them. If
you do not want the ability to redeem and exchange by telephone, call
Fidelity for instructions.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during
periods of unusual market activity), consider placing your order by
mail or by visiting a Fidelity Investor Center.
THE FUND RESER VES THE RIGHT TO SUSPEND THE OFFERING OF SHARES
for a period of time. The fund also reserves the right to
reject any specific purchase order, including certain purchases by
exchange. See "Exchange Restrictions" on page . Purchase orders may be
refused if, in FMR's opinion, they would disrupt management of th e
fu nd.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your order will be processed at
the next offering price calculated after your order is received and
accepted. Note the following:
(small solid bullet) All of your purchases must be made in U.S.
dollars and checks must be drawn on U.S. banks.
(small solid bullet) Fidelity does not accept cash.
(small solid bullet) When making a purchase with more than one check,
each check must have a value of at least $50.
(small solid bullet) Th e fun d reserves the right to limit the
number of checks processed at one time.
(small solid bullet) If your check does not clear, your purchase will
be cancelled and you could be liab le for any losses or fees the
fund or its transfer agent has incurred.
(small solid bullet) You begin to earn dividends as of the first
business day following the day of your purchase.
TO AVOID THE COLLECTION PERIOD associated with check and Money Line
purchases, consider buying shares by bank wire, U.S. Postal money
order, U.S. Treasury check, Federal Reserve check, or direct deposit
instead.
CERTAIN FINANCIAL INSTITUTIONS that have entered into sales
agreements with FDC may enter confirmed purchase orders on behalf of
customers by phone, with payment to follow no later than the time
when the fund is priced on the following business day. If
payment is not received by that time, the financial institution could
be held liable for resulting fees or losses.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at
the next NAV calculated after your request is received and accepted.
Note the following:
(small solid bullet) Normally, redemption proceeds will be mailed to
you on the next business day, but if making immediate payment could
adversely affect the fund, it may take up to seven days to pay you.
(small solid bullet) Shares will earn dividends through the date of
redemption; however, shares redeemed on a Friday or prior to a holiday
will continue to earn dividends until the next business day.
(small solid bullet) Fidelity Money Line redemptions generally will be
credited to your bank account on the second or third business day
after your phone call.
(small solid bullet) The fund may hol d payment on redemptions
until it is reasonably satisfied that investments made by check or
Fidelity Money Line have been collected, which can take up to seven
business days.
(small solid bullet) Redemptions may be suspended or payment dates
postponed when the NYSE is closed (other than weekends or holidays),
when trading on the NYSE is restricted, or as permitted by the SEC.
(small solid bullet) If you sell shares by writing a check and the
amount of the check is greater than the value of your account, your
check will be returned to you and you may be subject to additional
charges.
FIDELITY RESERVES THE RIGHT TO DEDUCT AN ANNUAL MAINTENANCE FEE
of $12.00 from accounts with a value of less than $2,500, subject to
an annual maximum char ge of $24 .00 per shareholder. It is
expected that accounts will be valued on the second Friday in November
of each year. Accounts opened after September 30 will not be subject
to the fee for that year. The fee, which is payable to the transfer
agent, is designed to offset in part the relatively higher costs of
servicing smaller accounts. This fee will not be dedu cted from
Fidelity broker age accou nts, retirement accounts (except
non-prototype retirement accounts), accounts using regular investment
plans, or if total assets with Fidelity exceed $30,000. Eligibility
for the $30,000 waiver is determined by aggregating Fidelity accounts
maintained by FSC or FBSI which are registered under the same social
security number or which list the same social security number for the
custodian of a Uniform Gifts/Transfers to Minors Act account.
IF YOUR ACCOUNT BALANCE FALLS BELOW $5,000, you will be given 30 days'
notice to reestablish the minimum balance. If you do not increase your
balance, Fidelity reserves the right to close your account and send
the proceeds to you. Your shares will be redeemed at the NAV on the
day your account is closed.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
FDC may, at its own expense, provide promotional incentives to
qualified recipients who support the sale of shares of the fund
without reimbursement from the fund. Qualified recipients are
securities dealers who have sold fund shares or others, including
banks and other financial institutions, under special arrangements in
connection with FDC's sales activities. In some instances, these
incentives may be offered only to certain institutions whose
representatives provide services in connection with the sale or
expected sale of significant amounts of shares.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege o f exchanging sha res
of the fund for shares of other Fidelity funds. However, you should
note the following:
(small solid bullet) The fund you are exchanging into m ust be
availa ble for sale in your state.
(small solid bullet) You may only exchange between accounts that are
registered in the same name, address, and taxpayer identification
number.
(small solid bullet) Before exchanging into a fund, read its
prospectus.
(small solid bullet) If you exchange into a fund with a sales charge,
you pay the percentage-point difference between that fund's sales
charge and any sales charge you have previously paid in connection
with the shares you are exchanging. For example, if you had already
paid a sales charge of 2% on your shares and you exchange them into a
fund with a 3% sales charge, you would pay an additional 1% sales
charge.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) Because excessive trading can hurt fund
perf ormance and shareholders, the fund reserves the right to
temporarily or permanently terminate the exchange privilege of any
investor who makes more than four exchanges out of the fund per
calendar year. Accounts under common ownership or control, including
accounts with the same taxpayer identification number, will be counted
together for purposes of the four exchange limit.
(small solid bullet) The fund re serves the right to refuse
exchange purchases by any person or group if, in FMR's judgment, the
fund would be unable to invest the money effectively in accordance
with its investment objective and policies, or would otherwise
potentially be adversely affected.
(small solid bullet) Your exchanges may be restricted or re fused if
the fund receives or anticipates simultaneous orders affecting
significant portions of the fund's assets. In particular, a pattern of
exchanges that coincides with a "market timing" strategy may be
disruptive to the fund.
Although the fund will attempt to give you prior notice whenever it
is reasonably able to do so, it may impose these restrictions at any
time. The fund reserves t he right to terminate or modify the
exchange privilege in the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may
im pose fees of up to 1.00% on purchases, administrative fees of up
to $7.50, and trading fees of up to 1.50% on exchanges. Check each
fund's prospectus for details.
This prospectus is printed on recycled paper using soy-based inks.
SPARTAN INTERMEDIATE MUNICIPAL INCOME FUND
A FUND OF FIDELITY UNION STREET TRUST
STATEMENT OF ADDITIONAL INFORMATION
OCTOBER 21, 1997
This Statement of Additional Information (SAI) is not a prospectus
but should be read in conjunction with the fund's current Prospectus
(dated October 21, 1997). Please retain this document for future
reference. The fund's Annual Report is a separate document supplied
with this SAI. To obtain a free additional copy of the Prospectus or
an Annual Report, please call Fidelity at 1-800-544-8888.
TABLE OF CONTENTS PAGE
Investment Policies and Limitations
Portfolio Transactions
Valuation
Performance
Additional Purchase and Redemption Information
Distributions and Taxes
FMR
Trustees and Officers
Management Contract
Distribution and Service Plan
Contracts with FMR Affiliates
Description of the Trust
Financial Statements
Appendix
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENT
UMB Bank, n.a. (UMB )
and Fidelity Service Company , Inc. (FSC)
SIM-ptb-1097
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in
the Prospectus. Unless otherwise noted, whenever an invest ment
policy or limitation states a maximum percentage of the fund's assets
that may be invested in any security or other asset, or sets forth
a policy regarding quality standards, such standard or percentage
limitation will be determined immediately after and as a result of the
fund's acquisition of such security or other asset. Accordingly, any
subsequent change in values, net assets, or other circumstances will
not be considered when determining whether the investment complies
with the fund's investment policies and limitations.
The fund's fundamental investment policies and limitations cannot be
changed without approval by a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940) of the
fund. However, except for the fundamental investment limita tions
listed below, the investmen t policies and limitations described in
this SAI are not fundamental and may be changed without shareholder
approval. THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT
LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(3) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(4) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities, or tax-exempt obligations issued or guaranteed by a
U.S. territory or possession or a state or local government, or a
political subdivision of any of the foregoing) if, as a result, more
than 25% of the fund's total assets would be invested in securities of
companies whose principal business activities are in the same
industry;
(5) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(6) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(7) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(8) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) In order to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended, the
fund currently intends to comply with certain diversification limits
imposed by Subchapter M.
(ii) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(iii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (2)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(v) The fund does not currently intend to purchase any security if, as
a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
( vi) The fund does not currently intend to engage in repurchase
agreements or make loans, but this limitation does not apply to
purchases of debt securities.
(v ii) The fund does not currently intend to invest all of its
assets in the securities of a single open-end management investment
company with substantially the same fundamental investment objective,
policies, and limitations as the fund.
For purposes of limitations (4) and (i), FMR identifies the issuer of
a security depending on its terms and conditions. In identifying the
issuer, FMR will consider the entity or entities responsible for
payment of interest and repayment of principal and the source of such
payments; the way in which assets and revenues of an issuing political
subdivision are separated from those of other political entities; and
whether a governmental body is guaranteeing the security.
For purposes of limitation (i), Subchapter M generally requires the
fund to invest no more than 25% of its total assets in securities of
any one issuer and to invest at least 50% of its total assets so that
no more than 5% of the fund's total assets are invested in securities
of any one issuer. However, Subchapter M allows unlimited investments
in cash, cash items, government securities (as defined in Subchapter
M) and securities of other investment companies. These tax
requirements are generally applied at the end of each quarter of the
fund's taxable year.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
beginning on page .
AFFILIATED BANK TRANSACTIONS. The fund may engage in transactions
with financial institutions that are, or may be considered to be,
"affiliated persons" of the fund under the Investment Company Act of
1940. These transactions may include repurchase agreements with
custodian banks; short-term obligations of, and repurchase agreements
with, the 50 largest U.S. banks (measured by deposits); municipal
securities; U.S. Government securities with affiliated financial
institutions that are primary dealers in these securities;
short-term currency transactions; and short-term borrowings. In
accordance with exemptive orders issued by the Securities and Exchange
Commission (SEC), the Board of Trustees has established and
periodically reviews procedures applicable to transactions involving
affiliated financial institutions.
DELAYED-DELIVERY TRANSACTIONS. The fund may buy and sell securities
on a delayed-delivery or when-issued basis. These transactions involve
a commitment by the fund to purchase or sell specific securities at a
predetermined price or yield, with payment and delivery taking
place after the customary settlement period for that type of security.
Typically, no interest accrues to the purchaser until the security
is delivered. The fund may receive fees for entering into
delayed-delivery transactions.
When purchasing securities on a delayed-delivery basis, the fund
assumes the rights and risks of ownership, including the risk of price
and yield fluctuations. Because the fund is not required to pay for
securities until the delivery date, these risks are in addition to
t he risks associated with the fund's other investments. If the
fund remains substantially fully invested at a time when
delayed-delivery purchases are outstanding, the delayed-delivery
purchases may result in a form of leverage. When delayed-delivery
purchases are outstanding, the fund will set aside appropriate liquid
assets in a segregated custodial account to cover its purchase
obligations. When the fund has sold a security on a delayed-delivery
basis, the fund does not participate in further gains or losses with
respect to the security. If the other party to a delayed-delivery
transaction fails to deliver or pay for the securities, the fund could
miss a favorable price or yield opportunity, or could suffer a loss.
The fund may renegotiate delayed-delivery transactions after they
are entered into, and may sell underlying securities before they
are delivered, which may result in capital gains or losses.
FEDERALLY TAXABLE OBLIGATIONS. U nder normal conditions, the fund
does not intend to invest in securities whose interest is federally
taxable. However, from time to time on a temporary basis, the fund
may invest a portion of its assets in fixed-income obligations whose
interest is subject to federal income tax.
Should the fund invest in federally taxable obligations, it would
purchase securities that in FMR's judgment are of high quality. These
would include obligations issued or guaranteed by the U.S. Government
or its agencies or instrumentalities; obligations of domesti c
banks; and repurchase agreements. The fund's standards for
high-quality, taxable obligations are essentially the same as those
described by Moody's Investors Service, Inc. (Moody's) in rating
corporate obligations within its two highest ratings of Prime-1 and
Prime-2, and those described by Standard & Poor's (S&P) in rating
corporate obligations within its two highest ratings of A-1 and A-2.
Proposals to restrict or eliminate the federal income tax exemption
for interest on municipal obligations are introduced before Congress
from time to time. Proposals also may be introduced before state
legislatures that would affect the state tax treatment of the
fund's distributions. If such proposals were enacted, the availability
of municipal obligations and the value of the fund's holdings
would be affected and the Trustees would reevaluate the fund's
investment objective and policies.
FUTURES AND OPTIONS. The following sections pertain to futures and
options: Asset Coverage for Futures and Options Positions, Combined
Positions, Correlation of Price Changes, Futures Contracts, Futures
Margin Payments, Limitations on Futures and Options Transactions,
Liquidity of Options and Futures Contracts, OTC Options, Purchasing
Put and Call Options, and Writing Put and Call Options.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. Th e fund will
comply with guidelines established by the Securities and Exchange
Commission with respect to coverage of options and futures strategies
by mutual funds, and if the guidelines so require will set aside
appropriate liquid assets in a segregated custodial account in the
amount prescribed. Securities held in a segregated account cannot be
sold while the futures or option strategy is outstanding, unless they
are replaced with other suitable assets. As a result, there is a
possibility that segregation of a large percentage of the fund's
assets could impede portfolio management or the fund's ability to meet
redemption requests or other current obligations.
COMBINED POSITIONS. Th e fund may purchase and write options in
combination with each other, or in combination with futures or forward
contracts, to adjust the risk and return characteristics of the
overall position. For example, the fund may purchase a put option and
write a call option on the same underlying instrument, in order to
construct a combined position whose risk and return characteristics
are similar to selling a futures contract. Another possible combined
position would involve writing a call option at one strike price and
buying a call option at a lower price, in order to reduce the risk of
the written call option in the event of a substantial price increase.
Because combined options positions involve multiple trades, they
result in higher transaction costs and may be more difficult to open
and close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of
types of exchange-traded options and futures contracts, it is
likely that the standardize d contracts available will not match
the fund's current or anticipated investments exactly. The fund may
invest in options and futures contracts based on securities with
different issuers, maturities, or other characteristics from the
securities in which it typically invests, which involves a risk
that the options or futures position will not track the performance of
the fund's other investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match the
fund's investments well. Options and futures prices are affected by
such factors as current and anticipated short-term interest rates,
changes in volatility of the underlying instrument, and the time
remaining until expiration of the contract, which may not affect
security prices the same way. Imperfect correlation may also result
from differing levels of demand in the options and futures markets and
the securities markets, from structural differences in how options and
futures and securities are traded, or from imposition of daily
price fluctuation li mits or trading halts. The fund may purchase
or sell options and futures contracts with a greater or lesser value
than the securities it wishes to hedge or intends to purchase in order
to attempt to compensate for differences in volatility between the
contract and the securities, although this may not be successful in
all cases. If price changes in the fund's options or futures
positions are poorly correlated with its other investments, the
positions may fail to produce anticipated gains or result in
losses that are not offset by gains in other investments.
FUTURES CONTRACTS. When the fund purchases a futures contract, it
agrees to purchase a specified underlying instrument at a
specified future date. When the fund sells a futures contract, it
agrees to sell the underlying instrument at a specified future date.
The price at which the purchase and sale will take place is fixed when
the fund enters into the contract. Some currently available futures
contracts are based on specific securities, such as U.S. Treasury
bonds or notes, and some are based on indices of securities prices,
such as the Bond Buyer Municipal Bond Index. Futures can be held until
their delivery dates, or can be closed out before then if a liquid
secondary market is available.
The value of a futures contract tends to increase and decrease in
tandem with the value of its underlying instrument. Therefore,
purchasing futures contracts will tend to increase the fund's
exposure to positive and negative price fluctuations in the underlying
instrument, mu ch as if it had purchased the underlying instrument
directly. When the fund sells a futures contract, by contrast, the
value of its futures position will tend to move in a direction
contrary to the market. Selling futures contracts, therefore, will
tend to offset both positive and negative market price changes, much
as if the underlying instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract
is not required to deliver or pay for the underlying instrument unless
the contract is held until the delivery date. However, both the
purchaser and seller are required to deposit "initial margin" with a
futures broker, known as a futures commission merchant (FCM), when the
contract is entered into. Initial margin deposits are typically equal
to a percentage of the contract's value. If the value of either
party's position declines, that party will be required to make
additional "variation margin" payments to settle the change in value
on a daily basis. The party that has a gain may be entitled to receive
all or a portion of this amount. Initial and variation margin payments
do not constitute purchasing securities on margin for purposes of the
fund's investment limitations. In the event of the bankruptcy of an
FCM that holds margin on behalf of the fund, the fund may be
entitled to return of margin owed to it only in proportion to the
amount received by the FCM's other customers, potentially resulting in
losses to the fund.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. The fund has
filed a notice of eligibility for exclusion from the definition of the
term "commodity pool operator" with the Commodity Futures Trading
Commission (CFTC) and the National Futures Association, which regulate
trading in the futures markets. The fund intends to comply with Rule
4.5 under the Commodity Exchange Act, which limits the extent to
which the fund can commit assets to initial margin deposits and option
premiums.
In addition, the fund will not: (a ) sell futures contracts,
purchase put options, or write call options if, as a result, more than
25% of the fund's total assets would be hedged with futures and
options under normal conditions; (b) purchase futures contracts or
write put options if, as a result, the fund's total obligations upon
settlement or exercise of purchased futures contracts and written put
options would exceed 25% of its total assets; or (c) purchase call
options if, as a result, the current value of option premiums for call
options purchased by the fund would exceed 5% of the fund's total
assets. These limitations do not apply to options attached to or
acquired or traded together with their underlying securities, and do
not apply to securities that incorporate features similar to options.
The above limitations on the fund's investments in futures contracts
and options, and the fund's policies regarding futures contracts and
options discussed elsewhere in this SAI, may be changed as regulatory
agencies permit.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a
liquid secondary market will exist for any particular options or
futures contract at any particular time. Options may have relatively
low trading volume and liquidity if their strike prices are not close
to the underlying instrument's current price. In addition, exchanges
may establish daily price fluctuation limits for options and futures
contracts, and may halt trading if a contract's price moves upward or
downward more than the limit in a given day. On volatile trading days
when the price fluctuation limit is reached or a trading halt is
imposed, it may be impossible for the fund to enter into new
positions or close out existing positions. If the secondary market for
a contract is not liquid because of price fluctuation limits or
otherwise, it could prevent prompt liquidation of unfavorable
positions, and potentially could require the fund to continue to
hold a position until delivery or expiration regardless of changes in
its value. As a result, the fund's access to other assets held to
cover its options or futures positions could also be impaired.
OTC OPTIONS. Unlike exchange-traded options, which are standardized
with respect to the underlying instrument, expiration date, contract
size, and strike price, the terms of over-the-counter (OTC) options
(options not traded on exchanges) generally are established through
negotiation with the other party to the option contract. While this
type of arrangement allows the fund greater flexibility to tailor
an option to its needs, OTC options generally involve greater credit
risk than exchange-traded options, which are guaranteed by the
clearing organization of the exchanges where they are traded.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, the fund
obtains the right (but not the obligation) to sell the option's
underlying instrument at a fixed strike price. In return for this
right, the fund pays the current market price for the option (known as
the option premium). Options have various types of underlying
instruments, including specific securities, indices of securities
prices, and futures contracts. The fund may terminate its position in
a put option it has purchased by allowing it to expire or by
exercising the option. If the option is allowed to expire, the fund
will lose the entire premium it paid. If the fund exercises the
option, it completes the sale of the underlying instrument at the
strike price. The fund may also terminate a put option position by
closing it out in the secondary market at its current price, if a
liquid secondary market exists.
The buyer of a typical put option can expect to realize a gain if
security prices fall substantially. However, if the underlying
instrument's price does not fall enough to offset the cost of
purchasing the option, a put buyer can expect to suffer a loss
(limited to the amount of the premium paid, plus related transaction
costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right
to purchase, rather than sell, the underlying instrument at the
option's strike price. A call buyer typically attempts to participate
in potential price increases of the underlying instrument with risk
limited to the cost of the option if security prices fall. At the same
time, the buyer can expect to suffer a loss if security prices do not
rise sufficiently to offset the cost of the option.
WRITING PUT AND CALL OPTIONS. When the fund writes a put option, it
takes the opposite side of the transaction from t he option's
purchaser. In return for receipt of the premium, the fund assumes the
obligation to pay the strike price for the option's underlying
instrument if the other party to the option chooses to exercise it.
When writing an option on a futures contract, the fund will be
required to mak e margin payments to an FCM as described above for
futures contracts. The fund may seek to terminate its position in a
put option it writes before exercise by closing out the option in the
secondary market at its current price. If the secondary market is not
liquid for a put option the fund has written, however, the fund must
continue to be prepared to pay the strike price while the option is
outstanding, regardless of price changes, and must continue to set
aside assets to cover its position.
If security prices rise, a put writer would generally expect to
profit, although its gain would be limited to the amount of the
premium it received. If security prices remain the same over time, it
is likely that the writer will also profit, because it should be able
to close out the option at a lower price. If security prices fall, the
put writer would expect to suffer a loss. This loss should be less
than the loss from purchasing the underlying instrument directly,
however, because the premium received for writing the option should
mitigate the effects of the decline.
W riting a call option obligates the fund to sell or deliver the
option's underlying instrument, in return for the strike price,
upon exercise of the option. The characteristics of writing call
options are similar to those of writing put options, except that
writing calls generally is a profitable strategy if prices remain the
same or fall. Through receipt of the option premium, a call writer
mitigates the effects of a price decline. At the same time, because a
call writer must be prepared to deliver the underlying instrument in
return for the strike price, even if its current value is greater, a
call writer gives up some ability to participate in security price
increases.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed
of in the ordinary course of business at approximately the prices
at which they are valued. Under the supervision of the Board of
Trustees, FMR determines the liquidity of the fund's investments and,
through reports from FMR, the Board monitors investments in illiquid
instruments. In determining the liquidity of the fund's
investments, FMR may consider various factors, including (1) the
frequency of trades and quotations, (2) the number of dealers and
prospective purchasers in the marketplace, (3) dealer undertakings to
make a market, (4) the nature of the security (including any demand or
tender features), and (5) the nature of the marketplace for trades
(including the ability to assign or offset the fund's rights and
obligations relating to the investment).
Investments currently considered by the fund to be illiquid include
over-the-counter options. Also, FMR may determine some restricted
securities and municipal lease obligations to be illiquid. However,
with respect to over-the-counter options the fund writes, all or a
portion of the value of the underlying instrument may be illiquid
depending on the assets held to cover the option and the nature and
terms of any agreement the fund may have to close out the option
before expiration.
In the absence of market quotations, illiquid investments are priced
at fair value as determined in good faith by a committee appointed
by the Board of Trustees. If through a change in values, net assets,
or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would seek to take appropriate steps to protect liquidity.
INDEXED SECURITIES. The fund may purchase securities whose prices
are indexed to the prices of other securities, securities indices,
or other financial indicators. Indexed securities typically, but not
always, are debt securities or deposits whose value at maturity or
coupon rate is determined by reference to a specific instrument or
statistic. Indexed securities may have principal payments as well as
coupon payments that depend on the performance of one or more interest
rates. Their coupon rates or principal payments may change by several
percentage points for every 1% interest rate change. One example of
indexed securities is inverse floaters.
The performance of indexed securities depends to a great extent on the
performance of the security or other instrument to which they are
indexed, and may also be influenced by interest rate changes. At the
same time, indexed securities are subject to the credit risks
associated with the issuer of the security, and their values may
decline substantially if the issuer's creditworthiness deteriorates.
Indexed securities may be more volatile than the underlying
instruments.
INTERFUND BORROWING AND LENDING PROGRAM. Pursuant to an exemptive
order issued by the SEC, the fund has received permission to lend
money to, and borrow money from, other funds advised by FMR or its
affiliates, but it currently intends to participate in this program
only as a borrower. Interfund borrowings normally extend overnight,
but can have a maximum duration of seven days. The fund will borrow
through the program only when the costs are equal to or lower than the
costs of bank loans. Loans may be called on one day's notice, and
the fund may have to borrow from a bank at a higher interest rate if
an interfund loan is called or not renewed.
INVERSE FLOATERS have variable interest rates that typically move in
the opposite direction from prevailing short-term interest rate levels
- - rising when prevailing short-term interest rates fall, and vice
versa. This interest rate feature can make the prices of inverse
floaters considerably more volatile than bonds with comparable
maturities.
LOWER-QUALITY MUNICIPAL SECURITIES. The fund may invest a portion
of its assets in lower-quality municipal securities as described in
the Prospectus.
While the market for municipals is considered to be adequate,
adverse publicity and changing investor perceptions may affect the
ability of outside pricing services used by the fund to value its
portfolio securities, and the fund's ability to dispose of
lower-quality bonds. The outside pricing services are monitored by FMR
and reported to the Board to determine whether the services are
furnishing prices that accurately reflect fair value. The impact of
changing investor perceptions may be especially pronounced in markets
where municipal securities are thinly traded.
The fund may choose, at its expense or in conjunction with others,
to pursue litigation or otherwise exercise its rights as a
security holder to seek to protect the interests of security
holders if it determines this to be in the best interest of the fund's
shareholders.
MARKET DISRUPTION RISK. The value of municipal securities may be
affected by uncertainties in the municipal market related to
legislation or litigation involving the taxation of municipal
securities or the rights of municipal securities holders in the event
of a bankruptcy. Municipal bankruptcies are relatively rare, and
certain provisions of the U.S. Bankruptcy Code governing such
bankruptcies are unclear and remain untested. Further, the application
of state law to municipal issuers could produce varying results among
the states or among municipal securities issuers within a state. These
legal uncertainties could affect the municipal securities market
generally, certain specific segments of the market, or the relative
credit quality of particular securities. Any of these effects could
have a significant impact on the prices of some or all of the
municipal securities held by a fund.
MUNICIPAL SECTORS:
EDUCATION. In general, there are two types of education-related bonds;
those issued to finance projects for public and private colleges and
universities, and those representing pooled interests in student
loans. Bonds issued to supply educational institutions with funds are
subject to the risk of unanticipated revenue decline, primarily the
result of decreasing student enrollment or decreasing state and
federal funding. Among the factors that may lead to declining or
insufficient revenues are restrictions on students' ability to pay
tuition, availability of state and federal funding, and general
economic conditions. Student loan revenue bonds are generally offered
by state (or substate) authorities or commissions and are backed by
pools of student loans. Underlying student loans may be guaranteed by
state guarantee agencies and may be subject to reimbursement by the
United States Department of Education through its guaranteed student
loan program. Others may be private, uninsured loans made to parents
or students which are supported by reserves or other forms of credit
enhancement. Recoveries of principal due to loan defaults may be
applied to redemption of bonds or may be used to re-lend, depending on
program latitude and demand for loans. Cash flows supporting student
loan revenue bonds are impacted by numerous factors, including the
rate of student loan defaults, seasoning of the loan portfolio, and
student repayment deferral periods of forbearance. Other risks
associated with student loan revenue bonds include potential changes
in federal legislation regarding student loan revenue bonds, state
guarantee agency reimbursement and continued federal interest and
other program subsidies currently in effect.
TRANSPORTATION. Transportation debt may be issued to finance the
construction of airports, toll roads, highways, or other transit
facilities. Airport bonds are dependent on the general stability of
the airline industry and on the stability of a specific carrier who
uses the airport as a hub. Air traffic generally follows broader
economic trends and is also affected by the price and availability of
fuel. Toll road bonds are also affected by the cost and availability
of fuel as well as toll levels, the presence of competing roads and
the general economic health of an area. Fuel costs and availability
also affect other transportation-related securities, as do the
presence of alternate forms of transportation, such as public
transportation.
MUNICIPAL LEASES and participation interests therein may take the form
of a lease, an installment purchase, or a conditional sale contract
and are issued by state and local governments and authorities to
acquire land or a wide variety of equipment and facilities.
Generally, the fund will not hold such obligations directly as a
lessor of the property, but will purchase a participation interest in
a municipal obligation from a bank or other third party. A
participation interest gives the fund a specified, undivided interest
in the obligation in proportion to its purchased interest in the total
amount of the obligation.
Municipal leases frequently have risks distinct from those associated
with general obligation or revenue bonds. State constitutions and
statutes set forth requirements that states or municipalities must
meet to incur debt. These may include voter referenda, interest rate
limits, or public sale requirements. Leases, installment purchases, or
conditional sale contracts (which normally provide for title to the
leased asset to pass to the governmental issuer) have evolved as a
means for governmental issuers to acquire property and equipment
without meeting their constitutional and statutory requirements for
the issuance of debt. Many leases and contracts include
"non-appropriation clauses" providing that the governmental issuer has
no obligation to make future payments under the lease or contract
unless money is appropriated for such purposes by the appropriate
legislative body on a yearly or other periodic basis.
Non-appropriation clauses free the issuer from debt issuance
limitations.
REFUNDING CONTRACTS. T he fund may purchase securities on a
when-issued basis in connection with the refinancing of an
issuer's outstanding indebtedness. Refunding contracts require the
issuer to sell and the fund to buy refunded municipal obligations
at a stated price and yield on a settlement date that may be several
months or several years in the future. The fund generally will not
be obligated to pay the full purchase price if it fails to perform
under a refunding contract. Instead, refunding contracts generally
provide for payment of liquidated damages to the issuer (currently
15-20% of the purchase price). The fund may secure its obligations
under a refunding contract by depositing collateral or a letter of
credit equal to the liquidated damages provisions of the refunding
contract. When required by SEC guidelines, the fund will place
liquid assets in a segregated custodial account equal in amount to its
obligations under refunding contracts.
REPURCHASE AGREEMENTS. In a repurchase agreement, the fund
purchases a security and simultaneously commits to sell that
security back to the original seller at an agreed-upon price. The
resale price reflects the purchase price plus an agreed-upon
incremental amount which is unrelated to the coupon rate or maturity
of the purchased security. To protect the fund from risk that the
original seller will not fulfill its obligation, the securities are
held in an account of the fund at a bank, marked-to-market daily, and
maintained at a value at least equal to the sale price plus the
accrued incremental amount. While it does not presently appear
possible to eliminate all risks from these transactions (particularly
the possibility that the value of the underlying security will be
less than the resale price, as well as delays and costs to the fund
in connection with bankruptcy proceedings), it is the fund's
current policy to engage in repurchase agreement transactions with
parties whose creditworthiness has been reviewed and found
satisfactory by FMR.
RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, the fund may be obligated to pay all or
part of the registration expense and a considerable period may
elapse between the time it decides to seek registration and the time
it may be permitted to sell a security under an effective registration
statement. If, during such a period, adverse market conditions were to
develop, the fund might obtain a less favorable price than prevailed
when it decided to seek registration of the security.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement,
the fund sells a portfolio instrument to another party, such as a
bank or broker-dealer, in return for cash and agrees to repurchase the
instrument at a particular price and time. While a reverse repurchase
agreement is outstanding, the fund will maintain appropriate liquid
assets in a segregated custodial account to c over its obligation
under the agreement . The fund will enter into reverse repurchase
agreements only with parties whose creditworthiness has been found
satisfactory by FMR. Such transactions may increase fluctuations in
the market value of the fund's assets and may be viewed as a form of
leverage.
STANDBY COMMITMENTS are puts that entitle holders to same-day
settlement at an exercise price equal to the amortized cost of the
underlying security plus accrued interest, if any, at the time of
exercise. The fund may acquire standby commitments to enhance the
liquidity of portfolio securities.
Ordinarily the fund will not transfer a standby commitment to a
third party, although it could sell the underlying municipal security
to a third party at any time. The fund may purchase standby
commitments separate from or in conjunction with the purchase of
securities subject to such commitments. In the latter case, the fund
would pay a higher price for the securities acquired, thus reducing
their yield to maturity.
Issuers or financial intermediaries may obtain letters of credit or
other guarantees to support their ability to buy securities on demand.
FMR may rely upon its evaluation of a bank's credit in determining
whether to support an instrument supported by a letter of credit. In
evaluating a foreign bank's credit, FMR will consider whether adequate
public information about the bank is available and whether the bank
may be subject to unfavorable political or economic developments,
currency controls, or other governmental restrictions that might
affect the bank's ability to honor its credit commitment.
Standby commitments are subject to certain risks, including the
ability of issuers of standby commitments to pay for securities at
the time the commitments are exercised; the fact that standby
commitments are not marketable by the fund; and the possibilit y
that the maturities of the underlying securities may be different from
those of the commitments.
TENDER OPTION BONDS are created by coupling an intermediate- or
long-term, fixed-rate, tax-exempt bond (generally held pursuant to a
custodial arrangement) with a tender agreement that gives the holder
the option to tender the bond at its face value. As consideration for
providing the tender option, the sponsor (usually a bank,
broker-dealer, or other financial institution) receives periodic fees
equal to the difference between the bond's fixed coupon rate and the
rate (determined by a remarketing or similar agent) that would cause
the bond, coupled with the tender option, to trade at par on the date
of such determination. After payment of the tender option fee, the
fund effectively holds a demand obligation that bears interest at the
prevailing short-term tax-exempt rate. In selecting tender option
bonds for the fund, FMR will consider the creditworthiness of the
issuer of the underlying bond, the custodian, and the third party
provider of the tender option. In certain instances, a sponsor may
terminate a tender option if, for example, the issuer of the
underlying bond defaults on interest payments.
VARIABLE OR FLOATING RATE OBLIGATIONS, including certain participation
interests in municipal instruments, have interest rate adjustment
formulas that help stabilize their market values. Many variable and
floating rate instruments also carry demand features that permit
the fund to sell them at par value plus accrued interest on short
notice.
In many instances bonds and participation interests have tender
options or demand features that permit the fund to tender (or put) the
bonds to an institution at periodic intervals and to receive the
principal amount thereof. The fund considers variable rate instruments
structured in this way (Participating VRDOs) to be essentially
equivalent to other VRDOs it purchases. The IRS has not ruled whether
the interest on Participating VRDOs is tax-exempt and, accordingly,
the fund intends to purchase these instruments based on opinions of
bond counsel. A fund may also invest in fixed-rate bonds that are
subject to third party puts and in participation interests in such
bonds held by a bank in trust or otherwise.
ZERO COUPON BONDS do not make regular interest payments. Instead, they
are sold at a deep discount from their face value and are redeemed at
face value when they mature. Because zero coupon bonds do not pay
current income, their prices can be very volatile when interest
rates change. In calculating its daily dividend, the fund takes into
account as income a portion of the difference between a zero
coupon bond's purchase price and its face value.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are
placed on behalf of the fund by FMR pursuant to authority
contained in the fund's management contract. FMR is also responsible
for the placement of transaction orders for other investment companies
and accounts for which it or its affiliates act as investment adviser.
In selecting broker-dealers, subject to applicable limitations of the
federal securities laws, FMR considers various relevant factors,
including, but not limited to, the size and type of the transaction;
the nature and character of the markets for the security to be
purchased or sold; the execution efficiency, settlement capability,
and financial condition of the broker-dealer firm; the broker-dealer's
execution services rendered on a continuing basis; and the
reasonableness of any commissions.
The f und may execute portfolio transactions with broker-dealers who
provide research and execution services to the fund or other
accounts over which FMR or its affiliates exercise investment
discretion. Such services may include advice concerning the value of
securities; the advisability of investing in, purchasing, or selling
securities; and the availability of securities or the purchasers or
sellers of securities. In addition, such broker-dealers may furnish
analyses and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy, and performance of
accounts; effect securities transactions, and perform functions
incidental thereto (such as clearance and settlement). The selection
of such broker-dealers generally is made by FMR (to the extent
possible consistent with execution considerations) based upon the
quality of research and execution services provided.
The receipt of research from broker-dealers that execute
transactions on behalf of the fund may be useful to FMR in rendering
investment management services to the fund or its other clients, and
conversely, such research provided by broker-dealers who have executed
transaction orders on behalf of other FMR clients may be useful to FMR
in carrying out its obligations to the fund. The receipt of such
research has not reduced FMR's normal independent research activities;
however, it enables FMR to avoid the additional expenses that could be
incurred if FMR tried to develop comparable information through its
own efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that
are in excess of the amount of commissions charged by other
broker-dealers in recognition of their research and execution
services. In order to cause the fund to pay such higher
commissions, FMR must determine in good faith that such commissions
are reasonable in relation to the value of the brokerage and
research services provided by such executing broker-dealers, viewed in
terms of a particular transaction or FMR's overall responsibilities
to the fund and its other clients. In reaching this determination, FMR
will not attempt to place a specific dollar value on the brokerage
and research services provided, or to determine what portion of the
compensation should be related to those services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided
assistance in the distribution of shares of the fund, or shares of
other Fidelity funds to the extent permitted by law. FMR may use
research services provided by and place agency transactions with
National Financial Services Corporation (NFSC), an indirect subsidiary
of FMR Corp., if the commissions are fair, reasonable, and
comparable to commissions charged by non-affiliated, qualified
brokerage firms for similar services.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members
of national securities exchanges from executing exchange transactions
for accounts which they or their affiliates manage, unless certain
requirements are satisfied. Pursuant to such requirements, the
Board of Trustees has authorized NFSC to execute portfolio
transactions on national securities exchanges in accordance with
approved procedures and applicable SEC rules.
The Trustees periodically review FMR's performance of its
responsibilities in connection with the placement of portfolio
transactions on behalf of the fund and review the commissions paid by
the fund over representative periods of time to determine if they are
reasonable in relation to the benefits to the fund.
For the fiscal periods ended August 31, 1997 and 1996, the fund's
portfolio turnover rates were 20% and 64 %, respectively.
For the fiscal years ended August 1997, 1996, and 1995, the fund
paid no brokerage commissions.
From time to time the Trustees will review whether the recapture
for the benefit of the fund of some portion of the brokerage
commissions or similar fees paid by the fund on portfolio transactions
is legally permissible and advisable. The fund seeks to recapture
soliciting broker-dealer fees on the tender of portfolio securities,
but at present no other recapture arrangements are in effect. The
Trustees intend to continue to review whether recapture opportunities
are available and are legally permissible and, if so, to determine
in the exercise of their business judgment whether it would be
advisable for the fund to seek such recapture.
Although the Trustees and officers of the fund are substantially
the same as those of other funds managed by FMR, investment decisions
for the fund are made independently from those of other funds managed
by FMR or accounts managed by FMR affil iates. It sometimes happens
that the same security is held in the portfolio of more than one of
these funds or accounts. Simultaneous transactions are inevitable when
several funds and accounts are managed by the same investment adviser,
particularly when the same security is suitable for the investment
objective of more than one fund or account.
When two or more funds are simultaneously engaged in the purchase or
sale of the same security, the prices and amounts are allocated in
accordance with procedures believed to be appropriate and equitable
for each fund. In some cases this system could have a detrimental
effect on the price or value of the security as far as the fund is
concerned. In other cases, however, the ability of the fund to
participate in volume transactions will produce better executions and
prices for the fund. It is the current opinion of the Trustees
that the desirability of retaining FMR as investment adviser to the
fund outweighs any disadvantages that may be said to exist from
exposure to simultaneous transactions.
VALUATION
F idelity Service Company, Inc. (FSC) normally determines the fund's
net asset value per share (NAV) as of the close of the New York Stock
Exchange (NYSE) (normally 4:00 p.m. Eastern time). The valuation of
portfolio securities is determined as of this time for the purpose of
computing the fund's NAV.
Portfolio securities are valued by various methods. If quotations
are not available, fixed-income securities are usually valued on the
basis of information furnished by a pricing service that uses a
valuation matrix which incorporates both dealer-supplied valuations
and electronic data processing techniques. Use of pricing services has
been approved by the Board of Trustees. A number of pricing services
are available, and the fund may use various pricing services or
discontinue the use of any pricing service.
Futures contracts and options are valued on the basis of market
quotations, if available. Securities of other open-end investment
companies are valued at their respective NAV's.
Securities and other assets for which there is no readily available
market value are valued in good faith by a committee appointed by the
Board of Trustees. The procedures set forth above need not be used to
determine the value of the securities owned by the fund if, in the
opinion of a committee appointed by the Board of Trustees, some other
method would more accurately reflect the fair market value of such
securities.
PERFORMANCE
The fund may quote performance in various ways. All performance
information supplied by the fund in advertising is historical and is
not intended to indicate future returns. The fund's share price,
yield, and total return fluctuate in response to market conditions and
other factors, and the value of fund shares when redeemed may be more
or less than their original cost.
YIELD CALCULATIONS. Yields for the fund are computed by dividing
the fund's interest income for a given 30-day or one-month period, net
of expenses, by the average number of shares entitled to receive
distributions during the period, dividing this figure by the
fund's net asset value (NAV) at the end of the period, and annualizing
the result (assuming compounding of income) in order to arrive at
an annual percentage rate. Income is calculated for purposes of
yield quotations in accordance with standardized methods applicable to
all stock and bond funds. In general, interest income is reduced with
respect to bonds trading at a premium over their par value by
subtracting a portion of the premium from income on a daily basis, and
is increased with respect to bonds trading at a discount by adding a
portion of the discount to daily income. Capital gains and losses
generally are excluded from the calculation.
Income calculated for the purposes of calculating the fund's yield
differs from income as determined for other accounting purposes.
Because of the different accounting methods used, and because of the
compounding of income assumed in yield calculations, the fund's yield
may not equal its distribution rate, the income paid to your account,
or the income reported in the fund's financial statements.
Yield information may be useful in reviewing the fund's performance
and in providing a basis for comparison with other investment
alternatives. However, the fund's yield fluctuates, unlike
investments that pay a fixed interest rate over a stated period of
time. When comparing investment alternatives, investors should also
note the quality and maturity of the portfolio securities of
respective investment companies they have chosen to consider.
Investors should recognize that in periods of declining interest
rates the fund's yield will tend to be somewhat higher than
prevailing market rates, and in periods of rising interest rates
the fund's yield will tend to be somewhat lower. Also, when interest
rates are falling, the inflow of net new money to the fund from the
continuous sale of its shares will likely be invested in instruments
producing lowe r yields than the balance of the fund's holdings,
thereby reducing the fund's current yield. In periods of rising
interest rates, the opposite can be expected to occur.
The fund's tax-equivalent yield is the rate an investor would have to
earn from a fully taxable investment before taxes to equal the fund's
tax-free yield. Tax-equivalent yields are calculated by dividing the
fund's yield by the result of one minus a stated federal income tax
rate. If only a portion of the fund's yield is tax-exempt, only that
portion is adjusted in the calculation.
The following table shows the effect of a shareholder's tax status
on effective yield under federal income tax laws for 1997. It
shows the approximate yield a taxable security must provide at various
income brackets to produce after-tax yields equivalent to those of
hypothetical tax-exempt obligations yielding from 4% to 8%. Of course,
no assurance can be given that the fund will achieve any specific
tax-exempt yield. While the fund invests principally in obligations
whose interest is exempt from federal income tax, other income
received by the fund may be taxable.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 TAX RATES AND TAX-EQUIVALENT YIELDS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Federal If individual tax-exempt yield is:
Taxable Income* Marginal 4% 5% 6% 7% 8%
Single Return Joint Return Rate** Then taxable-equivalent yield is:
$ 24,651 - $ 59,750 $ 41,201 - $ 99,600 28.0% 5.56% 6.94% 8.33% 9.72% 11.11%
$ 59,751 - $ 124,650 $ 99,601 - $ 151,750 31.0% 5.80% 7.25% 8.70% 10.14% 11.59%
$ 124,651 - $ 271,050 $ 151,751 - $ 271,050 36.0% 6.25% 7.81% 9.38% 10.94% 12.50%
$ 271,051 + $ 271,051 + 39.6% 6.62% 8.28% 9.93% 11.59% 13.25%
</TABLE>
* Net amount subject to federal income tax after deductions and
exemptions. Assumes ordinary income only.
** Excludes the impact of the phaseout of personal exemptions,
limitations on itemized deductions, and other credits, exclusions, and
adjustments which may increase a taxpayer's marginal tax rate. An
increase in a shareholder's marginal tax rate would increase that
shareholder's tax-equivalent yield.
The fund may invest a portion of its assets in obligations that are
subject to federal income tax. When the fund invests in these
obligations, its tax-equivalent yields will be lower. In the table
above, tax-equivalent yields are calculated assuming investments are
100% federally tax-free.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect
all aspects of the fund's return, including the effect of reinvesting
dividends and capital gain distributions, and any change in the fund's
NAV over a stated period. Average annual total returns are
calculated by determining the growth or decline in value of a
hypothetical historical investment in the fund over a stated
period, and then calculating the annually compounded percentage rate
that would have produced the same result if the rate of growth or
decline in value had been constant over the period. For example, a
cumulative total return of 100% over ten years would produce an
average annual total return of 7.18%, which is the steady annual rate
of return that would equal 100% growth on a compounded basis in ten
years. While average annual total returns are a convenient means of
comparing investment a lternatives, investors should realize that
the fund's performance is not constant over time, but changes from
year to year, and that average annual total returns represent
averaged figures as opposed to the actual year-to-year performance of
the fund.
In addition to average annual total returns, the fund may quote
unaveraged or cumulative total returns reflecting the simple
change in value of an investment over a stated period. Average annual
and cumulative total returns may be quoted as a percentage or as a
dollar amount, and may be calculated for a single investment, a series
of investments, or a series of redemptions, over any time period.
Total returns may be broken down into their components of income and
capital (including capital gains and changes in share price) in order
to illustrate the relationship of these factors and their
contributions to total return. Total returns may be quoted on a
before-tax or after-tax basis. Total returns, yields, and other
performance information may be quoted numerically or in a table,
graph, or similar illustration.
NET ASSET VALUE. Charts and graphs using the fund's net asset
values, adjusted net asset values, and benchmark indices may be
used to exhibit performance. An adjusted NAV includes any
distributions paid by the fund and reflects all elements of its
return. Unless otherwise indicated, the fund's adjusted NAVs are not
adjusted for sales charges, if any.
HISTORICAL FUND RESULTS. The following tables show the fund's yields,
tax-equivalent yields, and total returns for periods ended August 31,
1997.
The tax-equivalent yield is based on a 36% federal income tax
rate. Note that the fund may invest in securities whose income is
subject to the federal alternative minimum tax.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Average Annual Total Returns Cumulative Total Returns
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Thirty Day Tax- One Life of One Life of
Yield Equivalent Year Fund* Year Fund*
Yield
Spartan Intermediate 4.38 % 6.84 % 8.07% 5.98% 8.07% 28.76%
Municipal Income
</TABLE>
* From April 26, 1993 (commencement of operations).
Note: If FMR had not reimbursed certain fund expenses during
these periods, the fund's total returns would have been lower.
The following table shows the income and capital elements of the
fund's cumulative total return. The table compares the fund's
return to the record of the Standard & Poor's 500 Index (S&P 500), the
Dow Jones Industrial Average (DJIA), and the cost of living, as
measured by the Consumer Price Index (CPI), over the same period. The
CPI information is as of the month-end closest to the initial
investment date for the fund. The S&P 500 and DJIA comparisons are
provided to show how the fund's total return compared to the
record of a broad unmanaged index of common stocks and a narrower set
of stocks of major industrial companies, respectively, over the
same period. Because the fund invests in fixed-income securities,
common stocks represent a different t ype of investment from the
fund. Common stocks generally offer greater growth potential than the
fund, but generally experience greater price volatility, which means
greater potential for loss. In addition, common stocks generally
provide lower income than a fixed-income investment such as the
fund. The S&P 500 and DJIA returns are based on the prices of
unmanaged groups of stocks and, unlike the fund's returns, do not
include the effect of brokerage commissions or other costs of
investing.
During the period from April 26, 1993 (commencement of operations)
to August 31, 1997, a hypothetical $10,000 investment in Spartan
Intermediate Municipal Income Fund would have grown to $12,876,
assuming all distributions were reinvested. This was a period of
fluctuating interest rates and bond prices and the figures below
should not be considered representative of the dividend income or
capital gain or loss that could be realized from an investment in the
fund today. Tax consequences of different investments have not been
factored into the figures below.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
SPARTAN INTERMEDIATE MUNICIPAL INCOME FUND INDICES
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
August
31 Initial Reinvested Reinvested Value Living**
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1997 $ 10,360 $ 2,476 $ 40 $ 12,876 $ 22,939 $ 24,775 $ 11,167
1996 $ 10,050 $ 1,825 $ 40 $ 1 1,915 $ 16,309 $ 17,906 $ 10,924
1995 $ 10,060 $ 1,270 $ 40 $ 11,370 $ 13,737 $ 14,381 $ 1 0 ,618
1994 $ 9,840 $ 697 $ 39 $ 10,576 $ 11,311 $ 11,897 $ 10,34 7
1993 * $ 10,340 $ 182 $ 0 $ 10,522 $ 10,725 $ 10,802 $ 10,05 6
</TABLE>
* From April 26, 1993 (commencement of operations)
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in the
fund on April 26, 1993, the net amount invested in fund shares was
$10,000. The cost of the initial investment ($10,000) together with
the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $ 12,443. If distributions had
not been reinvested, the amount of distributions earned from the fund
over time would have been smaller, and cash payments for t he period
would have amounted to $2,151 for dividends and $40 for capital gain
distributions.
PERFORMANCE COMPARISONS. The fund's performance may be compared to
the performance of other mutual funds in general, or to the
performance of particular types of mutual funds. These comparisons may
be expressed as mutual fund rankings prepared by Lipper Analytical
Services, Inc. (Lipper), an independent service located in Summit, New
Jersey that monitors the performance of mutual funds. Generally,
Lipper rankings are based on total return, assume reinvestment of
distributions, do not take sales charges trading fees into
consideration, and are prepared without regard to tax consequences.
Lipper may also rank funds based on yield. In addition to the mutual
fund rankings, the fund's performance may be compared to stock, bond,
and money market mutual fund performance indices prepared by
Lipper or other organizations. When comparing these indices, it is
important to remember the risk and return characteristics of each type
of investment. For example, while stock mutual funds may offer higher
potential returns, they also carry the highest degree of share price
volatility. Likewise, money market funds may offer greater stability
of principal, but generally do not offer the higher potential returns
available from stock mutual funds.
From time to time, t he fund's performance may also be compared
to other mutual funds tracked by financial or business publications
and periodicals. For example, the fund may quote Morningstar, Inc. in
its advertising materials. Morningstar, Inc. is a mutual fund rating
service that rates mutual funds on the basis of risk-adjusted
performance. Rankings that compare the performance of Fidelity funds
to one another in appropriate categories over specific periods of time
may also be quoted in advertising.
The fund's performance may also be compared to that of a benchmark
index representing the universe of securities in which the fund may
invest. The total return of a benchmark index reflects reinvestment of
all dividends and capital gains paid by securities included in the
index. Unlike the fund's returns, however, the index returns do not
reflect brokerage commissions, transaction fees, or other costs of
investing directly in the securities included in the index.
The fund may compare to the Lehman Brothers Municipal Bond Index, a
total return performance benchmark for investment-grade municipal
bonds with maturities of at least one year. In addition, the fund may
compare its performance to that of the Lehman Brothers 1-17 Year
Municipal Bond Index, a total return performance benchmark for
investment-grade municipal bonds with maturities between one and 17
years. Issues included in the index have been issued after December
31, 1990 and have an outstanding par value of at least $50 million.
Subsequent to December 31, 1995, zero coupon bonds and issues subject
to the alternative minimum tax are included in the index.
The fund may be compared in advertising to Certificates of Deposit
(CDs) or other investments issued by banks or other depository
institutions. Mutual funds differ from bank investments in several
respects. For example, the fund may offer greater liquidity or higher
potential returns than CDs, the fund does not guarantee your principal
or your return, and fund shares are not FDIC insured.
Fidelity may provide information designed to help individuals
understand their investment goals and explore various financial
strategies. Such information may include information about current
economic, market, and political conditions; materials that describe
general principles of investing, such as asset allocation,
diversification, risk tolerance, and goal setting; questionnaires
designed to help create a personal financial profile; worksheets used
to project savings needs based on assumed rates of inflation and
hypothetical rates of return; and action plans offering investment
alternatives. Materials may also include discussions of Fidelity's
asset allocation funds and other Fidelity funds, products, and
services.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides
historical returns of the capital markets in the United States,
including common stocks, small capitalization stocks, long-term
corporate bonds, intermediate-term government bonds, long-term
government bonds, Treasury bills, the U.S. rate of inflation (based on
the CPI), and combinations of various capital markets. The
performance of these capital markets is based on the returns of
different indices.
Fidelity funds may use the performance of these capital markets in
order to demonstrate general risk-versus-reward investment scenarios.
Performance comparisons may also include the value of a hypothetical
investment in any of these capital markets. The risks associated with
the security types in any capital market may or may not correspond
directly to those of the funds. Ibbotson calculates total returns in
the same method as the funds. The funds may also compare performance
to that of other compilations or indices that may be developed and
made available in the future.
T he fund may compare and contrast in advertising the relative
advantages of investing in a mutual fund versus an individual
municipal bond. Unlike tax-free mutual funds, individual municipal
bonds offer a stated rate of interest and, if held to maturity,
repayment of principal. Although some individual municipal bonds might
offer a higher return, they do not offer the reduced risk of a mutual
fund that invests in many different securities. The initial investment
requirements and sales charges of many tax-free mutual funds are lower
than the purchase cost of individual municipal bonds, which are
generally issued in $5,000 denominations and are subject to direct
brokerage costs.
In advertising materials, Fidelity may reference or discuss its
products and services, which may include other Fidelity funds;
retirement investing; brokerage products and services; model
portfolios or allocations; saving for college or other goals;
charitable giving; and the Fidelity credit card. In addition, Fidelity
may quote or reprint financial or business publications and
periodicals as they relate to current economic and political
conditions, fund management, portfolio composition, investment
philosophy, investment techniques, the desirability of owning a
particular mutual fund, and Fidelity services and products.
Fidelity may also reprint, and use as advertising and sales
literature, articles from Fidelity Focus(Registered trademark), a
quarterly magazine provided free of charge to Fidelity fund
shareholders.
The fund may present its fund number, Quotron(trademark) number,
an d CUSIP number, and discuss or quote its current portfolio
manager.
VOLATILITY. The fund may quote v arious measures o f volatility
and benchmark correlation in advertising. In addition, the fund may
compare these measures to those of other funds. Measures of volatility
seek to compare the fund's historical share price fluctuations or
total returns to those of a benchmark. Measures of benchmark
correlation indicate how valid a comparative b enchmark may be. All
measures of volatility and correlation are calculated using
averages of historical data. In advertising, the fund may also discuss
or illustrate examples of interest rate sensitivity.
MOMENTUM INDICATORS ind icate the fund's price movements over
specific periods of time. Each point on the momentum indicator
represents the fund's percentage change in price movements over that
period.
The fund may advertise examples of the effects of periodic
investment plans, including the principle of dollar cost
averaging. In such a program, an investor invests a fixed dollar
amount in a fund at periodic intervals, thereby purchasing fewer
shares when prices are high and more shares when prices are low. While
such a strategy does not assure a profit or guard against loss in a
declining market, the investor's average cost per share can be lower
than if fixed numbers of shares are purchased at the same intervals.
In evaluating such a plan, investors should consider their ability to
continue purchasing shares during periods of low price levels.
As of August 31, 199 7, FMR advised over $29 billion in tax-free
fund assets, $97 billion in money market fund assets, $368 billion
in equity fund assets, $74 billion in international fund assets,
and $27 billion in Spartan fund assets. The fund may reference the
growth and variety of money market mutual funds and the adviser's
innovation and participation in the industry. The equity funds under
management figure represents the largest amount of equity fund assets
under management by a mutual fund investment adviser in the United
States, making FMR America's leading equity (stock) fund manager. FMR,
its subsidiaries, and affiliates maintain a worldwide information and
communications network for the purpose of researching and managing
investments abroad.
In addition to performance rankings, the fund may compare its total
expense ratio to the average total expense ratio of similar funds
tracked by Lipper. The fund's total expense ratio is a significant
factor in comparing bond and money market investments because of
its effect on yield.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The fund is open for business and its net asset value per share
(NAV) is calculated each day the New York Stock Exchange (NYSE) is
open for trading. The NYSE has designated the following holiday
closings for 1997 and 1998: New Year's Day, Martin Luther King's
Birthday (in 1998), President's Day, Good Friday, Memorial Day,
Independence Day (observed), Labor Day, Thanksgiving Day, and
Christmas Day. Although FMR expects the same holiday schedule to be
observed in the future, the NYSE may modify its holiday schedule at
any time. In addition, the fund will not process wire purchases and
redemptions on days when the Federal Reserve Wire System is
closed.
FSC normally determines the fund's NAV as of the close of the NYSE
(normally 4:00 p.m. Eastern time). However, NAV may be calculated
earlier if trading on the NYSE is restricted or as permitted by the
Securities and Exchange Commission (SEC). To the extent that
portfolio securities are traded in other markets on days when the NYSE
is closed, the fund's NAV may be affected on days when investors do
not have access to the fund to purchase or redeem shares. In addition,
trading in some of the fund's portfolio securities may not occur
on days when the fund is open for business.
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are
valued in computing the fund's NAV. Shareholders receiving
securities or other property on redemption may realize a gain or loss
for tax purposes, and will incur any costs of sale, as well as the
associated inconveniences.
Pursuant to Rule 11a-3 under the Investment Company Act of 1940
(the 1940 Act), the fund is required to give shareholders at least
60 days' notice prior to terminating or modifying its exchange
privilege. Under the Rule, the 60-day notification requirement may be
waived if (i) the only effect of a modification would be to reduce or
eliminate an administrative fee, redemption fee, or deferred sales
charge ordinarily payable at the time of an exchange, or (ii) the fund
suspends the redemption of the shares to be exchanged as permitted
under the 1940 Act or the rules and regulations thereunder, or the
fund to be acquired suspends the sale of its shares because it is
unable to invest amounts effectively in accordance with its investment
objective and policies.
In the Prospectus, the fund has notified shareholders that it
reserves the right at any time, without prior notice, to refuse
exchange purchases by any person or group if, in FMR's judgment, the
fund would be unable to invest effectively in accordance with its
investment objective and policies, or would otherwise potentially be
adversely affected.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and
the U.S. Postal Service cannot deliver your checks, or if your checks
remain uncashed for six months, Fidelity may reinvest your
distributions at the then-current NAV. All subsequent distributions
will then be reinvested until you provide Fidelity with alternate
instructions.
DIVIDENDS. To the extent that the fun d's income is designated
as federally tax-exempt interest, the daily dividends declared by the
fund are also federally tax-exempt. Short-term capital gains are
distributed as dividend income, but do not qualify for the
dividends- recei ved deduction. These gains will be taxed as
ordinary income. The fund will send each shareholder a notice in
January describing the tax status of dividend and capital gain
distributions (if any) for the prior year.
Shareholders are required to report tax-exempt income on their federal
tax returns. Shareholders who earn other income, such as s ocial
s ecurity benefits, may be subject to federal income tax on up
to 85% of such benefits to the extent that their income, including
tax-exempt income, exceeds certain base amounts.
The fund purchases municipal securities whose interest FMR believes
is free from federal income tax. Generally, issuers or other
parties have entered into covenants requiring continuing compliance
with federal tax requirements to preserve the tax-free status of
interest payments over the life of the security. If at any time the
covenants are not complied with, or if the IRS otherwise determines
that the issuer did not comply with relevant tax requirements,
interest payments from a security could become federally taxable
retroactive to the date the security was issued. For certain types of
structured securities, the tax status of the pass-through of tax-free
income may also be based on the federal tax treatment of the
structure.
As a result of the Tax Reform Act of 1986, interest on certain
"private activity" securities is subject to the federal alternative
minimum tax (AMT), although the interest continues to be excludable
from gross income for other tax purposes. Interest from private
activity securities will be considered tax-exempt for purposes of the
fund's policies of investing so that at least 80% of its income is
free from federal income tax. Interest from private activity
securities is a tax preference item for the purposes of determining
whether a taxpayer is subject to the AMT and the amount of AMT to be
paid, if any. Private activity securities issued after August 7, 1986
to benefit a private or industrial user or to finance a private
facility are affected by this rule.
A portion of the gain on bonds purchased with market discount after
April 30, 1993 and short-term capital gains distributed by the fund
are taxable to shareholders as dividends, not as capital gains.
Dividend distributions resulting from a recharacterization of gain
from the sale of bonds purchased with market discount after April 30,
1993 are not considered income for purposes of the fund's policy
of investing so that at least 80% of its income is free from federal
income tax.
Corporate investors should note that a tax preference item for
purposes of the corporate AMT is 75% of the amount by which adjusted
current earnings (which includes tax-exempt interest) exceeds the
alternative minimum taxable income of the corporation. If a
shareholder receives an exempt-interest dividend and sells shares at a
loss after holding them for a period of six months or less, the loss
will be disallowed to the extent of the amount of exempt-interest
dividend.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by the
fund on the sale of securities and distributed to sharehol ders are
federally taxable as long-term capital gains, regardless of the length
of time shareholders have held their shares. If a share holder
receives a capital gain distribution on shares of the fund, and such
shares are held six months or less and are sold at a loss, the
portion of the loss equal to the amount of the capital gain
distribution will be considered a long-term loss for tax p urposes.
Short-term capital gains distributed by the fund are taxable to
shareholders as dividends, not as capital gains.
As of August 31, 1997, the fund had a capital loss carryforward
aggregating approximately $8,4 9 3,000. This loss carryforward,
of which $3,196,000 and $5,297,000 will expire on August 31, 2003 and
200 4, respectively, is available to offset future capital
gains.
TAX STATUS OF THE FUND. The fund intends to qualify each year as a
"r egulated investment company" for tax purposes so that it will
not be liable for federal tax on income and capital gains distributed
to shareholders. In order to qualify as a regulated investment
company and avoid being subject to federal income or excise taxes at
the fund level, the fund intends to distribute substantially all
of its net investment income and net realized capital gains within
each calendar year as well as on a fiscal year basis, and intends
to comply with other tax rules applicable to regulated investment
companies .
The fund is treated as a separate ent ity from the other funds
of Fidelity Union Street Trust for tax purposes.
OTHER TAX INFORMATION. The information above is only a sum mary of
some of the tax conse quences generally affecting the fund and its
shareholders, and no attempt has been made to discuss individual tax
consequences. In addition to federal income taxes, shareholders may be
subject to state and local taxes on fund distributions, and shares may
be subject to state and local personal property taxes. Investors
should consult their tax advisers to determine whether the fund is
suitable to their particular tax situation.
FMR
All of the stock of FMR is owned by FMR Corp., its parent organized in
1972. The voting common stock of FMR Corp. is divided into two
classes. Class B is held predominantly by members of the Edward C.
Johnson 3d family and is entitled to 49% of the vote on any matter
acted upon by the voting common stock. Class A is held predominantly
by non-Johnson family member employees of FMR Corp. and its affiliates
and is entitled to 51% of the vote on any such matter. The Johnson
family group and all other Class B shareholders have entered into a
shareholders' voting agreement under which all Class B shares will be
voted in accordance with the majority vote of Class B shares. Under
the Investment Company Act of 1940 (1940 Act), control of a company is
presumed where one individual or group of individuals owns more than
25% of the voting stock of that company. Therefore, through their
ownership of voting common stock and the execution of the
shareholders' voting agreement, members of the Johnson family may be
deemed, under the 1940 Act, to form a controlling group with respect
to FMR Corp.
At present, the principal operating activities of FMR Corp. are those
conducted by its division, Fidelity Investments Retail Marketing
Company, which provides marketing services to various companies within
the Fidelity organization.
Fidelity investment personnel may invest in securities for their
own accounts pursuant to a code of ethics that sets forth all
employees' fiduciary responsibilities regarding the funds, establishes
procedures for personal investing and restricts certain transactions.
For example, all personal trades in most securities require
pre-clearance, and participation in initial public offerings is
prohibited. In addition, restrictions on the timing of personal
investing in relation to trades by Fidelity funds and on short-term
trading have been adopted.
TRUSTEES AND OFFICERS
The Trustees, Members of the Advisory Board, and executive officers of
the trust are listed below. Except as indicated, each individual has
held the office shown or other offices in the same company for the
last five years. All persons named as Trustees and Members of the
Advisory Board also serve in similar capacities for other funds
advised by FMR. The business address of each Trustee, Member of the
Advisory Board, and officer who is an "interested person" (as defined
in the Investment Company Act of 1940) is 82 Devonshire Street,
Boston, Massachusetts 02109, which is also the address of FMR. The
business address of all the other Trustees is Fidelity Investments,
P.O. Box 9235, Boston, Massachusetts 02205-9235. Those Trustees who
are "interested persons" by virtue of their affiliation with either
the trust or FMR are indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d (67) , Trustee and President, is Chairman,
Chief Executive Officer and a Director of FMR Corp.; a Director and
Chairman of the Board and of the Executive Committee of FMR; Chairman
and a Director of FMR Texas Inc., Fidelity Management & Research
(U.K.) Inc., and Fidelity Management & Research (Far East) Inc.
J. GARY BURKHEAD (56), Member of the Advisory Board (1997), is Vice
Chairman and a member of the Board of Directors of FMR Corp. (1997)
and President and Chief Executive Officer of the Fidelity
Institutional Group (1997). Previously, Mr. Burkhe ad served as
President of Fidelity Management & Research Company.
RALPH F. COX (65), Trustee, is President of RABAR Enterprises
(management consulting-engineering industry, 1994). Prior to February
1994, he was President of Greenhill Petroleum Corporation (petroleum
exploration and production). Until March 1990, Mr. Cox was President
and Chief Operating Officer of Union Pacific Resources Company
(exploration and production). He is a Director of USA Waste
Services, Inc. (non-hazardous waste, 1993), CH2M Hill Companies
(engineering), Rio Grande, Inc. (oil and gas production), and Daniel
Industries (petroleum measurement equipment manufacturer). In
addition, he is a member of advisory boards of Texas A&M University
and the University of Texas at Austin.
PHYLLIS BURKE DAVIS (65), Trustee (1992). Prior to her
retirement in September 1991, Mrs. Davis was the Senior Vice President
of Corporate Affairs of Avon Products, Inc. She is currently a
Director of BellSouth Corporation (telecommunications), Eaton
Corporation (manufacturing, 1991), and the TJX Companies, Inc. (retail
stores), and previously served as a Director of Hallmark Cards, Inc.
(1985-1991) and Nabisco Brands, Inc. In addition, she is a member of
the President's Advisory Council of The University of Vermont School
of Business Administration.
ROBERT M. GATES (53), Trustee (1997), is a consultant, author, and
lecturer (1993). Mr. Gates was Director of the Central Intelligence
Agency (CIA) from 1991-1993. From 1989 to 1991, Mr. Gates served as
Assistant to the President of the United States and Deputy National
Security Advisor. Mr. Gates is currently a Trustee for the Forum For
International Policy, a Board Member for the Virginia Neurological
Institute, and a Senior Advisor of the Harvard Journal of World
Affairs. In addition, Mr. Gates also serves as a member of the
corporate board for LucasVarity PLC (automotive components and diesel
engines), Charles Stark Draper Laboratory (non-profit), NACCO
Industries, Inc. (mining and manufacturing), and TRW Inc. (original
equipment and replacement products).
E. BRADLEY JONES (69), Trustee. Prior to his retirement in 1984,
Mr. Jones was Chairman and Chief Executive Officer of LTV Steel
Company. He is a Director of TRW Inc. (original equipment and
replacement products), Consolidated Rail Corporation, Birmingham
Steel Corporation, and RPM, Inc. (manufacturer of chemical products),
and he previously served as a Director of NACCO Industries, Inc.
(mining and manufacturing, 1985-1995) Hyster-Yale Materials Handling,
Inc. (1985-1995) and Cleveland-Cliffs Inc. (mining), and as a Trustee
of First Union Real Estate Investments. In addition, he serves as a
Trustee of the Cleveland Clinic Foundation, where he has also been a
member of the Executive Committee as well as chairman of the Board and
President, a Trustee and member of the Executive Committee of
University School (Cleveland), and a Trustee of Cleveland Clinic
Florida.
DONALD J. KIRK (64), Trustee, is Executive-in-Residence (1995)
at Columbia University Graduate School of Business and a financial
consultant. From 1987 to January 1995, Mr. Kirk was a Professor at
Columbia University Graduate School of Business. Prior to 1987, he was
Chairman of the Financial Accounting Standards Board. Mr. Kirk is a
Director of General Re Corporation (reinsurance), and he previously
served as a Director of Valuation Research Corp. (appraisals and
valuations, 1993-1995). In addition, he serves as Chairman of the
Board of Directors of the National Arts Stabilization Fund, Chairman
of the Board of Trustees of the Greenwich Hospital Association, a
Member of the Public Oversight Board of the American Institute of
Certified Public Accountants' SEC Practice Section (1995), and as a
Public Governor of the National Association of Securities Dealers,
Inc. (1996).
*P ETER S. LYNCH (54), Trustee, is Vice Chairman and Director of
FMR (1992). Prior to May 31, 1990, he was a Director of FMR and
Executive Vice President of FMR (a position he held until March 31,
1991); Vice President of Fidelity Magellan Fund and FMR Growth Group
Leader; and Managing Director of FMR Corp. Mr. Lynch was also Vice
President of Fidelity Investments Corporate Services (1991-1992). In
addition, he serves as a Trustee of Boston College, Massachusetts Eye
& Ear Infirmary, Historic Deerfield (1989) and Society for the
Preservation of New England Antiquities, and as an Overseer of the
Museum of Fine Arts of Boston.
WILLIAM O. McCOY (63), Truste e (1997), is the Vice President of
Finance for the University of North Carolina (16-school system, 1995).
Prior to his retirement in December 1994, Mr. McCoy was Vice Chairman
of the Board of BellSouth Corporation (telecommunications,
1984) and President of BellSouth Enterprises (1986). He is
currently a Director of Liberty Corporation (holding company, 1984),
Weeks Corporation of Atlanta (real estate, 1994), Carolina Power and
Light Company (electric utility, 1 996), and the Kenan Transport
C o. (1996). Previously, he was a Director of First American
Corporation (bank holding company, 1979-1996). In addition, Mr. McCoy
serves as a member of the Board of Visitors for the University of
North Carolina at Chapel Hill (1994) and for the Kenan-Flager
Business School (University of North Carolina at Chapel Hill,
1988).
GERALD C. McDONOUGH (68), Trustee and Chairman of the
non-interested Trustees, is Chairman of G.M. Management Group
(strategic advisory services). Mr. McDonough is a Director of York
International Corp. (air conditioning and refrigeration), Commercial
Intertech Corp. (hydraulic systems, building systems, and metal
products, 1992), CUNO, Inc. (liquid and gas filtration products,
1996), and Associated Estates Realty Corporation (a real estate
investment trust, 1993). Mr. McDonough served as a Director of
ACME-Cleveland Corp. (metal working, telecommunications, and
electronic products) from 1987-1996.
MARVIN L. MANN (64), Trustee (1993) is Chairman of the Board,
President, and Chief Executive Officer of Lexmark International, Inc.
(office machines, 1991). Prior to 1991, he held the positions of Vice
President of International Business Machines Corporation ("IBM") and
President and General Manager of various IBM divisions and
subsidiaries. Mr. Mann is a Director of M.A. Hanna Company (chemicals,
1993) , Imation Corp. (imaging and information storage, 1997),
and Infomart (marketing services, 1991), a Trammell Crow Co. In
addition, he serves as the Campaign Vice Chairman of the Tri-State
United Way (1993) and is a member of the University of Alabama
President's Cabinet.
*ROBERT C. POZEN (51), Trustee (1997) and Senior Vice President, is
also President and a Director of FMR (1997); and President and a
Director of FMR Texas Inc. (1997), Fidelity Management & Research
(U.K.) Inc. (1997), and Fidelity Management & Research (Far East) Inc.
(1997). Previously, Mr. Pozen served as General Counsel, Managing
Director, and Senior Vice Preside nt of FMR Corp.
THOMAS R. WILLIAMS (68), Trustee, is President of The Wales Group,
Inc. (management and financial advisory services). Prior to
retiring in 1987, Mr. Williams served as Chairman of the Board of
First Wachovia Corporation (bank holding company), and Chairman and
Chief Executive Officer of The First National Bank of Atlanta and
First Atlanta Corporation (bank holding company). He is currently a
Director of ConAgra, Inc. (agricultural products), Georgia Power
Company (electric utility), National Life Insurance Company of
Vermont, American Software, Inc., and AppleSouth, Inc. (restaurants,
1992).
DWIGHT D. CHURCHILL (43). is Vice President of Bond Funds, group
leader of the Bond Group, and is Senior Vice President of FMR (1997).
Mr. Churchill joined Fidelity in 1993 as Vice President and Group
Leader of Taxable Fixed-Income Investments. Prior to joining Fidelity,
he spent three years as president and CEO of CSI Asset Management,
Inc, in Chicago, an investm ent management subsidiary of The
Prudential.
FRED L. HENNING, JR. (58), is Vice President of Fidelity's
Fixed-Income Group (1995) and Senior Vice President of FMR
(1995). Before assuming his current responsibilities, Mr. Henning
was head of Fidelity's Money Market Division.
NORM LIND (41), is Vice President of Spartan Short-Intermediate
Municipal Income (1995) and Spartan Intermediate Munic ipal Income
(1995), and an employee of FMR (1986).
ARTHUR S. LORING (49), Secretary, is Senior Vice President (1993)
and General Counsel of FMR, Vice President-Legal of FMR Corp., and
Vice President and Clerk of FDC.
R ICHARD A. SILVER (51), Treasurer (1997), is Treasurer of the
Fidelity funds and is an employee of FMR (1997). Before joining FMR,
Mr. Silver served as Executive Vice President, Fund Accounting &
Administration at First Data Investor Services Group, Inc.
(1996-1997). Prior to 1996, Mr. Silver was Senior Vice President and
Chief Financial Officer at The Colonial Group, Inc. Mr. Silver also
served as Chairman of the Accounting/Treasurer's Committee of the
Investment Company Institute (1987-1 993).
THOMAS D. MAHER (52), Assistant Vice President, is Assistant Vice
President of Fidelity's municipal bond funds (1996) and of Fidelity's
money market funds and Vice President and Associate General Counsel of
FMR Texas Inc.
JOHN H. COSTELLO (51), Assistant Treasurer, is an employee of
FMR.
LEONARD M. RUSH (51), Assistant Treasurer (1994), is an employee of
FMR (1994). Prior to becoming Assistant Treasurer of the Fidelity
funds, Mr. Rush was Chief Compliance Officer of FMR Corp. (1993-1994)
and Chief Financial Officer of Fidelity Brokerage Services, Inc.
(1990-1993).
THOMAS J. SIMPSON (39), Assistant Treasurer, is Assistant Treasurer
of Fidelity's municipal bond funds (1996) and of Fidelity's money
market funds (1996) and an employee of FMR (1996). Prior to joining
FMR, Mr. Simpson was Vice President and Fund Controller of Liberty
Investment Services (1987-1995).
The following table sets forth information describing the
compensation of each Trustee and Member of the Advisory Board
of the fund for his or her services for the fiscal year ended August
31, 1997, or calendar year ended December 31, 1996, as applicable.
COMPENSATION TABLE
<TABLE>
<CAPTION>
<S> <C> <C>
Trustees Aggregate Compensation Total
and from Spartan Compensation from the
Members of the Advisory Intermediate Municipal Fund Complex*A
Board IncomeB,C
J. Gary Burkhead ** $ 0 $ 0
Ralph F. Cox $ 87 $ 137,700
Phyllis Burke Davis $ 85 $ 134,700
Richard J. Flynn*** $ 30 $ 168,000
Robert M. Gates **** $ 46 $ 0
Edward C. Johnson 3d ** $ 0 $ 0
E. Bradley Jones $ 85 $ 134,700
Donald J. Kirk $ 86 $ 136,200
Peter S. Lynch ** $ 0 $ 0
William O. McCoy***** $ 86 $ 85,333
Gerald C. McDonough $ 101 $ 136,200
Edward H. Malone*** $ 25 $ 136,200
Marvin L. Mann $ 87 $ 134,700
Robert C. Pozen** $ 0 $ 0
Thomas R. Williams $ 86 $ 136,200
</TABLE>
* Information is for the calendar year ended December 31, 1996 for
235 funds in the complex.
** Interested Trustees of the fund are compensated by FMR.
*** Richard J. Flynn and Edward H. Malone served on the Board of
Trustees through December 31, 1996.
**** Mr. Gates was appointed to the Board of Trustees of Fidelity
Union Street Trust effective March 1, 1997.
***** During the period from May 1, 1996 through December 31, 1996,
William O. McCoy served as a Member of the Advisory Board of the
trust. Mr. McCoy was appointed to the Board of Trustees of Fidelity
Union Street Trust effective January 1, 1997.
A Compensation figures include cash, a pro rata portion of benefits
accrued under the retirement program for the period ended December 30,
1996 and required to be deferred, and may include amounts deferred at
the election of Trustees.
B Compensation figures include cash, and may include amounts
required to be deferred, a pro rata portion of benefits accrued under
the retirement program for the period ended December 30, 1996 and
required to be deferred, and amounts deferred at the election of
Trustees.
C The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph
F. Cox, $ 3 , Phyllis Burke Davis, $ 3 , Richard J. Flynn,
$0, Robert M. Gates, $ 0 , E. Bradley Jones, $ 3 , Donald J.
Kirk, $ 3 , William O. McCoy, $ 0, Gerald C.
McDonough, $ 3 , Edward H. Malone, $ 3 , Marvin L. Mann,
$ 3 , and Thomas R. Williams, $ 3 .
Under a retirement program adopted in July 1988 and modified in
November 1995 and November 1996, each non-interested Trustee who
retired before December 30, 1996 may receive payments from a Fidelity
fund during his or her lifetime based on his or her basic trustee
fees and length of service. The obligation of a fund to make such
payments is neither secured nor funded. A Trustee became eligible
to participate in the program at the end of the calendar year in which
he or she reached age 72, provided that, at the time of
retirement, he or she had served as a Fidelity fund Trustee for at
least five years.
Under a deferred compensation plan adopted in September 1995 and
amended in November 1996 (the Plan), non-interested Trustees must
defer receipt of a portion of, and may elect to defer receipt of an
additional portion of, their annual fees. Amounts deferred under the
Plan are treated as though equivalent dollar amounts had been invested
in shares of a cross-section of Fidelity funds including funds in each
major investment discipline and representing a majority of Fidelity's
assets under management (the Reference Funds). The amounts ultimately
received by the Trustees under the Plan will be directly linked to the
investment performance of the Reference Funds. Deferral of fees in
accordance with the Plan will have a negligible effect on a fund's
assets, liabilities, and net income per share, and will not obligate a
fund to retain the services of any Trustee or to pay any particular
level of compensation to the Trustee. A fund may invest in the
Reference Funds under the Plan without shareholder approval.
As of December 30, 1996, the non-interested Trustees terminated the
retirement program for Trustees who retire after such date. In
connection with the termination of the retirement program, each
then-existing non-interested Trustee received a credit to his or her
Plan account equal to the present value of the estimated benefits that
would have been payable under the retirement program. The amounts
credited to the non-interested Trustees' Plan accounts are subject to
vesting and are treated as though equivalent dollar amounts had been
invested in shares of the Reference Funds. The amounts ultimately
received by the Trustees in connection with the credits to their Plan
accounts will be directly linked to the investment performance of the
Reference Funds. The termination of the retirement program and related
crediting of estimated benefits to the Trustees' Plan accounts did not
result in a material cost to the funds.
As of August 31, 1997, the Trustees, Members of the Advisory Board
and officers of the fund owned, in the aggregate, less than 1% of
the fund's total outstanding shares.
As of August 31, 1997 , the following owned of record or
beneficially 5% or more of the fund's outstanding shares: National
Financial Services Corporation, Boston, MA (29.34%).
MANAGEMENT CONTRACT
FM R is th e fund's manager pursuant to a management contract
dated March 18, 1993, which was approved by FMR, as the then sole
shareh older, on April 8, 1993.
MANAGEMENT SERVICES. The fund employs FMR to furnish
investment advisory and other services. Under the terms of its
management contract with the fund, FMR acts as investment adviser and,
subject to the supervision of the Board of Trustees, directs the
investments of the fund in accordance with its investment objective,
policies, and limitations. FMR also provides the fund with all
necessary office facilities and personnel for servicing the fund's
investments, compensates all officers of the fund and all Trustees who
are "interested persons" of the trust or of FMR, and all personnel of
the fund or FMR performing services relating to research, statistical,
and investment activities.
In addition, FMR or its affiliates, subject to the supervision of
the Board of Trustees, provide the management and administrative
services necessary for the operation of the fund. These services
include providing facilities for maintaining the fund's organization;
supervising relations with custodians, transfer and pricing agents,
accountants, underwriters, and other persons dealing with the fund;
preparing all general shareholder communications and conducting
shareholder relations; maintaining the fund's records and the
registration of the fund's shares under federal securities laws and
making necessary filings under state securities laws; developing
management and shareholder services for the fund; and furnishing
reports, evaluations, and analyses on a variety of subjects to the
Trustees.
MANAGEMENT-RELATED EXPENSES. Under the terms of the fund's
management contract, FMR is responsible for payment of all operating
expenses of the fund with certain exceptions. Specific expenses
payable by FMR include expenses for typesetting, printing, and mailing
proxy materials to shareholders, legal expenses, fees of the
custodian, auditor and interested Trustees, the fund's proportionate
share of insurance premiums and Investment Company Institute dues, and
the costs of registering shares under federal securities laws and
making necessary filings under state securities laws. The fund's
management contract further provides that FMR will pay for
typesetting, printing, and mailing prospectuses, statements of
additional information, notices, and reports to shareholders; however,
under the terms of the fund's transfer agent agreement, the transfer
agent bears the costs of providing these services to existing
shareholders. FMR also pays all fees associated with transfer agent,
dividend disbursing, and shareholder services, and pricing and
bookkeeping services.
FMR pays all other expenses of the fund with the following
exceptions: fees and expenses of the non-interested Trustees,
interest, taxes, brokerage commissions (if any), and such nonrecurring
expenses as may arise, including costs of any litigation to which the
fund may be a party, and any obligation it may have to indemnify its
officers and Trustees with respect to litigation.
MANAGEMENT FEE. For the services of FMR under the management
contract, the fund pays FMR a monthly management fee at the annual
rate of 0.55% of its average net assets throughout the month. The
management fee paid to FMR by the fund is reduced by an amount equal
to the fees and expenses paid by the fund to the non-interested
Trustees.
For the fiscal years ended August 31, 1997, 1996, and 1995, the fund
paid FMR management fees of $ 1,161,719 , $ 1,223,445 , and
$ 1,213,370 , respectively, after reduction of fees and expenses
paid by the fund to the non-interested Trustees. In addition, for the
fiscal years ended August 31 , 199 7 , 199 6 , and
199 5 , credits reducing management fees amounted to $ 9,003,
$7,768 and $0 respectively .
FMR may, from time to time, voluntarily reimburse all or a portion
of the fund's operating expenses (exclusive of interest, taxes,
brokerage commissions, and extraordinary expenses). FMR retains the
ability to be repaid for these expense reimbursements in the amount
that expenses fall below the limit prior to the end of the fiscal
year.
Expense reimbursements by FMR will increase the fund's total
returns and yield, and repayment of the reimbursement by the fund will
lower its total returns and yield.
During the past three fiscal years, FMR voluntarily agreed, subject to
revision or termination, to reimburse the fund if and to the
extent that the fund's aggregate operating expenses, including
management fees, were in excess of an annual rate of its average net
assets. The table below shows the periods of reimbursement and levels
of expense limitations, the dollar amount of management fees
incurred under the fund's contract before reimbursement, and the
dollar amount of management fees reimburs ed by FMR under the
expense reimbursement for each period.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Periods of Aggregate Fiscal
Years Management Amount of
Expense Limitation Operating Ended Fee Management
From To Expense August
31 Before Fee
Limitation Reimbursement Reimbursement
Spartan
Intermediate February 1, January 31, .45% 1997 $ 1,161,719 --
Municipal
Income 1995 1996
October 1, January 31, .40% 1996 $ 1,223,445 $ 106,892
1994 1995
August 1, September .30% 1995 $ 1,213,370 $ 289,444
1994 30, 1994
</TABLE>
DISTRIBUTION AND SERVICE PLAN
The Trustees have approved a Distribution and Service Plan on
behalf of the fund (the Plan) pursuant to Rule 12b-1 under the 1940
Act (the Rule). The Rule provides in substance that a mutual fund may
not engage directly or indirectly in financing any activity that is
primarily intended to result in the sale of shares of the fund except
pursuant to a plan approved on behalf of the fund under the Rule. The
Plan, as approved by the Trustees, allows the fund and FMR to incur
certain expenses that might be considered to constitute indirect
payment by the fund of distribution expenses.
Under the Plan, if the payment of management fees by the fund to
FMR is deemed to be indirect financing by the fund of the distribution
of its shares, such payment is authorized by the Plan. The Plan
specifically recognizes that FMR may use its management fee revenue,
as well as its past profits or its other resources, to pay FDC for
expenses incurred in connection with the distribution of fund shares.
In addition, the Plan provides that FMR, directly or through FDC, may
make payments to third parties, such as banks or broker-dealers, that
engage in the sale of fund shares, or provide shareholder support
services. Currently, the Board of Trustees has not authorized such
payments for Spartan Intermediate Municipal Income Fund shares.
FMR made no payments either directly or through FDC to third
parties for the fiscal year ended August 1997.
Prior to approving the Plan, the Trustees carefully considered all
pertinent factors relating to the implementation of the Plan, and
determined that there is a reasonable likelihood that the Plan will
benefit the fund and its shareholders. In particular, the Trustees
noted that the Plan does not authorize payments by the fund other than
those made to FMR under its management contract with the fund. To the
extent that the Plan gives FMR and FDC greater flexibility in
connection with the distribution of fund shares additional sales of
fund shares may result. Furthermore, certain shareholder support
services may be provided more effectively under the Plan by local
entities with whom shareholders have other relationships.
The Plan for Spartan Intermediate Municipal Income was approved by
FMR, the then sole shareholder of the fund, on April 8, 1993.
The Glass-Steagall Act generally prohibits federally and state
chartered or supervised banks from engaging in the business of
underwriting, selling, or distributing securities. Although the scope
of this prohibition under the Glass-Steagall Act has not been clearly
defined by the courts or appropriate regulatory agencies, FDC believes
that the Glass-Steagall Act should not preclude a bank from performing
shareholder support services, or servicing and recordkeeping
functions. FDC intends to engage banks only to perform such functions.
However, changes in federal or state statutes and regulations
pertaining to the permissible activities of banks and their affiliates
or subsidiaries, as well as further judicial or administrative
decisions or interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a bank were
prohibited from so acting, the Trustees would consider what actions,
if any, would be necessary to continue to provide efficient and
effective shareholder services. In such event, changes in the
operation of the fund might occur, including possible termination of
any automatic investment or redemption or other services then
provided by the bank. It is not expected that shareholders would
suffer any adverse financial consequences as a result of any of these
occurrences. In addition, state securities laws on this issue may
differ from the interpretations of federal law expressed herein, and
banks and other financial institutions may be required to register as
dealers pursuant to state law.
The fund may execute portfolio transactions with, and purchase
securities issued by, depository institutions that receive
payments under the Plan. No preference for the instruments of such
depository institutions will be shown in the selection of investments.
CONTRACTS WITH FMR AFFILIATES
The fund has entered into a transfer agent agreement with UMB.
Under the terms of the agreement, UMB provides transfer agency,
dividend disbursing, and shareholder services for the fund. UMB in
turn has entered into a sub-transfer agent agreement with FSC, an
affiliate of FMR. Under the terms of the sub-agreement, FSC performs
all processing activities associated with providing these services for
the fund and receives all related transfer agency fees paid to
UMB.
For providing transfer agency services, FSC receives an annual
account fee and an asset-based fee each based on account size and fund
type for each retail account and certain institutional accounts. With
respect to certain institutional retirement accounts, FSC receives an
annual account fee and an asset-based fee based on account type or
fund type. These annual account fees are subject to increase based on
postal rate changes.
FSC also collects small account fees from certain accounts with
balances of less than $2,500.
In addition, FSC receives the pro rata portion of the transfer
agency fees applicable to shareholder accounts in each Fidelity
Freedom Fund, a fund of funds managed by an FMR affiliate, according
to the percentage of the Freedom Fund's assets that is invested in the
fund.
FSC pays out-of-pocket expenses associated with providing transfer
agent services. In addition, FSC bears the expense of typesetting,
printing, and mailing prospectuses, statements of additional
information, and all the other reports, notices, and statements to
existing shareholders, with the exception of proxy statements.
The fund has also entered into a service agent agreement with UMB.
Under the terms of the agreement, UMB provides pricing and bookkeeping
services for the fund. UMB in turn has entered into a sub-service
agent agreement with FSC. Under the terms of the sub-agreement, FSC
performs all processing activities associated with providing these
services, including calculating the NAV and dividends for the fund and
maintaining the fund's portfolio and general accounting records, and
receives all related pricing and bookkeeping fees paid to UMB.
For providing pricing and bookkeeping services, FSC receives a
monthly fee based on the fund's average daily net assets throughout
the month.
FMR bears the cost of transfer agency, dividend disbursing, and
shareholder services and pricing and bookkeeping services under the
terms of its management contract with the fund.
The fund has entered into a distribution agreement with FDC, an
affiliate of FMR organized as a Massachusetts corporation on July 18,
1960. FDC is a broker-dealer registered under the Securities Exchange
Act of 1934 and is a member of the National Association of Securities
Dealers, Inc. The distribution agreement calls for FDC to use all
reasonable efforts, consistent with its other business, to secure
purchasers for shares of the fund, which are continuously offered at
NAV. Promotional and administrative expenses in connection with the
offer and sale of shares are paid by FMR.
DESCRIPTION OF THE TRUST
TRUST ORGANIZATION. Spartan Intermediate Municipal Income Fund is a
fund of Fidelity Union Street Trust, an open-end ma nagement
investment company organized as a Massachusetts business trust on
March 1, 1974 as Fidelity Daily Income Trust. The trust's name was
changed to Fidelity Union Street Trust by a supplement to the
Declaration of Trust dated and filed with the Com monwealth of
Massachusetts on April 30, 1990. Currently, there are seven funds
of the Massachusetts trust: Spartan Municipal Income Fund, Spartan
Ginnie Mae Fund, Spartan Maryland Municipal Income Fund, Spartan
Intermediate Municipal Income Fund, Spartan Short-Intermediate
Municipal Income Fund, Spartan Arizona Municipal Income Fund, and
Fidelity Export and Multinational Fund. Spartan Short-Intermediate
Fund entered into an agreement to acquire all of the assets of Spartan
Short-Intermediate Municipal Fund, a series of Fidelity Daily
Municipal Trust on October 20, 1993. The Declaration of Trust permits
the Trustees to create additional funds.
In the event that FMR ceases to be the investment adviser to the
trust or a fund, the right of the trust or fund to use the
identifying names "Fidelity" and "Spartan" may be withdrawn.
The assets of the trust received for the issue or sale of shares of
each fund and all income, earnings, profits, and proceeds thereof,
subject only to the rights of creditors, are especially allocated to
such fund, and constitute the underlying assets of such fund. The
underlying assets of each fund are segregated on the books of account,
and are to be charged with the liabilities with respect to such
fund and with a share of the general expenses of the trust. Expenses
with respect to the trust are to be allocated in proportion to the
asset value of the respective funds, except where allocations of
direct expense can otherwise be fairly made. The officers of the
trust, subject to the general supervision of the Board of Trustees,
have the power to determine which expenses are allocable to a given
fund, or which are general or allocable to all of the funds. In the
event of the dissolution or liquidation of the trust, shareholders
of each fund are entitled to receive as a class the underlying assets
of such fund available for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. The trust is an entity of the type
commonly known as a "Massachusetts business trust." Under
Massachusetts law, shareholders of such a trust may, under certain
circumstances, be held personally liable for the obligations of the
trust. The Declaration of Trust provides that the trust shall not have
any claim against shareholders except for the payment of the purchase
price of shares and requires that each agreement, obligation, or
instrument entered into or executed by the trust or the Trustees
include a provision limiting the obligations created thereby to the
trust and its assets. The Declaration of Trust provides for
indemnification out of each fund's property of any shareholder held
personally liable for the obligations of the fund. The Declaration of
Trust also provides that each fund shall, upon request, assume the
defense of any claim made against any shareholder for any act or
obligation of the fund and satisfy any judgment thereon. Thus, the
risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which a fund
itself would be unable to meet its obligations. FMR believes that,
in view of the above, the risk of personal liability to shareholders
is remote.
The Declaration of Trust further provides that the Trustees, if they
have exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declaration of Trust protects Trustees
against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of their
office.
VOTING RIGHTS. Each fund's capital consists of shares of beneficial
interest. As a shareholder, you receive one vote for each dollar
value of net asset value you own. The shares have no preemptive or
conversion rights; the voting and dividend rights, the right of
redemption, and the privilege of exchange are described in the
Prospectus. Shares are fully paid and nonassessable, except as set
forth under the heading "Shareholder and Trustee Liability" above.
Shareholders representing 10% or more of the trust or a fund may, as
set fort h in the Declaration of Trust, call meetings of the trust
or a fund for any purpose related to the trust or fund, as the case
may be, including, in the case of a meeting of the entire trust, the
purpose of voting on removal of one or more Trustees. The trust or
any fund may be terminated upon the sale of its assets to another
open-end management investment company, or upon liquidation and
distribution of its assets, if approved by vote of the holders of a
majority of the trust or the fund, as determined by the current value
of each shareholder's investment in the fund or trust. If not so
terminated, the trust and its funds will continue indefinitely. Each
fund may invest all of its assets in another investment company.
CUSTODIAN. U MB Bank, n.a., 1010 Grand Avenue, Kansas City,
Missouri, is custodian of the assets of the fund. The custodian is
responsible for the safekeeping of a fund's assets and the appointment
of any subcustodian banks and clearing agencies. The custodian
takes no part in determining the investment policies of a fund or in
deciding which securities are purchased or sold by a fund. However, a
fund may invest in obligations of the custodian and may purchase
securities from or sell securities to the custodian.
FMR, its officers and directors, its affiliated companies, and the
Board of Trustees may, from time to time, conduct transactions with
various banks, including banks serving as custodians for certain funds
advised by FMR. Transactions that have occurred to date include
mortgages and personal and general business loans. In the judgment of
FMR, the terms and conditions of those transactions were not
influenced by existing or potential custodial or other fund
relationships.
AUDITOR. Coopers & Lybrand L.L.P., One Post Office Square, Boston,
Massachusetts serves as the trust's independent accountant. The
auditor examines financial statements for the fund and provides other
audit, tax, and related services.
FINANCIAL STATEMENTS
The fund's financial statements and financial highlights for the
fiscal year ended August 31, 1997, and report of the auditor,
are included in the fund's Annual Report, which is a separate
report supplied with this SAI. The fund's financial stateme nts,
inclu ding the financial highlights, and report of the auditor are
incorporated herein by reference. For a free additional copy of
the fund's Annual Report, contact Fidelity at 1-800-544-8888, 82
Devonshire Street, Boston, MA 02109.
APPENDIX
DOLLAR-WEIGHTED AVERAGE MATURITY is derived by multiplying the value
of each investment by the time remaining to its maturity, adding these
calculations, and then dividing the total by the value of the fund's
portfolio. An obligation's maturity is typically determined on a
stated final maturity basis, although there are some exceptions to
this rule.
For example, if it is probable that the issuer of an instrument will
take advantage of a maturity-shortening device, such as a call,
refunding, or redemption provision, the date on which the instrument
will probably be called, refunded, or redeemed may be considered to be
its maturity date. When a municipal bond issuer has committed to call
an issue of bonds and has established an independent escrow account
that is sufficient to, and is pledged to, refund that issue, the
number of days to maturity for the prerefunded bond is considered to
be the number of days to the announced call date of the bonds.
The descriptions that follow are examples of eligible ratings for
the fund. The fund may, however, consider the ratings for other
types of investments and the ratings assigned by other rating
organizations when determining the eligibility of a particular
investment.
DESCRIPTION OF MOODY' S INVESTOR S SERVICE RATINGS OF MUNICIPAL
OBLIGATIONS
Moody's ratings for long-term municipal obligations fall within
nine categories. They range from Aaa (highest quality) to C (lowest
quality). Those bonds within the Aa through B categories that Moody's
believes possess the strongest credit attributes within those
categories are designated by the symbol "1."
AAA - Bonds that are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edged." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
AA - Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high-grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than the Aaa securities.
A - Bonds that are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade obligations.
Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility to
impairment sometime in the future.
BAA - Bonds that are rated Baa are considered as medium-grade
obligations, (i.e., they are neither highly protected nor poorly
secured). Interest payments and principal security appear adequate for
the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
BA - Bonds that are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in this class.
B - Bonds that are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or
of maintenance of other terms of the contract over any long period of
time may be small.
CAA - Bonds that are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with respect
to principal or interest.
CA - Bonds that are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have
other marked short-comings.
C - Bonds that are rated C are the lowest-rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
DESCRIPTION OF STANDARD & POOR'S RATINGS OF MUNICIPAL DEBT
Municipal debt issues may be designated by Standard & Poor's as
either investment grade ("AAA" through "BBB") or speculative grade
("BB" through "D"). While speculative grade debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major exposures to adverse conditions. Ratings from
AA through CCC may be modified by the addition of a plus sign (+) or
minus sign (-) to show relative standing within the major rating
categories.
AAA - Debt rated AAA has the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay
principal is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the highest rated issues only in
small degree.
A - Debt rated A has a strong capacity to pay interest and repay
principal, although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher rated categories.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in
higher-rated categories.
BB - Debt rated BB has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or economic
conditions which could lead to inadequate capacity to meet timely
interest and principal payments. The BB rating category is also used
for debt subordinated to senior debt that is assigned an actual or
implied BBB- rating.
B - Debt rated B has a greater vulnerability to default but currently
has the capacity to meet interest payments and principal repayments.
Adverse business, financial, or economic conditions will likely impair
capacity or willingness to pay interest and repay principal. The B
rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied BB or BB- rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial, and
economic conditions to meet timely payment of interest and repayment
of principal. In the event of adverse business, financial, or economic
conditions, it is not likely to have the capacity to pay interest and
repay principal. The CCC rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied B or
B- rating.
CC - Debt rated CC is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC debt rating.
C - The rating C is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC- debt rating. The C
rating may be used to cover a situation where a bankruptcy petition
has been filed but debt service payments are continued.
CI - The rating CI is reserved for income bonds on which no interest
is being paid.
D - Debt rated D is in payment default. The D rating category is used
when interest payments or principal payments are not made on the date
due even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period. The
D rating will also be used upon the filing of a bankruptcy petition if
debt service payments are jeopardized.
SPARTAN SHORT-INTERMEDIATE MUNICIPAL INCOME FUND
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER PROSPECTUS SECTION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 ................................ Cover Page
2 a ................................ Expenses
b, c ................................ Contents; The Funds at a Glance; Who May Want
to Invest
3 a ................................ Financial Highlights
b ................................ *
c, d ................................ Performance
4 a i............................... Charter
ii.............................. The Funds at a Glance; Investment Principles and
Risks
b ................................ Investment Principles and Risks
c ................................ Who May Want to Invest; Investment Principles
and Risks
5 a ................................ Charter
b i............................... Cover Page: The Funds at a Glance; Charter;
Doing Business with Fidelity
ii.............................. Charter
iii............................. Expenses; Breakdown of Expenses
c ................................ Charter
d ................................ Charter; Breakdown of Expenses
e ................................ Cover Page; Charter
f ................................ Expenses
g i............................... Charter
ii.............................. *
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
5A ................................ Performance
6 a i............................... Charter
ii.............................. How to Buy Shares; How to Sell Shares;
Transaction Details; Exchange Restrictions
iii............................. Charter
b ................................ Charter
c ................................ Transaction Details; Exchange Restrictions
d ................................ *
e ................................ Doing Business with Fidelity; How to Buy Shares;
How to Sell Shares; Investor Services
f, g ................................ Dividends, Capital Gains, and Taxes
h ................................ *
7 a ................................ Cover Page; Charter
b ................................ Expenses; How to Buy Shares; Transaction Details
c ................................ *
d ................................ How to Buy Shares
e ................................ *
f ................................ Breakdown of Expenses
8 ................................ How to Sell Shares; Investor Services; Transaction
Details; Exchange Restrictions
9 ................................ *
</TABLE>
* Not Applicable
SPARTAN SHORT-INTERMEDIATE MUNICIPAL INCOME FUND
CROSS REFERENCE SHEET
(CONTINUED)
FORM N-1A
ITEM NUMBER STATEMENT OF ADDITIONAL INFORMATION SECTION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
10, 11 ............................... Cover Page
12 ............................... Descrption of the Trusts
13 a - c ............................... Investment Policies and Limitations
d ............................... Portfolio Transactions
14 a - c ............................... Trustees and Officers
15 a, b ............................... *
c ............................... Trustees and Officers
16 a i ............................... FMR, Portfolio Transactions
ii ............................... Trustees and Officers
iii ............................... Management Contracts
b ............................... Management Contracts
c, d ............................... Contracts with FMR Affiliates
e ............................... *
f ............................... Distribution and Service Plans
g ............................... *
h ............................... Description of the Trusts
i ............................... Contracts with FMR Affiliates
17 a ............................... Portfolio Transactions
b ............................... *
c ............................... Portfolio Transactions
d, e ............................... *
18 a ............................... Description of the Trusts
b ............................... *
19 a ............................... Additional Purchase and Redemption Information
b ............................... Additional Purchase and Redemption Information;
Valuation of Portfolio Securities
c ............................... *
20 ............................... Distributions and Taxes
21 a, b ............................... Contracts with FMR Affiliates
c ............................... *
22 a ............................... *
b ............................... Performance
23 ............................... Financial Statements
</TABLE>
* Not Applicable
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how
the fund invests and the services available to shareholders.
SPARTAN(REGISTERED TRADEMARK)
SHORT-
INTERMEDIATE
MUNICIPAL
INCOME
FUND
To learn more about the fund and its investments, you can obtain a
copy of the fund's most recent financial report and portfolio
listing, or a copy of the Statement of Additional Information (SAI)
dated October 21, 1997. The SAI has been filed with the Securities
and Exchange Commission (SEC) and is available along with other
related materials on the SEC's Internet Web site (http://www.sec.gov).
The SAI is incorporated herein by reference (legally forms a part of
the prospectus). For a free copy of either document, call Fidelity at
1-800-544-8888.
Mutual fund shares are not deposits or obligations of, or guaranteed
by, any depository institution. Shares are not insured by the FDIC,
Federal Reserve Board, or any other agency, and are subject to
investment risks, including possible loss of principal amount
invested.
LIKE ALL MUTUAL FUNDS, THESE
SECURITIES HAVE NOT BEEN APPROVED
OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE
COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
STM-pro-1097
(fund number 404, trading symbol FSTFX)
The fund seeks a high level of income free from federal
income tax. The fund invests normally in investment grade municipal
securities while maintaining an average maturity of between two and
five years.
PROSPECTUS
OCTOBER 21, 1997(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET,
BOSTON, MA 02109
CONTENTS
KEY FACTS THE FUND AT A GLANCE
WHO MAY WANT TO INVEST
EXPENSES The fund's yearly operating
expenses.
FINANCIAL HIGHLIGHTS A summary of
the fund's financial data.
PERFORMANCE How the fund has done
over time.
THE FUND IN DETAIL CHARTER How the fund is organized.
INVESTMENT PRINCIPLES AND RISKS The
fund's overall approach to investing.
BREAKDOWN OF EXPENSES How
operating costs are calculated and
what they include.
YOUR ACCOUNT DOING BUSINESS WITH FIDELITY
TYPES OF ACCOUNTS Different ways to
set up your account.
HOW TO BUY SHARES Opening an
account and making additional
investments.
HOW TO SELL SHARES Taking money out
and closing your account.
INVESTOR SERVICES Services to help you
manage your account.
SHAREHOLDER AND DIVIDENDS, CAPITAL GAINS,
ACCOUNT POLICIES AND TAXES
TRANSACTION DETAILS Share price
calculations and the timing of
purchases and redemptions.
EXCHANGE RESTRICTIONS
KEY FACTS
THE FUND AT A GLANCE
GOAL: High current income free from federal income tax. As with any
mutual fund, there is no assurance that the fund will achieve its
goal.
STRATEGY: Normally invests in investment grade municipal
securities while maintaining an average maturity of two to five
years.
MANAGEMENT: Fidelity Management & Research Company (FMR) is the
management arm of Fidelity Investments, which was established in 1946
and is now America's largest mutual fund manager.
SIZE: As of August 31, 1997, the fu nd had over $725 million
in assets.
WHO MAY WANT TO INVEST
This non-diversified fund may be a ppropriate for investors in
higher tax brackets who seek high current income that is free from
federal income taxes. The fund's level of risk and potential
reward depend on the quality and maturity of its investments.
The fund is designed to offer greater share price stability than
funds that invest in long-term securities. You should consider
your investment objective and tolerance for risk when making an
investment decision.
The value of the fund's investments and the income they generate will
vary from day to day, and generally reflect interest rates,
market conditions, and other economic and political news.
When you sell your shares, they may be worth more or less than what
you paid for them. By itself, the fund does not constitute a
balanced investment plan.
THE SPECTRUM OF
FIDELITY FUNDS
BROAD CATEGORIES OF FIDELITY
FUNDS ARE PRESENTED HERE IN
ORDER OF ASCENDING RISK.
GENERALLY, INVESTORS SEEKING TO
MAXIMIZE RETURN MUST ASSUME
GREATER RISK. SPARTAN
SHORT-INTERMEDIATE MUNICIPAL
INCOME IS IN THE INCOME
CATEGORY.
(SOLID BULLET) MONEY MARKET SEEKS
INCOME AND STABILITY BY
INVESTING IN HIGH-QUALITY,
SHORT-TERM INVESTMENTS.
(RIGHT ARROW) INCOME SEEKS INCOME BY
INVESTING IN BONDS.
(SOLID BULLET) GROWTH AND INCOME SEEKS
LONG-TERM GROWTH AND INCOME
BY INVESTING IN STOCKS AND
BONDS.
(SOLID BULLET) GROWTH SEEKS LONG-TERM
GROWTH BY INVESTING MAINLY IN
STOCKS.
(CHECKMARK)
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you may pay when you buy
or sell shares of the fund. In addition, you may be charged
an annual account maintenance fee if your account balance falls below
$2,500. See "Transaction Details," page , for an explanation of how
and when these charges apply.
Sales charge on purchases None
and reinvested distributions
Deferred sales charge on redemptions None
Annual account maintenance fee $12.00
(for accounts under $2,500)
ANNUAL FUND OPERATING EXPENSES are paid out of the fund's
assets. The fund pays a management fee to FMR. FMR is responsible
for the payment of all other fund expenses with certain limited
exceptions. Expenses are factored into the fund's share
price or dividends and are not charged directly to shareholder
accounts (see "Breakdown of Expenses" page ).
The following figures are based on historical expenses and are
calculated as a percentage of average net assets. FMR has
entered into arrangements on behalf of the fund with the
fund's custodian and transfer agent whereby credits realized as a
result of unin vested cash balances are used to reduce
fund expenses.
Management fee 0.55 %
12b-1 fee None
Other expenses 0.00 %
Total fund operating expenses 0.55 %
EXAMPLES: Let's say, hypothetically, that the fund's annual return is
5% and that your shareholder transaction expenses and the fund's
annual operating expenses are exactly as just described. For every
$1,000 you invested, here's how much you would pay in total
expenses if you close your account after the number of years
indicated:
UNDERSTANDING
EXPENSES
Operating a mutual fund
involves a variety of expenses
for portfolio management,
shareholder statements, tax
reporting, and other services.
The management fee is paid
from the fund's assets, and its
effect is already factored into
any quoted share price or
return. Other expenses are
paid by FMR out of the fund's
management fee. Also as an
investor, you may pay certain
expenses directly.
(checkmark)
After 1 year $ 6
After 3 years $ 18
After 5 years $ 31
After 10 years $ 69
These examples illustrate the effect of expenses, but are not meant to
suggest actual or expected expenses or returns, all of which
may vary.
FINANCIAL HIGHLIGHTS
The financial highlights table that follows has been audited by
Coopers & Lybrand L.L.P., independent accoun tants. The fund's
financial highlights, financial statements, and report of the auditor
are included in the fund's Ann ual Report, and are incorporated by
reference into (are legally a part of) the fund's SAI. Contact
Fidelity for a free copy of the Annual Report or the SAI.
SELECTED PER-SHARE DATA
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Years ended August
31 1997 1996 1995 1994D 1993F 1992E 1991E 1990E 1989E 1988E 1987E
Net asset
value, $ 9.930 $ 9.980 $ 9.840 $ 10.090 $ 9.880 $ 9.780 $ 9.520 $ 9.490 $ 9.450 $ 9.510 $ 9.920
beginning of period
Income
from .425 .418 .429 .443 .303 .490 .559 .562 .536 .516 .433
Investment Operations
Net interest income
Net realized
and .110 (.050) .140 (.240) .210 .100 .260 .030 .040 (.060) (.410)
unrealized gain
(loss)
Total from
investment .535 .368 .569 .203 .513 .590 .819 .592 .576 .456 .023
operations
Less Distribu
tions (.425) (.418) (.429) (.443) (.303) (.490) (.559) (.562) (.536) (.516) (.433)
From net interest
income
In excess of
net -- -- -- (.010) -- -- -- -- -- -- --
realized gain
Total distribu
tions (.425) (.418) (.429) (.453) (.303) (.490) (.559) (.562) (.536) (.516) (.433)
Net asset
value, $ 10.040 $ 9.930 $ 9.980 $ 9.840 $ 10.090 $ 9.880 $ 9.780 $ 9.520 $ 9.490 $ 9.450 $ 9.510
end of period
Total
returnB,C 5.49% 3.75% 5.95% 2.05% 5.25% 6.18% 8.85% 6.42% 6.30% 4.89% .26%
RATIOS AND SUPPLEMENTAL DATA
Net assets,
end of $ 726 $ 791 $ 909 $ 1,083 $ 967 $ 659 $ 244 $ 59 $ 58 $ 77 $ 59
period (In millions)
Ratio of expenses
to .55% .54%G .55% .47%G .55%A .55% .55%G .60%G .58%G .35%G .60%G
average net assets
Ratio of net
interest 4.25% 4.17% 4.38% 4.45% 4.55%A 4.95% 5.68% 5.90% 5.69% 5.48% 4.58%
income to average
net assets
Portfolio
turnover 32% 78% 51% 44% 56%A 28% 59% 75% 82% 96% 180%
rate
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE FORMER ACCOUNT CLOSEOUT FEE AND
FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D EFFECTIVE SEPTEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF
POSITION 93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT
PRESENTATION OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL
DISTRIBUTIONS BY INVESTMENT COMPANIES." AS A RESULT, NET INTEREST
INCOME PER SHARE MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
TO TAX DIFFERENCES.
E YEARS ENDED DECEMBER 31
F FOR THE EIGHT MONTHS ENDING AUGUST 31, 1993
G FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD
HAVE BEEN HIGHER .
PERFORMANCE
Bond fund performance can be me asured as TOTAL RETURN or YIELD.
The total returns that follow are based on historical fund results.
The fund's fiscal year runs from September 1 through August 31.
The tables below show the fund's perfo rmance over past fiscal
years compared to different measures, including a comparative index
and a competitive funds average. Data for the comparative i ndex
is available only from June 30, 1993 to the present. The chart on
page presents calendar year performance.
AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fiscal periods ended Past 1 Past 5 Past 10
August 31, 1997 year years years
Spartan Short-Intermediate Municipal Income 5.49% 4.91% 5.51%
Lehman Brothers 1-5 Year Municipal Bond Index 5.75% n/a n/a
Lipper Short-Intermediate Municipal Debt Funds 5.25% 4.80% 5.84%
Average
</TABLE>
CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fiscal periods ended Past 1 Past 5 Past 10
August 31, 1997 year years years
Spartan Short-Intermediate Municipal Income 5.49% 27.05% 70.98%
Lehman Brothers 1-5 Year Municipal Bond Index 5.75% n/a n/a
Lipper Short-Intermediate Municipal Debt Funds 5.25% 26.40% 76.47%
Average
</TABLE>
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated
period of time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate
of return that, if achieved annually, would have produced the same
cumulative total return if performance had been constant over the
entire period. Average annual total returns smooth out variations in
performance; they are not the same as actual year-by-year results.
UNDERSTANDING
PERFORMANCE
YIELD illustrates the income
earned by a fund over a recent
period. 30-day yields are
usually used for bond funds.
Yields change daily, reflecting
changes in interest rates.
TOTAL RETURN reflects both the
reinvestment of income and
capital gain distributions and
any change in a fund's share
price.
(checkmark)
YIELD refers to the income generated by an investment in the fund
over a gi ven period of time, expressed as an annual percentage
rate. A TAX-EQUIVALENT YIELD shows what an investor would have to earn
before taxes to equal a tax-free yield. Yields are calculated
according to a standard that is required for all stock and bond funds.
Because this differs from other accounting methods, the quoted yield
may not equal the income actually paid to shareholders.
LEHMAN BROTHERS 1-5 YEAR MUNICIPAL BOND INDEX is a total return
performance benchmark for investment-grade municipal bonds with
maturities between one and five years.
YEAR-BY-YEAR TOTAL RETURNS
Calendar years 1987 1988 1989 1990 1991 1992 1993 1994 1995
1996
SPARTAN SHORT-INTE R.
MUNI . INCOME .26% 4.89% 6.30% 6.42% 8.85% 6.18% 7.12%
- -.09% 8.47% 3.88%
Lipper Short-Inter. Muni.
Debt Funds Average 2.56% 5.94% 7.36% 6.53% 9.15% 6.92% 7.42% -.84%
8.32% 3.33%
Consumer Price Index 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75%
2.67% 2.54% 3.32%
Percentage (%)
Row: 1, Col: 1, Value: 0.26
Row: 2, Col: 1, Value: 4.89
Row: 3, Col: 1, Value: 6.3
Row: 4, Col: 1, Value: 6.42
Row: 5, Col: 1, Value: 8.850000000000001
Row: 6, Col: 1, Value: 6.18
Row: 7, Col: 1, Value: 7.119999999999999
Row: 8, Col: 1, Value: -0.09000000000000002
Row: 9, Col: 1, Value: 8.470000000000001
Row: 10, Col: 1, Value: 3.88
(LARGE SOLID BOX) Spartan Short-Inter.
Muni. Income
Unlike the fund's returns, the total re turns of the comparative
index do not include the effect of any brokerage commissions,
transaction fees, or other costs of investing.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
cal culated by the U.S. Government.
THE COMPETITIVE FUNDS AVERAGE is the Lipper
Short-Intermediate Municipal Debt Funds Average. As of August
31, 1997, the average reflected the perfo rmance of 31
mutual funds with simi lar investment objectives. This average,
published by Lipper Analytical Services, Inc., excludes the effect
of sales loads.
The fund's recent strategies, performance, and holdings are detailed
twice a year in financial reports, which are sent to all shareholders.
For current performance or a free annual report, call 1-800-544-8888.
TOTAL RETURNS AND YIELDS ARE BASED ON PAST RESULTS AND ARE NOT AN
INDICATION OF FUTURE PERFORMANCE.
THE FUND IN DETAIL
CHARTER
SPARTAN SHORT-INTERMEDIATE MUNICIPAL INCOME IS A MUTUAL
FUND: an inves tment that pools shareholders' money and invests
it toward a specified goal. The fund is a non-diversified fund of
Fidelity Union Street Trust, an open-end management investment
company organized as a Massachusetts business trust on March 1,
1974.
THE FUND IS GOVERNED BY A BOARD OF TRUSTEES which is
responsible for protecting the interests of shareholders. The trustees
are experienced executives who meet periodically throughout the
year to oversee the fund's activities, review contractual arrangements
with companies that pro vide services to the fund, and review
the fund's performance. The trustees serve as trustees for other
Fidelity funds. The majority of trustees are not otherwise
affiliated with Fidelity.
THE FUND MAY HOLD SPECIAL SHAREHOLDER MEETINGS AND MAIL PROXY
MATERIALS. These meetings may be called to elect or remove trustees,
change fundamental policies, approve a management contract, or for
other purposes. Shareholders not attending these meetings are
encouraged to vote by proxy. Fidelity will mail proxy materials in
advance, including a voting card and information about the proposals
to be voted on. The number of votes you are entitled to is based upon
the dollar value of your investment.
FMR AND ITS AFFILIATES
The fund is managed by FMR, which chooses the fund's investments
and handles its business affairs.
Norm Lind is Vice President and manager f or Spartan
Short-Intermediate Municipal Income , which he has managed
since October 1995. He also manages other Fidelity F unds.
Since joining Fidelity in 1986, Mr. Lind has worked as
an analyst and manager.
Fidelity investment personnel may in vest in securities for their
own accounts pursuant to a code of ethics that establishes
procedures for personal investing and restricts certain transactions.
Fidelity Distributors Corporation (FDC) distributes and markets
Fidelity's funds and services.
UMB Bank, n.a. (UMB) is the fund's transfer agent, and is located
at 1010 Grand Avenue, Kansas City, Missouri. UMB employs Fidelity
Service Company, Inc. (FSC) to perform transfer agent servicing
functions for the fund.
FIDELITY FACTS
Fidelity offers the broadest
selection of mutual funds
in the world.
(solid bullet) Number of Fidelity mutual
funds: over 228
(solid bullet) Assets in Fidelity mutual
funds: over $498 billion
(solid bullet) Number of shareholder
accounts: over 33 million
(solid bullet) Number of investment
analysts and portfolio
managers: over 273
(checkmark)
FMR Corp. is the ultimate parent company of FMR. Members of the Edward
C. Johnson 3d family are the predominant owners of a class of shares
of common stock representing approximately 49% of the voting power of
FMR Corp. Under the Investment Company Act of 1940 (the 1940 Act),
control of a company is presumed where one individual or group of
individuals owns more than 25% of the voting stock of that company;
therefore, the Johnson family may be deemed under the 1940 Act to form
a controlling group with respect to FMR Corp.
FMR may use its broker-dealer affiliates and other firms that sell
fund shares to carry out the fund's transa ctions, provided that
the fund receives brokerage services and commission rates comparable
to those of other broker-dealers.
INVESTMENT PRINCIPLES AND RISKS
BOND FUNDS IN GENERAL. The yield and share price of a bond fund
change daily based on changes in interest rates and market conditions,
and in response to other economic, political or financial events. The
types and maturities of the securities a bond fund purchases and the
credit quality of their issuers will impact a bond fund's reaction to
these events.
INTEREST RATE RISK. In general, bond prices rise when interest
rates fall and fall when interest rates rise. Longer-term bonds are
usually more sensitive to interest rate changes. In other words, the
longer the maturity of a bond, the greater the impact a change in
interest rates is likely to have on the bond's price. In addition,
short-term interest rates and long-term interest rates do not
necessarily move in the same amount or in the same direction. A
short-term bond tends to react to changes in short-term interest rates
and a long-term bond tends to react to changes in long-term interest
rates.
ISSUER RISK. The price of a bond is affected by the credit quality
of its issuer. Changes in the financial condition of an issuer,
changes in general economic conditions, and changes in specific
economic conditions that affect a particular type of issuer can impact
the credit quality of an issuer. Lower quality bonds generally tend to
be more sensitive to these changes than higher quality bonds.
MUNICIPAL MARKET RISK. Municipal securities are backed by the
entity that issued them and/or other revenue streams. Municipal
security values may be significantly affected by political changes as
well as uncertainties in the municipal market related to taxation or
the rights of municipal securities holders.
FIDELITY'S APPROACH TO BOND FUNDS. The total return from a bond
includes both income and price gains or losses. In selecting
investments for a bond fund, FMR considers a bond's expected income
together with its potential for price gains or losses. While income is
the most important component of bond returns over time, a bond fund's
emphasis on income does not mean the fund invests only in the
highest-yielding bonds available, or that it can avoid losses of
principal.
FMR focuses on assembling a portfolio of income-producing bonds
that it believes will provide the best balance between risk and return
within the range of eligible investments for the fund. FMR's
evaluation of a potential investment includes an analysis of the
credit quality of the issuer, its structural features, its current
price compared to FMR's estimate of its long-term value, and any
short-term trading opportunities resulting from market inefficiencies.
In structuring a bond fund, FMR allocates assets among different
market sectors (for example, general obligation bonds of a state or
bonds financing a specific project) and different maturities based on
its view of the relative value of each sector or maturity. The
performance of the fund will depend on how successful FMR is in
pursuing this approach.
SPARTAN SHORT-INTERMEDIATE MUNICIPAL INCOME seeks high current
income that is free from federal income tax, consistent with
preservation of capital, by investing in investment-grade municipal
securities under normal conditions. Although the fund can invest in
securities of any maturity, the fund normally maintains a
dollar-weighted average maturity between two and five years.
FMR normally invests so that at least 80% of the fund's income is
derived from municipal securities whose interest is free from federal
income tax. In addition, FMR may invest all of the fund's assets in
municipal securities issued to finance private activities. The
interest from these securities is a tax-preference item for purposes
of the federal alternative minimum tax.
As of August 31, 1997, the fund's dollar-weighted average maturity
was approximately 3.2 years.
FMR may use various techniques to hedge a portion of a fund's
risks, but there is no guarantee that these strategies will work as
intended. When you sell your shares of a fund, they may be worth more
or less than what you paid for them.
FMR normally invests the fund's assets according to its investment
strategy and does not expect to invest in federally taxable
obligations. The fund also reserves the right to invest without
limitation in short-term instruments, to hold a substantial amount of
uninvested cash, or to invest more than normally permitted in
federally taxable obligations for temporary, defensive purposes.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which the fund may invest, strategies FMR may employ in
pursuit of the fund's investment obje ctive, and a summary of
related risks. Any restrictions listed supplement those discussed
earlier in this section. A complete listing of the fund's
limitations and more detailed information about the fund's
investments are contained in the fund's SAI. Policies and
limitations are considered at the time of purchase; the sale of
instruments is not required in the event of a subsequent change in
circumstances.
FMR may not buy all of these instruments or use all of these
techniques unless it believes that they are consistent with the fund's
investment objective and policies and that doing so will help the fund
achieve its goal. Fund holdings and recent investment strate gies
are detailed in the fund's financial reports, which are sent to
shareholders twice a year. For a free SAI or financial report, call
1-800-544-8888.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers
to borrow money from investors. The issuer generally pays the
investor a fixed, variable, or floating rate of interest, and must
repay the amount borrowed at maturity. Some debt securities, such as
zero coupon bonds, do not pay cur rent interest, but are sold at a
discount from their face values.
Debt securities have varying levels of sensitivity to changes in
interest rates and varying degrees of credit quality. In general,
bond prices rise when interest rates fall, and fall when interest
rates rise. Longer-term bonds and zero coupon bonds are generally more
sensitive to interest rate changes.
In addition, bond prices are also affected by the credit quality of
the issuer. Investment-grade debt securities are medium- and
high-quality securities. Some, however, may possess speculative
characteristics, and may be more sensitive to economic changes and to
changes in the financial condition of issuers.
RESTRICTIONS: The fund normally invests in investment-grade
securities, but reserves the right to invest up to 5% of its assets
in below investment-grade securities (sometimes called "junk
bonds"). A security is considered to be investment-grade if it is
rated investment-grade by Moody's Investors Services, Standard &
Poor's, Duff & Phelps Credit Rating Co., or Fitch Investors Service,
L.P., or is unrated but judged by FMR to be of equivalent quality.
CREDIT AND LIQUIDITY SUPPORT. Issuers may employ various forms
of credit and liquidity enhancement, including letters of
credit, guarantees, puts and demand features, and insurance, provided
by foreign or domestic entities such as banks and other financial
institutions. These arrangements expose the fund to the credit
risk of the entity providing the credit or liquidity support.
Changes in the credit quality of the provider could affect the value
of the security and the fund's share price. In addition, in the case
of foreign providers of credit or liquidity support, extensive public
information about the provider may not be available, and unfavorable
political, economic, or governmental developments could affect its
ability to honor its commitment.
MUNICIPAL SECURITIES are issued to raise money for a variety of
public or private purposes, including general financing for state and
local governments, or financing for specific projects or public
facilities. They may be fully or partially backed by the local
government, or by the credit of a private issuer or the current or
anticipated revenues from specific projects or assets. Because many
municipal securities are issued to finance similar types of projects,
especially those relating to education, health care, housing,
transportation, and utilities, the municipal markets can be affected
by conditions in those sectors. In addition, all municipal securities
may be affected by uncertainties regarding their tax status,
legislative changes, or rights of municipal securities holders. A
municipal security may be owned directly or through a participation
interest.
ASSET-BACKED SECURITIES include interests in pools of purchase
contracts, financing leases, or sales agreements entered into by
municipalities. The value of these securities depends on many factors,
including changes in interest rates, the availability of information
concerning the pool and its structure, the credit quality of the
underlying assets, the market's perception of the servicer of the
pool, and any credit enhancement provided. In addition, these
securities may be subject to prepayment risk.
VARIABLE AND FLOATING RATE SECURITIES have interest rates that are
periodically adjusted either at specific intervals or whenever a
benchmark rate changes. Inverse floaters have interest rates that move
in the opposite direction from a benchmark, making the security's
market value more volatile.
MUNICIPAL LEASE OBLIGATIONS are used by municipalities to acquire
land, equipment, or facilities. If the municipality stops making
payments or transfers its obligations to a private entity, the
obligation could lose value or become taxable.
OTHER MUNICIPAL SECURITIES may include obligations of U.S. territories
and possessions such as Guam, the Virgin Islands, and Puerto Rico, and
their political subdivisions and public corporations.
PUT FEATURES entitle the holder to put (sell back) a security to the
issuer or another party. In exchange for this benefit, the fund may
accept a lower interest rate. Demand features and standby
commitments are types of put features.
PRIVATE ENTITIES may be involved in some municipal securities. For
example, industrial revenue bonds are backed by private entities, and
resource recovery bonds often involve private corporations. The
viability of a project or tax incentives could affect the value and
credit quality of these securities.
ADJUSTING INVESTMENT EXPOSURE. The fund can use various techniques
to increase or decrease its exposure to changing security prices,
interest rates, commodity prices, or other factors that affect
security values. These techniques may involve derivative transactions
such as buying and selling options and futures contracts, entering
into swap agreements and purchasing indexed securities.
FMR can use these practices to adjust the risk and return
characteristics of the fund's portfolio of investments. If FMR judges
market conditions incorrectly or employs a strategy that does not
correlate well with the fund's investments, these techniques could
result in a loss, regardless of whether the intent was to reduce risk
or increase return. These techniques may increase the volatility of
the fund and may i nvolve a small investment of cash relative to
the magnitude of the risk assumed. In addition, these techniques could
result in a loss if the counterparty to the transaction does not
perform as promised.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined
by FMR, under the supervision of the Board of Trustees, to be
illiquid, which means that they may be difficult to sell promptly at
an acceptable price. The sale of some illiquid securities, and some
other securities, may be subject to legal restrictions. Difficulty in
selling securities may result in a loss or may be costly to the
fund.
RESTRICTIONS : The fund may not purchase a security if,
as a result, more than 10% of its assets would be invested in illiquid
securities.
WHEN-ISSUED AND FORWARD PURCHASE OR SALE TRANSACTIONS are
trading practices in which payment and delivery for the security take
place at a later date than is customary for that type of security.
The market value of the security could change during this period.
CASH MANAGEMENT. The fund may invest in money market
securities and in a money market fund available only to funds and
accounts managed by FMR or its affiliates, whose goal is to
seek a high level of current income exempt from federal income tax
while maintaining a stable $1.00 share price. A major change in
interest rates or a default on the money market fund's investments
could cause its share price to change.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce
the risks of investing. This may include limiting the amount of money
invested in any one issuer or, on a broader scale, in any one industry
or type of project. Economic, business, or political changes can
affect all securities of a similar type. A fund that is not
diversified may be more sensitive to changes in the market value of a
single issuer or industry.
RESTRICTIONS: The fund is considered non-diversified.
Generally, to meet fed eral tax requirements at the close of each
quarter, the fund does not invest more than 25% of its total
assets in any one issuer and, with respect to 50% of total assets,
does not invest more than 5% of its total assets in any issuer. These
limitations do not apply to U.S. Government securities or to
securities of other investment companies. The fund may invest
more than 25% of its total assets in tax-free securities that finance
similar types of projects.
BORROWING . The fund may borrow from banks or from other
funds advised by FMR, or through reverse repurchase agreements. If
the fund borrows money, its share price may be subject to greater
fluctuation until the borrowing is paid off. If the fund makes
additional investments while borrowings are outstanding, this may
be considered a form of leverage.
RESTRICTIONS : The fund may borrow only for temporary or
emergency purposes, but not in an amount exceeding 331/3% of its total
assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages
are fundamental, that is, subject to change only by shareholder
approval. The following paragraphs restate all those that are
fundamental. All policies stated throughout this prospectus, other
than those identified in the following paragraphs, can be changed
without shareholder approval.
The fund seeks as high a level of current income, exempt from
federal income tax, as is consistent with preservation of capital by
investing primarily in short term municipal obligations. The fund will
normally invest so that at least 80% of its income is free from
federal income tax.
The fund may borrow only for t emporary or emergency purposes,
but not in an amount exceeding 33 1/3 % of its total assets.
BREAKDOWN OF EXPENSES
Like all mutual funds, the fund pays fees related to its daily
operations. Expenses paid out of the fund's assets are reflected
in its share price or dividends; they are neither billed directly to
shareholders nor deducted from shareholder accounts.
The fund pays a MANAGEMENT FEE to FMR for managing its
investments and business affairs.
FMR may, from time to time, agree to reimburse the fund for
management fees above a specified limit. FMR re tains the
ability to be repaid by the fund if expenses fall below the
specified limit prior to the end of the fiscal year. Reimbursement
arrangements, which may be terminated at any time without notice,
can decrease the fund's expenses and boost its performance.
MANAGEMENT FEE
The fund's management fee is calculated and paid to FMR every
month. FMR pays all of the other expenses of the fund with limited
exceptions. The fund's annual management fee rate is 0.55% of its
average net assets.
UMB is the transfer and service agent for the fund. UMB has entered
into sub-agreements with FSC under which FSC performs transfer agency,
dividend disbursing, shareholder servicing, and accounting functions
for the fund. These services include processing shareholder
transactions, valuing the fund's investments, and calculating the
fund's share price and dividends. FMR, not the fund, pays for
these services.
The fund also pays other expenses, such as brokerage fees and
commissions, interest on borrowings, taxes, and the compensation of
trustees who are not affiliated with Fidelity.
The fund has adopted a DISTRIBUTION AND SERVICE PLAN. This
plan recognizes that FMR may use its management fee revenues, as well
as its past profits or its resources from any other source, to pay FDC
for expenses incurred in connection with the distribution of fund
shares. FMR directly, or through FDC, may make payments to third
parties, such as banks or broker-dealers, that engage in the sale of,
or provide shareholder support services for, the fund's shares.
Currently, the Board of Trustees has not authorized such payments.
The fund's portfolio turnover rate for the fiscal year ended August
1997 was 32%. This rate varies from year to year.
YOUR ACCOUNT
DOING BUSINESS WITH FIDELITY
Fidelity Investments was established in 1946 to manage one of
America's first mutual funds. Today, Fidelity is the largest mutual
fund company in the country, and is known as an innovative provider of
high-quality financial services to individuals and institutions.
In addition to its mutual fund business, the company operates one of
America's leading discount brokerage firms, Fidelity Brokerage
Services, Inc. (FBSI). Fidelity is also a leader in providing
tax-sheltered retirement plans for individuals investing on their own
or through their employer.
Fidelity is committed to providing investors with practical
information to make investment decisions. Based in Boston, Fidelity
provides customers with complete service 24 hours a day, 365 days a
year, through a network of telephone service centers around the
country.
To reach Fidelity for general information, call these numbers:
(small solid bullet) For mutual funds, 1-800-544-8888
(small solid bullet) For brokerage, 1-800-544-7272
If you would prefer to speak with a representative in person, Fidelity
has over 80 walk-in Investor Centers across the country.
TYPES OF ACCOUNTS
You may set up an account directly in the fund or, if you own or
intend to purchase individual securities as part of your total
investment portfolio, you may consider investing in the fund
through a brokerage account.
You may purchase or sell shares of the fund through an
investment professional, including a broker, who may charge
you a transaction fee for this service. If you invest
through FBSI, another financial institution, or an investment
professional, read their program materials for any special
provisions, additional service features or fees that may apply to your
investment in the fund. Certain features of the fund, such as the
minimum initial or subsequent investment amounts, may be modified.
The different ways to set up (register) your account with Fidelity are
listed in the table that follows.
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have
two or more owners (tenants).
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and
obtain tax benefits. An individual can give up to $10,000 a year per
child without paying federal gift tax. Depending on state laws, you
can set up a custodial account under the Uniform Gifts to Minors Act
(UGMA) or the Uniform Transfers to Minors Act (UTMA).
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR
OTHER GROUPS
Requires a special application.
HOW TO BUY SHARES
THE PRICE TO BUY ONE SHARE of the fund is the fund's net
asset value per share (NAV). The fund's shares are sold without a
sales charge.
Your shares will be purchased at the next NAV calculated after
your investment is received and accepted. The fund's NAV is normally
calculated each business day at 4:00 p.m. Eastern time.
IF YOU ARE NEW TO FIDELITY, complete and sign an account application
and mail it along with your check. You may also open your account in
person or by wire as described on page . If there is no application
accompanying this prospectus, call 1-800-544-8888.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(small solid bullet) Mail in an application with a check, or
(small solid bullet) Open your account by exchanging from another
Fidelity fund.
If you buy shares by check or Fidelity Money Line(registered
trademark), and then sell those shares by any method other than by
exchange to another Fidelity fund, the payment may be delayed for up
to seven business days to ensure that your previous investment has
cleared.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $10,000
TO ADD TO AN ACCOUNT $1,000
Through regular investment plans* $500
MINIMUM BALANCE $5,000
*FOR MORE INFORMATION ABOUT REGULAR INVESTMENT PLANS, PLEASE REFER TO
"INVESTOR SERVICES," PAGE .
These minimums may vary for investments through Fidelity Portfolio
Advisory Services. Refer to the program materials for details.
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TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
PHONE 1-800-544-7777
(PHONE_GRAPHIC) (SMALL SOLID BULLET) EXCHANGE FROM ANOTHER FIDELITY FUND (SMALL SOLID BULLET) EXCHANGE FROM ANOTHER
FIDELITY FUND
ACCOUNT WITH THE SAME REGISTRATION, ACCOUNT WITH THE SAME REGISTRATION,
INCLUDING NAME, ADDRESS, AND INCLUDING NAME, ADDRESS, AND
TAXPAYER ID NUMBER. TAXPAYER ID NUMBER.
(SMALL SOLID BULLET) USE FIDELITY MONEY
LINE TO TRANSFER
FROM YOUR BANK ACCOUNT. CALL BEFORE
YOUR FIRST USE TO VERIFY THAT THIS
SERVICE IS IN PLACE ON YOUR ACCOUNT.
MAXIMUM MONEY LINE: UP TO
$ 100,000.
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MAIL
(MAIL_GRAPHIC)(SMALL SOLID BULLET) COMPLETE AND SIGN THE APPLICATION. (SMALL SOLID BULLET) MAKE YOUR CHECK PAYABLE TO
MAKE YOUR CHECK PAYABLE TO "SPARTAN SHORT-INTERMEDIATE
"SPARTAN SHORT-INTERMEDIATE MUNICIPAL INCOME FUND." INDICATE
MUNICIPAL INCOME FUND." MAIL TO THE YOUR FUND ACCOUNT NUMBER ON YOUR
ADDRESS INDICATED ON THE APPLICATION. CHECK AND MAIL TO THE ADDRESS PRINTED
ON YOUR ACCOUNT STATEMENT.
(SMALL SOLID BULLET) EXCHANGE BY MAIL: CALL
1-800-544-6666 FOR INSTRUCTIONS.
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IN PERSON
(HAND_GRAPHIC) (SMALL SOLID BULLET) BRING YOUR APPLICATION AND CHECK TO A (SMALL SOLID BULLET) BRING YOUR CHECK TO A
FIDELITY INVESTOR
FIDELITY INVESTOR CENTER. CALL CENTER. CALL 1-800-544-9797 FOR THE
1-800-544-9797 FOR THE CENTER CENTER NEAREST YOU.
NEAREST YOU.
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WIRE (WIRE_GRAPHIC) (SMALL SOLID BULLET) CALL 1-800-544-7777 TO SET UP YOUR (SMALL SOLID BULLET) WIRE TO:
ACCOUNT AND TO ARRANGE A WIRE BANKERS TRUST COMPANY,
TRANSACTION. BANK ROUTING #021001033,
(SMALL SOLID BULLET) WIRE WITHIN 24 HOURS TO: ACCOUNT #00163053.
BANKERS TRUST COMPANY, SPECIFY THE COMPLETE NAME OF THE
BANK ROUTING #021001033, FUND AND INCLUDE YOUR ACCOUNT
ACCOUNT #00163053. NUMBER AND YOUR NAME.
SPECIFY THE COMPLETE NAME OF THE
FUND AND INCLUDE YOUR NEW ACCOUNT
NUMBER AND YOUR NAME.
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AUTOMATICALLY (AUTOMATIC_GRAPHIC) (SMALL SOLID BULLET) NOT AVAILABLE. (SMALL SOLID BULLET) USE FIDELITY AUTOMATIC
ACCOUNT
BUILDER. SIGN UP FOR THIS SERVICE
WHEN OPENING YOUR ACCOUNT, OR CALL
1-800-544-6666 TO ADD IT.
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(TDD_GRAPHIC) TDD - SERVICE FOR THE DEAF AND HEARING IMPAIRED: 1-800-544-0118
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HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time
by selling (redeeming) some or all of your shares.
THE PRICE TO SELL ONE SHARE of the fund is the fund's
NAV.
Your shares will be sold at the next NAV calculated after your
order is received and accepted. The fund's NAV is normally calculated
each business day at 4:00 p.m. Eastern time.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least
$5,000 worth of shares in the account to keep it open.
TO SELL SHARES BY BANK WIRE OR FIDELITY MONEY LINE, you will need to
sign up for these services in advance.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to
protect you and Fidelity from fraud. Your request must be made in
writing and include a signature guarantee if any of the following
situations apply:
(small solid bullet) You wish to redeem more than $100,000 worth of
shares,
(small solid bullet) Your account registration has changed within the
last 30 days,
(small solid bullet) The check is being mailed to a different address
than the one on your account (record address),
(small solid bullet) The check is being made payable to someone other
than the account owner, or
(small solid bullet) The redemption proceeds are being transferred to
a Fidelity account with a different registration.
You should be able to obtain a signature guarantee from a bank, broker
(including Fidelity Investor Centers), dealer, credit union (if
authorized under state law), securities exchange or association,
clearing agency, or savings association. A notary public cannot
provide a signature guarantee.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(small solid bullet) Your name,
(small solid bullet) The fund's name,
(small solid bullet) Your fund account number,
(small solid bullet) The dollar amount or number of shares to be
redeemed, and
(small solid bullet) Any other applicable requirements listed in the
table that follows.
Unless otherwise instructed, Fidelity will send a check to the record
address. Deliver your letter to a Fidelity Investor Center, or mail it
to:
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
CHECKWRITING
If you have a checkbook for your account, you may write an unlimited
number of checks. Do not, however, try to close out your account by
check.
ACCOUNT TYPE SPECIAL REQUIREMENTS
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PHONE 1-800-544-777
(PHONE_GRAPHIC) ALL ACCOUNT TYPES (SMALL SOLID BULLET) MAXIMUM CHECK REQUEST: $100,000.
(SMALL SOLID BULLET) FOR MONEY LINE TRANSFERS TO YOUR BANK ACCOUNT;
MINIMUM: $10; MAXIMUM: UP TO $100,000.
(SMALL SOLID BULLET) YOU MAY EXCHANGE TO OTHER FIDELITY FUNDS IF
BOTH ACCOUNTS ARE REGISTERED WITH THE SAME
NAME(S), ADDRESS, AND TAXPAYER ID NUMBER.
MAIL OR IN PERSON
(MAIL_GRAPHIC)
(HAND_GRAPHIC) INDIVIDUAL, JOINT TENANT, (SMALL SOLID BULLET) THE LETTER OF INSTRUCTION MUST BE SIGNED BY ALL
SOLE PROPRIETORSHIP, PERSONS REQUIRED TO SIGN FOR TRANSACTIONS,
UGMA, UTMA EXACTLY AS THEIR NAMES APPEAR ON THE ACCOUNT.
TRUST (SMALL SOLID BULLET) THE TRUSTEE MUST SIGN THE LETTER INDICATING
CAPACITY AS TRUSTEE. IF THE TRUSTEE'S NAME IS NOT
IN THE ACCOUNT REGISTRATION, PROVIDE A COPY OF THE
TRUST DOCUMENT CERTIFIED WITHIN THE LAST 60 DAYS.
BUSINESS OR ORGANIZATION (SMALL SOLID BULLET) AT LEAST ONE PERSON AUTHORIZED BY CORPORATE
RESOLUTION TO ACT ON THE ACCOUNT MUST SIGN THE
LETTER.
(SMALL SOLID BULLET) INCLUDE A CORPORATE RESOLUTION WITH CORPORATE
SEAL OR A SIGNATURE GUARANTEE.
EXECUTOR, ADMINISTRATOR, (SMALL SOLID BULLET) CALL 1-800-544-6666 FOR INSTRUCTIONS.
CONSERVATOR, GUARDIAN
WIRE (WIRE_GRAPHIC) ALL ACCOUNT TYPES (SMALL SOLID BULLET) YOU MUST SIGN UP FOR THE WIRE FEATURE BEFORE
USING IT. TO VERIFY THAT IT IS IN PLACE, CALL
1-800-544-6666. MINIMUM WIRE: $5,000.
(SMALL SOLID BULLET) YOUR WIRE REDEMPTION REQUEST MUST BE RECEIVED
AND ACCEPTED BY FIDELITY BEFORE 4 P.M. EASTERN
TIME FOR MONEY TO BE WIRED ON THE NEXT
BUSINESS DAY.
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CHECK (CHECK_GRAPHIC) ALL ACCOUNT TYPES (SMALL SOLID BULLET) MINIMUM CHECK: $500.
(SMALL SOLID BULLET) ALL ACCOUNT OWNERS MUST SIGN A SIGNATURE CARD
TO RECEIVE A CHECKBOOK.
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(TDD_GRAPHIC) TDD - SERVICE FOR THE DEAF AND HEARING IMPAIRED: 1-800-544-0118
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INVESTOR SERVICES
Fidelity provides a variety of services to help you manage your
account.
INFORMATION SERVICES
FIDELITY'S TELEPHONE REPRESENTATIVES are available 24 hours a day, 365
days a year. Whenever you call, you can speak with someone equipped to
provide the information or service you need.
STATEMENTS AND REPORTS that Fidelity sends to you include the
following:
(small solid bullet) Confirmation statements (after every transaction,
except reinvestments, that affects your account balance or your
account registration)
(small solid bullet) Account statements (quarterly)
(small solid bullet) Financial reports (every six months)
24-HOUR SERVICE
ACCOUNT ASSISTANCE
1-800-544-6666
ACCOUNT TRANSACTIONS
1-800-544-7777
PRODUCT INFORMATION
1-800-544-8888
RETIREMENT ACCOUNT ASSISTANCE
1-800-544-4774
TOUCHTONE XPRESSSM
1-800-544-5555
AUTOMATED SERVICE
(checkmark)
To reduce expenses, only one copy of most financial reports and
prospectuses will be mailed to your household, even if you have more
than one account in the fund. Call 1-800-544-6666 if you need copies
of financial reports, prospectuses, or historical account information.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your fund shares and buy shares of
other Fidelity funds by telephone or in writing.
Note that exchanges out of the fund are limited to four per
calendar year, and that they may have tax consequences for you. For
details on policies and restrictions governing exchanges, including
circumstances under which a shareholder's exchange privilege may be
suspended or revoked, see page .
SYSTEMATIC WITHDRAWAL PLANS let you set up periodic redemptions from
your account.
FIDELITY MONEY LINE(registered trademark) enables you to transfer
money by phone between your bank account and your fund account. Most
transfers are complete within three business days of your call.
REGULAR INVESTMENT PLANS
One easy way to pursue your financial goals is to invest money
regularly. Fidelity offers convenient services that let you transfer
money into your fund account, or between fund accounts, automatically.
While regular investment plans do not guarantee a profit and will not
protect you against loss in a declining market, they can be an
excellent way to invest for a home, educational expenses, and other
long-term financial goals.
REGULAR INVESTMENT PLANS
FIDELITY AUTOMATIC ACCOUNT BUILDERSM
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY FUND
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MINIMUM FREQUENCY SETTING UP OR CHANGING
$500 MONTHLY OR QUARTERLY (SMALL SOLID BULLET) FOR A NEW ACCOUNT, COMPLETE THE APPROPRIATE SECTION ON THE FUND
APPLICATION.
(SMALL SOLID BULLET) FOR EXISTING ACCOUNTS, CALL 1-800-544-6666 FOR AN APPLICATION.
(SMALL SOLID BULLET) TO CHANGE THE AMOUNT OR FREQUENCY OF YOUR INVESTMENT, CALL
1-800-544-6666 AT LEAST THREE BUSINESS DAYS PRIOR TO YOUR NEXT
SCHEDULED INVESTMENT DATE.
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DIRECT DEPOSIT
TO SEND ALL OR A PORTION OF YOUR PAYCHECK OR GOVERNMENT CHECK TO A
FIDELITY FUNDA
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MINIMUM FREQUENCY SETTING UP OR CHANGING
$500 EVERY PAY PERIOD (SMALL SOLID BULLET) CHECK THE APPROPRIATE BOX ON THE FUND APPLICATION, OR CALL
1-800-544-6666 FOR AN AUTHORIZATION FORM.
(SMALL SOLID BULLET) CHANGES REQUIRE A NEW AUTHORIZATION FORM.
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FIDELITY AUTOMATIC EXCHANGE SERVICE
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND TO ANOTHER FIDELITY
FUND
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MINIMUM FREQUENCY SETTING UP OR CHANGING
$500 Monthly, bimonthly, (small solid bullet) To establish, call 1-800-544-6666 after both accounts are
quarterly, or annually opened.
(small solid bullet) To change the amount or frequency of your investment, call
1-800-544-6666.
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A BECAUSE ITS SHARE PRICE FLUCTUATES, THE FUND MAY NOT BE AN
APPROPRIATE CHOICE FOR DIRECT DEPOSIT OF YOUR ENTIRE CHECK.
SHAREHOLDER AND ACCOUNT POLICIES
DIVIDENDS, CAPITAL GAINS, AND TAXES
The fund distributes substantially all of its net investment
income and capital gains to shareholders each year. Income dividends
are declared daily and paid monthly. Capital gains are normally
distributed in October and December.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. If the option you prefer is not listed on
the application, call 1-800-544-6666 for instructions. The fund
offers four options:
5. REINVESTMENT OPTION. Your dividend and capital gain distributions
will be automatically reinvested in additional shares of the fund. If
you do not indicate a choice on your application, you will be assigned
this option.
6. INCOME-EARNED OPTION. Your capital gain distributions will be
automatically reinvested, but you will be sent a check for each
dividend distribution.
7. CASH OPTION. You will be sent a check for your dividend and capital
gain distributions.
8. DIRECTED DIVIDENDS(registered trademark) OPTION. Your dividend and
capital gain distributions will be automatically invested in another
identically registered Fidelity fund.
Dividends will be reinvested at the fund's NAV on the last day of the
month. Capital gain distributions will be reinvested at the NAV as of
the date the fund deducts the distribution from its NAV. The mailing
of distribution checks will begin within seven days.
TAXES
As with any investment, you should consider how an investment in a
tax-free fund could affect you. Below are some of the fund's tax
implications.
TAXES ON DISTRIBUTIONS. Interest in come that the fund earns is
distributed to shareholders as income dividends. Interest that is
federally tax-free remains tax-free when it is distributed.
UNDERSTANDING
DISTRIBUTIONS
As a fund shareholder, you are
entitled to your share of the
fund's net income and gains
on its investments. The fund
passes its earnings along to its
investors as DISTRIBUTIONS.
The fund earns interest from its
investments. These are passed
along as DIVIDEND
DISTRIBUTIONS. The fund may
realize capital gains if it sells
securities for a higher price
than it paid for them. These
are passed along as CAPITAL
GAIN DISTRIBUTIONS.
(checkmark)
However, gain on the sale of tax-free bonds results in taxable
distributions. Short-term capital gains and a portion of the gain on
bonds purchased at a discount are distributed as dividends and taxed
as ordinary income. Capital gain distributions are taxed as long-term
capital gains. These distributions are taxable when they are paid,
whether you take them in cash or reinvest them. However, distributions
declared in December and paid in January are taxable as if they were
paid on December 31. Fidelity will send you a statement showing the
tax status of distributions and will report to the IRS the amount of
any taxable distributions paid to you in the previous year.
The interest from some municipal securities is subject to the federal
alter native minimum tax. The fund may invest up to 100% of its
assets in these securities. Individuals who are subject to the tax
must report this interest on their tax returns.
A portion of the fund's dividends may be free from state or
local taxes. Income from investments in your state are often tax-free
to you. Each year, Fidelity will send you a breakdown of the fund's
income from each state to help you calculate your taxes.
During the fiscal year ended August 1997, 100 % of the fund's
income dividends was free from federal income tax. 13.75 % of
the fund's income dividends was subject to the federal alternative
minimum tax.
TAXES ON TRANSACTIONS. Your redemptions - including exchanges to other
Fidelity funds - are subject to capital gains tax. A capital gain or
loss is the difference between the cost of your shares and the price
you receive when you sell them.
Whenever you sell shares of the fund, Fidelity will send you a
confirmation statement showing how many shares you sold and at what
price. You will also receive a consolidated transaction statement
every January. However, it is up to you or your tax preparer to
determine whether this sale resulted in a capital gain and, if so, the
amount of tax to be paid. Be sure to keep your regular account
statements; the information they contain will be essential in
calculating the amount of your capital gains.
"BUYING A DIVIDEND." If you buy shares when the fund has realized
but not yet distributed income or capital gains, you will pay the
full price for the shares and then receive a portion of the price back
in the form of a taxable distribution.
TRANSACTION DETAILS
THE FUND IS OPEN FOR BUSINESS each day the New York Stock Exchange
(NYSE) is open. FSC normally calcu lates the fund's NAV as of the
close of business of the NYSE, normally 4:00 p.m. Eastern time.
THE FUND'S NAV is the value of a single share. The NAV is
computed by adding the value of the fund's investments, cash, and
other assets, subtracting its liabilities, and then dividing the
result by the number of shares outstanding.
The fund's assets are valued primarily on the basis of information
furnished by a pricing service or market quotations, if available, or
by another met hod that the Board of Trustees believes accurately
reflects fair value.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify
that your social security or taxpayer identification number is
correct and that you are not subject to 31% backup withholding for
failing to report income to the IRS. If you violate IRS
regula tions, the IRS can require the fund to withhold 31% of
your taxable distributions and redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Fidelity may only be
liable for losses resulting from unauthorized transactions if it does
not follow reasonable procedures designed to verify the identity of
the caller. Fidelity will request personalized security codes or other
information, and may also record calls. You should verify the accuracy
of your confirmation statements immediately after you receive them. If
you do not want the ability to redeem and exchange by telephone, call
Fidelity for instructions.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during
periods of unusual market activity), consider placing your order by
mail or by visiting a Fidelity Investor Center.
THE FUND RESERVES THE RIGHT SUSPEND THE OFFERING OF SHARES for
a period of time. The fund also reserves the right to reject
any specific purchase order, including certain purchases by exchange.
See "Exchange Restrictions" on page . Purchase orders may be refused
if, in FMR's opinion, they would disrupt management of the
fund.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your shares will be
purchased at the next NAV calculated after your
investment is received and accepted. Note the following:
(small solid bullet) All of your purchases must be made in U.S.
dollars and checks must be drawn on U.S. banks.
(small solid bullet) Fidelity does not accept cash.
(small solid bullet) When making a purchase with more than one check,
each check must have a value of at least $50.
(small solid bullet) The fund reserves the right to limit the
number of checks processed at one time.
(small solid bullet) If your check does not clear, your purchase will
be cancelled and you could be liable for any losses or fees the
fund or its transfer agent has incurred.
(small solid bullet) You begin to earn dividends as of the first
business day following the day of your purchase.
TO AVOID THE COLLECTION PERIOD associated with check and Money Line
purchases, consider buying shares by bank wire, U.S. Postal money
order, U.S. Treasury check, Federal Reserve check, or direct deposit
instead.
CERTAIN FINANCIAL INSTITUTIONS that have entered into sales
agreements with FDC may enter confirmed purchase orders on behalf of
customers by phone, with payment to follow no later than the time
when the fund is priced on the following business day. If
payment is not received by that time, the financial institution could
be held liable for resulting fees or losses.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at
the next NAV calculated after your request is received and accepted.
Note the following:
(small solid bullet) Normally, redemption proceeds will be mailed to
you on the next business day, but if making immediate payment could
adversely affect the fund, it may take up to seven days to pay
you.
(small solid bullet) Shares will earn dividends through the date of
redemption; however, shares redeemed on a Friday or prior to a holiday
will continue to earn dividends until the next business day.
(small solid bullet) Fidelity Money Line redemptions generally will be
credited to your bank account on the second or third business day
after your phone call.
(small solid bullet) The fund may hold payment on redemptions
until it is reasonably satisfied that investments made by check or
Fidelity Money Line have been collected, which can take up to seven
business days.
(small solid bullet) Redemptions may be suspended or payment dates
postponed when the NYSE is closed (other than weekends or holidays),
when trading on the NYSE is restricted, or as permitted by the SEC.
(small solid bullet) If you sell shares by writing a check and the
amount of the check is greater than the value of your account, your
check will be returned to you and you may be subject to additional
charges.
FIDELITY RESERVES THE RIGHT TO DEDUCT AN ANNUAL MAINTENANCE FEE
of $12.00 from accounts with a value of less than $2,500, subject to
an annual maximum charge of $24.00 per shareholder. It is
expected that accounts will be valued on the second Friday in November
of each year. Accounts opened after September 30 will not be subject
to the fee for that year. The fee, which is payable to the transfer
agent, is designed to offset in part the relatively higher costs of
servicing smaller accounts. This fee will not be deducted from
Fidelity brokerage accounts, retirement accounts (except
non-prototype retirement accounts), accounts using regular investment
plans, or if total assets with Fidelity exceed $30 , 000.
Eligibility for the $30,000 waiver is determined by aggregating
Fidelity accounts maintained by FSC or FBSI which are registered under
the same social security number or which list the same social security
number for the custodian of a Uniform Gifts/Transfers to Minors Act
account.
IF YOUR ACCOUNT BALANCE FALLS BELOW $5,000, you will be given 30 days'
notice to reestablish the minimum balance. If you do not increase your
balance, Fidelity reserves the right to close your account and send
the proceeds to you. Your shares will be redeemed at the NAV on the
day your account is closed.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
FDC may, at its own expense, provide promotional incentives to
qualified recipients who support the sale of shares of the fund
without reimbursement from the fund. Qualified recipients are
securities dealers who have sold fund shares or others, including
banks and other financial institutions, under special arrangements in
connection with FDC's sales activities. In some instances, these
incentives may be offered only to certain institutions whose
representatives provide services in connection with the sale or
expected sale of significant amounts of shares.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging shares of
the fund for shares of other Fidelity funds. However, you should
note the following:
(small solid bullet) The fund you are exchanging into must be
available for sale in your state.
(small solid bullet) You may only exchange between accounts that are
registered in the same name, address, and taxpayer identification
number.
(small solid bullet) Before exchanging into a fund, read its
prospectus.
(small solid bullet) If you exchange into a fund with a sales charge,
you pay the percentage-point difference between that fund's sales
charge and any sales charge you have previously paid in connection
with the shares you are exchanging. For example, if you had already
paid a sales charge of 2% on your shares and you exchange them into a
fund with a 3% sales charge, you would pay an additional 1% sales
charge.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) Because excessive trading can hurt fund
performance and shareholders, the fund reserves the right to
temporarily or permanently terminate the exchange privilege of any
investor who makes more than four exchanges out of the fund per
calendar year. Accounts under common ownership or control, including
accounts with the same taxpayer identification number, will be counted
together for purposes of the four exchange limit.
(small solid bullet) The fund reserves the right to refuse
exchange purchases by any person or group if, in FMR's judgment, the
fund would be unable to invest the money effectively in accordance
with its investment objective and policies, or would otherwise
potentially be adversely affected.
(small solid bullet) Your exchanges may be restricted or refused if
the fund receives or antic ipates simultaneous orders affecting
significant portions of the fund's assets. In particular, a pattern of
exchanges that coincides with a "market timing" strategy may be
disruptive to the fund.
Although the fund will attempt to give you prior notice whenever it
is reasonably able to do so, it may impose these restrictions at any
time. The fund reserves the right to terminate or modify the
exchange privilege in the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
fees of up to 1.00% on purchases, administrative fees of
up to $7.50, and trading fees of up to 1.50% on exchanges.
Check each fund's prospectus for details.
This prospectus is printed on recycled paper using soy-based inks.
SPARTAN SHORT-INTERMEDIATE MUNICIPAL INCOME FUND
A FU ND OF FIDELITY UNION STREET TRUST
STATEMENT OF ADDITIONAL INFORMATION
OCTOBER 21, 1997
Thi s Statement of Additional Information (SAI) is not a
prospectus but should be read in conjunction with the fund's
curre nt P rospectus (dated October 21, 1997). Please retain this
document for future reference. The fun d's Annual Report is a
separate document supplied with this SAI. To obtain a free additional
copy of the Prosp ectus or an Annual Report, please call
Fidelity at 1-800-544-8888.
TABLE OF CONTENTS PAGE
Investment Policies and Limitations
Portfolio Transactions
Valuation
Performance
Additional Purchase and Redemption Information
Distributions and Taxes
FMR
Trustees and Officers
Management Contract
Distribution and Service Plan
Contracts with FMR Affiliates
Description of the Trust
Financial Statements
Appendix
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENT
UMB Bank, n.a. (UMB )
and Fidelity Service Company, Inc. ( FSC )
STM -ptb- 1097
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in
the Prospectus. Unless otherwise noted, whenever an investment
policy or limitation states a maximum percentage of the fund's assets
that may be invested in any security or other asset, or sets forth
a policy regarding quality standards, such standard or percentage
limitation will be determined immediately after and as a result of the
fund's acquisition of such security or other asset. Accordingly, any
subsequent change in values, net assets, or other circumstances will
not be considered when determining whether the investment complies
with the fund's investment policies and limitations.
The fund's fundamental investment policies and limitations cannot be
changed without approval by a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940) of the
fund. However, except for the fundamental investment limitations
listed below the investment policies and limitations described in this
SAI are not fundamental and may be changed without shareholder
approval. THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT
LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(3) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(4) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities, or tax-exempt obligations issued or guaranteed by a
U.S. territory or possession or a state or local government, or a
political subdivision of any of the foregoing) if, as a result, more
than 25% of the fund's total assets would be invested in securities of
companies whose principal business activities are in the same
industry;
(5) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(6) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(7) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties (but
this limitation does not apply to purchases of debt securities or to
repurchase agreements).
(8) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) In order to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended, the
fund currently intends to comply with certain diversification limits
imposed by Subchapter M.
(ii) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(iii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (2)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(v) The fund does not currently intend to purchase any security if, as
a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(vi) The fund does not currently intend to engage in repurchase
agreements or make loans, but this limitation does not apply to
purchases of debt securities.
(vii) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company
with substantially the same fundamental investment objective,
policies, and limitations as the fund.
For purposes of limitations (4), and (i), FMR identifies the issuer of
a security depending on its terms and conditions. In identifying the
issuer, FMR will consider the entity or entities responsible for
payment of interest and repayment of principal and the source of such
payments; the way in which assets and revenues of an issuing political
subdivision are separated from those of other political entities; and
whether a governmental body is guaranteeing the security.
For purposes of limitation (i), Subchapter M generally requires the
fund to invest no more than 25% of its total assets in securities of
any one issuer and to invest at least 50% of its total assets so that
no more than 5% of the fund's total assets are invested in securities
of any one issuer. However, Subchapter M allows unlimited investments
in cash, cash items, government securities (as defined in Subchapter
M) and securities of other investment companies. These tax
requirements are generally applied at the end of each quarter of the
fund's taxable year.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options
Transactions" on page .
AFFILIATED BANK TRANSACTIONS. T he fund may engage in transactions
with financial institutions that are, or may be considered to be,
"affiliated persons" of the fund under the Investment Company Act of
1940. These transactions may include repurchase agreements with
custodian banks; short-term obligations of, and repurchase agreements
with, the 50 largest U.S. banks (measured by deposits); municipal
securities; U.S. Government securities with affiliated financial
institutions that are primary dealers in these securities;
short-term currency transactions; and short-term borrowings. In
accordance with exemptive orders issued by the Securities and Exchange
Commission (SEC), the Board of Trustees has established and
periodically reviews procedures applicable to transactions involving
affiliated financial institutions.
DELAYED-DELIVERY TRANSACTIONS. The fund may buy and sell securities
on a delayed-delivery or when-issued basis. These transactions involve
a commitment by the fund to purchase or sell specific securities at a
predetermined price or yield, with payment and delivery taking
place after the customary settlement period for that type of security.
Typically, no interest accrues to the purchaser until the security
is delivered. The fund may receive fees for entering into
delayed-delivery transactions.
When purchasing securities on a delayed-delivery basis, the fund
assumes the rights and risks of ownership, including the risk of price
and yield fluctuations. Because the fund is not required to pay for
securities until the delivery date, these risks are in addition to the
risks associated with the fund's other investments. If the fund
remains substantially fully invested at a time when
delayed-delivery purchases are outstanding, the delayed-delivery
purchases may result in a form of leverage. When delayed-delivery
purchases are outstanding, the fund will set aside appropriate liquid
assets in a segregated custodial account to c over its purchase
obligations. When the fund has sold a security on a delayed-delivery
basis, the fund does not participate in further gains or losses
with respect to the security. If the other party to a delayed-delivery
transaction fails to deliver or pay for the securities, the fund could
miss a favorable price or yield opportunity, or could suffer a loss.
The fund may renegotiate delayed-delivery transactions after they
are entered into, and may sell underlying securities before they
are delivered, which may result in capital gains or losses.
FEDERALLY TAXABLE OBLIGATIONS. Under normal conditions, the fund
does not intend to invest in securities whose interest is federally
taxable. However, from time to time on a temporary basis, the fund may
invest a portion of its assets in fixed-income obligations whose
interest is subject to federal income tax.
Should the fund invest in federally taxable obligations, it would
purchase securities that in FMR's judgment are of high quality. These
would include obligations issued or guaranteed by the U.S. Government
or its agencies or instrumentalities; obligations of domestic banks;
and repurchase agreements. The fund's standards for high-quality,
taxable obligations are essentially the same as those described by
Moody's Investors Service, Inc. (Moody's) in rating corporate
obligations within its two highest ratings of Prime-1 and Prime-2, and
those described by Standard & Poor's (S&P) in rating corporate
obligations within its two highest ratings of A-1 and A-2.
Proposals to restrict or eliminate the federal income tax exemption
for interest on municipal obligations are introduced before Congress
from time to time. Proposals also may be introduced before state
legislatures that would affect the state tax treatment of the
fund's distributions. If such proposals were enacted, the availability
of municipal obligations and the value of the fund's holdings would be
affected and the Trustees would reevaluate the fund's investment
objective and policies.
FUTURES AND OPTIONS. The following sections pertain to futures and
options: Asset Coverage for Futures and Options Positions, Combined
Positions, Correlation of Price Changes, Futures Contracts, Futures
Margin Payments, Limitations on Futures and Options Transactions,
Liquidity of Options and Futures Contracts, OTC Options, Purchasing
Put and Call Options, and Writing Put and Call Options.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. T he fund will
comply with guidelines established by the Securities an d Exchange
Commission with respect to coverage of options and futures strategies
by mutual funds, and if the guidelines so require will set aside
appropriate liquid assets in a segregated custodial account in the
amount prescribed. Securities held in a segregated account cannot be
sold while the futures or option strategy is outstanding, unless they
are replaced with other suitable assets. As a result, there is a
possibility that segregation of a large percentage of the fund's
assets could impede portfolio management or the fund's ability to meet
redemption requests or other current obligations.
COMBINED POSITIONS. Th e fund may purchase and write options in
combination with each other, or in combination with futures or forward
contracts, to adjust the risk and return characteristics of the
overall position. For example, the fund may purchase a put option
and write a call option on the same underlying instrument, in order to
construct a combined position whose risk and return characteristics
are similar to selling a futures contract. Another possible combined
position would involve writing a call option at one strike price and
buying a call option at a lower price, in order to reduce the risk of
the written call option in the event of a substantial price increase.
Because combined options positions involve multiple trades, they
result in higher transaction costs and may be more difficult to open
and close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of
types of exchange-traded options and futures contracts, it is
likely that the standardized contracts available will not match the
fund's current or anticipated investments exactly. The fund may
invest in options and futures contracts based on securities with
different issuers, maturities, or other characteristics from the
securities in which it typically invests, which involves a risk
that the options or futures position will not track the performance
of the fund's other investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match the
fund's investments well. Options and futures prices are affected by
such factors as current and anticipated short-term interest rates,
changes in volatility of the underlying instrument, and the time
remaining until expiration of the contract, which may not affect
security prices the same way. Imperfect correlation may also result
from differing levels of demand in the options and futures markets and
the securities markets, from structural differences in how options and
futures and securities are traded, or from imposition of daily
price fluctuation limits or trading halts. The fund may purchase or
sell options and futures contracts with a greater or lesser value
than the securities it wishes to hedge or intends to purchase in order
to attempt to compensate for differe nces in volatility between the
contract and the securities, although this may not be successful in
all cases. If price changes in the fund's options or futures
positions are poorly correlated with its other investments, the
positions may fail to produce anticipated gains or result in losses
that are not offset by gains in other investments.
FUTURES CONTRACTS. When the fund purchases a futures contract, it
agrees to purchase a specified underlying instrument at a specified
future date. When the fund sells a futures contract, it agrees to sell
the underlying instrument at a specified future date. The price at
which the purchase and sale will take place is fixed when the fund
enters into the contract. Some currently available futures contracts
are based on specific securities, such as U.S. Treasury bonds or
notes, and some are based on indices of securities prices, such as the
Bond Buyer Municipal Bond Index. Futures can be held until their
delivery dates, or can be closed out before then if a liquid secondary
market is available.
The value of a futures contract tends to increase and decrease in
tandem with the value of its underlying instrument. Therefore,
purchasing futures contracts will tend to increase the fund's
exposure to positive and negative price fluctuations in the underlying
instrument, much as if it had purchased the underlying instrument
directly. When the fund sells a futures contract, by contrast, the
value of its futures position will tend to move in a direction
contrary to the market. Selling futures contracts, therefore, will
tend to offset both positive and negative market price changes, much
as if the underlying instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract
is not required to deliver or pay for the underlying instrument unless
the contract is held until the delivery date. However, both the
purchaser and seller are required to deposit "initial margin" with a
futures broker, known as a futures commission merchant (FCM), when the
contract is entered into. Initial margin deposits are typically equal
to a percentage of the contract's value. If the value of either
party's position declines, that party will be required to make
additional "variation margin" payments to settle the change in value
on a daily basis. The party that has a gain may be entitled to receive
all or a portion of this amount. Initial and variation margin payments
do not constitute purchasing securities on margin for purposes of the
fund's investment limitations. In the event of the bankruptcy of an
FCM that holds margin on behalf of the fund, the fund may be
entitled to return of margin owed to it only in proportion to the
amount received by the FCM's other customers, potentially
resulting in losses to the fund.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. The fund has filed
a notice of eligibility for exclusion from the definition of the
term "commodity pool operator" with the Commodity Futures Trading
Commission (CFTC) and the National Futures Association, which regulate
trading in the futures markets. The fund intends to comply with Rule
4.5 under the Commodity Excha nge Act, which limits the extent to
which the fund can commit assets to initial margin deposits and option
premiums.
In addition, the fund will not: (a) sell futures contracts,
purchase put options, or write call options if, as a result, more than
25% of the fund's total assets would be hedged with futures and
options under normal conditions; (b) purchase futures contracts or
write put options if, as a result, the fund's total obligations upon
settlement or exercise of purchased futures contracts and written put
options would exceed 25% of its total assets; or (c) purchase call
options if, as a result, the current value of option premiums for call
options purchased by the fund would exceed 5% of the fund's total
assets. These limitations do not apply to options attached to or
acquired or traded together with their underlying securities, and do
not apply to securities that incorporate features similar to options.
The above limitations on the fund's investments in futures contracts
and options, and the fund's policies regarding futures contracts and
options discussed elsewhere in this SAI, may be changed as regulatory
agencies permit.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a
liquid secondary market will exist for any particular options or
futures contract at any particular time. Options may have relatively
low trading volume and liquidity if their strike prices are not close
to the underlying instrument's current price. In addition, exchanges
may establish daily price fluctuation limits for options and futures
contracts, and may halt trading if a contract's price moves upward or
downward more than the limit in a given day. On volatile trading days
when the price fluctuation limit is reached or a trading halt is
imposed, it may be impossible for the fund to enter into new
positions or close out existing positions. If the secondary market for
a contract is not liquid because of price fluctuation limits or
otherwise, it could prevent prompt liquidation of unfavorable
positions, and potentially could require the fund to co ntinue to
hold a position until delivery or expiration regardless of changes in
its value. As a result, the fund's access to other assets held to
cover its options or futures positions could also be impaired.
OTC OPTIONS. Unlike exchange-traded options, which are standardized
with respect to the underlying instrument, expiration date, contract
size, and strike price, the terms of over-the-counter (OTC) options
(options not traded on exchanges) generally are established through
negotiation with the other party to the option contract. While this
type of arrangement allows the fund greater flexibility to tailor
an option to its needs, OTC options generally involve greater credit
risk than exchange-traded options, which are guaranteed by the
clearing organization of the exchanges where they are traded.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, the
fund obtains the right (but not the obligation) to sell the
option's underlying instrument at a fixed strike price. In return for
this right, the fund pays the current market price for the option
(known as the option premium). Options have various types of
underlying instruments, including specific securities, indices of
securities prices, and futures contracts. The fund may terminate its
position in a put option it has purchased by allowing it to expire or
by exercising the option. If the option is allowed to expire, the fund
will lose the entire premium it paid. If the fund exercises the
op tion, it completes the sale of the underlying instrument at the
strike price. The fund may also terminate a put option position by
closing it out in the secondary market at its current price, if a
liquid secondary market exists.
The buyer of a typical put option can expect to realize a gain if
security prices fall substantially. However, if the underlying
instrument's price does not fall enough to offset the cost of
purchasing the option, a put buyer can expect to suffer a loss
(limited to the amount of the premium paid, plus related transaction
costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right
to purchase, rather than sell, the underlying instrument at the
option's strike price. A call buyer typically attempts to participate
in potential price increases of the underlying instrument with risk
limited to the cost of the option if security prices fall. At the same
time, the buyer can expect to suffer a loss if security prices do not
rise sufficiently to offset the cost of the option.
WRITING PUT AND CALL OPTIONS. When the fund writes a put option, it
takes the opposite side of the transaction from the o ption's
purchaser. In return for receipt of the premium, the fund assumes the
obligation to pay the strike price for the option's underlying
instrument if the other party to the option chooses to exercise it.
When writing an option on a futures contract, the fund will be
required to make margin payments to an FCM as described above for
futures contracts. The fund may seek to terminate its position in
a put option it writes before exercise by closing out the option in
the secondary market at its current price. If the secondary market is
not liquid for a put option the fund has written, however, the fund
must continue to be prepared to pay the strike price while the option
is outstanding, regardless of price changes, and must continue to set
aside assets to cover its position.
If security prices rise, a put writer would generally expect to
profit, although its gain would be limited to the amount of the
premium it received. If security prices remain the same over time, it
is likely that the writer will also profit, because it should be able
to close out the option at a lower price. If security prices fall, the
put writer would expect to suffer a loss. This loss should be less
than the loss from purchasing the underlying instrument directly,
however, because the premium received for writing the option should
mitigate the effects of the decline.
Writing a call option obligates the fund to sell or deliver the
option's underlying instrument, in return for the strike price,
upon exercise of the option. The characteristics of writing call
options are similar to those of writing put options, except that
writing calls generally is a profitable strategy if prices remain the
same or fall. Through receipt of the option premium, a call writer
mitigates the effects of a price decline. At the same time, because a
call writer must be prepared to deliver the underlying instrument in
return for the strike price, even if its current value is greater, a
call writer gives up some ability to participate in security price
increases.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed
of in the ordinary course of business at approximately the prices
at which they are valued. Under the supervision of the Board of
Trustees, FMR determines the liquidity of the fund's investments
and, through reports from FMR, the Board monitors investments in
illiquid instruments. In determining the liquidity of the fund's
investments, FMR may consider various factors, including (1) the
frequency of trades and quotations, (2) the number of dealers and
prospective purchasers in the marketplace, (3) dealer undertakings to
make a market, (4) the nature of the security (including any demand or
tender features), and (5) the nature of the marketplace for trades
(including the ability to assign or offset the fund's rights and
obligations relating to the investment).
Investments currently considered by the fund to be illiquid include
over-the-counter options. Also, FMR may determine some restricted
securities and municipal lease obligations to be illiquid. However,
with respect to over-the-counter options the fund writes, all or a
portion of the value of the underlying instrument may be illiquid
depending on the assets held to cover the option and the nature and
terms of any agreement the fund may have to close out the option
before expiration.
In the absence of market quotations, illiquid investments are priced
at fair value as determined in good faith by a committee appointed
by the Board of Trustees. If through a change in values, net assets,
or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would seek to take appropriate steps to protect liquidity.
INDEXED SECURITIES. The fund may purchase securities whose prices
are indexed to the prices of other securities, securities indices,
or other financial indicators. Indexed securities typically, but not
always, are debt securities or deposits whose value at maturity or
coupon rate is determined by reference to a specific instrument or
statistic. Indexed securities may have principal payments as well as
coupon payments that depend on the performance of one or more interest
rates. Their coupon rates or principal payments may change by several
percentage points for every 1% interest rate change. One example of
indexed securities is inverse floaters.
The performance of indexed securities depends to a great extent on the
performance of the security or other instrument to which they are
indexed, and may also be influenced by interest rate changes. At the
same time, indexed securities are subject to the credit risks
associated with the issuer of the security, and their values may
decline substantially if the issuer's creditworthiness deteriorates.
Indexed securities may be more volatile than the underlying
instruments.
INTERFUND BORROWING AND LENDING PROGRAM. Pursuant to an exemptive
order issued by the SEC, the fund has received permission to lend
money to, and borrow money from, other funds advised by FMR or its
affiliates, but it currently intends to partic ipate in this
program only as a borrower. Interfund borrowings normally extend
overnight, but can have a maximum duration of seven days. The fund
will borrow through the program only when the costs are equal to or
lower than the costs of bank loans. Loans may be called on one day's
notice, and the fund may have to borrow from a bank at a higher
interest rate if an interfund loan is called or not renewed.
INVERSE FLOATERS have variable interest rates that typically move in
the opposite direction from prevailing short-term interest rate levels
- - rising when prevailing short-term interest rates fall, and vice
versa. This interest rate feature can make the prices of inverse
floaters considerably more volatile than bonds with comparable
maturities.
LOWER-QUALITY MUNICIPAL SECURITIES. The fund may invest a portion
of its assets in lower-quality municipal securities as described
in the Prospectus.
While the market for municipals is considered to be adequate,
adverse publicity and changing investor perceptions may affect the
ability of outside pricing services used by the fund to value its
portfolio securities, and the fund's ability to dispose of
lower -quality bonds. The outside pricing services are monitored by
FMR and reported to the Board to determine whether the services are
furnishing prices that accurately reflect fair value. The impact of
changing investor perceptions may be especially pronounced in markets
where municipal securities are thinly traded.
The fund may choose, at its expense or in conjunction with others,
to pursue litigation or otherwise exercise its rights as a
security holder to seek to protect the interests of security
holders if it determines this to be in the best interest of the fund's
shareholders.
MARKET DISRUPTION RISK. The value of municipal securities may be
affected by uncertainties in the municipal market related to
legislation or litigation involving the taxation of municipal
securities or the rights of municipal securities holders in the event
of a bankruptcy. Municipal bankruptcies are relatively rare, and
certain provisions of the U.S. Bankruptcy Code governing such
bankruptcies are unclear and remain untested. Further, the application
of state law to municipal issuers could produce varying results among
the states or among municipal securities issuers within a state. These
legal uncertainties could affect the municipal securities market
generally, certain specific segments of the market, or the relative
credit quality of particular securities. Any of these effects could
have a significant impact on the prices of some or all of the
municipal securities held by a fund.
MUNICIPAL SECTORS:
EDUCATION. In general, there are two types of education-related bonds;
those issued to finance projects for public and private colleges and
universities, and those representing pooled interests in student
loans. Bonds issued to supply educational institutions with funds are
subject to the risk of unanticipated revenue decline, primarily the
result of decreasing student enrollment or decreasing state and
federal funding. Among the factors that may lead to declining or
insufficient revenues are restrictions on students' ability to pay
tuition, availability of state and federal funding, and general
economic conditions. Student loan revenue bonds are generally offered
by state (or substate) authorities or commissions and are backed by
pools of student loans. Underlying student loans may be guaranteed by
state guarantee agencies and may be subject to reimbursement by the
United States Department of Education through its guaranteed student
loan program. Others may be private, uninsured loans made to parents
or students which are supported by reserves or other forms of credit
enhancement. Recoveries of principal due to loan defaults may be
applied to redemption of bonds or may be used to re-lend, depending on
program latitude and demand for loans. Cash flows supporting student
loan revenue bonds are impacted by numerous factors, including the
rate of student loan defaults, seasoning of the loan portfolio, and
student repayment deferral periods of forbearance. Other risks
associated with student loan revenue bonds include potential changes
in federal legislation regarding student loan revenue bonds, state
guarantee agency reimbursement and continued federal interest and
other program subsidies currently in effect.
MUNICIPAL LEASES and participation interests therein may take the form
of a lease, an installment purchase, or a conditional sale contract
and are issued by state and local governments and authorities to
acquire land or a wide variety of equipment and facilities.
Generally, the fund will not hold such obligations directly as a
lessor of the property, but will purchase a participation interest
in a municipal obligation from a bank or other third party. A
participation interest gives the fund a specified, undivided interest
in the obligation in proportion to its purchased interest in the total
amount of the obligation.
Municipal leases frequently have risks distinct from those associated
with general obligation or revenue bonds. State constitutions and
statutes set forth requirements that states or municipalities must
meet to incur debt. These may include voter referenda, interest rate
limits, or public sale requirements. Leases, installment purchases, or
conditional sale contracts (which normally provide for title to the
leased asset to pass to the governmental issuer) have evolved as a
means for governmental issuers to acquire property and equipment
without meeting their constitutional and statutory requirements for
the issuance of debt. Many leases and contracts include
"non-appropriation clauses" providing that the governmental issuer has
no obligation to make future payments under the lease or contract
unless money is appropriated for such purposes by the appropriate
legislative body on a yearly or other periodic basis.
Non-appropriation clauses free the issuer from debt issuance
limitations.
REFUNDING CONTRACTS. The fund may purchase securities on a
when-issued basis in connection with the refinancing of an
issuer's outstanding indebtedness. Refunding contracts require the
issuer to sell and the fund to buy refunded municipal obliga tions
at a stated price and yield on a settlement date that may be several
months or several years in the future. The fund generally will not
be obligated to pay the full purchase price if it fails to perform
under a refunding contract. Instead, refunding contracts generally
provide for payment of liquidated damages to the issuer (currently
15-20% of the purchase price). The fund may secure its obligations
under a refunding contract by depositing collateral or a letter of
credit equal to the liquidated damages provisions of the refunding
contract. When required by SEC guidelines, the fund will place liquid
assets in a segregated custodial account equal in amount to its
obligations under refunding contracts.
REPURCHASE AGREEMENTS. In a repurchase agreement, the fund
purchases a security and simultaneously commits to sell that
sec urity back to the original seller at an agreed-upon price. The
resale price reflects the purchase price plus an agreed-upon
incremental amount which is unrelated to the coupon rate or maturity
of the purchased security. To protect the fund from risk that the
original seller will not fulfill its obligation, the securities are
held in an account of the fund at a bank, marked-to-market daily, and
maintained at a value at least equal to the sale price plus the
accrued incremental amount. While it does not presently appear
possible to eliminate all risks from these transactions (particularly
the possibility that the value of the underlying security will be less
than the resale price, as well as delays and costs to the fund in
connection with bankruptcy proceedings), it is the fund's current
policy to engage in repurchase agreement transactions with parties
whose creditworthiness has been reviewed and found satisfactory by
FMR.
RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, the fund may be obligated to pay all or
pa rt of the registration expense and a considerable period may
elapse between the time it decides to seek registration and the time
it may be permitted to sell a security under an effective registration
statement. If, during such a period, adverse market conditions were to
develop, the fund might obtain a less favorable price than prevailed
when it decided to seek registration of the security.
REVERSE REPURCHASE AGREEMENTS. I n a reverse repurchase agreement,
the fund sells a portfolio instrument to another party, such as a
bank or broker-dealer, in return for cash and agrees to repurchase the
instrument at a particular price and time. While a reverse repurchase
agreement is outstanding, the fund will maintain appropriate liquid
assets in a segregated custodial account to c over its obligation
under the agreement. The fund will enter into reverse repurchase
agreements only with parties whose credi tworthiness has been found
satisfactory by FMR. Such transactions may increase fluctuations in
the market value of the fund's assets and may be viewed as a form of
leverage.
STANDBY COMMITMENTS are puts that entitle holders to same-day
settlement at an exercise price equal to the amortized cost of the
underlying security plus accrued interest, if any, at the time of
exercise. The fund may acquire standby commitments to e nhance the
liquidity of portfolio securities.
Ordinarily the fund will not transfer a standby commitment to a
third party, although it could sell the underlying municipal security
to a third party at any time. The fund may purchase standby
commitments separate from or in conjunction with the pu rchase of
securities subject to such commitments. In the latter case, the fund
would pay a higher price for the securities acquired, thus reducing
their yield to maturity.
Issuers or financial intermediaries may obtain letters of credit or
other guarantees to support their ability to buy securities on demand.
FMR may rely upon its evaluation of a bank's credit in determining
whether to support an instrument supported by a letter of credit. In
evaluating a foreign bank's credit, FMR will consider whether adequate
public information about the bank is available and whether the bank
may be subject to unfavorable political or economic developments,
currency controls, or other governmental restrictions that might
affect the bank's ability to honor its credit commitment.
Standby commitments are subject to certain risks, including the
ability of issuers of standby commitments to pay for securities a t
the time the commitments are exercised; the fact that standby
commitments are not marketable by the fund; and the possibility
that the maturities of the underlying securities may be different from
those of the commitments.
TENDER OPTION BONDS are created by coupling an intermediate- or
long-term, fixed-rate, tax-exempt bond (generally held pursuant to a
custodial arrangement) with a tender agreement that gives the holder
the option to tender the bond at its face value. As consideration for
providing the tender option, the sponsor (usually a bank,
broker-dealer, or other financial institution) receives periodic fees
equal to the difference between the bond's fixed coupon rate and the
rate (determined by a remarketing or similar agent) that would cause
the bond, coupled with the tender option, to trade at par on the date
of such determination. After payment of the tender option fee, the
fund effectively holds a demand obligation that bears interest at the
prevailing short-term tax-exempt rate. In selecting tender option
bonds for the fund, FMR will consider the creditworthiness of the
issuer of the underlying bond, the custodian, and the third party
provider of the tender option. In certain instances, a sponsor may
terminate a tender option if, for example, the issuer of the
underlying bond defaults on interest payments.
VARIABLE OR FLOATING RATE OBLIGATIONS, including certain participation
interests in municipal instruments, have interest rate adjustment
formulas that help stabilize their market values. Many variable and
floating rate instruments also carry demand fea tures that permit
the fund to sell them at par value plus accrued interest on short
notice.
In many instances bonds and participation interests have tender
options or demand features that permit the fund to tender (or put) the
bonds to an institution at periodic intervals and to receive the
principal amount thereof. The fund considers variable rate instruments
structured in this way (Participating VRDOs) to be essentially
equivalent to other VRDOs it purchases. The IRS has not ruled whether
the interest on Participating VRDOs is tax-exempt and, accordingly,
the fund intends to purchase these instruments based on opinions of
bond counsel. A fund may also invest in fixed-rate bonds that are
subject to third party puts and in participation interests in such
bonds held by a bank in trust or otherwise.
ZERO COUPON BONDS do not make regular interest payments. Instead, they
are sold at a deep discount from their face value and are redeemed at
face value when they mature. Because zero coupon bonds do not pay
current income, their prices can be very volatile when interest
rates change. In calculating its daily dividend, the fund takes into
account as income a portion of the diffe rence between a zero
coupon bond's purchase price and its face value.
PORTFOLIO TRANSACTIONS
A ll orders for the purchase or sale of portfolio securities are
placed on behalf of the fund by FMR pursuant to authority
co ntained in the fund's management contract. FMR is also
responsible for the placement of transaction orders for other
investment companies and accounts for which it or its affiliates act
as investment adviser. In selecting broker-dealers, subject to
applicable limitations of the federal securities laws, FMR considers
various relevant factors, including, but not limited to, the size and
type of the transaction; the nature and character of the markets for
the security to be purchased or sold; the execution efficiency,
settlement capability, and financial condition of the broker-dealer
firm; the broker-dealer's execution services rendered on a continuing
basis; and the reasonableness of any commissions.
The fund may execute portfolio transactions with broker-dealers who
provide research and execution services to the fund or other
accounts over which FMR or its affiliates exercise investment
discretion. Such services may include advice concerning the value of
securities; the advisability of investing in, purchasing, or selling
securities; and the availability of securities or the purchasers or
sellers of securities. In addition, such broker-dealers may furnish
analyses and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy, and performance of
accounts; effect securities transactions, and perform functions
incidental thereto (such as clearance and settlement). The selection
of such broker-dealers generally is made by FMR (to the extent
possible consistent with execution considerations) based upon the
quality of research and execution services provided.
The receipt of research from broker-dealers that execute
transactions on behalf of the fund may be useful to FMR in rendering
investment management services to the fund or its other clients, and
conversely, such research provided by broker-dealers who have executed
transaction orders on behalf of other FMR clients may be useful to FMR
in carrying out its obligations to the fund. The receipt of such
research has not reduced FMR's normal independent research activities;
however, it enables FMR to avoid the additional expenses that could be
incurred if FMR tried to develop comparable information through its
own efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that
are in excess of the amount of commissions charged by other
broker-dealers in recognition of their research and execution
services. In order to cause the fund to pay such higher commissions,
FMR must determine in good faith that such commissions are
reasonable in relation to the value of the brokerage and research
services provided by such executing broker-dealers, viewed in terms
of a particular transaction or FMR's overall responsibilities to the
fund and its other clients. In reaching this determination, FMR
will not attempt to place a specific dollar value on the brokerage and
research services provided, or to determine what portion of the
compensation should be related to those services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided
assistance in the distribution of shares of the fund, or shares of
other Fidelity funds to the extent permitted by law. FMR may use
research services provided by and place agency transactions with
National Financial Services Corporation (NFSC), an indirect subsidiary
of FMR Corp., if the commissions are fair, reasonable, and comparable
to commissions charged by non-affiliated, qualified brokerage
firms for similar services.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members
of national securities exchanges from executing exchange transactions
for accounts which they or their affiliates manage, unless certain
requirements are satisfied. Pursuant to such requirements, the
Board of Trustees has authorized NFSC to execute portfolio
transactions on national securities exchanges in accordance with
approved procedures and applicable SEC rules.
The Trustees periodically review FMR's performance of its
responsibilities in connection with the placement of portfolio
transactions on behalf of the fund and review the commissions paid by
the fund over representative periods of time to determine if they
are reasonable in relation to the benefits to the fund.
For the fiscal periods ended August 31, 1997 and 1996, the fund's
portfolio turnover rates were 32 % and 78%, respectively.
For the fiscal years ended August 1997, 1996, and 1995, the fund
paid no brokerage commissio ns.
From time to time the Trustees will review whether the recapture
for the benefit of the fund of some portion of the brokerage
commissions or similar fees paid by the fund on portfolio transactions
is legally permissible and advisable. The fund seeks to recapture
soliciting broker-dealer fees on the tender of portfolio securities,
but at present no other recapture arrangements are in effect. The
Trustees intend to continue to review whether recapture opportunities
are available and are legally permissible and, if so, to determine
in the exercise of their business judgment whether it would be
advisable for the fund to seek such recapture.
Although the Trustees and officers of the fund are substantially
the same as those of other funds managed by FMR, investment decisions
for the fund are made independently from those of other funds managed
by FMR or accounts managed by FMR affil iates. It sometimes happens
that the same security is held in the portfolio of more than one of
these funds or accounts. Simultaneous transactions are inevitable when
several funds and accounts are managed by the same investment adviser,
particularly when the same security is suitable for the investment
objective of more than one fund or account.
When two or more funds are simultaneously engaged in the purchase or
sale of the same security, the prices and amounts are allocated in
accordance with procedures believed to be appropriate and equitable
for each fund. In some cases this system could have a detrimental
effect on the price or value of the security as far as the fund is
concerned. In other cases, however, the ability of the fund to
participate in volume transactions will produce better executions and
prices for the fund. It is the current opinion of the Trustees
that the desirability of retaining FMR as investment adviser to the
fund outweighs any disadvantages that may be said to exist from
exposure to simultaneous transactions.
VALUATION
Fidelity Service Company, Inc. (FSC) normally determines the fund's
net asset value per share (NAV) as of the close of the New York Stock
Exchange (NYSE) (normally 4:00 p.m. Eastern time). The valuation of
portfolio securities is determined as of this time for the purpose of
computing the fund's NAV.
Portfolio securities are valued by various methods. If quotations
are not available, fixed-income securities are usually valued on the
basis of information furnished by a pricing service that uses a
valuation matrix which incorporates both dealer-supplied valuations
and electronic data processing techniques. Use of pricing services has
been approved by the Board of Trustees. A number of pricing services
are available, and the fund may use various pricing services or
discontinue the use of any pricing service.
Futures contracts and options are valued on the basis of market
quotations, if available. Securities of other open-end investment
companies are valued at their respective NAVs.
Securities and other assets for which there is no readily available
market value are valued in good faith by a committee appointed by the
Board of Trustees. The procedures set forth above need not be used to
determine the value of the securities owned by the fund if, in the
opinion of a committee appointed by the Board of Trustees, some other
method would more accurately reflect the fair market value of such
securities.
PERFORMANCE
The fund may quote performance in various ways. All performance
information supplied by the fund in advertising is historical and is
not intended to indicate future returns. The fund's share price,
yield, and total return fluctuate in response to market conditions and
other factors, and the value of fund shares when redeemed may be more
or less than their original cost.
YIELD CALCULATIONS. Yields for the fund are computed by dividing
the fund's interest income for a given 30-day or one-month period, net
of expenses, by the average number of shares entitled to receive
distributions during the period, dividing this figure by the
fund's net asset value (NAV) at the end of the period, and annualizing
the result (assuming compounding of income) in order to arrive at
a n annual percentage rate. Income is calculated for purposes of
yield quotations in accordance with standardized methods applicable to
all stock and bond funds. In general, interest income is reduced with
respect to bonds trading at a premium over their par value by
subtracting a portion of the premium from income on a daily basis, and
is increased with respect to bonds trading at a discount by adding a
portion of the discount to daily income. Capital gains and losses
generally are excluded from the calculation.
Income calculated for the purposes of calculating the fund's yield
differs from income as determined for other accounting purposes.
Because of the different accounting methods used, and because of the
compounding of income assumed in yield calculations, the fund's yield
may not equal its distribution rate, the income paid to your account,
or the income reported in the fund's financial statements.
Yield information may be useful in reviewing the fund's performance
and in providing a basis for comparison with other investment
alternatives. However, the fund's yield fluctuates, unlike investments
that pay a fixed interest rate over a stated period of time. When
comparing investment alternatives, investors should also note the
quality and maturity of the portfolio securities of respective
investment companies they have chosen to consider.
Investors should recognize that in periods of declining interest
rates the fund's yield will tend to be somewhat higher than
prevailing market rates, and in periods of rising interest rates the
fund's yield will tend to be somewhat lower. Also, when interest
rates are falling, the inflow of net new money to the fund from the
continuous sale of its shares will likely be invested in
instr uments producing lower yields than the balance of the fund's
holdings, thereby reducing the fund's current yield. In periods of
rising interest rates, the opposite can be expected to occur.
The fund's tax-equivalent yield is the rate an investor would have to
earn from a fully taxable investment before taxes to equal the fund's
tax-free yield. Tax-equivalent yields are calculated by dividing the
fund's yield by the result of one minus a stated federal income tax
rate. If only a portion of the fund's yield is tax-exempt, only that
portion is adjusted in the calculation.
The following table shows the effect of a shareholder's tax status
on effective yield under federal income tax laws for 1997. It
shows the approximate yield a taxable security must provide at various
income brackets to produce after-tax yields equivalent to those of
hypothetical tax-exempt obligations yielding from 4% to 8%. Of course,
no assurance can be given that the fund will achieve any specific
tax-exempt yield. While the fund invests principally in obligations
whose interest is exempt from federal income tax, other income
received by the fund may be taxable.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1997 TAX RATES AND TAX-EQUIVALENT YIELDS
Federal If individual tax-exempt yield is:
Taxable Income* Marginal 4% 5% 6% 7% 8%
Single Return Joint Return Rate** Then taxable-equivalent yield is:
$ 24,651 - $ 59,750 $ 41,201 - $ 99,600 28.0% 5.56% 6.94% 8.33% 9.72% 11.11%
$ 59,751 - $ 124,650 $ 99,601 - $ 151,750 31.0% 5.80% 7.25% 8.70% 10.14% 11.59%
$ 124,651 - $ 271,050 $ 151,751 - $ 271,050 36.0% 6.25% 7.81% 9.38% 10.94% 12.50%
$ 271,051 + $ 271,051 + 39.6% 6.62% 8.28% 9.93% 11.59% 13.25%
</TABLE>
* Net amount subject to federal income tax after deductions and
exemptions. Assumes ordinary income only.
** Excludes the impact of the phaseout of personal exemptions,
limitations on itemized deductions, and other credits, exclusions, and
adjustments which may increase a taxpayer's marginal tax rate. An
increase in a shareholder's marginal tax rate would increase that
shareholder's tax-equivalent yield.
The fund may invest a portion of its assets in obligations that are
subject to federal income tax. When the fund invests in these
obligations, its tax-equivalent yields will be lower. In the table
above, tax-equivalent yields are calculated assuming investments are
100% federally tax-free.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect
all aspects of the fund's return, including the effect of reinvesting
dividends and capital gain distributions, and any change in the fund's
NAV over a stated period. Average annual total returns are
calculated by determining the growth or decline in value of a
hypothetical historical investment in the fund over a stated
period, and then calculating the annually compounded percentage rate
that would have produced the same result if the rate of growth or
decline in value had been constant over the period. For example, a
cumulative total return of 100% over ten years would produce an
average annual total return of 7.18%, which is the steady annual rate
of return that would equal 100% growth on a compounded basis in ten
years. While average annual total returns are a convenient means of
comparing investment alterna tives, investors should realize that
the fund's performance is not constant over time, but changes from
year to year, and that ave rage annual total returns represent
averaged figures as opposed to the actual year-to-year performance of
the fund.
In addition to average annual total returns, the fund may quote
unaveraged or cumulative total returns reflecting the simple
change in value of an investment over a stated period. Average annual
and cumulative total returns may be quoted as a percentage or as a
dollar amount, and may be calculated for a single investment, a series
of investments, or a series of redemptions, over any time period.
Total returns may be broken down into their components of income and
capital (including capital gains and changes in share price) in order
to illustrate the relationship of these factors and their
contributions to total return. Total returns may be quoted on a
before-tax or after-tax basis. Total returns, yields, and other
performance information may be quoted numerically or in a table,
graph, or similar illustration.
NET ASSET VALUE. Charts and graphs using the fund's net asset
values, adjusted net asset values, and benchmark indices may be
used to exhibit performance. An adjusted NAV includes any
distributions paid by the fund and reflects all elements of its
return. Unless otherwise indicated, the fund's adjusted NAVs are not
adjusted for sales charges, if any.
HISTORICAL FUND RESULTS. The following tables show the fund's yields,
tax-equivalent yields, and total returns for periods ended August 31,
1997.
The tax-equivalent yield is based on a 36 % federal income tax
rate. Note that the fund may invest in securities whose income is
subject to the federal alternative minimum tax.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Average Annual Total Returns Cumulative Total Returns
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Thirty-Day Tax- One Five Ten One Five Ten
Yield Equivalent Year Years Years Year Years Years
Yield
Spartan 3.86 % 6.03 % 5.49 % 4.91 % 5.51 % 5.49 % 27.05 % 70.98 %
Short-Intermediate
Municipal Income
</TABLE>
Note: If FMR had not reimbursed certain fund expenses during these
periods, the fund's total returns would have been lower.
The following table shows the income and capital elements of the
fund's cumulative total return. The table compares the fund's
return to the record of the Standard & Poor's 500 Index (S&P 500), the
Dow Jones Industrial Average (DJIA), and the cost of living, as
measured by the Consumer Price Index (CPI), over the same period. The
CPI information is as of the month-end closest to the initial
inve stment date for the fund. The S&P 500 and DJIA comparisons are
provided to show how the fund's total return compared to the record of
a broad unmanaged index of common stocks and a narrower set of stocks
of major industrial companies, respectively, over the same period.
Because the fund invests in fixed-income securities, common stocks
represent a different type of investment from the fund. Common
stocks generally offer greater growth potential than the fund, but
generally experience greater price volatility, which means greater
potential for loss. In addition, common stocks generally provide lower
income than a fixed-income investment such as the fund. The S&P 500
and DJIA returns are based on the prices of unmanaged groups of stocks
and, unlike the fund's returns, do not inc lude the effect of
brokerage commissions or other costs of investing.
During the 10- year period ended August 31, 1997, a hypothetical
$10,000 investment in Spartan Short-Intermediate Municipal Income Fund
would have grown to $ 17,098 , assuming all distributions were
reinvested. This was a period of fluctuating interest rates and bond
prices and the figures below should not be considered representative
of the dividend income or capital gain or loss that could be
realized from an investment in the fund today. Tax consequences of
different investments have not been factored into the figures
below.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
SPARTAN SHORT-INTERMEDIATE MUNICIPAL INCOME FUND INDICES
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P 500 DJIA Cost of
August 31 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1997 $ 10,393 $ 6,691 $ 14 $ 17,098 $ 36,719 $ 38,606 $ 14,056
1996 $ 10,280 $ 5,915 $ 14 $ 16,209 $ 26,106 $ 27,905 $ 13,750
1995 $ 10,331 $ 5,278 $ 14 $ 15,623 $ 21,988 $ 22,411 $ 13,565
1994 $ 10,186 $ 4,546 $ 14 $ 14,746 $ 18,106 $ 18,541 $ 13,024
1993 $ 10,445 $ 4,004 $ 0 $ 14,449 $ 17,167 $ 16,834 $ 12,657
1992 $ 10,186 $ 3,272 $ 0 $ 13,458 $ 14,898 $ 14,582 $ 12,316
1991 $ 9,979 $ 2,535 $ 0 $ 12,514 $ 13.803 $ 13,228 $ 11,941
1990 $ 9,783 $ 1,770 $ 0 $ 11,553 $ 10,876 $ 10,961 $ 11,503
1989 $ 9,733 $ 1,121 $ 0 $ 10,904 $ 11,448 $ 11,047 $ 10,892
1988 $ 9,803 $ 509 $ 0 $ 10,312 $ 8,222 $ 7,903 $ 10,402
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in the fund
on September 1, 1987, the net amount invested in fund shares was
$10,000. The cost of the initial investment ($10,000) together with
the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $ 16,508 . If distributions had
not been reinvested, the amount of distributions earned from the fund
over time would have been smaller, and cash payments for the period
would have amounted to $ 5,008 for dividends and $ 10 for
capital gain distributions.
PERFORMANCE COMPARISONS. The fund's performance may be co mpared to
the performance of other mutual funds in general, or to the
performance of particular types of mutual funds. These comparisons may
be expressed as mutual fund rankings prepared by Lipper Analytical
Services, Inc. (Lipper), an independent service located in Summit, New
Jersey that monitors the performance of mutual funds. Generally,
Lipper rankings are based on total return, assume reinvestment of
distributions, do not take sales charges or trading fees into
consideration, and are prepared without regard to tax consequences.
Lipper may also rank funds based on yield. In addition to the mutual
fund rankings, the fund's performance may be compared to stock, bond,
and money market mutual fund performance indices prepared by Lipper or
other organizations . When comparing these indices, it is important
to remember the risk and return characteristics of each type of
investment. For example, while stock mutual funds may offer higher
potential returns, they also carry the highest degree of share price
volatility. Likewise, money market funds may offer greater stability
of principal, but generally do not offer the higher potential returns
available from stock mutual funds.
From time to time, the fund's performance may also be compared to
other mutual funds tracked by financial or business publications
and periodicals. For example, the fund may quote Morningstar, Inc. in
its advertising materials. Morningstar, Inc. is a mutual fund rating
service that rates mutual funds on the basis of risk-adjusted
performance. Rankings that compare the performance of Fidelity funds
to one another in appropriate categories over specific periods of time
may also be quoted in advertising.
The fund's performance may also be compared to that of a benchmark
index representing the universe of securities in which the fund may
invest. The total return of a benchmark index reflects reinvestment of
all dividends and capital gains paid by securities included in the
index. Unlike the fund's returns, however, the index returns do not
reflect brokerage commissions, transaction fees, or other costs of
investing directly in the securities included in the index.
The fund may compare to the Lehman Brothers Municipal Bond
Index, a total return performance benchmark for investment-grade
municipal bonds with maturities of at least one year. In addition,
Spartan Short-Intermediate Municipal Income may compare its
performance to that of the Lehman Brothers 1-5 Year Municipal Bond
Index, a total return performance benchmark for investment-grade
municipal bonds with maturities between one and five years. Issues
included in the index have been issued after December 31, 1990 and
have an outstanding par value of at least $50 million. Subsequent to
December 31, 1995, zero coupon bonds and issues subject to the
alternative minimum tax are included in the index.
The fund may be compared in advertising to Certificates of Deposit
(CDs) or other investments issued by banks or other depository
institutions. Mutual funds differ from bank investments in several
respects. For example, the fund may offer greater liquidity or higher
potential returns than CDs, the fund does not guarantee your principal
or your return, and fund shares are not FDIC insured.
Fidelity may provide information designed to help individuals
understand their investment goals and explore various financial
strategies. Such information may include information about current
economic, market, and political conditions; materials that describe
general principles of investing, such as asset allocation,
diversification, risk tolerance, and goal setting; questionnaires
designed to help create a personal financial profile; worksheets used
to project savings needs based on assumed rates of inflation and
hypothetical rates of return; and action plans offering investment
alternatives. Materials may also include discussions of Fidelity's
asset allocation funds and other Fidelity funds, products, and
services.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides
historical returns of the capital markets in the United States,
including common stocks, small capitalization stocks, long-term
corporate bonds, intermediate-term government bonds, long-term
government bonds, Treasury bills, the U.S. rate of inflation (based on
the CPI), and combinations of various capital markets. The
performance of these capital markets is based on the returns of
different indices.
Fidelity funds may use the performance of these capital markets in
order to demonstrate general risk-versus-reward investment scenarios.
Performance comparisons may also include the value of a hypothetical
investment in any of these capital markets. The risks associated with
the security types in any capital market may or may not correspond
directly to those of the funds. Ibbotson calculates total returns in
the same method as the funds. The funds may also compare performance
to that of other compilations or indices that may be developed and
made available in the future.
The fund may compare and contrast in advertising the relative
advantages of investing in a mutual fund versus an individual
municipal bond. Unlike tax-free mutual funds, individual municipal
bonds offer a stated rate of interest and, if held to maturity,
repayment of principal. Although some individual municipal bonds might
offer a higher return, they do not offer the reduced risk of a mutual
fund that invests in many different securities. The initial investment
requirements and sales charges of many tax-free mutual funds are lower
than the purchase cost of individual municipal bonds, which are
generally issued in $5,000 denominations and are subject to direct
brokerage costs.
In advertising materials, Fidelity may reference or discuss its
products and services, which may include other Fidelity funds;
retirement investing; brokerage products and services; model
portfolios or allocations; saving for college or other goals;
charitable giving; and the Fidelity credit card. In addition, Fidelity
may quote or reprint financial or business publications and
periodicals as they relate to current economic and political
conditions, fund management, portfolio composition, investment
philosophy, investment techniques, the desirability of owning a
particular mutual fund, and Fidelity services and products.
Fidelity may also reprint, and use as advertising and sales
literature, articles from Fidelity Focus(Registered trademark), a
quarterly magazine provided free of charge to Fidelity fund
shareholders.
The fund may present its fund number, Quotron(trademark) number,
and CUSIP number, and discuss or quote its current portfolio
manager.
VOLATILITY. The fund may quote various measures of volatility and
benchmark correlation in advertising. In addition, the fund may
compare these measures to those of other funds. Measures of volatility
seek to compare the fund's historical share price fluctuations or
total returns to those of a benchmark. Measures of benchmark
correlation indicate how valid a comparative benchmark may be. All
measures of volatility and correlation are calculated using averages
of historical data. In advertising, the fund may also discuss or
illustrate examples of interest rate sensitivity.
MOMENTUM INDICATORS in dicate the fund's price movements over
specific periods of time. Each point on the momentum indicator
represents the fund's percentage change in price movements over that
period.
The fund may advertise examples of the effects of periodic
investment plans, including the principle of dollar cost averaging.
In such a program, an investor invests a fixed dollar amount in a
fund at periodic intervals, thereby purchasing fewer shares when
prices are high and more shares when prices are low. While such a
strategy does not assure a profit or guard against loss in a declining
market, the investor's average cost per share can be lower than if
fixed numbers of shares are purchased at the same intervals. In
evaluating such a plan, investors should consider their ability to
continue purchasing shares during periods of low price levels.
As of August 31, 1997, FMR advised over $ 29 billion in tax-free
fund assets, $ 97 billion in money market fund assets,
$ 368 billion in equity fund assets, $ 74 billion in
international fund assets, and $ 27 billion in Spartan fund
assets. The fund may reference the growth and variety of money market
mutual funds and the adviser's innovation and participation in the
industry. The equity funds under management figure represents the
largest amount of equity fund assets under management by a mutual fund
investment adviser in the United States, making FMR America's leading
equity (stock) fund manager. FMR, its subsidiaries, and affiliates
maintain a worldwide information and communications network for the
purpose of researching and managing investments abroad.
In addition to performance rankings, the fund may compare its total
expense ratio to the average total expense ratio of similar funds
tracked by Lipper. The fund's total expense ratio is a significant
factor in comparing bond and money market investments because of
its effect on yield.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The fund is open for business and its net asset value per share
(NAV) is calculated each day the New York Stock Exchange (NYSE) is
open for trading. The NYSE has designated the following holiday
closings for 1997 and 1998 : New Year's Day, Martin Luther
King's Birthday (in 1998), President's Day, Good Friday, Memorial
Day, Independence Day (observed) , Labor Day, Thanksgiving Day,
and Christmas Day. Although FMR expects the same holiday schedule to
be observed in the future, the NYSE may modify its holiday schedule
at any time. In addition, the fund will not process wire purchases and
redemptions on days when the Federal Reserve Wire System is
closed.
FSC normally determines the fund's NAV as of the close of the NYSE
(normally 4:00 p.m. Eastern time). However, NAV may be calculated
earlier if trading on the NYSE is restricted or as permitted by the
Securities and Exchange Commission (SEC). To the extent that
portfolio securities are traded in other markets on days when the NYSE
is closed, the fund's NAV may be affected on days when investors do
not have access to the fund to purchase or redeem shares. In addition,
trading in some of the fund's portfolio securities may not occur
on days when the fund is open for business.
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are
valued in computing the fund's NAV. Sharehol ders receiving
securities or other property on redemption may realize a gain or loss
for tax purposes, and will incur any costs of sale, as well as the
associated inconveniences.
Pursuant to Rule 11a-3 under the Investment Company Act of 1940
(the 1940 Act), the fund is required to give shareholders at least
60 days' notice prior to terminating or modifying its exchange
privilege. Under the Rule, the 60-day notification requirement may be
waived if (i) the only effect of a modification would be to reduce or
eliminate an administrative fee, redemption fee, or deferred sales
charge ordinarily payable at the time of an exchange, or (ii) the fund
suspends the redemption of the shares to be exchanged as permitted
under the 1940 Act or the rules and regulations thereunder, or the
fund to be acquired suspends the sale of its shares because it is
unable to invest amounts effectively in accordance with its investment
objective and policies.
In the Prospectus, the fund has notified shareholders that it
reserves the right at any time, without prior notice, to refuse
e xchange purchases by any person or group if, in FMR's judgment,
the fund would be unable to invest effectively in accordance with its
investment objective and policies, or would otherwise potentially be
adversely affected.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and
the U.S. Postal Service cannot deliver your checks, or if your checks
remain uncashed for six months, Fidelity may reinvest your
distributions at the then-current NAV. All subsequent distributions
will then be reinvested until you provide Fidelity with alternate
instructions.
DIVIDENDS. To the extent that the fund's income is designated as
federally tax-exempt interest, the daily dividends declared by the
fund are also federally tax-exempt. Short-term capital gains are
distributed as dividend income, but do not qualify for the
dividends-received deduction. These gains will be taxed as ordinary
income. The fund will send each shareholder a notice in January
describing the tax status of dividend and capital gain distributions
(if any) for the prior year.
Shareholders are required to report tax-exempt income on their federal
tax returns. Shareholders who earn other income, such as social
security benefits, may be subject to federal income tax on up to 85%
of such benefits to the extent that their income, including
tax-exempt income, exceeds certain base amounts.
Th e fund purchases municipal securities whose interest FMR believes
is free from federal income tax. Generally, issuers or other
parties have entered into covenants requiring continuing compliance
with federal tax requirements to preserve the tax-free status of
interest payments over the life of the security. If at any time the
covenants are not complied with, or if the IRS otherwise determines
that the issuer did not comply with relevant tax requirements,
interest payments from a security could become federally taxable
retroactive to the date the security was issued. For certain types of
structured securities, the tax status of the pass-through of tax-free
income may also be based on the federal tax treatment of the
structure.
As a result of the Tax Reform Act of 1986, interest on certain
"private activity" securities is subject to the federal alternative
minimum tax (AMT), although the interest continues to be excludable
from gross income for other tax purposes. Interest from private
activity securities will be considered tax-exempt for purposes of the
fund's policies of investing so that at least 80% of its income is
free from federal income tax. Interest from private activity
securities is a tax preference item for the purposes of determining
whether a taxpayer is subject to the AMT and the amount of AMT to be
paid, if any. Private activity securities issued after August 7, 1986
to benefit a private or industrial user or to finance a private
facility are affected by this rule.
A portion of the gain on bonds purchased with market discount after
April 30, 1993 and short-term capital gains distributed by the fund
are taxable to shareholders as dividends, not as capital gains.
Dividend distributions resulting from a recharacterization of gain
from the sale of bonds purchased with market discount after April 30,
1993 are not considered income for purposes of the fund's policy
of investing so that at least 80% of its income is free from federal
income tax.
Corporate investors should note that a tax preference item for
purposes of the corporate AMT is 75% of the amount by which adjusted
current earnings (which includes tax-exempt interest) exceeds the
alternative minimum taxable income of the corporation. If a
shareholder receives an exempt-interest dividend and sells shares at a
loss after holding them for a period of six months or less, the loss
will be disallowed to the extent of the amount of exempt-interest
dividend.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by the
fund on the sale of securities and distributed to sharehol ders are
federally taxable as long-term capital gains, regardless of the length
of time shareholders have held their shares. If a share holder
receives a capital gain distribution on shares of the fund, and such
shares are held six months or less and are sold at a loss, the
portion of the loss equal to the amount of the capital gain
distribution will be considered a long-term loss for tax purposes.
Short-term capital gains distributed by the fund are taxable to
shareholders as dividends, not as capital gains.
As of August 31, 199 7 , the fun d had a capital loss
carryforward aggregating approximately $ 5,406,000 . This loss
carryforward, of which $ 4,494,000 , and $ 912,000
will expire on August 31, 2003 , and 2004 ,
respectively, is available to offset future capital gains.
TAX STATUS OF THE FUND. T he fund intends to qualify each year as a
"regulated investment company" for tax purposes so that it will
not be liable for federal tax on income and capital gains distributed
to shareholders. In order to qualify as a regulated invest ment
company and avoid being subject to federal income or excise taxes at
the fund level, the fund intends to distribute substantially all of
its net in vestment income and net realized capital gains within
each calendar year as well as on a fiscal year basis and
intends to comply with other tax rules applicable to regulated
investment companies .
The fund is treated as a separate entity from the other funds
of Fidelity Union Street Trust for tax purposes.
OTHER TAX INFORMATION. Th e information a bove is only a summary
of some of the tax consequences generally affecting the fund and its
shareholders, and no attempt has been made to discuss individual tax
consequences. In addition to federal income taxes, shareholders may be
subject to state and local taxes on fund distributions, and shares may
be subject to state and local personal property taxes. Investors
should consult their tax advisers to determine whether the fund is
suitable to their particular tax situation.
FMR
All of the stock of FMR is owned by FMR Corp., its parent organized in
1972. The voting common stock of FMR Corp. is divided into two
classes. Class B is held predominantly by members of the Edward C.
Johnson 3d family and is entitled to 49% of the vote on any matter
acted upon by the voting common stock. Class A is held predominantly
by non-Johnson family member employees of FMR Corp. and its affiliates
and is entitled to 51% of the vote on any such matter. The Johnson
family group and all other Class B shareholders have entered into a
shareholders' voting agreement under which all Class B shares will be
voted in accordance with the majority vote of Class B shares. Under
the Investment Company Act of 1940 (1940 Act), control of a company is
presumed where one individual or group of individuals owns more than
25% of the voting stock of that company. Therefore, through their
ownership of voting common stock and the execution of the
shareholders' voting agreement, members of the Johnson family may be
deemed, under the 1940 Act, to form a controlling group with respect
to FMR Corp.
At present, the principal operating activities of FMR Corp. are those
conducted by its division, Fidelity Investments Retail Marketing
Company, which provides marketing services to various companies within
the Fidelity organization.
Fidelity investment personnel may invest in securities for their
own accounts pursuant to a code of ethics that sets forth all
employees' fiduciary responsibilities regarding the funds, establishes
procedures for personal investing and restricts certain transactions.
For example, all personal trades in most securities require
pre-clearance, and participation in initial public offerings is
prohibited. In addition, restrictions on the timing of personal
investing in relation to trades by Fidelity funds and on short-term
trading have been adopted.
TRUSTEES AND OFFICERS
The Trustees, Members of the Advisory Board, and executive officers of
the trust are listed below. Except as indicated, each individual has
held the office shown or other offices in the same company for the
last five years. All persons named as Trustees and Members of the
Advisory Board also serve in similar capacities for other funds
advised by FMR. The business address of each Trustee, Member of the
Advisory Board, and officer who is an "interested person" (as defined
in the Investment Company Act of 1940) is 82 Devonshire Street,
Boston, Massachusetts 02109, which is also the address of FMR. The
business address of all the other Trustees is Fidelity Investments,
P.O. Box 9235, Boston, Massachusetts 02205-9235. Those Trustees who
are "interested persons" by virtue of their affiliation with either
the trust or FMR are indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d ( 67), Trustee and President, is Chairman,
Chief Executive Officer and a Director of FMR Corp.; a Director and
Chairman of the Board and of the Executive Committee of FMR; Chairman
and a Director of FMR Texas Inc., Fidelity Management & Research
(U.K.) Inc., and Fidelity Management & Research (Far East) Inc.
J. GARY BURKHEAD (56), Member of the Advisory Board (1997), is Vice
Chairman and a Member of the Board of Directors of FM R Corp.
(1997) and President and Chief Executive Officer of the Fidelity
Institutional Group (1997). Previously, Mr. Burkhead served as
President of Fidelity Management & Research Co mpany .
R ALPH F. COX (65), Trustee, is President of RABAR Enterprises
(management consulting-engineering industry, 1994). Prior to February
1994, he was President of Greenhill Petroleum Corporation (petroleum
exploration and production). Until March 1990, Mr. Cox was President
and Chief Operating Officer of Union Pacific Resources Company
(exploration and produc tion). He is a Director of USA Waste
Services, Inc. (non-hazardous waste, 1993), CH2M Hill Companies
(engineering), Rio Grande, Inc. (oil and gas production), and
Daniel Industries (petroleum measurement equipment manufacturer). In
addition, he is a member of advisory boards of Texas A&M University
and the University of Texas at Austin.
PHYLLIS BUR KE DAVIS (65), Trustee (1992). Prior to her
retirement in September 1991, Mrs. Davis was the Senior Vice President
of Corporate Affairs of Avon Products, Inc. She is currently a
Director of BellSouth Corporation (telecommunications), Eaton
Corporation (manufacturing, 1991), and the TJX Companies, Inc. (retail
stores), and previously served as a Director of Hallmark Cards, Inc.
(1985-1991) and Nabisco Brands, Inc. In addition, she is a member of
the President's Advisory Council of The University of Vermont School
of Business Administration.
ROBERT M. GATES (53), Trustee (1997), is a consultant, author, and
lecturer (1993). Mr. Gates was Director of the Central Intelligence
Agency (CIA) from 1991-1993. From 1989 to 1991, Mr. Gates served as
Assistant to the President of the United States and Deputy National
Security Advisor. Mr. Gates is currently a Trustee for the Forum For
International Policy, a Board Member for the Virginia Neurological
Institute, and a Senior Advisor of the Harvard Journal of World
Affairs. In addition, Mr. Gates also serves as a member of the
corporate board for LucasVarity PLC (automotive components and diesel
engines), Charles Stark Draper Laboratory (non-profit), NACCO
Industries, Inc. (mining and manufacturing), and TRW Inc. (original
equipment and replacement products).
E. BRADLEY JONES (69), Trustee. Prior to his retirement in 1984,
Mr. Jones was Chairman and Chief Executive Officer of LTV Steel
Company. He is a Director of TRW Inc. (original equipment and
replacement products), Consolidated Rail Corporation, Birmingham Steel
Corporation, and RPM, Inc. (manufacturer of chemical products), and he
previously served as a Director of NACCO Industries, Inc. (mining and
manufacturing, 1985-1995), Hyster-Yale Materials Handling, Inc.
(1985-1995) and Cleveland-Cliffs Inc. (mining), and as a Trustee of
First Union Real Estate Investments. In addition, he serves as a
Trustee of the Cleveland Clinic Foundation, where he has also been a
member of the Executive Committee as well as Chairman of the Board and
President, a Trustee and member of the Executive Committee of
University School (Cleveland), and a Trustee of Cleveland Clinic
Florida.
DONALD J. KIRK (64), Truste e, is Executive-in-Residence (1995)
at Columbia University Graduate School of Business and a financial
consultant. From 1987 to January 1995, Mr. Kirk was a Professor at
Columbia University Graduate School of Business. Prior to 1987, he was
Chairman of the Financial Accounting Standards Board. Mr. Kirk is a
Director of General Re Corporation (reinsurance), and he previously
served as a Director of Valuation Research Corp. (appraisals and
valuations, 1993-1995). In addition, he serves as Chairman of the
Board of Directors of the National Arts Stabilization Fund, Chairman
of the Board of Trustees of the Greenwich Hospital Association, a
Member of the Public Oversight Board of the American Institute of
Certified Public Accountants' SEC Practice Section (1995), and as a
Public Governor of the National Association of Securities Dealers,
Inc. (1996).
*PETER S. LYNCH (54), Truste e, is Vice Chairman and Director of
FMR (1992). Prior to May 31, 1990, he was a Director of FMR and
Executive Vice President of FMR (a position he held until March 31,
1991); Vice President of Fidelity Magellan Fund and FMR Growth Group
Leader; and Managing Director of FMR Corp. Mr. Lynch was also Vice
President of Fidelity Investments Corporate Services (1991-1992). In
addition, he serves as a Trustee of Boston College, Massachusetts Eye
& Ear Infirmary, Historic Deerfield (1989) and Society for the
Preservation of New England Antiquities, and as an Overseer of the
Museum of Fine Arts of Boston.
WILLIAM O. McCOY (63) , Trustee (1997), is the Vice President of
Finance for the University of North Carolina (16-school system, 1995).
Prior to his retirement in December 1994, Mr. McCoy was Vice Chairman
of the Board of BellSouth Corporation (telecommunications, 1984)
and President of BellSouth Enterprises (1986). He is currently a
Director of Liberty Corporation (holding company, 1984), Weeks
Corporation of Atlanta (real estate, 1994), Carolina Power and Light
Company (electric utility, 1996), and the Kenan T ransport Co.
(1996). Previously, he was a Director of First American Corporation
(bank holding company, 1979-1996). In addition, Mr. McCoy serves as a
member of the Board of Visitors for the University of North Carolina
at Chapel Hill (1994) and for the Kenan-Fla ger Business School
(University of North Carolina at Chapel Hill, 1988).
GERALD C. McDONOUGH ( 68), Trustee and Chairman of the
non-interested Trustees, is Chairman of G.M. Management Group
(strategic advisory services). Mr. McDonough is a Director of York
International Corp. (air conditioning and refrigeration), Commercial
Intertech Corp. (hydraulic systems, building systems, and metal
products, 1992), CUNO, Inc. (liquid and gas filtration products,
1996), and Associated Estates Realty Corporation (a real estate
investment trust, 1993). Mr. McDonough served as a Director of
ACME-Cleveland Corp. (metal working, telecommunications, and
electronic products) from 1987-1996.
MARVIN L. MANN (64), Trus tee (1993) is Chairman of the Board,
President, and Chief Executive Officer of Lexmark International, Inc.
(office machines, 1991). Prior to 1991, he held the positions of Vice
President of International Business Machines Corporation ("IBM") and
President and General Manager of various IBM divisions and
subsidiaries. Mr. Mann is a Director of M.A. Hanna Company (chemicals,
1993), Imation Corp. (imaging and information storage, 1997),
and Infomart (marketing services, 1991), a Trammell Crow Co. In
addition, he serves as the Campaign Vice Chairman of the Tri-State
United Way (1993) and is a member of the University of Alabama
President's Cabinet.
*ROBERT C. POZEN (51), Trustee (1997) and Senior Vice President, is
also President and a Director of FMR (1997); and President and a
Director of FMR Texas, Inc. (1997), Fidelity Management & Research
(U.K.) Inc. (1997), and Fidelity Management & Research (Far East) Inc.
(1997). Previously, Mr. Pozen served as General Counsel, Managing
Director, and Senior Vice President of FMR Corp.
THOMAS R. WILLIAMS (68), Trustee, is President of The Wales
Group, Inc. (management and financial advisory services). Prior to
retiring in 1987, Mr. Williams served as Chairman of the Board of
First Wachovia Corporation (bank holding company), and Chairman and
Chief Executive Officer of The First National Bank of Atlanta and
First Atlanta Corporation (bank holding company). He is currently a
Director of ConAgra, Inc. (agricultural products), Georgia Power
Company (electric utility), National Life Insurance Company of
Vermont, American Software, Inc., and AppleSouth, Inc. (restaurants,
1992).
DWIGHT D. CHURCHILL (43), is Vice President of Bond Funds, group
leader of the Bond Group, and Senior Vice President of FMR (1997). Mr.
Churchill joined Fidelity in 1993 as Vice President and Group Leader
of Taxable Fixed-Income Investments. Prior to joining Fidelity, he
spent three years as president and CEO of CSI Asset Management, Inc.
in Chicago, as investment management subsidiary of The Prudential.
FRED L. HENNING, JR. (58), is Vice President of Fidelity's
F ixed- I ncome Group (1995) and Senior Vice
President of FMR (1995). Before assuming his current
responsibilities, Mr. Henning was head of Fidelity's Money Market
Division.
NORM LIND (41), is Vice President of Spartan Short-Intermediate
Municipal Income ( 1995 ) and Spartan Intermediate
Municipal Income (1995) , and an employee of FMR
(1986).
ARTHUR S. LORING (49), Secreta ry, is Senior Vice President
(1993) and General Counsel of FMR, Vice President-Legal of FMR Corp.,
and Vice President and Clerk of FDC.
RICHARD A. SILVER (51), Treasurer (1997), is Treasurer of the
Fidelity funds and is an employee of FMR (1997). Before joining FMR,
Mr. Silver served as Executive Vice President, Fund Accounting &
Administration at First Data Investor Services Group, Inc.
(1996-1997). Prior to 1996, Mr. Silver was Senior Vice President and
Chief Financial Officer at The Colonial Group, Inc. Mr. Silver also
served as Chairman of the Accounting/Treasurer's Committee of the
Investment Company Institute (1987-1993).
THOMAS D. MAHER (52), Assistant Vice President, is Assistant Vice
President of Fidelity's municipal bond funds (1996) and of Fidelity's
money market funds and Vice President and Associate General Counsel
o f FMR Texas Inc.
JOHN H. COSTELLO (51), Assistant Tre asurer, is an employee of
FMR.
LEONARD M. RUSH (51), Assistant Treasurer (1994), is an
employee of FMR (1994). Prior to becoming Assistant Treasurer of the
Fidelity funds, Mr. Rush was Chief Compliance Officer of FMR Corp.
(1993-1994) and Chief Financial Officer of Fidelity Brokerage
Services, Inc. (1990-1993).
THOMAS J. SIMPSON (3 9), Assistant Treasurer, is Assistant
Treasurer of Fidelity's municipal bond funds (1996) and of Fidelity's
money market funds (1996) and an employee of FMR (1996). Prior to
joining FMR, Mr. Simpson was Vice President and Fund Controller of
Liberty Investment Services (1987-1995).
The following table sets forth information describing the compensation
of each Trustee and Member of the Advisory Board of the fun d
for his or her services for the fiscal year ended August 31, 1997,
or calendar year ended December 31, 1996, as applicable.
COMPENSATION TABLE
Trustees Aggregate Total
and Compensation Compensation
Members of the Advisory from Spartan Short- from the
Board Intermediate Municipal Fund Complex*A
Income FundB,C
J. Gary Burkhead ** $ 0 $ 0
Ralph F. Cox $ 302 137,700
Phyllis Burke Davis $ 295 134,700
Richard J. Flynn*** $ 107 168,000
Robert M. Gates **** $ 159 0
Edward C. Johnson 3d ** $ 0 0
E. Bradley Jones $ 298 134,700
Donald J. Kirk $ 301 136,200
Peter S. Lynch ** $ 0 0
William O. McCoy***** $ 298 85,333
Gerald C. McDonough $ 352 136,200
Edward H. Malone*** $ 91 136,200
Marvin L. Mann $ 302 134,700
Robert C. Pozen** $ 0 0
Thomas R. Williams $ 303 136,200
* Infor mation is for the calendar year ended December 31, 1996
for 235 funds in the complex.
** Interested Trustees of the fund and Mr. Burkhead are compensated by
FMR.
*** Richard J. Flynn and Edward H. Malone served on the Board of
Trustees through December 31, 1996.
**** Mr. Gates was appointed to the Board of Trustees of Fidelity
Union Street Trust effective March 1, 1997.
***** During the period from May 1, 1996 through December 31, 1996,
William O. McCoy served as a Member of the Advisory Board of the
trust. Mr. McCoy was appointed to the Board of Trustees of Fidelity
Union Street Trust effective January 1, 1997.
A Compensation figures include cash, a pro rata portion of benefits
accrued under the retirement program for the period ended December 30,
1996 and required to be deferred, and may include amounts deferred at
the election of Trustees.
B Compensation figures include cash, and may include amounts
required to be deferred, a pro rata portion of benefits accrued under
the retirement program for the period ended December 30, 1996 and
required to be deferred, and amounts deferred at the election of
Trustees.
C The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $11, Phyllis Burke Davis, $11, Richard J. Flynn, $0, Robert M.
Gates, $0, E. Bradley Jones, $11, Donald J. Kirk, $11, William O.
McCoy, $0, Gerald C. McDonough, $11, Edward H. Malone, $11, Marvin L.
Mann, $11, and Thomas R. Williams, $11.
Under a retirement program adopted in July 1988 and modified in
November 1995 and November 1996, each non-interested Trustee who
retired before December 30, 1996 may receive payments from a Fidelity
fund during his or her lifetime based on his or her basic trustee
fees and length of service. The obligation of a fund to make such
payments is neither secured nor funded. A Trustee became eligible
to participate in the program at the end of the calendar year in which
he or she reached age 72, provided that, at the time of
retirement, he or she had served as a Fidelity fund Trustee for at
least five years.
Under a deferred compensation plan adopted in September 1995 and
amended in November 1996 (the Plan), non-interested Trustees must
defer receipt of a portion of, and may elect to defer receipt of an
additional portion of, their annual fees. Amounts deferred under the
Plan are treated as though equivalent dollar amounts had been invested
in shares of a cross-section of Fidelity funds including funds in each
major investment discipline and representing a majority of Fidelity's
assets under management (the Reference Funds). The amounts ultimately
received by the Trustees under the Plan will be directly linked to the
investment pe r formance of the Reference Funds. Deferral of fees
in accordance with the Plan will have a negligible effect on a fund's
assets, liabilities, and net income per share, and will not obligate a
fund to retain the services of any Trustee or to pay any particular
level of compensation to the Trustee. A fund may invest in the
Reference Funds under the Plan without shareholder approval.
As of December 30, 1996, the non-interested Trustees terminated the
retirement program for Trustees who retire after such date. In
connection with the termination of the retirement program, each
then-existing non-interested Trustee received a credit to his or her
Plan account equal to the present value of the estimated benefits that
would have been payable under the retirement program. The amounts
credited to the non-interested Trustees' Plan accounts are subject to
vesting and are treated as though equivalent dollar amounts had been
invested in shares of the Reference Funds. The amounts ultimately
received by the Trustees in connection with the credits to their Plan
accounts will be directly linked to the investment performance of the
Reference Funds. The termination of the retirement program and related
crediting of estimated benefits to the Trustees' Plan accounts did not
result in a material cost to the funds.
As of August 31, 1997, the Trustees, Members of the Advisory
Board, and officers of the fund owned, in the aggregate, less than
1 % of the fund's total outstanding shares.
As of August 31, 1997 , the following owned of record or
beneficially 5% or more of the fund's outstanding shares: National
Financial Services Corporation, Boston, MA (19.08%).
MANAGEMENT CONTRACT
FMR is the fund's manager pursuant to a management contract dated
October 18, 1993, which was approved by Fidelity Municipal Trust, on
October 18, 1993.
MANAGEMENT SERVICES. The fund employs FMR to furnish investment
advisory and other services. Under the terms of its management
contract with the fund, FMR acts as investment adviser and, subject to
the supervision of the Board of Trustees, directs the investments of
the fund in accordance with its investment objective, policies, and
limitations. FMR also provides the fund with all necessary office
facilities and personnel for servicing the fund's investments,
compensates all officers of the fund and all Trustees who are
"interested persons" of the trust or of FMR, and all personnel of the
fund or FMR performing services relating to research, statistical, and
investment activities.
In addition, FMR or its affiliates, subject to the supervision of
the Board of Trustees, provide the management and administrative
services necessary for the operation of the fund. These services
include providing facilities for maintaining the fund's organization;
supervising relations with custodians, transfer and pricing agents,
accountants, underwriters, and other persons dealing with the fund;
preparing all general shareholder communications and conducting
shareholder relations; maintaining the fund's records and the
registration of the fund's shares under federal securities laws and
making necessary filings under state securities laws; developing
management and shareholder services for the fund; and furnishing
reports, evaluations, and analyses on a variety of subjects to the
Trustees.
MANAGEMENT-RELATED EXPENSES. Under the terms of the fund's
management contract, FMR is responsible for payment of all operating
expenses of the fund with certain exceptions. Specific expenses
payable by FMR include expenses for typesetting, printing, and mailing
proxy materials to shareholders, legal expenses, fees of the
custodian, auditor and interested Trustees, the fund's proportionate
share of insurance premiums and Investment Company Institute dues, and
the costs of registering shares under federal securities laws and
making necessary filings under state securities laws. The fund's
management contract further provides that FMR will pay for
typesetting, printing, and mailing prospectuses, statements of
additional information, notices, and reports to shareholders; however,
under the terms of the fund's transfer agent agreement, the transfer
agent bears the costs of providing these services to existing
shareholders. FMR also pays all fees associated with transfer agent,
dividend disbursing, and shareholder services, pricing and bookkeeping
services.
FMR pays all other expenses of the fund with the following
exceptions: fees and expenses of the non-interested Trustees,
interest, taxes, brokerage commissions (if any), and such nonrecurring
expenses as may arise, including costs of any litigation to which the
fund may be a party, and any obligation it may have to indemnify its
officers and Trustees with respect to litigation.
MANAGEMENT FEE. For the services of FMR under the management
contract, the fund pays FMR a monthly management fee at the annual
rate of 0.55% of its average net assets throughout the month. The
management fee paid to FMR by the fund is reduced by an amount equal
to the fees and expenses paid by the fund to the non-interested
Trustees.
For the fiscal years ended August 31 , 1997, 1996, and 1995,
the fund paid FMR management fees of $4,041,000, $4,739,000, and
$5,253,000, respectively, after reduction of fees and expenses paid by
the fund to the non-interested Trustees. In addition, for the fiscal
years ended August 31, 1997, 1996, and 1995, credits reducing
management fees amounted to $9,000, $80,000, and $0, respectively.
FMR may, from time to time, voluntarily reimburse all or a portion
of the fund's operating expenses (exclusive of interest, taxes,
brokerage commissions, and extraordinary expenses). FMR retains the
ability to be repaid for these expense reimbursements in the amount
that expenses fall below the limit prior to the end of the fiscal
year.
Expense reimbursements by FMR will increase the fund's total
returns and yield, and repayment of the reimbursement by the fund will
lower its total returns and yield.
DISTRIBUTION AND SERVICE PLAN
The Trustees have approved a Distribution and Service Plan on behalf
of the fund (the Plan) pursuant to Rule 12b-1 under the 1940 Act
(the Rule). The Rule provides in substance that a mutual fund may not
engage directly or indirectly in financing any activity that is
primarily intended to result in the sale of shares of the fund except
pursuant to a plan approved on behalf of the fund under the Rule. The
Plan, as approved by the Trustees, allows the fund and FMR to incur
certain expenses that might be considered to constitute indirect
payment by the fund of distribution expenses.
Under the Plan, if the payment of management fees by the fund to
FMR is deemed to be indirect financing by the fund of the distribution
of its shares, such payment is authorized by the Plan. The Plan
specifically recognizes that FMR may use its management fee revenue,
as well as its past profits or its other resources, to pay FDC for
expenses incurred in connection with the distribution of fund shares.
In addition, the Plan provides that FMR, directly or through FDC, may
make payments to third parties, such as banks or broker-dealers, that
engage in the sale of fund shares, or provide shareholder support
services. Currently, the Board of Trustees has not authorized such
payments for Spartan Short-Intermediate Municipal Income Fund.
FMR made no payments either directly or through FDC to third
parties for the fiscal year ended August 1997.
Prior to approving the Plan, the Trustees carefully considered all
pertinent factors relating to the implementation of the Plan, and
determined that there is a reasonable likelihood that the Plan will
benefit the fund and its shareholders. In particular, the Trust ees
noted that the Plan does not authorize payments by the fund other than
those made to FMR under its management contract with the fund. To the
extent that the Plan gives FMR and FDC greater flexibility in
connection with the distribution of fund shares, additional sales of
fund shares may result. Furthermore, certain shareholder support
services may be provided more effectively under the Plan by local
entities with whom shareholders have other relationships.
Spartan Short-Intermediate Municipal Income's Plan was approved by
Fidelity Municipal Trust on October 20, 1993, as the then sole
shareholder of the fund pursuant to an Agreement and Plan of
Conversion approved by public shareholders of the fund on August 18,
1993.
The Glass-Steagall Act generally prohibits federally and state
chartered or supervised banks from engaging in the business of
underwriting, selling, or distributing securities. Although the scope
of this prohibition under the Glass-Steagall Act has not been clearly
defined by the courts or appropriate regulatory agencies, FDC believes
that the Glass-Steagall Act should not preclude a bank from performing
shareholder support services, or servicing and recordkeeping
functions. FDC intends to engage banks only to perform such functions.
However, changes in federal or state statutes and regulations
pertaining to the permissible activities of banks and their affiliates
or subsidiaries, as well as further judicial or administrative
decisions or interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a bank were
prohibited from so acting, the Trustees would consider what actions,
if any, would be necessary to continue to provide efficient and
effective shareholder services. In such event, c hanges in the
operation of the fund might occur, including possible termination of
any automatic investment or redemption or other services then provided
by the bank. It is not expected that shareholders would suffer any
adverse financial consequences as a result of any of these
occurrences. In addition, state securities laws on this issue may
differ from the interpretations of federal law expressed herein, and
banks and other financial institutions may be required to register as
dealers pursuant to state law.
The fund may execute portfolio transactions with, and purchase
securities issued by, depository institutions that receive
payments under the Plan. No preference for the instruments of such
depository institutions will be shown in the selection of investments.
CONTRACTS WITH FMR AFFILIATES
The fund has entered into a transfer agent agreement with UMB.
Under the terms of the agreement, UMB provides transfer agency,
dividend disbursing, and shareholder services for the fund. UMB in
turn has entered into a sub-transfer agent agreement with FSC, an
affiliate of FMR. Under the terms of the sub-agreement, FSC performs
all processing activities associated with providing these services for
the fund and receives all related transfer agency fees paid to UMB.
For providing transfer agency services, FSC receives an annual
account fee and an asset-based fee each based on account size and fund
type for each retail account and certain institutional accounts. With
respect to certain institutional retirement accounts, FSC receives and
annual account fee and an asset-based fee based on account type or
fund type. These annual account fees are subject to increase based on
postal rate changes.
FSC also collects small account fees from certain accounts with
balances of less than $2,500.
In addition, FSC receives the pro rata portion of the transfer
agency fees applicable to shareholder accounts in each Fidelity
Freedom Fund, a fund of funds managed by an FMR affiliate, according
to the percentage of the Freedom Fund's assets that is invested in the
fund.
FSC pays out-of-pocket expenses associated with providing transfer
agent services. In addition, FSC bears the expense of typesetting,
printing, and mailing prospectuses, statements of additional
information, and all other reports, notices, and statements to
existing shareholders, with the exception of proxy statements.
The fund has also entered into a service agent agreement with UMB.
Under the terms of the agreement, UMB provides pricing and bookkeeping
services for the fund. UMB in turn has entered into a sub-service
agent agreement with FSC. Under the terms of the sub-agreement,
FSC performs all processing activities associated with providing these
services, including calculating the NAV and dividends for the fund
and maintaining the fund's portfolio and general accounting records,
and receives all related pricing and bookkeeping fees paid to UMB.
For providing pricing and bookkeeping services, FSC receives a
monthly fee based on the fund's average daily net assets throughout
the month.
FMR bears the cost of transfer agency, dividend disbursing, and
shareholder services and pricing and bookkeeping services, under the
terms of its management contract with the fund.
The fund has entered into a distribution agreement with FDC, an
affiliate of FMR organized as a Massachusetts corporation on July 18,
1960. FDC is a broker-dealer registered under the Securities Exchange
Act of 1934 and is a member of the National Association of Securities
Dealers, Inc. The distribution agreement calls for FDC to use all
reasonable efforts, consistent with its other business, to secure
purchasers for shares of the fund, which are continuously offered at
NAV. Promotional and administrative expenses in connection with the
offer and sale of shares are paid by FMR.
DESCRIPTION OF THE TRUST
TRUST ORGANIZATION. Spartan Short-Intermediate Municipal Income Fund
is a fund o f Fidelity Union Street Trust, an open-end
management investment company organized as a Massachusetts business
trust on March 1, 1974 as Fidelity Daily Income Trust. The trust's
name was changed to Fidelity Union Street Trust by a supplement to the
Declaration of Trust dated and filed with the Commonwealth of
Massachusetts on April 30, 1990. Currently, there are seven
funds of the Massachusetts trust: Spartan Municipal Income Fund,
Spartan Ginnie Mae Fund, Spartan Maryland Municipal Income Fund,
Spartan Intermediate Municipal Income Fund, Spartan Short-Intermediate
Municipal Income Fund, Spartan Arizona Municipal Income Fund and
Fidelity Export and Multinational Fund. Spartan Short-Intermediate
Municipal Fund entered into an agreement to acquire all of the assets
of Spartan Short-Intermediate Municipal Fund, a series of
Fidelity Daily Municipal Trust on October 20, 1993. The
Declaration of Trust permits the Trustees to create additional funds.
In the event that FMR ceases to be the investment adviser to the
trust or a fund, the right of the trust or fund to use the
identif ying names "Fidelity" and "Spartan" may be withdrawn.
Th e assets of the trust received for the issue or sale of
shares of each fund and all income, earnings, profits, and proceeds
thereof, subject only to the rights of creditors, are especially
allocated to such fund, and constitute the underlying assets of such
fund. The underlying assets of each fund are segregated on the books
of account, and are to be charged with the liabilities with respect
to such fund and w ith a share of the general expenses of the
trust. Expenses with respect to the trust are to be allocated in
proportion to the asset value of the respective funds, except where
allocations of direct expense can otherwise be fairly made. The
officers of the trust, subject to the general supervision of the Board
of Trustees, have the power to determine which expenses are
allocable to a given fund , or which are general or allocable to
all of the funds. In the event of the dissolution or liquidation of
the trust, shareholders of each fund are entitled to receive as a
class the underlying assets of such fund available for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. The trust is an entity of the type
commonly known as a "Massachusetts business trust." Under
Massachusetts law, shareholders of such a trust may, under certain
circumstances, be held personally liable for the obligations of the
trust. The Declaration of Trust provides that the trust shall not have
any claim against shareholders except for the payment of the purchase
price of shares and requires that each agreement, obligation, or
instrument entered into or executed by the trust or the Trustees
include a provision limiting the obligations created thereby to the
trust and its assets. The Declaration of Trust provides for
indemnification out of each fund's property of any shareholder held
personally liable for the obligations of the fund. The Declaration of
Trust also provides that each fund shall, upon request, assume the
defense of any claim made against any shareholder for any act or
obligation of the fund and satisfy any judgment thereon. Thus, the
risk of a shareholder incurring finan cial loss on account of
shareholder liability is limited to circumstances in which a fund
itself would be unable to meet its oblig ations. FMR believes that,
in view of the above, the risk of personal liability to shareholders
is remote.
The Declaration of Trust further provides that the Trustees, if they
have exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declaration of Trust protects Trustees
against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of their
office.
VOTING RIGHTS. Each fund's capital co nsists of shares of
beneficial interest. As a shareholder, you receive one vote for each
dollar value of net asset value you own. The shares have no preemptive
or conversion rights; the voting and dividend rights, the right of
redemption, and the privilege of exchange are described in the
Prospectus. Shares are fully paid and nonassessable, except as set
forth under the heading "Shareholder and Trustee Liability" above.
Shareholders representing 10% or more of the trust or a fund may,
as set forth in the Declaration of Trust, call meetings of the trust
or a fund for any purpose related to the trust or fund, as the case
may be, including, in the case of a meeting of the entire trust, the
purpose of voting on removal of one or more Trustees. The trust or any
fund may be terminated upon the sale of its assets to another open-end
management investment company, or upon liquidation and distribution of
its assets, if approved by vote of the holders of a majority of the
trust or the fund, as determined by the current value of each
shareholder's investment in the fund or trust. If not so terminated,
the trust and its funds will continue indefinitely. Each fund may
invest all of its assets in another investment company.
CUSTODIAN. UMB Bank, n.a., 1010 G rand Avenue, Kansas City,
Missouri, is custodian of the assets of the fund. The custodian is
respon sible for the safekeepin g of a fund's assets and the
appointment of any subcustodian banks and clearing agencies. The
custodian takes no part in determining the investment policies of a
fund or in deciding which securities are purchased or sold by a fund.
However, a fund may invest in obligations of the custodian and may
purchase securities from or sell securities to the custodian.
FMR, its officers and directors, its affiliated companies, and the
Board of Trustees may, from time to time, conduct transactions with
various banks, including banks serving as custodians for certain funds
advised by FMR. Transactions that have occurred to date include
mortgages and personal and general business loans. In the judgment of
FMR, the terms and conditions of those transactions were not
influenced by existing or potential custodial or other fund
relationships.
AUDITOR. Co opers & Lybrand L.L.P., One Post Office Square, Boston,
Massachusetts serves as the trust's independent accountant. The
auditor examines financial statements for the fund and provides other
audit, tax, and related services.
FINANCIAL STATEMENTS
The fund's financial statements and financial highlights for the
fiscal yea r ended August 31, 1997, and report of the auditor,
are included in the fund's Annual Report, which is a separate report
supplied with th is SAI. The fund's financial statements,
including the financial highlights, and report of the auditor are
incorporated herein b y reference. For a free additional copy of
the fund's Annual Report, contact Fidelity at 1-800-544-8888, 82
Devon shire Street, Boston, M A 02109.
APPENDIX
DOLLAR-WEIGHTED AVERAGE MATURITY is derived by multiplying the value
of each investment by the time remaining to its maturity, adding these
calculations, and then dividing the total by the value of the fund's
portfolio. An obligation's maturity is typically determined on a
stated final maturity basis, although there are some exceptions to
this rule.
For example, if it is probable that the issuer of an instrument will
take advantage of a maturity-shortening device, such as a call,
refunding, or redemption provision, the date on which the instrument
will probably be called, refunded, or redeemed may be considered to be
its maturity date. When a municipal bond issuer has committed to call
an issue of bonds and has established an independent escrow account
that is sufficient to, and is pledged to, refund that issue, the
number of days to maturity for the prerefunded bond is considered to
be the number of days to the announced call date of the bonds.
The descriptions that follow are examples of eligible ratings for the
fund. The fund may, however, consider the ratings for other types
of investments and the ratings assigned by other rating organizations
when determining the eligibility of a particular investment.
DESCRIPTION OF MOODY'S INVESTORS SERVICE RATINGS OF MUNICIPAL
OBLIGATIONS
Moody's ratings for long-term municipal obligations fall within
nine categories. They range from Aaa (highest quality) to C (lowest
quality). Those bonds within the Aa through B categories that Moody's
believes possess the strongest credit attributes within those
categories are designated by the symbol "1."
AAA - Bonds that are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edged." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
AA - Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high-grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than the Aaa securities.
A - Bonds that are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade obligations.
Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility to
impairment sometime in the future.
BAA - Bonds that are rated Baa are considered as medium-grade
obligations, (i.e., they are neither highly protected nor poorly
secured). Interest payments and principal security appear adequate for
the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
BA - Bonds that are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in this class.
B - Bonds that are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or
of maintenance of other terms of the contract over any long period of
time may be small.
CAA - Bonds that are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with respect
to principal or interest.
CA - Bonds that are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have
other marked short-comings.
C - Bonds that are rated C are the lowest-rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
DESCRIPTION OF STANDARD & POOR'S RATINGS OF MUNICIPAL DEBT
Municipal debt issues may be designated by Standard & Poor's as
either investment grade ("AAA" through "BBB") or speculative grade
("BB" through "D"). While speculative grade debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major exposures to adverse conditions. Ratings from
AA through CCC may be modified by the addition of a plus sign (+) or
minus sign (-) to show relative standing within the major rating
categories.
AAA - Debt rated AAA has the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay
principal is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the highest rated issues only in
small degree.
A - Debt rated A has a strong capacity to pay interest and repay
principal, although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher rated categories.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in
higher-rated categories.
BB - Debt rated BB has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or economic
conditions which could lead to inadequate capacity to meet timely
interest and principal payments. The BB rating category is also used
for debt subordinated to senior debt that is assigned an actual or
implied BBB- rating.
B - Debt rated B has a greater vulnerability to default but currently
has the capacity to meet interest payments and principal repayments.
Adverse business, financial, or economic conditions will likely impair
capacity or willingness to pay interest and repay principal. The B
rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied BB or BB- rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial, and
economic conditions to meet timely payment of interest and repayment
of principal. In the event of adverse business, financial, or economic
conditions, it is not likely to have the capacity to pay interest and
repay principal. The CCC rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied B or
B- rating.
CC - Debt rated CC is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC debt rating.
C - The rating C is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC- debt rating. The C
rating may be used to cover a situation where a bankruptcy petition
has been filed but debt service payments are continued.
CI - The rating CI is reserved for income bonds on which no interest
is being paid.
D - Debt rated D is in payment default. The D rating category is used
when interest payments or principal payments are not made on the date
due even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period. The
D rating will also be used upon the filing of a bankruptcy petition if
debt service payments are jeopardized.
PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a)(1) Financial Statements and Financial Highlights, included in the
Annual Report, for Spartan Intermediate Municipal Income Fund for the
fiscal year ended August 31, 1997 are incorporated herein by reference
into the fund's Statement of Addi-tional Information and were filed on
October 14, 1997 for Fidelity Union Street Trust (No. 811-2460)
pursuant to Rule 30d-1 under the Investment Company Act of 1940 and
are incorporated herein by reference.
(a)(2) Financial Statements and Financial Highlights, included in the
Annual Report, for Spartan Short-Intermediate Municipal Income Fund
for the fiscal year ended August 31, 1997 are incorporated herein by
reference into the fund's Statement of Additional Information and were
filed on October 14, 1997 for Fidelity Union Street Trust (No.
811-2460) pursuant to Rule 30d-1 under the Investment Company Act of
1940 and are incorporated herein by reference.
(b) Exhibits:
1. Amended and Restated Declaration of Trust, dated September 14,
1995, is incorporated herein by reference to Exhibit (1) to
Post-Effective Amendment No. 92.
2. (a) Bylaws of the Trust, as amended, are incorporated herein by
reference to Exhibit 2(a) to Post-Effective Amendment No. 87.
3. Not applicable.
4. Not applicable.
5. (a) Management Contract, dated April 19, 1990, between Spartan
Municipal Income Portfolio and Fidelity Management & Research Company
is incorporated herein by reference to Exhibit 5(a) to Post-Effective
Amendment No. 89.
(b) Management Contract, dated December 13, 1990, between Spartan
Ginnie Mae Fund and Fidelity Management & Research Company is
incorporated herein by reference to Exhibit 5(b) to Post-Effective
Amendment No. 89.
(c) Management Contract, dated March 18, 1993, between Spartan
Maryland Municipal Income Fund and Fidelity Management & Research
Company is incorporated herein by reference to Exhibit 5(c) to
Post-Effective Amendment No. 89.
(d) Management Contract, dated March 18, 1993, between Spartan
Aggressive Municipal Fund and Fidelity Management & Research Company
is incorporated herein by reference to Exhibit 5(f) to Post-Effective
Amendment No. 84.
(e) Management Contract, dated March 18, 1993, between Spartan
Intermediate Municipal Income Fund and Fidelity Management & Research
Company is incorporated herein by reference to Exhibit 5(g) to
Post-Effective Amendment No. 84.
(f) Management Contract, dated October 18, 1993, between Spartan
Short-Intermediate Municipal Income Fund and Fidelity Management &
Research Company is incorporated herein by reference to Exhibit 5(f)
to Post-Effective Amendment No. 89.
(g) Management Contract, dated July 14, 1994, between Fidelity
Export Fund (currently known as Fidelity Export and Multinational
Fund) and Fidelity Management & Research Company is incorporated
herein by reference to Exhibit 5(g) to Post-Effective Amendment No.
89.
(h) Sub-Advisory Agreement, dated July 14, 1994, between Fidelity
Management & Research Company, Fidelity Management & Research Company
(U.K.) Inc., and Fidelity Union Street Trust on behalf of Fidelity
Export Fund (currently known as Fidelity Export and Multinational
Fund) is incorporated herein by reference to Exhibit 5(h) to
Post-Effective Amendment No. 89.
(i) Sub-Advisory Agreement, dated July 14, 1994, between Fidelity
Management & Research Company, Fidelity Management & Research Company
(Far East) Inc., and Fidelity Union Street Trust on behalf of Fidelity
Export Fund (currently known as Fidelity Export and Multinational
Fund) is incorporated herein by reference to Exhibit 5(i) to
Post-Effective Amendment No. 89.
(j) Management Contract, dated September 16, 1994, between Spartan
Arizona Municipal Income Portfolio and Fidelity Management & Research
Company is incorporated herein by reference to Exhibit 5(j) to
Post-Effective Amendment No. 89.
6. (a) General Distribution Agreement, dated April 19, 1990, between
Fidelity Union Street Trust, on behalf of Spartan Municipal Income
Portfolio and Fidelity Distributors Corporation is incorporated herein
by reference to Exhibit 6(a) to Post-Effective Amendment No. 89.
(b) General Distribution Agreement, dated December 13, 1990, between
Fidelity Union Street Trust, on behalf of Spartan Ginnie Mae Fund and
Fidelity Distributors Corporation is incorporated herein by reference
to Exhibit 6(b) to Post-Effective Amendment No. 84.
(c) Amendment, dated May 10, 1994, to the General Distribution
Agreement, dated December 13, 1990, between Spartan Ginnie Mae Fund
and Fidelity Distributors Corporation is incorporated herein by
reference to Exhibit 6(c) to Post-Effective Amendment No. 89.
(d) General Distribution Agreement, dated March 18, 1993, between
Fidelity Union Street Trust, on behalf of Spartan Maryland Municipal
Income Fund and Fidelity Distributors Corporation is incorporated
herein by reference to Exhibit 6(d) to Post-Effective Amendment No.
89.
(e) General Distribution Agreement, dated March 18, 1993, between
Fidelity Union Street Trust, on behalf of Spartan Aggressive Municipal
Fund and Fidelity Distributors Corporation is incorporated herein by
reference to Exhibit 6(e) to Post-Effective Amendment No. 84.
(f) Amendment, dated May 10, 1994, to the General Distribution
Agreement, dated March 18, 1993, between Spartan Aggressive Municipal
Fund and Fidelity Distributors Corporation is incorporated herein by
reference to Exhibit 6(f) to Post-Effective Amendment No. 89.
(g) General Distribution Agreement, dated March 18, 1993, between
Fidelity Union Street Trust, on behalf of Spartan Intermediate
Municipal Fund and Fidelity Distributors Corporation is incorporated
herein by reference to Exhibit 6(f) to Post-Effective Amendment No.
84.
(h) Amendment, dated May 10, 1994, to the General Distribution
Agreement, dated March 18, 1993, between Fidelity Union Street Trust,
on behalf of Spartan Intermediate Municipal Fund and Fidelity
Distributors Corporation is incorporated herein by reference to
Exhibit 6(h) to Post-Effective Amendment No. 89.
(i) General Distribution Agreement, dated July 14, 1994, between
Fidelity Union Street Trust, on behalf of Fidelity Export Fund
(currently known as Fidelity Export and Multinational Fund), and
Fidelity Distributors Corporation is incorporated herein by reference
to Exhibit 6(i) to Post-Effective Amendment No. 92.
(j) Amendments to the General Distribution Agreement between
Fidelity Union Street Trust on behalf of Fidelity Export Fund
(currently known as Fidelity Export and Multinational Fund), and
Fidelity Distributors Corporation, dated March 14, 1996 and July 15,
1996, are incorporated herein by reference to Exhibit 6(k) of Fidelity
Select Portfolios' Post-Effective Amendment No. 57 (File No. 2-69972).
(k) General Distribution Agreement, dated September 16, 1994,
between Fidelity Union Street Trust, on behalf of Spartan Arizona
Municipal Income Portfolio, and Fidelity Distributors Corporation is
incorporated herein by reference to Exhibit 6(j) to Post-Effective
Amendment No. 91.
(l) General Distribution Agreement, dated October 18, 1993, between
Fidelity Union Street Trust, on behalf of Spartan Short-Intermediate
Municipal Fund, and Fidelity Distributors Corporation is incorporated
herein by reference to Exhibit 6(k) to Post-Effective Amendment No.
92.
(m) Amendments to the General Distribution Agreement between
Fidelity Union Street Trust, on behalf of Spartan Aggressive Municipal
Fund, Spartan Arizona Municipal Income Fund, Spartan Ginnie Mae Fund,
Spartan Intermediate Municipal Income Fund, Spartan Maryland Municipal
Income Fund, Spartan Municipal Income Fund, and Spartan
Short-Intermediate Municipal Income Fund, and Fidelity Distributors
Corporation, dated March 14, 1996 and July 15, 1996, are incorporated
herein by reference to Exhibit 6(a) of Fidelity Court Street Trust's
Post-Effective Amendment No. 61 (File No. 2-58774).
(n) Form of Bank Agency Agreement (as revised January, 1997) is
incorporated herein by reference to Exhibit 6(n) to Post-Effective
Amendment No. 97.
(o) Form of Selling Dealer Agreement for Bank-Related Transactions
(as revised January, 1997) is incorporated herein by reference to
Exhibit 6(o) to Post-Effective Amendment No. 97.
7. (a) Retirement Plan for Non-Interested Person Trustees, Directors
or General Partners, as amended on November 16, 1995, is incorporated
herein by reference to Exhibit 7(a) of Fidelity Select Portfolio's
(File No. 2-69972) Post-Effective Amendment No. 54.
. (b) The Fee Deferral Plan for Non-Interested Person Directors and
Trustees of the Fidelity Funds, effective as of September 14, 1995 and
amended through November 14, 1996, is incorporated herein by reference
to Exhibit 7(b) of Fidelity Aberdeen Street Trust's (File No.
33-43529) Post-Effective Amendment No. 19.
8. (a) Custodian Agreement and Appendix C, dated December 1, 1994,
between The Bank of New York and Fidelity Union Street Trust on behalf
of Spartan Ginnie Mae Fund is incorporated herein by reference to
Exhibit 8(a) of Fidelity Hereford Street Trust's Post-Effective
Amendment No. 4 (File No. 33-52577).
(b) Appendix A, dated April 17, 1997, to the Custodian Agreement,
dated December 1, 1994, between The Bank of New York and Fidelity
Union Street Trust on behalf of Spartan Ginnie Mae Fund is
incorporated herein by reference to Exhibit 8(b) of Fidelity Hereford
Street Trust's Post-Effective Amendment No. 8 (File No. 33-52577).
(c) Appendix B, dated June 19, 1997, to the Custodian Agreement,
dated December 1, 1994, between The Bank of New York and Fidelity
Union Street Trust on behalf of Spartan Ginnie Mae Fund is
incorporated herein by reference to Exhibit 8(c) of Fidelity Income
Fund's Post-Effective Amendment No. 42 (File No. 2-92661).
(d) Custodian Agreement, Appendix B, and Appendix C, dated December
1, 1994, between UMB Bank, n.a. and Fidelity Union Street Trust on
behalf of Spartan Short-Intermediate Municipal Fund, Spartan
Aggressive Municipal Fund, Spartan Intermediate Municipal Fund,
Spartan Municipal Income Portfolio, Spartan Maryland Municipal Income
Fund, and Spartan Arizona Municipal Income Portfolio is incorporated
herein by reference to Exhibit 8 of Fidelity California Municipal
Trust's Post-Effective Amendment No. 28 (File No. 2-83367).
(e) Appendix A, dated October 17, 1996, to the Custodian Agreement,
dated December 1, 1994, between UMB Bank, n.a. and Fidelity Union
Street Trust on behalf of Spartan Short-Intermediate Municipal Fund,
Spartan Aggressive Municipal Fund, Spartan Intermediate Municipal
Fund, Spartan Municipal Income Portfolio, Spartan Maryland Municipal
Income Fund, and Spartan Arizona Municipal Income Portfolio is
incorporated herein by reference to Exhibit 8(a) of Fidelity Court
Street Trust's Post-Effective Amendment No. 61 (File No. 2-58774).
(f) Custodian Agreement and Appendix C, dated August 1, 1994,
between The Chase Manhattan Bank, N.A. and Fidelity Union Street Trust
on behalf of Fidelity Export Fund (currently known as Fidelity Export
and Multinational Fund) is incorporated herein by reference to Exhibit
8(a) of Fidelity Investment Trust's Post-Effective Amendment No. 59
(File No. 2-90649).
(g) Appendix A, dated October 17, 1996, to the Custodian Agreement,
dated August 1, 1994, between The Chase Manhattan Bank, N.A. and
Fidelity Union Street Trust on behalf of Fidelity Export Fund
(currently known as Fidelity Export and Multinational Fund) is
incorporated herein by reference to Exhibit 8(c) of Fidelity Charles
Street Trust's Post-Effective Amendment No. 57 (File No. 2-73133).
(h) Appendix B, dated June 19, 1997, to the Custodian Agreement,
dated August 1, 1994, between The Chase Manhattan Bank, N.A. and
Fidelity Union Street Trust on behalf of Fidelity Export Fund
(currently known as Fidelity Export and Multinational Fund) is
incorporated herein by reference to Exhibit 8(c) of Fidelity
Securities Fund's Post-Effective Amendment No. 36 (File No. 2-93601).
(i) Fidelity Group Repo Custodian Agreement among The Bank of New
York, J. P. Morgan Securities, Inc., and Fidelity Union Street Trust
on behalf of Fidelity Export Fund (currently known as Fidelity Export
and Multinational Fund) and Spartan Ginnie Mae Fund, dated February
12, 1996, is incorporated herein by reference to Exhibit 8(d) of
Fidelity Institutional Cash Portfolios' (File No. 2-74808)
Post-Effective Amendment No. 31.
(j) Schedule 1 to the Fidelity Group Repo Custodian Agreement
between The Bank of New York and Fidelity Union Street Trust on behalf
of Fidelity Export Fund (currently known as Fidelity Export and
Multinational Fund) and Spartan Ginnie Mae Fund, dated February 12,
1996, is incorporated herein by reference to Exhibit 8(e) of Fidelity
Institutional Cash Portfolios' (File No. 2-74808) Post-Effective
Amendment No. 31.
(k) Fidelity Group Repo Custodian Agreement among Chemical Bank,
Greenwich Capital Markets, Inc., and Fidelity Union Street Trust on
behalf of Fidelity Export Fund (currently known as Fidelity Export and
Multinational Fund) and Spartan Ginnie Mae Fund, dated November 13,
1995, is incorporated herein by reference to Exhibit 8(f) of Fidelity
Institutional Cash Portfolios' (File No. 2-74808) Post-Effective
Amendment No. 31.
(l) Schedule 1 to the Fidelity Group Repo Custodian Agreement
between Chemical Bank and Fidelity Union Street Trust on behalf of
Fidelity Export Fund (currently known as Fidelity Export and
Multinational Fund) and Spartan Ginnie Mae Fund, dated November 13,
1995, is incorporated herein by reference to Exhibit 8(g) of Fidelity
Institutional Cash Portfolios' (File No. 2-74808) Post-Effective
Amendment No. 31.
(m) Joint Trading Account Custody Agreement between The Bank of New
York and Fidelity Union Street Trust on behalf of Fidelity Export Fund
(currently known as Fidelity Export and Multinational Fund) and
Spartan Ginnie Mae Fund, dated May 11, 1995, is incorporated herein by
reference to Exhibit 8(h) of Fidelity Institutional Cash Portfolios'
(File No. 2-74808) Post-Effective Amendment No. 31.
(n) First Amendment to Joint Trading Account Custody Agreement
between The Bank of New York and Fidelity Union Street Trust on
behalf of Fidelity Export Fund (currently known as Fidelity Export and
Multinational Fund) and Spartan Ginnie Mae Fund, dated July 14, 1995,
is incorporated herein by reference to Exhibit 8(i) of Fidelity
Institutional Cash Portfolios' (File No. 2-74808) Post-Effective
Amendment No. 31.
9. Not applicable.
10. Not applicable.
11. Consent of Coopers & Lybrand L.L.P. is filed herein as Exhibit
11.
12. Not applicable.
13. Not applicable.
14. (a) Fidelity Individual Retirement Account Custodial Agreement
and Disclosure Statement, as currently in effect, is incorporated
herein by reference to Exhibit 14(a) of Fidelity Union Street Trust's
(File No. 2-50318) Post-Effective Amendment No. 87.
(b) Fidelity Institutional Individual Retirement Account Custodial
Agreement and Disclosure Statement, as currently in effect, is
incorporated herein by reference to Exhibit 14(d) of Fidelity Union
Street Trust's (File No. 2-50318) Post-Effective Amendment No. 87.
(c) National Financial Services Corporation Individual Retirement
Account Custodial Agreement and Disclosure Statement, as currently in
effect, is incorporated herein by reference to Exhibit 14(h) of
Fidelity Union Street Trust's (File No. 2-50318) Post-Effective
Amendment No. 87.
(d) Fidelity Portfolio Advisory Services Individual Retirement
Account Custodial Agreement and Disclosure Statement, as currently in
effect, is incorporated herein by reference to Exhibit 14(i) of
Fidelity Union Street Trust's (File No. 2-50318) Post-Effective
Amendment No. 87.
(e) Fidelity 403(b)(7) Custodial Account Agreement, as currently in
effect, is incorporated herein by reference to Exhibit 14(e) of
Fidelity Union Street Trust's (File No. 2-50318) Post-Effective
Amendment No. 87.
(f) National Financial Services Corporation Defined Contribution
Retirement Plan and Trust Agreement, as currently in effect, is
incorporated herein by reference to Exhibit 14(k) of Fidelity Union
Street Trust's (File No. 2-50318) Post-Effective Amendment No. 87.
(g) The CORPORATEplan for Retirement Profit Sharing/401K Plan, as
currently in effect, is incorporated herein by reference to Exhibit
14(l) of Fidelity Union Street Trust's (File No. 2-50318)
Post-Effective Amendment No. 87.
(h) The CORPORATEplan for Retirement Money Purchase Pension Plan, as
currently in effect, is incorporated herein by reference to Exhibit
14(m) of Fidelity Union Street Trust's (File No. 2-50318)
Post-Effective Amendment No. 87.
(i) Fidelity Investments Section 403(b)(7) Individual Custodial
Account Agreement and Disclosure Statement, as currently in effect, is
incorporated herein by reference to Exhibit 14(f) of Fidelity
Commonwealth Trust's (File No. 2-52322) Post Effective Amendment No.
57.
(j) Plymouth Investments Defined Contribution Retirement Plan and
Trust Agreement, as currently in effect, is incorporated herein by
reference to Exhibit 14(o) of Fidelity Commonwealth Trust's (File No.
2-52322) Post Effective Amendment No. 57.
(k) The Fidelity Prototype Defined Benefit Pension Plan and Trust
Basic Plan Document and Adoption Agreement, as currently in effect, is
incorporated herein by reference to Exhibit 14(d) of Fidelity
Securities Fund's (File No. 2-93601) Post Effective Amendment No. 33.
(l) The Institutional Prototype Plan Basic Plan Document,
Standardized Adoption Agreement, and Non-Standardized Adoption
Agreement, as currently in effect, is incorporated herein by reference
to Exhibit 14(o) of Fidelity Securities Fund's (File No. 2-93601) Post
Effective Amendment No. 33.
(m) The CORPORATEplan for Retirement 100SM Profit Sharing/401(k)
Basic Plan Document, Standardized Adoption Agreement, and
Non-Standardized Adoption Agreement, as currently in effect, is
incorporated herein by reference to Exhibit 14(f) of Fidelity
Securities Fund's (File No. 2-93601) Post Effective Amendment No. 33.
(n) The Fidelity Investments 401(a) Prototype Plan for Tax-Exempt
Employers Basic Plan Document, Standardized Profit Sharing Plan
Adoption Agreement, Non-Standardized Discretionary Contribution Plan
No. 002 Adoption Agreement, and Non-Standardized Discretionary
Contribution Plan No. 003 Adoption Agreement, as currently in effect,
is incorporated herein by reference to Exhibit 14(g) of Fidelity
Securities Fund's (File No. 2-93601) Post Effective Amendment No. 33.
(o) Fidelity Investments 403(b) Sample Plan Basic Plan Document and
Adoption Agreement, as currently in effect, is incorporated herein by
reference to Exhibit 14(p) of Fidelity Securities Fund's (File No.
2-93601) Post Effective Amendment No. 33.
(p) Fidelity Defined Contribution Retirement Plan and Trust
Agreement, as currently in effect, is incorporated herein by reference
to Exhibit 14(c) of Fidelity Securities Fund's (File No. 2-93601) Post
Effective Amendment No. 33.
(q) Fidelity SIMPLE-IRAPlan Adoption Agreement, Company Profile
Form, and Plan Document, as currently in effect, is incorporated
herein by reference to Exhibit 14(q) of Fidelity Aberdeen Street
Trust's (File No. 33-43529) Post Effective Amendment No. 19.
15. (a) Distribution and Service Plan pursuant to Rule 12b-1 for
Spartan Municipal Income Fund is incorporated herein by reference to
Exhibit 15(a) to Post-Effective Amendment No. 96.
(b) Distribution and Service Plan pursuant to Rule 12b-1 for Spartan
Ginnie Mae Fund is incorporated herein by reference to Exhibit 15(b)
to Post-Effective Amendment No. 89.
(c) Distribution and Service Plan pursuant to Rule 12b-1 for Spartan
Maryland Municipal Income Fund is incorporated herein by reference to
Exhibit 15(c) to Post-Effective Amendment No. 83.
(d) Distribution and Service Plan pursuant to Rule 12b-1 for
Spartan Aggressive Municipal Fund is incorporated herein by reference
to Exhibit 15(d) to Post-Effective Amendment No. 89.
(e) Distribution and Service Plan pursuant to Rule 12b-1 for
Spartan Intermediate Municipal Income Fund is incorporated herein by
reference to Exhibit 15(e) to Post-Effective Amendment No. 96.
(f) Distribution and Service Plan pursuant to Rule 12b-1 for
Spartan Arizona Municipal Income Portfolio is incorporated herein by
reference to Exhibit 15(f) to Post-Effective Amendment No. 92.
(g) Distribution and Service Plan pursuant to Rule 12b-1 for
Spartan Short-Intermediate Municipal Income Fund is incorporated
herein by reference to Exhibit 15(g) to Post-Effective Amendment 96.
16. (a) A schedule for the computation of 30-day yields and total
returns on behalf of the registrant is incorpo rated herein by
reference to Exhibit 16(a) to Post-Effective Amendment No. 92.
(b) A schedule for the computation of moving averages on behalf
of the registrant is incorporated herein by reference to Exhibit
16(b) to Post-Effective Amendment No. 92.
17. Financial Data Schedules are filed herein as Exhibit 27.
18. Not applicable.
Item 25. Persons Controlled by or Under Common Control with Registrant
The Board of Trustees of Fidelity Union Street Trust is the same as
the boards of other funds advised by FMR, each of which has Fidelity
Management & Research Company as its investment adviser. In addition,
the officers of these funds are substantially identical. Nonetheless,
Registrant takes the position that it is not under common control with
these other funds since the power residing in the respective boards
and officers arises as the result of an official position with the
respective funds.
Item 26. Number of Holders of Securities: September 30, 1997
Title of Class: Shares of Beneficial Interest
Name of Series Number of Record Holders
Fidelity Export and Multinational Fund 48,262
Spartan Arizona Municipal Income Fund 294
Spartan Ginnie Mae Fund 15,030
Spartan Intermediate Municipal Income Fund 3,213
Spartan Maryland Municipal Income Fund 985
Spartan Municipal Income Fund 10,774
Spartan Short-Intermediate Municipal Income Fund 13,065
Item 27. Indemnification
Article XI, Section 2 of the Declaration of Trust sets forth the
reasonable and fair means for determining whether indemnification
shall be provided to any past or present Trustee or officer. It
states that the Registrant shall indemnify any present or past Trustee
or officer to the fullest extent permitted by law against liability
and all expenses reasonably incurred by him in connection with any
claim, action, suit, or proceeding in which he is involved by virtue
of his service as a Trustee, an officer, or both. Additionally,
amounts paid or incurred in settlement of such matters are covered by
this indemnification. Indemnification will not be provided in certain
circumstances, however. These include instances of willful
misfeasance, bad faith, gross negligence, and reckless disregard of
the duties involved in the conduct of the particular office involved.
Pursuant to Section 11 of the Distribution Agreement, the Registrant
agrees to indemnify and hold harmless the Distributor and each of its
directors and officers and each person, if any, who controls the
Distributor within the meaning of Section 15 of the 1933 Act against
any loss, liability, claim, damages or expense arising by reason of
any person acquiring any shares, based upon the ground that the
registration statement, Prospectus, Statement of Additional
Information, shareholder reports or other information filed or made
public by the Registrant included a materially misleading statement or
omission. However, the Registrant does not agree to indemnify the
Distributor or hold it harmless to the extent that the statement or
omission was made in reliance upon, and in conformity with,
information furnished to the Registrant by or on behalf of the
Distributor. The Registrant does not agree to indemnify the parties
against any liability to which they would be subject by reason of
willful misfeasance, bad faith, gross negligence, and reckless
disregard of the obligations and duties under the Distribution
Agreement.
Pursuant to the agreement by which Fidelity Service Company, Inc.
("Service") is appointed sub-transfer agent, the Transfer Agent agrees
to indemnify Service for Service's losses, claims, damages,
liabilities and expenses (including reasonable counsel fees and
expenses) (losses) to the extent that the Transfer Agent is entitled
to and receives indemnification from the Portfolio for the same
events. Under the Transfer Agency Agreement, the Registrant agrees to
indemnify and hold the Transfer Agent harmless against any losses,
claims, damages, liabilities, or expenses (including reasonable
counsel fees and expenses) resulting from:
(1) any claim, demand, action or suit brought by any person other
than the Registrant, including by a shareholder which names the
Transfer Agent and/or the Registrant as a party and is not based on
and does not result from the Transfer Agent's willful misfeasance, bad
faith or negligence or reckless disregard of duties, and arises out of
or in connection with the Transfer Agent's performance under the
Transfer Agency Agreement; or
(2) any claim, demand, action or suit (except to the extent
contributed to by the Transfer Agent's willful misfeasance, bad faith
or negligence or reckless disregard of duties) which results from the
negligence of the Registrant, or from the Transfer Agent's acting upon
any instruction(s) reasonably believed by it to have been executed or
communicated by any person duly authorized by the Registrant, or as a
result of the Transfer Agent's acting in reliance upon advice
reasonably believed by the Transfer Agent to have been given by
counsel for the Registrant, or as a result of the Transfer Agent's
acting in reliance upon any instrument or stock certificate reasonably
believed by it to have been genuine and signed, countersigned or
executed by the proper person.
Pursuant to the agreement by which Fidelity Service Company, Inc.
("Service") is appointed transfer agent, the Registrant agrees to
indemnify and hold Service harmless against any losses, claims,
damages, liabilities or expenses (including reasonable counsel fees
and expenses) resulting from:
(1) any claim, demand, action or suit brought by any person other
than the Registrant, including by a shareholder, which names the
Service and/or the Registrant as a party and is not based on and does
not result from Service's willful misfeasance, bad faith or negligence
or reckless disregard of duties, and arises out of or in connection
with Service's performance under the Transfer Agency Agreement; or
(2) any claim, demand, action or suit (except to the extent
contributed to by Service's willful misfeasance, bad faith or
negligence or reckless disregard of duties) which results from the
negligence of the Registrant, or from Service's acting upon any
instruction(s) reasonably believed by it to have been executed or
communicated by any person duly authorized by the Registrant, or as a
result of Service's acting in reliance upon advice reasonably believed
by Service to have been given by counsel for the Registrant, or as a
result of Service's acting in reliance upon any instrument or stock
certificate reasonably believed by it to have been genuine and signed,
countersigned or executed by the proper person.
Item 28. Business and Other Connections of Investment Adviser
(1) FIDELITY MANAGEMENT & RESEARCH COMPANY (FMR)
FMR serves as investment adviser to a number of other investment
companies. The directors and officers of the Adviser have held,
during the past two fiscal years, the following positions of a
substantial nature.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman of the Board of FMR; President and Chief
Executive Officer of FMR Corp.; Chairman of the
Board and Director of FMR, FMR Corp., FMR Texas
Inc., FMR (U.K.) Inc., and FMR (Far East) Inc.;
Chairman of the Board and Representative Director of
Fidelity Investments Japan Limited; President and
Trustee of funds advised by FMR.
Robert C. Pozen President and Director of FMR; President and Director
of FMR Texas Inc., FMR (U.K.) Inc., and FMR (Far
East) Inc.; General Counsel, Managing Director, and
Senior Vice President of FMR Corp.
J. Gary Burkhead President of FIIS; President and Director of FMR, FMR
Texas Inc., FMR (U.K.) Inc., and FMR (Far East) Inc.;
Managing Director of FMR Corp.; Senior Vice
President and Trustee of funds advised by FMR.
Peter S. Lynch Vice Chairman of the Board and Director of FMR.
Marta Amieva Vice President of FMR.
John Carlson Vice President of FMR.
Dwight D. Churchill Senior Vice President of FMR.
Barry Coffman Vice President of FMR.
Arieh Coll Vice President of FMR.
Stephen G. Manning Assistant Treasurer of FMR
William Danoff Senior Vice President of FMR and of a fund advised by
FMR.
Scott E. DeSano Vice President of FMR.
Craig P. Dinsell Vice President of FMR.
Penelope Dobkin Vice President of FMR and of a fund advised by FMR.
George C. Domolky Vice President of FMR.
Bettina Doulton Vice President of FMR and of funds advised by FMR.
Margaret L. Eagle Vice President of FMR and a fund advised by FMR.
Richard B. Fentin Senior Vice President of FMR and Vice President of a
fund advised by FMR.
Gregory Fraser Vice President of FMR and of a fund advised by FMR.
Jay Freedman Assistant Clerk of FMR; Clerk of FMR Corp., FMR
(U.K.) Inc., and FMR (Far East) Inc.; Secretary of FMR
Texas Inc.
Robert Gervis Vice President of FMR.
David L. Glancy Vice President of FMR and of a fund advised by FMR.
Kevin E. Grant Vice President of FMR and of funds advised by FMR.
Barry A. Greenfield Vice President of FMR and of a fund advised by FMR.
Boyce I. Greer Senior Vice President of FMR.
Robert Haber Vice President of FMR.
Richard C. Habermann Senior Vice President of FMR; Vice President of funds
advised by FMR.
William J. Hayes Senior Vice President of FMR; Vice President of Equity
funds advised by FMR.
Richard Hazlewood Vice President of FMR and of a fund advised by FMR.
Fred L. Henning Jr. Senior Vice President of FMR; Vice President of
Fixed-Income funds advised by FMR.
Bruce Herring Vice President of FMR.
John R. Hickling Vice President of FMR and of a fund advised by FMR.
Robert F. Hill Vice President of FMR; Director of Technical Research.
Curt Hollingsworth Vice President of FMR and of funds advised by FMR.
Abigail P. Johnson Senior Vice President of FMR and of a fund advised by
FMR; Associate Director and Senior Vice President of
Equity funds advised by FMR.
David B. Jones Vice President of FMR.
Steven Kaye Vice President of FMR and of a fund advised by FMR.
Francis V. Knox Vice President of FMR; Compliance Officer of FMR
(U.K.) Inc.
David P. Kurrasch Vice President of FMR.
Robert A. Lawrence Senior Vice President of FMR; Associate Director and
Senior Vice President of Equity funds advised by FMR;
Vice President of High Income funds advised by FMR.
Harris Leviton Vice President of FMR and of a fund advised by FMR.
Bradford E. Lewis Vice President of FMR and of funds advised by FMR.
Mark G. Lohr Vice President of FMR; Treasurer of FMR, FMR (U.K.)
Inc., FMR (Far East) Inc., and FMR Texas Inc.
Arthur S. Loring Senior Vice President, Clerk, and General Counsel of
FMR; Vice President/Legal, and Assistant Clerk of
FMR Corp.; Secretary of funds advised by FMR.
Richard R. Mace Jr. Vice President of FMR and of funds advised by FMR.
Charles Mangum Vice President of FMR.
Kevin McCarey Vice President of FMR.
Diane McLaughlin Vice President of FMR.
Neal P. Miller Vice President of FMR.
Robert H. Morrison Vice President of FMR; Director of Equity Trading.
David L. Murphy Vice President of FMR and of funds advised by FMR.
Scott Orr Vice President of FMR.
Jacques Perold Vice President of FMR.
Anne Punzak Vice President of FMR.
Kenneth A. Rathgeber Vice President of FMR; Treasurer of funds advised by
FMR.
Kennedy P. Richardson Vice President of FMR.
Mark Rzepczynski Vice President of FMR.
Lee H. Sandwen Vice President of FMR.
Patricia A. Satterthwaite Vice President of FMR and of a fund advised by FMR.
Fergus Shiel Vice President of FMR.
Carol Smith-Fachetti Vice President of FMR.
Steven J. Snider Vice President of FMR.
Thomas T. Soviero Vice President of FMR and of a fund advised by FMR.
Richard Spillane Senior Vice President of FMR; Associate Director and
Senior Vice President of Equity funds advised by FMR;
Senior Vice President and Director of Operations and
Compliance of FMR (U.K.) Inc.
Thomas Sprague Vice President of FMR.
Robert E. Stansky Senior Vice President of FMR; Vice President of a fund
advised by FMR.
Scott Stewart Vice President of FMR.
Cythia Straus Vice President of FMR.
Thomas Sweeney Vice President of FMR and of a fund advised by FMR.
Beth F. Terrana Senior Vice President of FMR; Vice President of a fund
advised by FMR.
Yoko Tilley Vice President of FMR.
Joel C. Tillinghast Vice President of FMR and of a fund advised by FMR.
Robert Tuckett Vice President of FMR.
Jennifer Uhrig Vice President of FMR and of funds advised by FMR.
George A. Vanderheiden Senior Vice President of FMR; Vice President of funds
advised by FMR.
</TABLE>
(2) FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. (FMR U.K.)
25 Lovat Lane, London, EC3R 8LL, England
FMR U.K. provides investment advisory services to Fidelity Management
& Research Company and Fidelity Management Trust Company. The
directors and officers of the Sub-Adviser have held the following
positions of a substantial nature during the past two fiscal years.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman of the Board and Director of FMR U.K.,
FMR, FMR Corp., FMR Texas Inc., and FMR (Far
East) Inc.; Chairman of the Executive Committee of
FMR; President and Chief Executive Officer of FMR
Corp.; Chairman of the Board and Representative
Director of Fidelity Investments Japan Limited;
President and Trustee of funds advised by FMR.
J. Gary Burkhead President of FIIS; President and Director of FMR U.K.,
FMR, FMR (Far East) Inc., and FMR Texas Inc.;
Managing Director of FMR Corp.; Senior Vice
President and Trustee of funds advised by FMR.
Robert C. Pozen President and Director of FMR; President and Director
of FMR Texas Inc., FMR (U.K.) Inc., and FMR (Far
East) Inc.; General Counsel, Managing Director, and
Senior Vice President of FMR Corp.
Mark G. Lohr Treasurer of FMR U.K., FMR, FMR (Far East) Inc., and
FMR Texas Inc.; Vice President of FMR.
Stephen G. Manning Assistant Treasurer of FMR U.K., FMR, FMR (Far
East) Inc., and FMR Texas Inc.; Treasurer of FMR
Corp.
Francis V. Knox Compliance Officer of FMR U.K.; Vice President of
FMR.
Jay Freedman Clerk of FMR U.K., FMR (Far East) Inc., and FMR
Corp.; Assistant Clerk of FMR; Secretary of FMR
Texas Inc.
(3) FIDELITY MANAGEMENT & RESEARCH COMPANY (FAR EAST) INC. (FMR FAR
EAST)
Shiroyama JT Mori Bldg., 4-3-1 Toranomon Minato-ku, Tokyo 105,
Japan
FMR Far East provides investment advisory services to Fidelity
Management & Research Company and Fidelity Management Trust Company.
The directors and officers of the Sub-Adviser have held the following
positions of a substantial nature during the past two fiscal years.
Edward C. Johnson 3d Chairman of the Board and Director of FMR Far
East, FMR, FMR Corp., FMR Texas Inc., and
FMR (U.K.) Inc.; Chairman of the Executive
Committee of FMR; President and Chief
Executive Officer of FMR Corp.; Chairman of
the Board and Representative Director of Fidelity
Investments Japan Limited; President and
Trustee of funds advised by FMR.
J. Gary Burkhead President of FIIS; President and Director of FMR
Far East, FMR Texas Inc., FMR, and FMR
(U.K.) Inc.; Managing Director of FMR Corp.;
Senior Vice President and Trustee of funds
advised by FMR.
Robert C. Pozen President and Director of FMR; President and
Director of FMR Texas Inc., FMR (U.K.) Inc.,
and FMR (Far East) Inc.; General Counsel,
Managing Director, and Senior Vice President of
FMR Corp.
Bill Wilder Vice President of FMR Far East; President and
Representative Director of Fidelity Investments
Japan Limited.
Mark G. Lohr Treasurer of FMR Far East, FMR, FMR (U.K.)
Inc., and FMR Texas Inc.; Vice President of
FMR.
Stephen G. Manning Assistant Treasurer of FMR Far East, FMR,
FMR (U.K.) Inc., and FMR Texas Inc.; Vice
President and Treasurer of FMR Corp.
Jay Freedman Clerk of FMR Far East, FMR (U.K.) Inc., and
FMR Corp.; Assistant Clerk of FMR; Secretary
of FMR Texas Inc.
Robert Auld Vice President of FMR Far East.
</TABLE>
Item 29. Principal Underwriters
(a) Fidelity Distributors Corporation (FDC) acts as distributor for
most funds advised by FMR.
(b)
<TABLE>
<CAPTION>
<S> <C> <C>
Name and Principal Positions and Offices Positions and Offices
Business Address* With Underwriter With Registrant
Edward C. Johnson 3d Director Trustee and President
Michael Mlinac Director None
James Curvey Director None
Martha B. Willis President None
Arthur S. Loring Vice President and Clerk Secretary
Caron Ketchum Treasurer and Controller None
Gary Greenstein Assistant Treasurer None
Jay Freedman Assistant Clerk None
Linda Holland Compliance Officer None
</TABLE>
* 82 Devonshire Street, Boston, MA
(c) Not applicable.
Item 30. Location of Accounts and Records
All accounts, books, and other documents required to be maintained by
Section 31(a) of the 1940 Act and the Rules promulgated thereunder are
maintained by Fidelity Management & Research Company or Fidelity
Service Company, Inc., 82 Devonshire Street, Boston, MA 02109, or the
funds' respective custodian, The Bank of New York, 110 Washington
Street, New York, N.Y., The Chase Manhattan Bank, 1 Chase Manhattan
Plaza, New York, N.Y., and UMB Bank, n.a., 1010 Grand Avenue, Kansas
City, MO.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(1) The Registrant undertakes for Spartan Maryland Municipal Income
Fund, Spartan Intermediate Municipal Income Fund, Fidelity Export and
Multinational Fund, and Spartan Arizona Municipal Income Fund: (1) to
call a meeting of shareholders for the purpose of voting upon the
questions of removal of a trustee or trustees, when requested to do so
by record holders of not less than 10% of its outstanding shares; and
(2) to assist in communications with other shareholders pursuant to
Section 16(c)(1) and (2), whenever shareholders meeting the
qualifications set forth in Section 16(c) seek the opportunity to
communicate with other shareholders with a view toward requesting a
meeting.
(2) The Registrant on behalf of Spartan Short-Intermediate Municipal
Income Fund, Spartan Intermediate Municipal Income Fund, Spartan
Ginnie Mae Fund, Spartan Maryland Municipal Income Fund, Fidelity
Export and Multinational Fund, and Spartan Arizona Municipal Income
Fund, provided the information required by Item 5A is contained in the
annual report, undertakes to furnish each person to whom a prospectus
has been delivered, upon their request and without charge, a copy of
the Registrant's latest annual report to shareholders.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets
all of the requirements for the effectiveness of this Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and
has duly caused this Post-Effective Amendment No. 98 to the
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Boston, and the Commonwealth
of Massachusetts, on the 21 day of October 1997.
Fidelity Union Street Trust
By /s/Edward C. Johnson 3d (dagger)
Edward C. Johnson 3d, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
(Signature) (Title) (Date)
<TABLE>
<CAPTION>
<S> <C> <C>
/s/Edward C. Johnson 3d (dagger) President and Trustee October 21, 1997
Edward C. Johnson 3d (Principal Executive Officer)
/s/Richard A. Silver Treasurer October 21, 1997
Richard A. Silver
/s/Robert C. Pozen Trustee October 21, 1997
Robert C. Pozen
/s/Ralph F. Cox * Trustee October 21, 1997
Ralph F. Cox
/s/Phyllis Burke Davis * Trustee October 21, 1997
Phyllis Burke Davis
/s/Robert M. Gates ** Trustee October 21, 1997
Robert M. Gates
/s/E. Bradley Jones * Trustee October 21, 1997
E. Bradley Jones
/s/Donald J. Kirk * Trustee October 21, 1997
Donald J. Kirk
/s/Peter S. Lynch * Trustee October 21, 1997
Peter S. Lynch
/s/Marvin L. Mann * Trustee October 21, 1997
Marvin L. Mann
/s/William O. McCoy * Trustee October 21, 1997
William O. McCoy
/s/Gerald C. McDonough * Trustee October 21, 1997
Gerald C. McDonough
/s/Thomas R. Williams * Trustee October 21, 1997
Thomas R. Williams
</TABLE>
(dagger) Signatures affixed by Robert C. Pozen pursuant to a power of
attorney dated July 17, 1997 and filed herewith.
* Signature affixed by Robert C. Hacker pursuant to a power of
attorney dated December 19, 1996 and filed herewith.
** Signature affixed by Robert C. Hacker pursuant to a power of
attorney dated March 6, 1997 and filed herewith.
POWER OF ATTORNEY
I, the undersigned President and Director, Trustee, or General
Partner, as the case may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Aberdeen Street Trust Fidelity Hereford Street Trust
Fidelity Advisor Series I Fidelity Income Fund
Fidelity Advisor Series II Fidelity Institutional Cash Portfolios
Fidelity Advisor Series III Fidelity Institutional Tax-Exempt Cash Portfolios
Fidelity Advisor Series IV Fidelity Investment Trust
Fidelity Advisor Series V Fidelity Magellan Fund
Fidelity Advisor Series VI Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series VII Fidelity Money Market Trust
Fidelity Advisor Series VIII Fidelity Mt. Vernon Street Trust
Fidelity Beacon Street Trust Fidelity Municipal Trust
Fidelity Boston Street Trust Fidelity Municipal Trust II
Fidelity California Municipal Trust Fidelity New York Municipal Trust
Fidelity California Municipal Trust II Fidelity New York Municipal Trust II
Fidelity Capital Trust Fidelity Phillips Street Trust
Fidelity Charles Street Trust Fidelity Puritan Trust
Fidelity Commonwealth Trust Fidelity Revere Street Trust
Fidelity Concord Street Trust Fidelity School Street Trust
Fidelity Congress Street Fund Fidelity Securities Fund
Fidelity Contrafund Fidelity Select Portfolios
Fidelity Corporate Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Court Street Trust Fidelity Summer Street Trust
Fidelity Court Street Trust II Fidelity Trend Fund
Fidelity Covington Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Daily Money Fund Fidelity U.S. Investments-Government Securities
Fidelity Destiny Portfolios Fund, L.P.
Fidelity Deutsche Mark Performance Fidelity Union Street Trust
Portfolio, L.P. Fidelity Union Street Trust II
Fidelity Devonshire Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Exchange Fund Newbury Street Trust
Fidelity Financial Trust Variable Insurance Products Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund II
Fidelity Government Securities Fund Variable Insurance Products Fund III
Fidelity Hastings Street Trust
</TABLE>
in addition to any other investment company for which Fidelity
Management & Research Company or an affiliate acts as investment
adviser and for which the undersigned individual serves as President
and Director, Trustee, or General Partner (collectively, the "Funds"),
hereby constitute and appoint Robert C. Pozen my true and lawful
attorney-in-fact, with full power of substitution, and with full power
to him to sign for me and in my name in the appropriate capacity, all
Registration Statements of the Funds on Form N-1A, Form N-8A, or any
successor thereto, any and all subsequent Amendments, Pre-Effective
Amendments, or Post-Effective Amendments to said Registration
Statements on Form N-1A, Form N-8A, or any successor thereto, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such
things in my name and on my behalf in connection therewith as said
attorney-in-fact deems necessary or appropriate, to comply with the
provisions of the Securities Act of 1933 and the Investment Company
Act of 1940, and all related requirements of the Securities and
Exchange Commission. I hereby ratify and confirm all that said
attorney-in-fact or his substitutes may do or cause to be done by
virtue hereof. This power of attorney is effective for all documents
filed on or after August 1, 1997.
WITNESS my hand on the date set forth below.
/s/Edward C. Johnson 3d_ July 17, 1997
Edward C. Johnson 3d
POWER OF ATTORNEY
We, the undersigned Directors, Trustees, or General Partners, as the
case may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Aberdeen Street Trust Fidelity Government Securities Fund
Fidelity Advisor Annuity Fund Fidelity Hastings Street Trust
Fidelity Advisor Series I Fidelity Hereford Street Trust
Fidelity Advisor Series II Fidelity Income Fund
Fidelity Advisor Series III Fidelity Institutional Cash Portfolios
Fidelity Advisor Series IV Fidelity Institutional Tax-Exempt Cash Portfolios
Fidelity Advisor Series V Fidelity Institutional Trust
Fidelity Advisor Series VI Fidelity Investment Trust
Fidelity Advisor Series VII Fidelity Magellan Fund
Fidelity Advisor Series VIII Fidelity Massachusetts Municipal Trust
Fidelity Beacon Street Trust Fidelity Money Market Trust
Fidelity Boston Street Trust Fidelity Mt. Vernon Street Trust
Fidelity California Municipal Trust Fidelity Municipal Trust
Fidelity California Municipal Trust II Fidelity Municipal Trust II
Fidelity Capital Trust Fidelity New York Municipal Trust
Fidelity Charles Street Trust Fidelity New York Municipal Trust II
Fidelity Commonwealth Trust Fidelity Phillips Street Trust
Fidelity Congress Street Fund Fidelity Puritan Trust
Fidelity Contrafund Fidelity Revere Street Trust
Fidelity Corporate Trust Fidelity School Street Trust
Fidelity Court Street Trust Fidelity Securities Fund
Fidelity Court Street Trust II Fidelity Select Portfolios
Fidelity Covington Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Daily Money Fund Fidelity Summer Street Trust
Fidelity Daily Tax-Exempt Fund Fidelity Trend Fund
Fidelity Destiny Portfolios Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Deutsche Mark Performance Fidelity U.S. Investments-Government Securities
Portfolio, L.P. Fund, L.P.
Fidelity Devonshire Trust Fidelity Union Street Trust
Fidelity Exchange Fund Fidelity Union Street Trust II
Fidelity Financial Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Variable Insurance Products Fund II
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company or an affiliate acts as investment adviser and for
which the undersigned individual serves as Directors, Trustees, or
General Partners (collectively, the "Funds"), hereby constitute and
appoint Arthur J. Brown, Arthur C. Delibert, Stephanie A. Djinis,
Robert C. Hacker, Thomas M. Leahey, Richard M. Phillips, and Dana L.
Platt, each of them singly, our true and lawful attorneys-in-fact,
with full power of substitution, and with full power to each of them,
to sign for us and in our names in the appropriate capacities, all
Registration Statements of the Funds on Form N-1A, Form N-8A or any
successor thereto, any and all subsequent Amendments, Pre-Effective
Amendments, or Post-Effective Amendments to said Registration
Statements on Form N-1A or any successor thereto, any Registration
Statements on Form N-14, and any supplements or other instruments in
connection therewith, and generally to do all such things in our names
and behalf in connection therewith as said attorneys-in-fact deems
necessary or appropriate, to comply with the provisions of the
Securities Act of 1933 and the Investment Company Act of 1940, and all
related requirements of the Securities and Exchange Commission. I
hereby ratify and confirm all that said attorneys-in-fact or their
substitutes may do or cause to be done by virtue hereof. This power
of attorney is effective for all documents filed on or after January
1, 1997.
WITNESS our hands on this nineteenth day of December, 1996.
/s/Edward C. Johnson 3d___________ /s/Peter S. Lynch________________
Edward C. Johnson 3d Peter S. Lynch
/s/J. Gary Burkhead_______________ /s/William O. McCoy______________
J. Gary Burkhead William O. McCoy
/s/Ralph F. Cox __________________ /s/Gerald C. McDonough___________
Ralph F. Cox Gerald C. McDonough
/s/Phyllis Burke Davis_____________ /s/Marvin L. Mann________________
Phyllis Burke Davis Marvin L. Mann
/s/E. Bradley Jones________________ /s/Thomas R. Williams ____________
E. Bradley Jones Thomas R. Williams
/s/Donald J. Kirk __________________
Donald J. Kirk
POWER OF ATTORNEY
I, the undersigned Director, Trustee, or General Partner, as the case
may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Aberdeen Street Trust Fidelity Government Securities Fund
Fidelity Advisor Annuity Fund Fidelity Hastings Street Trust
Fidelity Advisor Series I Fidelity Hereford Street Trust
Fidelity Advisor Series II Fidelity Income Fund
Fidelity Advisor Series III Fidelity Institutional Cash Portfolios
Fidelity Advisor Series IV Fidelity Institutional Tax-Exempt Cash Portfolios
Fidelity Advisor Series V Fidelity Institutional Trust
Fidelity Advisor Series VI Fidelity Investment Trust
Fidelity Advisor Series VII Fidelity Magellan Fund
Fidelity Advisor Series VIII Fidelity Massachusetts Municipal Trust
Fidelity Beacon Street Trust Fidelity Money Market Trust
Fidelity Boston Street Trust Fidelity Mt. Vernon Street Trust
Fidelity California Municipal Trust Fidelity Municipal Trust
Fidelity California Municipal Trust II Fidelity Municipal Trust II
Fidelity Capital Trust Fidelity New York Municipal Trust
Fidelity Charles Street Trust Fidelity New York Municipal Trust II
Fidelity Commonwealth Trust Fidelity Phillips Street Trust
Fidelity Congress Street Fund Fidelity Puritan Trust
Fidelity Contrafund Fidelity Revere Street Trust
Fidelity Corporate Trust Fidelity School Street Trust
Fidelity Court Street Trust Fidelity Securities Fund
Fidelity Court Street Trust II Fidelity Select Portfolios
Fidelity Covington Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Daily Money Fund Fidelity Summer Street Trust
Fidelity Daily Tax-Exempt Fund Fidelity Trend Fund
Fidelity Destiny Portfolios Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Deutsche Mark Performance Fidelity U.S. Investments-Government Securities
Portfolio, L.P. Fund, L.P.
Fidelity Devonshire Trust Fidelity Union Street Trust
Fidelity Exchange Fund Fidelity Union Street Trust II
Fidelity Financial Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Variable Insurance Products Fund II
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company or an affiliate acts as investment adviser and for
which the undersigned individual serves as Director, Trustee, or
General Partner (collectively, the "Funds"), hereby constitute and
appoint Arthur J. Brown, Arthur C. Delibert, Stephanie A. Djinis,
Robert C. Hacker, Thomas M. Leahey, Richard M. Phillips, and Dana L.
Platt, each of them singly, my true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to
sign for me and in my name in the appropriate capacities, all
Registration Statements of the Funds on Form N-1A, Form N-8A or any
successor thereto, any and all subsequent Amendments, Pre-Effective
Amendments, or Post-Effective Amendments to said Registration
Statements on Form N-1A or any successor thereto, any Registration
Statements on Form N-14, and any supplements or other instruments in
connection therewith, and generally to do all such things in my name
and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the
Securities Act of 1933 and the Investment Company Act of 1940, and all
related requirements of the Securities and Exchange Commission. I
hereby ratify and confirm all that said attorneys-in-fact or their
substitutes may do or cause to be done by virtue hereof. This power
of attorney is effective for all documents filed on or after March 1,
1997.
WITNESS my hand on the date set forth below.
/s/Robert M. Gates March 6, 1997
Robert M. Gates
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference, into the
Prospectuses and Statements of Additional Information in
Post-Effective Amendment No. 98 to the Registration Statement on Form
N-1A of Fidelity Union Street Trust: Spartan Intermediate Municipal
Income Fund and Spartan Short-Intermediate Municipal Income Fund of
our reports dated October 3, 1997 on the financial statements and
financial highlights included in the August 31, 1997 Annual Reports to
Shareholders of Spartan Intermediate Municipal Income Fund and Spartan
Short-Intermediate Municipal Income Fund.
We further consent to the references to our Firm under the headings
"Financial Highlights" in the Prospectuses and "Auditor" in the
Statements of Additional Information.
/s/COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
October 20, 1997
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000035330
<NAME> Fidelity Union Street Trust
<SERIES>
<NUMBER> 61
<NAME> Spartan Intermediate Municipal Income Fund
<MULTIPLIER> 1,000
<S>
<C>
<PERIOD-TYPE> year
<FISCAL-YEAR-END> aug-31-1997
<PERIOD-END> Aug-31-1997
<INVESTMENTS-AT-COST> 199,046
<INVESTMENTS-AT-VALUE> 205,449
<RECEIVABLES> 2,026
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 207,475
<PAYABLE-FOR-SECURITIES> 3,849
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 591
<TOTAL-LIABILITIES> 4,440
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 205,173
<SHARES-COMMON-STOCK> 19,604
<SHARES-COMMON-PRIOR> 21,498
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (8,542)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6,404
<NET-ASSETS> 203,035
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 11,149
<OTHER-INCOME> 0
<EXPENSES-NET> 1,155
<NET-INVESTMENT-INCOME> 9,994
<REALIZED-GAINS-CURRENT> 381
<APPREC-INCREASE-CURRENT> 5,821
<NET-CHANGE-FROM-OPS> 16,196
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 9,994
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,766
<NUMBER-OF-SHARES-REDEEMED> 7,427
<SHARES-REINVESTED> 767
<NET-CHANGE-IN-ASSETS> (13,087)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (8,920)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,162
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,164
<AVERAGE-NET-ASSETS> 211,649
<PER-SHARE-NAV-BEGIN> 10.050
<PER-SHARE-NII> .484
<PER-SHARE-GAIN-APPREC> .310
<PER-SHARE-DIVIDEND> (.484)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.360
<EXPENSE-RATIO> 55
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000035330
<NAME> Fidelity Union Street Trust
<SERIES>
<NUMBER> 81
<NAME> Spartan Short-Intermediate Municipal Income Fund
<MULTIPLIER> 1,000
<S>
<C>
<PERIOD-TYPE> year
<FISCAL-YEAR-END> aug-31-1997
<PERIOD-END> Aug-31-1997
<INVESTMENTS-AT-COST> 727,810
<INVESTMENTS-AT-VALUE> 737,022
<RECEIVABLES> 13,638
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 750,660
<PAYABLE-FOR-SECURITIES> 23,724
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,268
<TOTAL-LIABILITIES> 24,992
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 722,258
<SHARES-COMMON-STOCK> 72,303
<SHARES-COMMON-PRIOR> 79,646
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (5,802)
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