FIDELITY UNION STREET TRUST, N-30D, 1998-10-14

FIDELITY UNION STREET TRUST
N-30D, 1998-10-14

Previous: WEATHERFORD INTERNATIONAL INC /NEW/, S-4, 1998-10-14

Next: INVESCO CAPITAL APPRECIATION FUNDS INC, 497, 1998-10-14

FIDELITY

(REGISTERED TRADEMARK)

EXPORT AND MULTINATIONAL
FUND
ANNUAL REPORT
AUGUST 31, 1998
CONTENTS

PRESIDENT'S MESSAGE 3 Ned Johnson on investing strategies.

PERFORMANCE 4 How the fund has done over time.

FUND TALK 6 The managers' review of fund
performance, strategy and outlook.

INVESTMENT CHANGES 9 A summary of the major shifts in the fund's
investments over the past six months.

INVESTMENTS 10 A complete list of the fund's investments
with their market values.

FINANCIAL STATEMENTS 16 Statements of assets and liabilities,
operations, and changes in net assets,
as well as financial highlights.

NOTES 20 Notes to the financial statements.

REPORT OF INDEPENDENT 24 The auditors' opinion.
ACCOUNTANTS

DISTRIBUTIONS 25

To reduce expenses and demonstrate respect for our environment, we
have initiated a project through which we will begin eliminating
duplicate copies of most financial reports and prospectuses to most
households, even if they have more than one account in the fund. If
additional copies of financial reports, prospectuses or historical
account information are needed, please call 1-800-544-6666.

(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
The dramatic volatility we've seen in recent months in the world's
stock and bond markets might seem at first glance to be unprecedented
in its scope and duration. In fact, however, the U.S. stock market has
declined by more than 10% 12 times just since 1970, only to recover
and go on to new highs each time. As has been the case recently,
segments of the bond market - most notably U.S. Treasuries -
frequently have thrived in such periods as investors seek a safer home
for their funds.
While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.
First, investors are encouraged to take a long-term view of their
portfolios. If you can afford to leave your money invested through the
inevitable up and down cycles of the financial markets, you will
greatly reduce your vulnerability to any single decline. We know from
experience, for example, that stock prices have gone up over longer
periods of time, have significantly outperformed other types of
investments and have stayed ahead of inflation.
Second, you can further manage your investing risk through
diversification. A stock mutual fund, for instance, is already
diversified, because it invests in many different companies. You can
increase your diversification further by investing in a number of
different stock funds, or in such other investment categories as
bonds. If you have a short investment time horizon, you might want to
consider moving some of your investment into a money market fund,
which seeks income and a stable share price by investing in
high-quality, short-term investments. Of course, it's important to
remember that there is no assurance that a money market fund will
achieve its goal of maintaining a stable net asset value of $1.00 per
share, and that these types of funds are neither insured nor
guaranteed by any agency of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it
makes good sense to follow a regular investment plan, investing a
certain amount of money in a fund at the same time each month or
quarter and periodically reviewing your overall portfolio. By doing
so, you won't get caught up in the excitement of a rapidly rising
market, nor will you buy all your shares at market highs. While this
strategy - known as dollar cost averaging - won't assure a profit or
protect you from a loss in a declining market, it should help you
lower the average cost of your purchases.
If you have questions, please call us at 1-800-544-8888. We are
available 24 hours a day, seven days a week to provide you the
information you need to make the investments that are right for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE

FIDELITY EXPORT AND MULTINATIONAL -2.35% 119.31%

FIDELITY EXPORT AND MULTINATIONAL -5.28% 112.73%
(INCL. 3.00% SALES CHARGE)

S&P 500 (registered trademark) 8.10% 128.68%

Growth Funds Average -1.95% n/a

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, or since the fund
started on October 4, 1994. For example, if you had invested $1,000 in
a fund that had a 5% return over the past year, the value of your
investment would be $1,050. You can compare the fund's returns to the
performance of the Standard & Poor's 500 Index - a widely recognized,
unmanaged index of common stocks. To measure how the fund's
performance stacked up against its peers, you can compare it to the
growth funds average, which reflects the performance of mutual funds
with similar objectives tracked by Lipper Analytical Services, Inc.
The past one year average represents a peer group of 930 mutual funds.
These benchmarks include reinvested dividends and capital gains, if
any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1998 PAST 1 LIFE OF
YEAR FUND

FIDELITY EXPORT AND MULTINATIONAL -2.35% 22.24%

FIDELITY EXPORT AND MULTINATIONAL -5.28% 21.29%
(INCL. 3.00% SALES CHARGE)

S&P 500 8.10% 23.56%

Growth Funds Average -1.95% n/a

MARKET RECAP
After successfully staring down
the Asian, Russian and Latin
American bear markets for most
of the year, the U.S. bull market
finally blinked - and hard - on
the last day of the 12-month
period ending August 31, 1998.
On that day, the Dow Jones
Industrial Average sank 512.61
points - a drop that Wilshire
Associates called the largest
single-day loss of market value
ever - erasing all previous gains
for the year. It was also the climax
to a period that saw the Dow - a
measure of 30 blue-chip stocks -
lose over 1000 points in August,
and fall nearly 20% since its
record high of 9337.97 on July 17,
1998. The domestic news was not
all bad, however. Unemployment
remained near record lows.
Millions of homeowners took
advantage of falling interest rates
to refinance their homes and, in
many cases, pay off credit debt.
Furthermore, the rate of inflation
also remained low. For the
12-month period ending August 31,
the Standard & Poor's 500 Index -
a measure of the U.S. stock market
- - produced a return of 8.10%.
But as one might expect in a
period characterized by extreme
volatility worldwide, tense investor
sentiment was affirmed by a flight
to safety into money markets and
bond funds, which helped to
produce a record-low yield of
5.25% on the U.S.
Government-backed 30-year
Treasury bond.

NOTE TO SHAREHOLDERS: The following is an interview with Jason Weiner
(left), who managed Fidelity Export and Multinational Fund during the
period covered by this report, and Adam Hetnarski, who has been
associate portfolio manager of the fund and becomes manager effective
September 21, 1998.
Q. HOW DID THE FUND PERFORM, JASON?
J.W. The tough times continued for exporters. For the 12 months that
ended August 31, 1998, the fund returned -2.35%. This trailed the
growth funds average, which returned -1.95% over the same period
according to Lipper Analytical Services. The Standard & Poor's 500
Index returned 8.10% for the 12 months that ended August 31, 1998.
Q. WHAT FACTORS CONSPIRED TO HURT PERFORMANCE?
J.W. Many of the fund's multinational positions - which are typically
larger companies with business exposure to multiple international
markets - were hurt dramatically by worldwide market volatility.
Economic problems continued to haunt Southeast Asia, Russia and Japan,
for example, and since these markets account for considerable
worldwide product demand, stocks such as Gillette were negatively
affected. Another factor involved the average size of the stocks in
which the fund was invested. I made a concerted effort to add more
larger-capitalization stocks to the fund's mix because the stock
market continued to punish small- and medium-sized stocks. While I did
accomplish this goal to some extent, many of the fund's small- and
medium-sized stocks - which accounted for roughly half the portfolio
at the end of the period - detracted from performance.
Q. DID YOU EMPLOY ANY STRATEGIES TO TRY TO OFFSET THESE PROBLEMS?
J.W. I tried a couple of things. First, I bulked up the fund's health
care weighting. For some time now, health care stocks - particularly
pharmaceuticals - have registered solid results. In general,
health-care stocks are not as economically sensitive as others. The
fund experienced good results from drug-makers Schering-Plough - which
produces the popular allergy drug Claritin - and Warner-Lambert, which
benefited from the success of Lipitor, a drug aimed at treating high
cholesterol. I also tried to find opportunities among companies that
are considered the leaders in their respective fields. The fund's
investments in Intel, Microsoft and America Online typified this
strategy.
Q. WHILE MANY ARE CONSIDERED EXPENSIVE FOR THE EARNINGS THEY PRODUCE,
INTERNET STOCKS HAVE BECOME POPULAR AMONG INVESTORS. WAS THE FUND
REPRESENTED IN THIS AREA?
J.W. The fund had only one so-called Internet stock in its portfolio,
but that one stock - America Online - produced terrific results. AOL's
success can be traced to rapid growth in both subscriber counts and
on-line advertising. I've talked to a few companies that advertise on
AOL, and they've been pleased with the results. Another indirect
Internet play was Time Warner, which crept into the fund's list of top
holdings. Time Warner is a multi-dimensional media company with many
valuable assets, and it has been working on developing a cable TV
modem service that will offer direct Internet access.
Q. WHICH STOCKS PERFORMED WELL? WHICH DIDN'T?
J.W. Positive contributors included Schering-Plough and Sabre Group
Holdings, a company that specializes in providing reservation booking
systems and information technology assistance to the transportation
industry. Disappointments included Gillette, disk-drive component
supplier Read-Rite and Saville Systems, which provides services to the
telecommunications industry. All three of these positions were hurt by
lower-than-expected earnings.
Q. TURNING TO YOU, ADAM, WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS?
A.H. Unfortunately, it looks like more of the same. Economies all over
the world are slowing, and I think we may see the beginnings of a
slowdown in both the U.S. and Europe. If so, that will put additional
pressure on export and multinational companies. Taking the theory that
the glass is half-full, however, volatility can often present
attractive buying opportunities. I hope to gradually improve the
performance of the fund by picking the most appealing of those
opportunities.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGERS ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.

ADAM HETNARSKI DISCUSSES HIS
APPROACH TO INVESTING AND
WHAT'S IN STORE FOR THE FUND:
"I'm a growth investor. When I'm
considering a potential investment,
I put a lot of credence in a company's
ability to sustain its revenue growth.
Ideally, I like to find companies that
I feel can sustain their revenue
growth over time, while not losing
money during that growth process.
With that last thought in mind, I pay
particularly close attention to a
company's ability to finance its
own growth plans.
"In terms of the fund itself, I'm
going to try to do two things from
the outset. First, I plan to continue
Jason's efforts to increase the
average size of the stocks within
the portfolio. Since continued
global volatility is likely, larger
stocks may continue to lead the
market. Second, I may also reduce
some of the fund's service-related
investments. Many of these
positions are smaller in size and
reducing them will help in
accomplishing the first goal."
FUND FACTS
GOAL: to increase the value of
the fund's shares by investing
mainly in the equity securities
of U.S. companies that are
expected to benefit from
exporting or selling their
goods or services outside the
U.S.
FUND NUMBER: 332
TRADING SYMBOL: FEXPX
START DATE: October 4, 1994
SIZE: as of August 31, 1998,
more than $357 million
MANAGER: Adam Hetnarski,
since September 1998;
associate portfolio manager,
Fidelity Export and
Multinational Fund, July
1998-September 1998;
manager, Fidelity Select
Technology Portfolio,
1996-1998; analyst,
networking, electronics,
CAD/CAM and other
technology-related industries,
1994-present; joined Fidelity
in 1991.
(checkmark)

INVESTMENT CHANGES

TOP TEN STOCKS AS OF AUGUST 31, 1998

% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE STOCKS
6 MONTHS AGO

MCI Communications Corp. 5.1 3.2

Insight Enterprises, Inc. 4.4 3.9

Microsoft Corp. 4.4 2.3

Monsanto Co. 4.2 0.0

Time Warner, Inc. 3.8 1.4

Warner-Lambert Co. 3.0 0.0

Gillette Co. 2.8 1.6

Merck & Co., Inc. 2.4 1.4

Meta Group, Inc. 2.2 2.1

Sabre Group Holdings, Inc. Class A 1.9 0.2

<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE MARKET SECTORS AS OF AUGUST 31, 1998

% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE MARKET SECTORS
6 MONTHS AGO

TECHNOLOGY 26.0 28.4

HEALTH 16.8 10.2

MEDIA & LEISURE 10.1 8.8

RETAIL & WHOLESALE 7.5 2.9

SERVICES 6.9 12.1

</TABLE>

ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF AUGUST 31, 1998* AS OF FEBRUARY 28, 1998**
ROW: 1, COL: 1, VALUE: 4.1
ROW: 1, COL: 2, VALUE: 95.90000000000001
STOCKS 93.6%
SHORT-TERM
INVESTMENTS 6.4%
FOREIGN
INVESTMENTS 6.0%
STOCKS 95.9%
SHORT-TERM
INVESTMENTS 4.1%
FOREIGN
INVESTMENTS 4.0%
ROW: 1, COL: 1, VALUE: 6.4
ROW: 1, COL: 2, VALUE: 93.59999999999999
*
**

INVESTMENTS AUGUST 31, 1998

SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES

<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 95.9%

SHARES VALUE (NOTE 1)

BASIC INDUSTRIES - 4.7%

CHEMICALS & PLASTICS - 4.7%

IMC Global, Inc. 100,000 $ 1,837,500

Monsanto Co. 278,600 15,235,938

17,073,438

CONSTRUCTION & REAL ESTATE - 1.7%

BUILDING MATERIALS - 1.0%

Masco Corp. 155,000 3,565,000

REAL ESTATE - 0.7%

Stewart Enterprises, Inc. Class A 6,700 131,488

Sunterra Corp. (a) 260,000 2,388,750

2,520,238

TOTAL CONSTRUCTION & REAL ESTATE 6,085,238

DURABLES - 0.8%

AUTOS, TIRES, & ACCESSORIES - 0.8%

Breed Technologies, Inc. 192,100 1,404,740

Federal-Mogul Corp. 25,000 1,334,375

2,739,115

ENERGY - 1.0%

OIL & GAS - 1.0%

Amoco Corp. 40,000 1,812,500

Total SA sponsored ADR 600 28,838

USX-Marathon Group 65,000 1,690,000

3,531,338

FINANCE - 5.7%

BANKS - 2.2%

Bank of New York Co., Inc. 75,000 1,814,063

BankAmerica Corp. 40,000 2,562,500

Citicorp 22,500 2,432,813

Comerica, Inc. 25,000 1,306,250

8,115,626

COMMON STOCKS - CONTINUED

SHARES VALUE (NOTE 1)

FINANCE - CONTINUED

CREDIT & OTHER FINANCE - 1.2%

American Express Co. 25,000 $ 1,950,000

Household International, Inc. 50,000 1,846,875

MBNA Corp. 20,000 470,000

4,266,875

FEDERAL SPONSORED CREDIT - 2.3%

Fannie Mae 75,000 4,260,938

Freddie Mac 100,000 3,950,000

8,210,938

TOTAL FINANCE 20,593,439

HEALTH - 16.8%

DRUGS & PHARMACEUTICALS - 11.5%

Forest Laboratories, Inc. (a) 124,900 4,090,475

Lilly (Eli) & Co. 95,000 6,222,500

Merck & Co., Inc. 75,000 8,695,313

Natural Alternatives International, Inc. (a) 85,000 1,190,000

NBTY, Inc. (a) 268,600 2,450,975

Pfizer, Inc. 30,000 2,790,000

Schering-Plough Corp. 60,000 5,257,500

Warner-Lambert Co. 163,200 10,648,800

41,345,563

MEDICAL EQUIPMENT & SUPPLIES - 5.3%

Boston Scientific Corp. (a) 90,000 6,232,500

McKesson Corp. 60,000 4,500,000

Sofamor/Danek Group, Inc. (a) 75,500 6,299,531

Steris Corp. (a) 90,000 2,148,750

19,180,781

TOTAL HEALTH 60,526,344

HOLDING COMPANIES - 0.1%

Triarc Companies, Inc. Class A (a) 25,000 373,438

INDUSTRIAL MACHINERY & EQUIPMENT - 2.4%

ELECTRICAL EQUIPMENT - 1.2%

American Power Conversion Corp. (a) 55,000 1,485,000

COMMON STOCKS - CONTINUED

SHARES VALUE (NOTE 1)

INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED

ELECTRICAL EQUIPMENT - CONTINUED

General Electric Co. 25,000 $ 2,000,000

Loral Space & Communications Ltd. (a) 38,400 609,600

4,094,600

INDUSTRIAL MACHINERY & EQUIPMENT - 1.2%

Tyco International Ltd. 80,000 4,440,000

TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 8,534,600

MEDIA & LEISURE - 10.1%

BROADCASTING - 7.0%

CBS Corp. 133,700 3,476,200

Chum Ltd. Class B 20,300 550,048

Clear Channel Communications, Inc. (a) 50,000 2,250,000

Cox Communications, Inc. Class A (a) 25,000 1,050,000

MediaOne Group, Inc. (a) 50,000 2,050,000

Nielson Media Research 33,699 303,291

TCA Cable TV, Inc. 78,400 1,803,200

Time Warner, Inc. 172,000 13,824,500

25,307,239

ENTERTAINMENT - 0.9%

King World Productions, Inc. (a) 121,300 2,547,300

Premier Parks, Inc. (a) 47,800 776,750

3,324,050

LODGING & GAMING - 1.4%

Sun International Hotels Ltd. (a) 129,800 4,891,838

RESTAURANTS - 0.8%

McDonald's Corp. 50,000 2,803,125

TOTAL MEDIA & LEISURE 36,326,252

NONDURABLES - 5.6%

AGRICULTURE - 0.9%

Delta & Pine Land Co. 75,000 3,220,313

BEVERAGES - 0.9%

Celestial Seasonings, Inc. (a) 58,500 2,062,125

Coca-Cola Co. (The) 20,100 1,309,013

3,371,138

FOODS - 1.0%

McCormick & Co., Inc. (non-vtg.) 120,000 3,487,500

COMMON STOCKS - CONTINUED

SHARES VALUE (NOTE 1)

NONDURABLES - CONTINUED

HOUSEHOLD PRODUCTS - 2.8%

Gillette Co. 242,400 $ 9,968,700

TOTAL NONDURABLES 20,047,651

RETAIL & WHOLESALE - 7.5%

APPAREL STORES - 1.6%

Abercrombie & Fitch Co. Class A (a) 100,000 4,300,000

Saks Holdings, Inc. (a) 70,700 1,480,281

5,780,281

APPLIANCE STORES - 0.3%

Grupo Elektra SA de CV unit 2,800,000 1,114,428

DRUG STORES - 1.4%

CVS Corp. 133,700 4,863,338

GENERAL MERCHANDISE STORES - 1.6%

Proffitts, Inc. (a) 50,000 1,275,000

Wal-Mart Stores, Inc. 78,100 4,588,375

5,863,375

RETAIL & WHOLESALE, MISCELLANEOUS - 2.6%

Best Buy Co., Inc. (a) 73,740 2,903,513

Circuit City Stores, Inc. - Circuit City Group 50,000 1,543,750

Henry Schein, Inc. (a) 125,000 4,812,500

9,259,763

TOTAL RETAIL & WHOLESALE 26,881,185

SERVICES - 6.9%

ADVERTISING - 2.6%

Omnicom Group, Inc. 115,000 5,476,875

WPP Group PLC ADR 75,000 4,078,125

9,555,000

LEASING & RENTAL - 0.9%

Hertz Corp. Class A 82,800 3,125,700

SERVICES - 3.4%

Hagler Bailly, Inc. (a) 348,300 6,748,313

IMS Health, Inc. 101,100 5,560,500

12,308,813

TOTAL SERVICES 24,989,513

COMMON STOCKS - CONTINUED

SHARES VALUE (NOTE 1)

TECHNOLOGY - 26.0%

COMMUNICATIONS EQUIPMENT - 1.2%

Cisco Systems, Inc. (a) 55,000 $ 4,503,125

COMPUTER SERVICES & SOFTWARE - 14.6%

Affiliated Computer Services, Inc. Class A (a) 75,000 2,451,563

America Online, Inc. 83,200 6,817,200

Autodesk, Inc. 45,000 1,051,875

DST Systems, Inc. (a) 85,000 4,802,500

HBO & Co. 25,000 531,250

Meta Group, Inc. (a) 321,150 7,948,463

Microsoft Corp. (a) 164,600 15,791,313

Sabre Group Holdings, Inc. Class A (a) 216,500 6,928,000

Saville Systems PLC sponsored ADR (a) 199,000 3,258,625

Siebel Systems, Inc. (a) 163,700 3,069,375

52,650,164

COMPUTERS & OFFICE EQUIPMENT - 6.2%

Compaq Computer Corp. 150,000 4,190,625

Fore Systems, Inc. (a) 130,000 2,242,500

Insight Enterprises, Inc. (a) 371,700 15,797,250

22,230,375

ELECTRONIC INSTRUMENTS - 0.4%

Waters Corp. (a) 27,100 1,460,013

ELECTRONICS - 3.6%

Alpine Group, Inc. (a) 214,000 3,049,500

Intel Corp. 95,000 6,762,813

Vitesse Semiconductor Corp. (a) 111,400 3,021,725

12,834,038

TOTAL TECHNOLOGY 93,677,715

UTILITIES - 6.6%

TELEPHONE SERVICES - 6.6%

AT&T Corp. 8,800 441,100

IXC Communications, Inc. 80,000 1,960,000

MCI Communications Corp. 364,100 18,204,991

Qwest Communications International, Inc. (a) 128,271 3,206,775

23,812,866

TOTAL COMMON STOCKS 345,192,132
(Cost $354,003,584)

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C>
CASH EQUIVALENTS - 4.1%

SHARES VALUE (NOTE 1)

Taxable Central Cash Fund (b) 14,668,671 $ 14,668,671
(Cost 14,668,671)

TOTAL INVESTMENT IN SECURITIES - 100% $ 359,860,803
(Cost $368,672,255)

</TABLE>

LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 5.58%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $369,646,366. Net unrealized depreciation
aggregated $9,785,563, of which $31,089,743 related to appreciated
investment securities and $40,875,306 related to depreciated
investment securities.
The fund hereby designates approximately $10,726,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1998

ASSETS

INVESTMENT IN SECURITIES, AT VALUE (COST $368,672,255) - $ 359,860,803
SEE ACCOMPANYING SCHEDULE

RECEIVABLE FOR INVESTMENTS SOLD 16,531,985

RECEIVABLE FOR FUND SHARES SOLD 218,496

DIVIDENDS RECEIVABLE 129,003

INTEREST RECEIVABLE 58,889

REDEMPTION FEES RECEIVABLE 3,102

OTHER RECEIVABLES 276,638

TOTAL ASSETS 377,078,916

LIABILITIES

PAYABLE FOR INVESTMENTS PURCHASED $ 16,227,691

PAYABLE FOR FUND SHARES REDEEMED 2,840,032

ACCRUED MANAGEMENT FEE 209,555

OTHER PAYABLES AND ACCRUED EXPENSES 118,730

TOTAL LIABILITIES 19,396,008

NET ASSETS $ 357,682,908

NET ASSETS CONSIST OF:

PAID IN CAPITAL $ 344,602,429

ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS 21,891,993
AND FOREIGN CURRENCY TRANSACTIONS

NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS AND (8,811,514)
ASSETS AND LIABILITIES IN FOREIGN CURRENCIES

NET ASSETS, FOR 22,272,438 SHARES OUTSTANDING $ 357,682,908

NET ASSET VALUE AND REDEMPTION PRICE PER SHARE ($357,682,908 $16.06
(DIVIDED BY) 22,272,438 SHARES)

MAXIMUM OFFERING PRICE PER SHARE (100/97.00 OF $16.06) $16.56

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31, 1998

INVESTMENT INCOME $ 1,719,623
DIVIDENDS

INTEREST 1,236,197

TOTAL INCOME 2,955,820

EXPENSES

MANAGEMENT FEE $ 2,772,440

TRANSFER AGENT FEES 1,170,579

ACCOUNTING FEES AND EXPENSES 282,053

NON-INTERESTED TRUSTEES' COMPENSATION 1,741

CUSTODIAN FEES AND EXPENSES 20,996

REGISTRATION FEES 42,217

AUDIT 38,149

LEGAL 37,270

MISCELLANEOUS 2,406

TOTAL EXPENSES BEFORE REDUCTIONS 4,367,851

EXPENSE REDUCTIONS (239,712) 4,128,139

NET INVESTMENT INCOME (LOSS) (1,172,319)

REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:

INVESTMENT SECURITIES (INCLUDING REALIZED LOSS OF $147,827 60,700,271
ON SALES OF INVESTMENTS IN AFFILIATED ISSUERS)

FOREIGN CURRENCY TRANSACTIONS (1,690) 60,698,581

CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:

INVESTMENT SECURITIES (62,359,178)

ASSETS AND LIABILITIES IN FOREIGN CURRENCIES 786 (62,358,392)

NET GAIN (LOSS) (1,659,811)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ (2,832,130)
FROM OPERATIONS

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
AUGUST 31, AUGUST 31,
1998 1997

INCREASE (DECREASE) IN NET ASSETS

OPERATIONS $ (1,172,319) $ (526,237)
NET INVESTMENT INCOME (LOSS)

NET REALIZED GAIN (LOSS) 60,698,581 102,059,228

CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) (62,358,392) 24,664,537

NET INCREASE (DECREASE) IN NET ASSETS RESULTING (2,832,130) 126,197,528
FROM OPERATIONS

DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED GAINS (91,163,265) (20,329,494)

SHARE TRANSACTIONS 131,254,192 727,939,550
NET PROCEEDS FROM SALES OF SHARES

REINVESTMENT OF DISTRIBUTIONS 89,917,943 20,039,185

COST OF SHARES REDEEMED (222,316,436) (668,382,473)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING (1,144,301) 79,596,262
FROM SHARE TRANSACTIONS

REDEMPTION FEES 186,612 113,002

TOTAL INCREASE (DECREASE) IN NET ASSETS (94,953,084) 185,577,298

NET ASSETS

BEGINNING OF PERIOD 452,635,992 267,058,694

END OF PERIOD $ 357,682,908 $ 452,635,992

OTHER INFORMATION
SHARES

SOLD 6,800,437 43,339,446

ISSUED IN REINVESTMENT OF DISTRIBUTIONS 4,924,895 1,216,684

REDEEMED (12,058,840) (39,935,185)

NET INCREASE (DECREASE) (333,508) 4,620,945

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED AUGUST 31,

1998 1997 1996 1995 E
SELECTED PER-SHARE DATA

NET ASSET VALUE, BEGINNING OF $ 20.02 $ 14.85 $ 14.22 $ 10.00
PERIOD

INCOME FROM INVESTMENT OPERATIONS

NET INVESTMENT INCOME (LOSS) D (.05) (.02) (.05) (.03)

NET REALIZED AND UNREALIZED GAIN (.13) 6.05 1.52 4.26
(LOSS)

TOTAL FROM INVESTMENT OPERATIONS (.18) 6.03 1.47 4.23

LESS DISTRIBUTIONS

FROM NET REALIZED GAIN (3.79) (.86) (.84) (.01)

REDEMPTION FEES ADDED TO PAID IN .01 - - -
CAPITAL

NET ASSET VALUE, END OF PERIOD $ 16.06 $ 20.02 $ 14.85 $ 14.22

TOTAL RETURN B, C (2.35)% 41.94% 11.15% 42.34%

RATIOS AND SUPPLEMENTAL DATA

NET ASSETS, END OF PERIOD (000 $ 357,683 $ 452,636 $ 267,059 $ 503,427
OMITTED)

RATIO OF EXPENSES TO AVERAGE NET .93% .98% 1.03% 1.22% A
ASSETS

RATIO OF EXPENSES TO AVERAGE NET .88% F .91% F 1.00% F 1.22% A
ASSETS
AFTER EXPENSE REDUCTIONS

RATIO OF NET INVESTMENT INCOME (.25)% (.13)% (.39)% (.27)%
(LOSS) A
TO AVERAGE NET ASSETS

PORTFOLIO TURNOVER RATE 281% 429% 313% 245% A

AVERAGE COMMISSION RATE G $ .0426 $ .0404 $ .0326

</TABLE>

A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD OCTOBER 4, 1994 (COMMENCEMENT OF SALE OF SHARES) TO
AUGUST 31, 1995.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES
(SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
G FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995 A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
NOTES TO FINANCIAL STATEMENTS
For the period ended August 31, 1998

1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Export and Multinational Fund (the fund) is a fund of
Fidelity Union Street Trust (the trust) and is authorized to issue an
unlimited number of shares. The trust is registered under the
Investment Company Act of 1940, as amended, as an open-end management
investment company organized as a Massachusetts business trust. The
financial statements have been prepared in conformity with generally
accepted accounting principles which require management to make
certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are
readily available are valued at the last sale price, or if no sale
price, at the closing bid price. Securities for which exchange
quotations are not readily available (and in certain cases debt
securities which trade on an exchange) are valued primarily using
dealer supplied valuations or at their fair value as determined in
good faith under consistently applied procedures under the general
supervision of the Board of Trustees. Short-term securities with
remaining maturities of sixty days or less for which quotations are
not readily available are valued at amortized cost or original cost
plus accrued interest, both of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
date and settlement on purchases and sales of securities. The effects
of changes in foreign currency exchange rates on investments in
securities are included with the net realized and unrealized gain or
loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the fund is
informed of the ex-dividend date. Non-cash dividends included in
dividend income, if any, are recorded at the fair market value of the
securities received. Interest income is accrued as earned. Investment
income is
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INVESTMENT INCOME - CONTINUED
recorded net of foreign taxes withheld where recovery of such taxes is
uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for litigation proceeds, foreign currency transactions, net
operating losses, and losses deferred due to wash sales. The fund also
utilized earnings and profits distributed to shareholders on
redemption of shares as a part of the dividends paid deduction for
income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Accumulated undistributed net realized gain (loss) on investments and
foreign currency transactions may include temporary book and tax basis
differences that will reverse in a subsequent period. Any taxable gain
remaining at fiscal year end is distributed in the following year.
SHORT-TERM TRADING (REDEMPTION) FEES. Shares held in the fund less
than 90 days are subject to a short-term trading fee equal to .75% of
the proceeds of the redeemed shares. The fee, which is retained by the
fund, is accounted for as an addition to paid in capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated
securities. Losses may arise from changes in the value of the foreign
currency or if the counterparties do not perform under the contracts'
terms. The U.S. dollar value of foreign currency contracts is
determined using contractual currency exchange rates established at
the time of each trade.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated entities of Fidelity Management & Research Company
(FMR), may transfer uninvested cash balances into one or more joint
trading accounts. These balances are invested in one or more
repurchase agreements for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
2. OPERATING POLICIES - CONTINUED
REPURCHASE AGREEMENTS - CONTINUED
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the SEC, the fund may invest in the Taxable Central Cash Fund (the
Cash Fund) managed by Fidelity Investments Money Management, Inc., an
affiliate of FMR. The Cash Fund is an open-end money market fund
available only to investment companies and other accounts managed by
FMR and its affiliates. The Cash Fund seeks preservation of capital,
liquidity, and current income by investing in U.S. Treasury securities
and repurchase agreements for these securities. Income distributions
from the Cash Fund are declared daily and paid monthly from net
interest income. Income distributions earned by the fund are recorded
as interest income in the accompanying financial statements.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $1,235,840,831 and $1,332,009,873, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
the fund. The group fee rate is the weighted average of a series of
rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .2500% to .5200% for the
period. The annual individual fund fee rate is .30%. In the event that
these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee. For the period, the management
fee was equivalent to an annual rate of .59% of average net assets .
SALES LOAD. For the period, Fidelity Distributors Corporation (FDC),
an affiliate of FMR and the general distributor of the fund, received
sales charges of $256,930 on sales of shares of the fund all of which
was retained.
TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an
affiliate of FMR, is the fund's transfer, dividend disbursing and
shareholder servicing agent. FSC receives account fees and asset-based
fees that vary according to account size and type of account. FSC pays
for typesetting, printing and mailing of all shareholder reports,
except proxy statements. For the period, the transfer agent fees were
equivalent to an annual rate of .25% of average net assets.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
ACCOUNTING FEES. FSC maintains the fund's accounting records. The fee
is based on the level of average net assets for the month plus
out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $217,425 for the
period.
5. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $219,911 under this arrangement.
In addition, the fund has entered into arrangements with its custodian
and transfer agent whereby credits realized as a result of uninvested
cash balances were used to reduce a portion of the fund's expenses.
During the period, the fund's custodian and transfer agent fees were
reduced by $7,775 and $12,026, respectively, under these arrangements.
6. TRANSACTIONS WITH AFFILIATED COMPANIES.
An affiliated company is a company in which the fund has ownership of
at least 5% of the voting securities. Transactions during the period
with companies which are or were affiliates are as follows:
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES
PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Meta Group, Inc. $ 1,525,806 $ 2,006,891 $ - $ -
TOTALS $ 1,525,806 $ 2,006,891 $ - $ -
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Fidelity Union Street Trust and the Shareholders of
Fidelity Export and Multinational Fund:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Fidelity Export and Multinational Fund (a fund of the Fidelity Union
Street Trust) at August 31, 1998, and the results of its operations,
the changes in its net assets and the financial highlights for the
periods indicated, in conformity with generally accepted accounting
principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the
responsibility of the Fidelity Export and Multinational Fund's
management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of
these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which
included confirmation of securities at August 31, 1998 by
correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
October 7, 1998
DISTRIBUTIONS

The Board of Trustees of Fidelity Export and Multinational Fund voted
to pay to shareholders of record at the opening of business on record
date, the following distributions derived from capital gains realized
from sales of portfolio securities, and dividends derived from net
investment income:

PAY DATE 10/6/97 12/29/97 10/5/98

RECORD DATE 10/3/97 12/26/97 10/2/98

DIVIDENDS - - -

SHORT-TERM
CAPITAL GAINS $2.05 $1.34 $.62

LONG-TERM
CAPITAL GAINS $.27 $.13 $.15

LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 89.42% 56.94%
20% rate 10.58% 43.06%
A total of 3% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate
shareholders.
The fund will notify shareholders in January 1999 of the applicable
percentages for use in preparing 1998 income tax returns.
MANAGING YOUR INVESTMENTS

Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a
day.
BY PHONE
Fidelity TouchTone Xpress(registered trademark) provides a single
toll-free number to access account balances, positions, quotes and
trading. It's easy to navigate the service, and on your first call,
the system will help you create a personal identification number (PIN)
for security.
(PHONE_GRAPHIC)TOUCHTONE XPRESS
1-800-544-5555
PRESS
1 For mutual fund and brokerage trading.

2 For quotes.*

3 For account balances and holdings.

4 To review orders and mutual
fund activity.

5 To change your PIN.

*0 To speak to a Fidelity representative.

BY PC
Fidelity's Web site on the Internet provides a wide range of
information, including daily financial news, fund performance,
interactive planning tools and news about Fidelity products and
services.
(COMPUTER_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call Fidelity at
1-800-544-7272 and we'll send you an America Online CD or disk with up
to 50 free hours of Web access.
(COMPUTER_GRAPHIC)
FIDELITY ON-LINE XPRESS+
TM
Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools . . . all on your desktop. Call Fidelity
at 1-800-544-7272 or visit our Web site for more information on how to
manage your investments via your PC.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD
AND RETURN WILL VARY AND,
EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS MEANS
THAT YOU MAY HAVE A GAIN
OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO ASSURANCE THAT MONEY
MARKET FUNDS WILL BE ABLE TO
MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY MARKET FUND
IS NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE HISTORICAL AND
INCLUDE CHANGES IN SHARE PRICE,
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF ANY
SALES CHARGES.
TO WRITE FIDELITY

If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and
send you written confirmation upon completion of your request.
(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
2300 Litton Lane - KH1A
Hebron, KY 41048
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
TO VISIT FIDELITY

For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
815 East Birch Street
Brea, CA
851 East Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19100 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
950 Northgate Drive
San Rafael, CA
1400 Civic Drive
Walnut Creek, CA
6300 Canoga Avenue
Woodland Hills, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
48 West Putnam Avenue
Greenwich, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
29 South Main Street
West Hartford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
90 Alhambra Plaza
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
1907 West State Road 434
Longwood, FL
8880 Tamiami Trail, North
Naples, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
1502 N. Westshore Blvd.
Tampa, FL
GEORGIA
3445 Peachtree Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
One North Franklin Street
Chicago, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
3232 Lake Avenue
Wilmette, IL
INDIANA
4729 East 82nd Street
Indianapolis, IN
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
7401 Wisconsin Avenue
Bethesda, MD
1 West Pennsylvania Ave.
Towson, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
155 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
29155 Northwestern Hwy.
Southfield, MI
MINNESOTA
7600 France Avenue South
Edina, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
150 Essex Street
Millburn, NJ
56 South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
NEW YORK
1055 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
1271 Avenue of the Americas
New York, NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
NORTH CAROLINA
4611 Sharon Road
Charlotte, NC
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
28699 Chagrin Boulevard
Woodmere Village, OH
OREGON
16850 SW 72 Avenue
Tigard, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
6150 Poplar Road
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
4017 Northwest Parkway
Dallas, TX
1155 Dairy Ashford Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
19740 IH 45 North
Spring, TX
UTAH
215 South State Street
Salt Lake City, UT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
511 Pine Street
Seattle, WA
WASHINGTON, DC
1900 K Street, N.W.
Washington, DC
WISCONSIN
595 North Barker Road
Brookfield, WI

INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Abigail P. Johnson, Vice President
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
* INDEPENDENT TRUSTEES
CUSTODIAN
The Chase Manhattan Bank
New York, NY
FIDELITY'S GROWTH FUNDS
Blue Chip Growth Fund
Capital Appreciation Fund
Contrafund
Contrafund II
Disciplined Equity Fund
Dividend Growth Fund
Emerging Growth Fund
Export and Multinational Fund
Fidelity Fifty
SM
Growth Company Fund
Large Cap Stock Fund
Low-Priced Stock Fund
Magellan(registered trademark) Fund
Mid-Cap Stock Fund
New Millennium(registered trademark) Fund
OTC Portfolio
Retirement Growth Fund
Small Cap Selector
Small Cap Stock Fund
Stock Selector
TechnoQuant Growth Fund
SM
Trend Fund
Value Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
(registered trademark)
TouchTone Xpress (registered trademark) 1-800-544-5555
AUTOMATED LINE FOR QUICKEST SERVICE

(2_FIDELITY_LOGOS)SPARTAN(REGISTERED TRADEMARK)

GINNIE MAE
FUND
ANNUAL REPORT
AUGUST 31, 1998
CONTENTS

PRESIDENT'S MESSAGE 3 NED JOHNSON ON INVESTING STRATEGIES.

PERFORMANCE 4 HOW THE FUND HAS DONE OVER TIME.

FUND TALK 7 THE MANAGER'S REVIEW OF FUND
PERFORMANCE, STRATEGY AND OUTLOOK.

INVESTMENT CHANGES 10 A SUMMARY OF MAJOR SHIFTS IN THE FUND'S
INVESTMENTS OVER THE PAST SIX MONTHS.

INVESTMENTS 11 A COMPLETE LIST OF THE FUND'S INVESTMENTS
WITH THEIR MARKET VALUES.

FINANCIAL STATEMENTS 13 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.

NOTES 17 NOTES TO THE FINANCIAL STATEMENTS.

REPORT OF INDEPENDENT 20 THE AUDITORS' OPINION.
ACCOUNTANTS

(PHOTO_OF_EDWARD_C_JOHNSON_3D)DEAR SHAREHOLDER:
The dramatic volatility we've seen in recent months in the world's
stock and bond markets might seem at first glance to be unprecedented
in its scope and duration. In fact, however, the U.S. stock market has
declined by more than 10% 12 times just since 1970, only to recover
and go on to new highs each time. As has been the case recently,
segments of the bond market - most notably U.S. Treasuries -
frequently have thrived in such periods as investors seek a safer home
for their funds.
While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.
The longer your investment time frame, the less likely it is that you
will be affected by short-term market volatility. A 10-year investment
horizon appropriate for saving for a college education, for example,
enables you to weather market cycles in a long-term fund, which may
have a higher risk potential, but also has a higher potential rate of
return.
An intermediate-length fund could make sense if your investment
horizon is two to four years, while a short-term bond fund could be
the right choice if you need your money in one or two years.
If your time horizon is less than a year, you might want to consider
moving some of your bond investment into a money market fund. These
funds seek income and a stable share price by investing in
high-quality, short-term investments. Of course, it's important to
remember that there is no assurance that a money market fund will
achieve its goal of maintaining a stable net asset value of $1.00 per
share, and that these types of funds are neither insured nor
guaranteed by any agency of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it
makes good sense to follow a regular investment plan, investing a
certain amount of money in a fund at the same time each month or
quarter and periodically reviewing your overall portfolio. By doing
so, you won't get caught up in the excitement of a rapidly rising
market, nor will you buy all your shares at market highs. While this
strategy - known as dollar cost averaging - won't assure a profit or
protect you from a loss in a declining market, it should help you
lower the average cost of your purchases.
If you have questions, please call us at 1-800-544-8888. We are
available 24 hours a day, seven days a week to provide you the
information you need to make the investments that are right for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE

There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). You can also look at the fund's income, as
reflected in the fund's yield, to measure performance. If Fidelity had
not reimbursed certain fund expenses, the total returns and dividends
would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1998 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND

SPARTAN GINNIE MAE 8.16% 38.32% 77.44%

LB GNMA 8.54% 41.04% N/A

SB GNMA 8.42% 40.70% N/A

GNMA FUNDS AVERAGE 8.34% 35.06% N/A

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or since
the fund started on December 27, 1990. For example, if you had
invested $1,000 in a fund that had a 5% return over the past year, the
value of your investment would be $1,050. You can compare the fund's
returns to the performance of both the Lehman Brothers GNMA Index and
the Salomon Brothers GNMA Index, both of which are market
capitalization weighted indexes of fixed-rate securities issued by the
Government National Mortgage Association (GNMA). These securities
represent interests in pools of mortgage loans with original terms of
15 and 30 years. To measure how the fund's performance stacked up
against its peers, you can compare it to the GNMA funds average, which
reflects the performance of mutual funds with similar objectives
tracked by Lipper Analytical Services, Inc. The past one year average
represents a peer group of 53 mutual funds. These benchmarks include
reinvested dividends and capital gains, if any, and exclude the effect
of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1998 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND

SPARTAN GINNIE MAE 8.16% 6.70% 7.75%

LB GNMA 8.54% 7.12% N/A

SB GNMA 8.42% 7.07% N/A

GNMA FUNDS AVERAGE 8.34% 6.19% N/A

AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and
show you what would have happened if the fund had performed at a
constant rate each year. (Note: Lipper calculates average annual total
returns by annualizing each fund's total return, then taking an
arithmetic average. This may produce a slightly different figure than
that obtained by averaging the cumulative total returns and
annualizing the result.)
$10,000 OVER LIFE OF FUND
Spartan Ginnie Mae LB GNMA
00461 LB020
1990/12/31 10000.00 10000.00
1991/01/31 10104.29 10149.46
1991/02/28 10164.54 10233.72
1991/03/31 10239.66 10307.56
1991/04/30 10302.26 10404.24
1991/05/31 10368.05 10489.17
1991/06/30 10380.51 10509.12
1991/07/31 10535.21 10688.74
1991/08/31 10732.56 10887.42
1991/09/30 10902.32 11079.23
1991/10/31 11063.72 11262.17
1991/11/30 11128.99 11340.22
1991/12/31 11378.62 11604.54
1992/01/31 11291.21 11460.85
1992/02/29 11443.21 11580.81
1992/03/31 11373.35 11514.96
1992/04/30 11467.54 11620.73
1992/05/31 11671.03 11825.40
1992/06/30 11808.37 11969.98
1992/07/31 11791.74 12074.86
1992/08/31 11898.52 12236.29
1992/09/30 11982.17 12345.17
1992/10/31 11900.60 12252.70
1992/11/30 11955.78 12308.58
1992/12/31 12118.71 12464.47
1993/01/31 12269.40 12621.24
1993/02/28 12385.98 12749.41
1993/03/31 12468.37 12819.26
1993/04/30 12522.22 12866.04
1993/05/31 12592.37 12954.30
1993/06/30 12720.19 13059.63
1993/07/31 12787.91 13114.62
1993/08/31 12803.63 13147.22
1993/09/30 12802.46 13158.52
1993/10/31 12850.63 13181.14
1993/11/30 12777.48 13162.29
1993/12/31 12881.92 13284.48
1994/01/31 13025.29 13388.92
1994/02/28 12915.69 13322.39
1994/03/31 12612.69 12962.72
1994/04/30 12498.55 12874.03
1994/05/31 12515.63 12910.84
1994/06/30 12488.13 12891.99
1994/07/31 12740.52 13143.45
1994/08/31 12772.21 13183.80
1994/09/30 12606.72 12998.20
1994/10/31 12600.46 12977.58
1994/11/30 12555.14 12940.99
1994/12/31 12687.28 13084.68
1995/01/31 12956.44 13355.66
1995/02/28 13294.80 13707.56
1995/03/31 13343.77 13774.75
1995/04/30 13529.95 13978.76
1995/05/31 13956.47 14405.61
1995/06/30 14035.85 14503.63
1995/07/31 14075.42 14534.23
1995/08/31 14212.67 14683.68
1995/09/30 14349.40 14827.37
1995/10/31 14471.77 14948.89
1995/11/30 14622.51 15121.63
1995/12/31 14801.04 15315.87
1996/01/31 14909.36 15422.53
1996/02/29 14785.22 15307.23
1996/03/31 14747.77 15268.20
1996/04/30 14706.99 15228.29
1996/05/31 14649.50 15177.06
1996/06/30 14818.39 15376.41
1996/07/31 14870.63 15434.29
1996/08/31 14876.07 15440.94
1996/09/30 15110.47 15699.49
1996/10/31 15394.25 16017.03
1996/11/30 15619.54 16250.08
1996/12/31 15537.40 16163.16
1997/01/31 15639.71 16287.34
1997/02/28 15676.01 16346.10
1997/03/31 15516.41 16184.89
1997/04/30 15767.56 16450.32
1997/05/31 15923.99 16619.07
1997/06/30 16110.62 16815.97
1997/07/31 16395.44 17121.09
1997/08/31 16374.64 17084.51
1997/09/30 16565.59 17311.57
1997/10/31 16740.71 17492.07
1997/11/30 16783.63 17545.73
1997/12/31 16927.63 17704.06
1998/01/31 17088.75 17875.02
1998/02/28 17132.16 17914.94
1998/03/31 17195.72 17990.78
1998/04/30 17288.80 18095.22
1998/05/31 17431.45 18218.73
1998/06/30 17472.74 18295.45
1998/07/31 17566.12 18398.34
1998/08/31 17710.25 18543.58
IMATRL PRASUN SHR__CHT 19980831 19980915 111112 R00000000000095
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Spartan Ginnie Mae Fund on December 31, 1990, shortly
after the fund started. As the chart shows, by August 31, 1998, the
value of the investment would have grown to $17,710 - a 77.10%
increase on the initial investment. For comparison, look at how the
Lehman Brothers GNMA Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $18,544 - an 85.44% increase. Going forward, the
fund will compare its performance to that of the Lehman Brothers GNMA
Index rather than the Salomon Brothers GNMA Index. The indexes include
the same type of bonds, and their performance is not materially
different. The fund is changing to the Lehman Brothers index mainly
because Lehman Brothers indexes are used by most other Fidelity bond
funds. For comparison purposes, both indexes are shown on page 4.
UNDERSTANDING
PERFORMANCE
HOW A FUND DID YESTERDAY IS
NO GUARANTEE OF HOW IT WILL DO
TOMORROW. BOND PRICES, FOR
EXAMPLE, GENERALLY MOVE IN
THE OPPOSITE DIRECTION OF
INTEREST RATES. IN TURN, THE SHARE
PRICE, RETURN AND YIELD OF A
FUND THAT INVESTS IN BONDS WILL
VARY. THAT MEANS IF YOU SELL
YOUR SHARES DURING A MARKET
DOWNTURN, YOU MIGHT LOSE
MONEY. BUT IF YOU CAN RIDE OUT
THE MARKET'S UPS AND DOWNS,
YOU MAY HAVE A GAIN.
(CHECKMARK)
TOTAL RETURN COMPONENTS
YEARS ENDED AUGUST 31,

1998 1997 1996 1995 1994

DIVIDEND RETURNS 6.87% 7.21% 6.58% 7.86% 5.23%

CAPITAL RETURNS 1.29% 2.86% -1.91% 3.42% -5.48%

TOTAL RETURNS 8.16% 10.07% 4.67% 11.28% -0.25%

TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
fund. A capital return reflects both the amount paid by the fund to
shareholders as capital gain distributions and changes in the fund's
share price. Both returns assume the dividends or capital gains paid
by the fund, if any, are reinvested.
DIVIDENDS AND YIELD
PERIODS ENDED AUGUST 31, 1998 PAST 1 PAST 6 PAST 1
MONTH MONTHS YEAR

DIVIDENDS PER SHARE 5.34(CENTS) 32.84(CENTS) 66.85(CENTS)

ANNUALIZED DIVIDEND RATE 6.18% 6.41% 6.58%

30-DAY ANNUALIZED YIELD 6.48% - -

DIVIDENDS per share show the income paid by the fund for a set period.
If you annualize this number, based on an average share price of
$10.17 over the past one month, $10.17 over the past six months and
$10.16 over the past one year, you can compare the fund's income over
these three periods. The 30-day annualized YIELD is a standard formula
for all funds based on the yields of the bonds in the fund, averaged
over the past 30 days. This figure shows you the yield characteristics
of the fund's investments at the end of the period. It also helps you
compare funds from different companies on an equal basis. If Fidelity
had not reduced certain fund expenses during the periods shown, the
30-day yield would have been 6.20%.
FUND TALK: THE MANAGER'S OVERVIEW

MARKET RECAP
The U.S. Treasury market rallied to
record levels over the past year as
investors abandoned stocks for the
safe haven of Treasuries. The Lehman
Brothers Aggregate Bond Index -
a broad gauge of the U.S. taxable
bond market - returned 10.57%
during the 12-month period that
ended August 31, 1998. In the
fourth quarter of 1997 and the first
half of 1998, global market
volatility and low interest rates
were the main stories. At the end of
the period, a free fall in stock
prices, which sent the Dow Jones
Industrial Average down 15% in
August alone, provided even
further strength to bond prices. As
investors continued to move assets
from stocks and riskier bonds to
Treasuries, yields on long-term
Treasury bonds, which move in the
opposite direction of their price, fell
to the lowest level since October
1968. Corporate bond investors
benefited from domestic economic
stability and high demand during
most of the past 12 months. Similar
to U.S. Treasuries, highly rated
corporate debt received further
support toward the end of the
period, as investors left the
turbulent equity markets for bonds.
The Lehman Brothers Corporate
Bond Index returned 9.47% for the
past 12 months. Even with
significant prepayment activity in
recent months due to low interest
rates, mortgage-backed securities
performed relatively well. The
Lehman Brothers
Mortgage-Backed Securities Index
returned 8.69% for the past year.
An interview with Curt Hollingsworth, Portfolio Manager of Spartan
Ginnie Mae Fund
Q. HOW DID THE FUND PERFORM, CURT?
A. For the 12-month period that ended August 31, 1998, the fund had a
total return of 8.16%. To get a sense of how the fund did relative to
its competitors, the GNMA funds average returned 8.34% for the same
one-year period, according to Lipper Analytical Services.
Additionally, the Lehman Brothers GNMA Index - which tracks the types
of securities in which the fund invests - also returned 8.54%.
Q. WHAT FACTORS INFLUENCED THE PERFORMANCE OF GINNIE MAE SECURITIES
OVER THE PAST YEAR?
A. Ginnie Maes performed fairly well in the first half of the period,
thanks in large part to the fact that they offered attractive yields
relative to U.S. Treasuries. But over recent months, interest rates
fell substantially, prompting home sales and mortgage refinancing to
increase to near-record rates. Those transactions, in turn, set off a
significant rise in the prepayment of mortgage-backed securities. As
prepayment activity accelerated, mortgage security prices came under
pressure. While refinancings often put money in consumers' pockets,
they take steady long-term streams of payments away from holders of
mortgage-backed securities. When refinancings step up, many mortgage
security holders must find a new place to put their money - usually at
lower interest rates.
Q. WHICH HOLDINGS CONTRIBUTED TO THE FUND'S PERFORMANCE?
A. The fund's holdings in securities containing loans that originated
between five and 10 years ago was relatively light throughout the
year, a strategy that proved beneficial for the fund. Those securities
were less immune to prepayment activity than observers once believed.
On the other hand, the fund's stake in loans that originated in early
1998 with coupons - the interest rate the borrower promises to pay -
of between 7.5% and 8.0% was relatively heavy. In large part because
of the newness of the underlying mortgages and the very slight risk
that the mortgage holders would turn around and refinance just months
after taking out the loan, these securities offered relatively good
protection against prepayment and were bid up as a result.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. I wouldn't point to a specific security that was a disappointment
or that meaningfully detracted from the fund's performance. However,
I'd point to the ever-decreasing number of opportunities to find
securities that offered good protection against prepayment, at a
reasonable price. In previous years there were occasions when a
particular security became cheap, but that hasn't been the case for
some time.
Q. WHAT WERE THE OTHER KEY ELEMENTS TO YOUR STRATEGY?
A. I kept the fund's duration - or interest-rate sensitivity -
neutral. By that I mean I didn't structure the fund to benefit from
interest rates moving higher or lower. Because it is extremely
difficult to predict the direction of interest rates with any regular
success over an extended time period, I keep duration in line with the
market rather than making it more or less sensitive based on where I
think interest rates are headed. Additionally, by keeping the fund's
investments evenly spread across the various coupons available in the
mortgage market, I have attempted to position the fund to perform well
whether interest rates rise, fall or remain stable.
Q. THE FUND USES A STRATEGY KNOWN AS A "DOLLAR ROLL." CAN YOU EXPLAIN
THIS STRATEGY?
A. Sure. A dollar roll essentially describes a strategy whereby I sell
a security that the fund owns, with settlement of that sale to occur
in the current month. At the same time, I buy a similar security at a
lower price, with settlement of that purchase to occur in the
following month. By conducting these two simultaneous trades, I
attempt to add to the fund's total return.
Q. WHAT'S YOUR OUTLOOK FOR THE GINNIE MAE MARKET?
A. I believe that prepayments will continue at a fairly quick pace
until interest rates stabilize or move higher. As is generally the
case, the direction of interest rates will be the main factor that
determines the performance of mortgage securities. But since I'm not
in the business of forecasting interest rates, I won't try to predict
where rates will end up six months or a year from today. I'll continue
to focus on finding securities that I believe will offer the best
total-return potential, whether interest rates are heading higher,
lower or remain the same.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.

CURT HOLLINGSWORTH ON HIS
MORTGAGE-BACKED SECURITY
SELECTION:
"Because there are some periods -
such as the past 12 months - when
significantly falling interest rates
can set off an unexpected wave of
mortgage prepayments, I spend a
fair amount of time analyzing a
mortgage security's risk of being
called, or redeemed, when the
underlying mortgages are prepaid.
I try to identify mortgage securities
that have less chance of being
prepaid, such as securities with
coupons - or the interest rate the
borrower promises to pay - that
are significantly higher than current
interest rates. At first glance, it may
appear that mortgages with coupons
much higher than prevailing rates
are extremely susceptible to being
prepaid. But because these mortgages
have not yet been prepaid - despite
the borrowers being presented with
several attractive opportunities to
do so - the likelihood that they
will be prepaid in the future is
rather small."
(solid bullet) Effective the close of business
on June 26, 1998, Spartan Ginnie
Mae Fund shares are no longer
available to new accounts.
Shareholders of the fund on that date
may continue to purchase shares in
accounts existing on that date.
FUND FACTS
GOAL: to provide high current
income by investing mainly in
mortgage securities issued by
the Government National
Mortgage Association (Ginnie
Mae)
FUND NUMBER: 461
TRADING SYMBOL: SGMNX
START DATE: December 27, 1990
SIZE: as of August 31, 1998,
more than $667 million
MANAGER: Curt Hollingsworth,
since 1997; manager, various
Fidelity and Spartan
government funds; joined
Fidelity in 1983

INVESTMENT CHANGES

COUPON DISTRIBUTION AS OF AUGUST 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS 6 MONTHS AGO

6 - 16.6 8.1
6.99%

7 - 47.9 44.3
7.99%

8 - 24.8 33.8
8.99%

9 - 5.4 5.9
9.99%

10 - 2.7 3.7
10.99%

11% AND 1.1 1.5
OVER

COUPON DISTRIBUTION SHOWS THE RANGE OF STATED INTEREST RATES ON THE
FUND'S INVESTMENTS, EXCLUDING SHORT-TERM INVESTMENTS.
AVERAGE YEARS TO MATURITY AS OF AUGUST 31, 1998
6 MONTHS AGO

YEARS 6.3 5.6

AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY
DOLLAR AMOUNT.
DURATION AS OF AUGUST 31, 1998
6 MONTHS AGO

YEARS 2.3 2.8

DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH
A FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER
FACTORS ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE.
ACCORDINGLY, A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS
EXAMPLE.
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF AUGUST 31, 1998 AS OF FEBRUARY 28, 1998
ROW: 1, COL: 1, VALUE: 1.8
ROW: 1, COL: 2, VALUE: 98.2
ROW: 1, COL: 1, VALUE: 3.0
ROW: 1, COL: 2, VALUE: 97.0
MORTGAGE-BACKED
SECURITIES* 98.5%
SHORT-TERM
INVESTMENTS 1.5%
GNMA SECURITIES 96.6%
MORTGAGE-BACKED
SECURITIES** 97.3%
SHORT-TERM
INVESTMENTS 2.7%
GNMA SECURITIES 94.8%
*
**
INVESTMENTS AUGUST 31, 1998

SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES

U.S. GOVERNMENT AGENCY - MORTGAGE-BACKED SECURITIES - 98.5%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
FANNIE MAE - 0.2%
7%, 9/1/28 (a) $ 121,000 $ 123,269
12 1/4%, 6/1/15 6,839 7,760
12 1/2%, 11/1/13 to 5/1/21 796,721 921,720
13 1/4%, 9/1/11 329,014 393,109
1,445,858
FREDDIE MAC - 1.7%
8 1/2%, 10/1/18 to 2/1/19 15,410 16,244
9%, 7/1/08 to 7/1/21 2,850,634 3,011,698
9 3/4%, 12/1/08 to 4/1/13 230,486 247,324
10%, 1/1/09 to 11/1/20 3,534,115 3,828,800
10 1/4%, 8/1/10 to 11/1/16 607,444 661,090
10 1/2%, 1/1/16 to 12/1/20 2,086,108 2,322,382
12%, 5/1/10 to 2/1/17 363,915 419,129
12 1/2%, 11/1/12 to 5/1/15 613,405 714,235
13%, 11/1/12 to 11/1/14 182,263 215,595
13 1/2%, 1/1/13 to 12/1/14 69,337 83,202
11,519,699
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 96.6%
6%, 4/15/24 to 9/15/28 12,088,931 11,965,462
6 1/2%, 10/15/08 to 9/15/28 99,584,419 100,392,209
7%, 12/15/07 to 9/15/28 170,385,695 173,928,782
7 1/2%, 2/15/07 to 7/15/28 145,491,510 149,896,070
8%, 6/15/04 to 12/15/27 134,627,238 139,686,349
8 1/2%, 7/15/06 to 2/15/23 26,596,490 28,241,653
9%, 2/15/06 to 11/15/24 8,010,379 8,579,267
9 1/2%, 5/15/02 to 1/15/23 22,761,705 24,567,694
10%, 9/15/15 to 2/15/25 8,073,045 8,871,300
10 1/2%, 9/15/00 to 10/15/18 2,587,738 2,865,981
11%, 1/15/10 to 7/15/20 2,266,417 2,549,598
11 1/2%, 10/15/10 to 12/15/15 1,500,418 1,694,942
12%, 12/15/12 to 1/15/15 265,545 304,957
13%, 9/15/13 to 1/15/15 301,859 355,164
653,899,428
TOTAL U.S. GOVERNMENT AGENCY -
MORTGAGE-BACKED SECURITIES
(Cost $657,079,908) 666,864,985
CASH EQUIVALENTS - 1.5%
MATURITY VALUE
AMOUNT (NOTE 1)
Investments in repurchase agreements
(U.S. Treasury Obligations) in a joint
trading account at 5.86% dated
8/31/98 due 9/1/98 $ 10,201,659 $ 10,200,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $667,279,908) $ 677,064,985
LEGEND
(a) Security purchased on a delayed delivery or when-issued basis (see
Note 2 of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $670,337,196. Net unrealized appreciation
aggregated $6,727,789, of which $7,456,044 related to appreciated
investment securities and $728,255 related to depreciated investment
securities.
At August 31, 1998, the fund had a capital loss carryforward of
approximately $10,006,000 of which $9,271,000 and $735,000 will expire
on August 31, 2003 and 2004, respectively.
FINANCIAL STATEMENTS

ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1998
INVESTMENT IN SECURITIES, AT VALUE (INCLUDING REPURCHASE $ 677,064,985
AGREEMENTS OF $10,200,000) (COST $667,279,908) - SEE
ACCOMPANYING SCHEDULE

CASH 384

RECEIVABLE FOR INVESTMENTS SOLD 2,787,568

RECEIVABLE FOR FUND SHARES SOLD 2,006,005

INTEREST RECEIVABLE 3,991,706

TOTAL ASSETS 685,850,648

LIABILITIES

PAYABLE FOR INVESTMENTS PURCHASED $ 15,209,460
REGULAR DELIVERY

DELAYED DELIVERY 123,159

PAYABLE FOR FUND SHARES REDEEMED 1,780,071

DISTRIBUTIONS PAYABLE 810,561

ACCRUED MANAGEMENT FEE 214,731

OTHER PAYABLES AND ACCRUED EXPENSES 8,468

TOTAL LIABILITIES 18,146,450

NET ASSETS $ 667,704,198

NET ASSETS CONSIST OF:

PAID IN CAPITAL $ 672,603,421

DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME (1,621,205)

ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) (13,063,095)
ON INVESTMENTS

NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 9,785,077

NET ASSETS, FOR 65,515,726 SHARES OUTSTANDING $ 667,704,198

NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE $10.19
PER SHARE ($667,704,198 (DIVIDED BY) 65,515,726 SHARES)

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31, 1998
INVESTMENT INCOME $ 44,586,107
INTEREST

EXPENSES

MANAGEMENT FEE $ 3,990,456

NON-INTERESTED TRUSTEES' COMPENSATION 5,490

TOTAL EXPENSES BEFORE REDUCTIONS 3,995,946

EXPENSE REDUCTIONS (1,666,744) 2,329,202

NET INVESTMENT INCOME 42,256,905

REALIZED AND UNREALIZED GAIN (LOSS) 6,735,854
NET REALIZED GAIN (LOSS) ON INVESTMENT SECURITIES

CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:

INVESTMENT SECURITIES (1,208,969)

DELAYED DELIVERY COMMITMENTS 9,516 (1,199,453)

NET GAIN (LOSS) 5,536,401

NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 47,793,306
FROM OPERATIONS

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
AUGUST 31, AUGUST 31,
1998 1997

INCREASE (DECREASE) IN NET ASSETS

OPERATIONS $ 42,256,905 $ 31,896,612
NET INVESTMENT INCOME

NET REALIZED GAIN (LOSS) 6,735,854 2,400,527

CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) (1,199,453) 9,964,708

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 47,793,306 44,261,847
FROM OPERATIONS

DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME (40,370,877) (31,450,669)

SHARE TRANSACTIONS 374,959,675 189,902,217
NET PROCEEDS FROM SALES OF SHARES

REINVESTMENT OF DISTRIBUTIONS 32,565,429 24,444,132

COST OF SHARES REDEEMED (280,798,602) (128,152,011)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 126,726,502 86,194,338
FROM SHARE TRANSACTIONS

TOTAL INCREASE (DECREASE) IN NET ASSETS 134,148,931 99,005,516

NET ASSETS

BEGINNING OF PERIOD 533,555,267 434,549,751

END OF PERIOD (INCLUDING DISTRIBUTIONS IN EXCESS OF $ 667,704,198 $ 533,555,267
NET INVESTMENT INCOME OF $1,621,205 AND
$2,245,026, RESPECTIVELY)

OTHER INFORMATION
SHARES

SOLD 36,895,821 19,021,848

ISSUED IN REINVESTMENT OF DISTRIBUTIONS 3,202,749 2,447,823

REDEEMED (27,638,095) (12,858,397)

NET INCREASE (DECREASE) 12,460,475 8,611,274

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED AUGUST 31,

1998 1997 1996 1995 1994
SELECTED PER-SHARE DATA

NET ASSET VALUE, BEGINNING $ 10.060 $ 9.780 $ 9.970 $ 9.640 $ 10.270
OF PERIOD

INCOME FROM INVESTMENT .698 C .687 C .639 .690 .332
OPERATIONS
NET INVESTMENT INCOME

NET REALIZED AND UNREALIZED .100 .271 (.181) .347 (.359)
GAIN (LOSS)

TOTAL FROM INVESTMENT .798 .958 .458 1.037 (.027)
OPERATIONS

LESS DISTRIBUTIONS

FROM NET INVESTMENT INCOME (.668) (.678) (.648) (.707) (.533)

FROM NET REALIZED GAIN - - - - -

IN EXCESS OF NET REALIZED GAIN - - - - (.070)

TOTAL DISTRIBUTIONS (.668) (.678) (.648) (.707) (.603)

NET ASSET VALUE, END OF PERIOD $ 10.190 $ 10.060 $ 9.780 $ 9.970 $ 9.640

TOTAL RETURN A, B 8.16% 10.07% 4.67% 11.28% (.25)%

RATIOS AND SUPPLEMENTAL DATA

NET ASSETS, END OF PERIOD $ 667,704 $ 533,555 $ 434,550 $ 419,637 $ 401,018
(000 OMITTED)

RATIO OF EXPENSES TO AVERAGE .38% D .51% D .63% D .65% .65%
NET ASSETS

RATIO OF EXPENSES TO AVERAGE .38% .51% .62% E .65% .65%
NET ASSETS AFTER EXPENSE
REDUCTIONS

RATIO OF NET INVESTMENT INCOME TO 6.88% 6.91% 6.77% 7.30% 7.36%
AVERAGE NET ASSETS

PORTFOLIO TURNOVER RATE 148% 104% 115% 229% 285%

</TABLE>

H THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
I TOTAL RETURNS DO NOT INCLUDE THE FORMER ACCOUNT CLOSEOUT FEE.
J NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
K 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 (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
L FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
NOTES TO FINANCIAL STATEMENTS
For the period ended August 31, 1998

1. SIGNIFICANT ACCOUNTING POLICIES.
Spartan Ginnie Mae Fund (the fund) is a fund of Fidelity Union Street
Trust (the trust) and is authorized to issue an unlimited number of
shares. The trust is registered under the Investment Company Act of
1940, as amended (the 1940 Act), as an open-end management investment
company organized as a Massachusetts business trust. The financial
statements have been prepared in conformity with generally accepted
accounting principles which require management to make certain
estimates and assumptions at the date of the financial statements. The
following summarizes the significant accounting policies of the fund:
SECURITY VALUATION. Securities are valued based upon a computerized
matrix system and/or appraisals by a pricing service, both of which
consider market transactions and dealer-supplied valuations.
Securities for which market quotations are not readily available are
valued at their fair value as determined in good faith under
consistently applied procedures under the general supervision of the
Board of Trustees. Short-term securities with remaining maturities of
sixty days or less for which quotations are not readily available are
valued at amortized cost or original cost plus accrued interest, both
of which approximate current value.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
INVESTMENT INCOME. Interest income, which includes accretion of
original issue discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and
paid monthly from net investment income. Distributions from realized
gains, if any, are recorded on the ex-dividend date.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for paydown gains/losses on certain securities, capital
loss carryforwards and losses deferred due to wash sales.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Distributions in excess of net investment income and accumulated
undistributed net realized gain (loss) on investments may include
temporary book and tax basis differences that will reverse in a
subsequent period. Any taxable income or gain remaining at fiscal year
end is distributed in the following year.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other
affiliated entities of Fidelity Management & Research Company (FMR),
may transfer uninvested cash balances into one or more joint trading
accounts. These balances are invested in one or more repurchase
agreements for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
DELAYED DELIVERY TRANSACTIONS. The fund may purchase or sell
securities on a delayed delivery basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of
the underlying securities and the date when the securities will be
delivered and paid for are fixed at the time the transaction is
negotiated. The market values of the securities purchased or sold on a
delayed delivery basis are identified as such in the fund's schedule
of investments. The fund may receive compensation for interest forgone
in the purchase of a delayed delivery security. With respect to
purchase commitments, the fund identifies securities as segregated in
its custodial records with a value at least equal to the amount of the
commitment. Losses may arise due to changes in the market value of the
underlying securities or if the counterparty does not perform under
the contract.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of long-term U.S. government and government agency
obligations aggregated $1,017,753,365 and $891,158,033, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR pays all
expenses, except the compensation of the non-interested Trustees and
certain exceptions such as interest, taxes, brokerage commissions and
extraordinary expenses. FMR receives a fee that is computed daily at
an annual rate of .65% of the fund's average net assets.
FMR also bears the cost of providing shareholder services to the fund.
To offset the cost of providing these
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES -
CONTINUED
MANAGEMENT FEE - CONTINUED
services, FMR or its affiliates collected certain transaction fees
from the fund's shareholders which amounted to $7,438 for the period.
Effective June 27, 1998 these transaction fees were eliminated.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse the fund's operating expenses
(excluding interest, taxes, brokerage commissions and extraordinary
expenses) above an annual rate of .38% of average net assets. This
agreement will continue until December 31, 1998. For the period, the
reimbursement reduced the expenses by $1,658,491.
In addition, 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 were used to reduce a portion
of the fund's expenses. During the period, the fund's expenses were
reduced by $8,253 under these arrangements.
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Fidelity Union Street Trust and the Shareholders of
Spartan Ginnie Mae Fund:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Spartan Ginnie Mae Fund (a fund of Fidelity Union Street Trust) at
August 31, 1998, the results of its operations, the changes in its net
assets and the financial highlights for the periods indicated, in
conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to
as "financial statements") are the responsibility of the Spartan
Ginnie Mae Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with
generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe
that our audits, which included
confirmation of securities at August 31, 1998 by correspondence with
the custodian and brokers, provide a reasonable basis for the opinion
expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
October 7, 1998
MANAGING YOUR INVESTMENTS

2 For quotes.*

3 For account balances and holdings.

4 To review orders and mutual
fund activity.

5 To change your PIN.

*0 To speak to a Fidelity representative.

INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Fred L. Henning, Jr., Vice President
Dwight D. Churchill, Vice President
Curt Hollingsworth, Vice President
Stanley N. Griffith, Assistant Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Thomas J. Simpson, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
* INDEPENDENT TRUSTEES
CUSTODIAN
The Bank of New York
New York, NY
FIDELITY'S TAXABLE BOND FUNDS
Capital & Income
Ginnie Mae
Government Income
High Income
Intermediate Bond
Intermediate Government Income
International Bond
Investment Grade Bond
New Markets Income
Short-Intermediate Government
Short-Term Bond
Spartan(registered trademark) Ginnie Mae
Spartan Government Income
Spartan Investment Grade Bond
Spartan Short-Intermediate
Government
Spartan Short-Term Bond
Strategic Income
Target Timeline 1999, 2001 & 2003
SM
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
(registered trademark)
TouchTone Xpress(registered trademark) 1-800-544-5555
AUTOMATED LINE FOR QUICKEST SERVICE

(2_FIDELITY_LOGOS)SPARTAN(REGISTERED TRADEMARK)

GINNIE MAE
FUND
ANNUAL REPORT
AUGUST 31, 1998
CONTENTS

PRESIDENT'S MESSAGE 3 NED JOHNSON ON INVESTING STRATEGIES.

PERFORMANCE 4 HOW THE FUND HAS DONE OVER TIME.

FUND TALK 7 THE MANAGER'S REVIEW OF FUND
PERFORMANCE, STRATEGY AND OUTLOOK.

INVESTMENT CHANGES 10 A SUMMARY OF MAJOR SHIFTS IN THE FUND'S
INVESTMENTS OVER THE PAST SIX MONTHS.

INVESTMENTS 11 A COMPLETE LIST OF THE FUND'S INVESTMENTS
WITH THEIR MARKET VALUES.

FINANCIAL STATEMENTS 13 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.

NOTES 17 NOTES TO THE FINANCIAL STATEMENTS.

REPORT OF INDEPENDENT 20 THE AUDITORS' OPINION.
ACCOUNTANTS

SPARTAN GINNIE MAE 8.16% 38.32% 77.44%

LB GNMA 8.54% 41.04% N/A

SB GNMA 8.42% 40.70% N/A

GNMA FUNDS AVERAGE 8.34% 35.06% N/A

SPARTAN GINNIE MAE 8.16% 6.70% 7.75%

LB GNMA 8.54% 7.12% N/A

SB GNMA 8.42% 7.07% N/A

GNMA FUNDS AVERAGE 8.34% 6.19% N/A

1998 1997 1996 1995 1994

DIVIDEND RETURNS 6.87% 7.21% 6.58% 7.86% 5.23%

CAPITAL RETURNS 1.29% 2.86% -1.91% 3.42% -5.48%

TOTAL RETURNS 8.16% 10.07% 4.67% 11.28% -0.25%

DIVIDENDS PER SHARE 5.34(CENTS) 32.84(CENTS) 66.85(CENTS)

ANNUALIZED DIVIDEND RATE 6.18% 6.41% 6.58%

30-DAY ANNUALIZED YIELD 6.48% - -

MARKET RECAP
The U.S. Treasury market rallied
to record levels over the past year
as investors abandoned stocks for
the safe haven of Treasuries. The
Lehman Brothers Aggregate Bond
Index - a broad gauge of the
U.S. taxable bond market -
returned 10.57% during the
12-month period that ended
August 31, 1998. In the fourth
quarter of 1997 and the first half of
1998, global market volatility and
low interest rates were the main
stories. At the end of the period, a
free fall in stock prices, which sent
the Dow Jones Industrial Average
down 15% in August alone,
provided even further strength to
bond prices. As investors
continued to move assets from
stocks and riskier bonds to
Treasuries, yields on long-term
Treasury bonds, which move in
the opposite direction of their price,
fell to the lowest level since October
1968. Corporate bond investors
benefited from domestic
economic stability and high demand
during most of the past 12
months. Similar to U.S. Treasuries,
highly rated corporate debt
received further support toward
the end of the period, as investors
left the turbulent equity markets for
bonds. The Lehman Brothers
Corporate Bond Index returned
9.47% for the past 12 months.
Even with significant prepayment
activity in recent months due to
low interest rates,
mortgage-backed securities
performed relatively well. The
Lehman Brothers
Mortgage-Backed Securities
Index returned 8.69% for the past
year.
An interview with Curt Hollingsworth, Portfolio Manager of Spartan
Ginnie Mae Fund
Q. HOW DID THE FUND PERFORM, CURT?
A. For the 12-month period that ended August 31, 1998, the fund had a
total return of 8.16%. To get a sense of how the fund did relative to
its competitors, the GNMA funds average returned 8.34% for the same
one-year period, according to Lipper Analytical Services.
Additionally, the Lehman Brothers GNMA Index - which tracks the types
of securities in which the fund invests - also returned 8.54%.
Q. WHAT FACTORS INFLUENCED THE PERFORMANCE OF GINNIE MAE SECURITIES
OVER THE PAST YEAR?
A. Ginnie Maes performed fairly well in the first half of the period,
thanks in large part to the fact that they offered attractive yields
relative to U.S. Treasuries. But over recent months, interest rates
fell substantially, prompting home sales and mortgage refinancing to
increase to near-record rates. Those transactions, in turn, set off a
significant rise in the prepayment of mortgage-backed securities. As
prepayment activity accelerated, mortgage security prices came under
pressure. While refinancings often put money in consumers' pockets,
they take steady long-term streams of payments away from holders of
mortgage-backed securities. When refinancings step up, many mortgage
security holders must find a new place to put their money - usually at
lower interest rates.
Q. WHICH HOLDINGS CONTRIBUTED TO THE FUND'S PERFORMANCE?
A. The fund's holdings in securities containing loans that originated
between five and 10 years ago was relatively light throughout the
year, a strategy that proved beneficial for the fund. Those securities
were less immune to prepayment activity than observers once believed.
On the other hand, the fund's stake in loans that originated in early
1998 with coupons - the interest rate the borrower promises to pay -
of between 7.5% and 8.0% was relatively heavy. In large part because
of the newness of the underlying mortgages and the very slight risk
that the mortgage holders would turn around and refinance just months
after taking out the loan, these securities offered relatively good
protection against prepayment and were bid up as a result.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. I wouldn't point to a specific security that was a disappointment
or that meaningfully detracted from the fund's performance. However,
I'd point to the ever-decreasing number of opportunities to find
securities that offered good protection against prepayment, at a
reasonable price. In previous years there were occasions when a
particular security became cheap, but that hasn't been the case for
some time.
Q. WHAT WERE THE OTHER KEY ELEMENTS TO YOUR STRATEGY?
A. I kept the fund's duration - or interest-rate sensitivity -
neutral. By that I mean I didn't structure the fund to benefit from
interest rates moving higher or lower. Because it is extremely
difficult to predict the direction of interest rates with any regular
success over an extended time period, I keep duration in line with the
market rather than making it more or less sensitive based on where I
think interest rates are headed. Additionally, by keeping the fund's
investments evenly spread across the various coupons available in the
mortgage market, I have attempted to position the fund to perform well
whether interest rates rise, fall or remain stable.
Q. THE FUND USES A STRATEGY KNOWN AS A "DOLLAR ROLL." CAN YOU EXPLAIN
THIS STRATEGY?
A. Sure. A dollar roll essentially describes a strategy whereby I sell
a security that the fund owns, with settlement of that sale to occur
in the current month. At the same time, I buy a similar security at a
lower price, with settlement of that purchase to occur in the
following month. By conducting these two simultaneous trades, I
attempt to add to the fund's total return.
Q. WHAT'S YOUR OUTLOOK FOR THE GINNIE MAE MARKET?
A. I believe that prepayments will continue at a fairly quick pace
until interest rates stabilize or move higher. As is generally the
case, the direction of interest rates will be the main factor that
determines the performance of mortgage securities. But since I'm not
in the business of forecasting interest rates, I won't try to predict
where rates will end up six months or a year from today. I'll continue
to focus on finding securities that I believe will offer the best
total-return potential, whether interest rates are heading higher,
lower or remain the same.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.

COUPON DISTRIBUTION AS OF AUGUST 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS 6 MONTHS AGO

6 - 16.6 8.1
6.99%

7 - 47.9 44.3
7.99%

8 - 24.8 33.8
8.99%

9 - 5.4 5.9
9.99%

10 - 2.7 3.7
10.99%

11% AND 1.1 1.5
OVER

COUPON DISTRIBUTION SHOWS THE RANGE OF STATED INTEREST RATES ON THE
FUND'S INVESTMENTS, EXCLUDING SHORT-TERM INVESTMENTS.
AVERAGE YEARS TO MATURITY AS OF AUGUST 31, 1998
6 MONTHS AGO

YEARS 6.3 5.6

AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY
DOLLAR AMOUNT.
DURATION AS OF AUGUST 31, 1998
6 MONTHS AGO

YEARS 2.3 2.8

SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES

<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1998

ASSETS
INVESTMENT IN SECURITIES, AT VALUE (INCLUDING REPURCHASE $ 677,064,985
AGREEMENTS OF $10,200,000) (COST $667,279,908) - SEE
ACCOMPANYING SCHEDULE

CASH 384

RECEIVABLE FOR INVESTMENTS SOLD 2,787,568

RECEIVABLE FOR FUND SHARES SOLD 2,006,005

INTEREST RECEIVABLE 3,991,706

TOTAL ASSETS 685,850,648

LIABILITIES

PAYABLE FOR INVESTMENTS PURCHASED $ 15,209,460
REGULAR DELIVERY

DELAYED DELIVERY 123,159

PAYABLE FOR FUND SHARES REDEEMED 1,780,071

DISTRIBUTIONS PAYABLE 810,561

ACCRUED MANAGEMENT FEE 214,731

OTHER PAYABLES AND ACCRUED EXPENSES 8,468

TOTAL LIABILITIES 18,146,450

NET ASSETS $ 667,704,198

NET ASSETS CONSIST OF:

PAID IN CAPITAL $ 672,603,421

DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME (1,621,205)

ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) (13,063,095)
ON INVESTMENTS

NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 9,785,077

NET ASSETS, FOR 65,515,726 SHARES OUTSTANDING $ 667,704,198

NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE $10.19
PER SHARE ($667,704,198 (DIVIDED BY) 65,515,726 SHARES)

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31, 1998

INVESTMENT INCOME $ 44,586,107
INTEREST

EXPENSES

MANAGEMENT FEE $ 3,990,456

NON-INTERESTED TRUSTEES' COMPENSATION 5,490

TOTAL EXPENSES BEFORE REDUCTIONS 3,995,946

EXPENSE REDUCTIONS (1,666,744) 2,329,202

NET INVESTMENT INCOME 42,256,905

REALIZED AND UNREALIZED GAIN (LOSS) 6,735,854
NET REALIZED GAIN (LOSS) ON INVESTMENT SECURITIES

CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:

INVESTMENT SECURITIES (1,208,969)

DELAYED DELIVERY COMMITMENTS 9,516 (1,199,453)

NET GAIN (LOSS) 5,536,401

NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 47,793,306
FROM OPERATIONS

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
AUGUST 31, AUGUST 31,
1998 1997

INCREASE (DECREASE) IN NET ASSETS

OPERATIONS $ 42,256,905 $ 31,896,612
NET INVESTMENT INCOME

NET REALIZED GAIN (LOSS) 6,735,854 2,400,527

CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) (1,199,453) 9,964,708

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 47,793,306 44,261,847
FROM OPERATIONS

DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME (40,370,877) (31,450,669)

SHARE TRANSACTIONS 374,959,675 189,902,217
NET PROCEEDS FROM SALES OF SHARES

REINVESTMENT OF DISTRIBUTIONS 32,565,429 24,444,132

COST OF SHARES REDEEMED (280,798,602) (128,152,011)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 126,726,502 86,194,338
FROM SHARE TRANSACTIONS

TOTAL INCREASE (DECREASE) IN NET ASSETS 134,148,931 99,005,516

NET ASSETS

BEGINNING OF PERIOD 533,555,267 434,549,751

END OF PERIOD (INCLUDING DISTRIBUTIONS IN EXCESS OF $ 667,704,198 $ 533,555,267
NET INVESTMENT INCOME OF $1,621,205 AND
$2,245,026, RESPECTIVELY)

OTHER INFORMATION
SHARES

SOLD 36,895,821 19,021,848

ISSUED IN REINVESTMENT OF DISTRIBUTIONS 3,202,749 2,447,823

REDEEMED (27,638,095) (12,858,397)

NET INCREASE (DECREASE) 12,460,475 8,611,274

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED AUGUST 31,

1998 1997 1996 1995 1994
SELECTED PER-SHARE DATA

NET ASSET VALUE, BEGINNING $ 10.060 $ 9.780 $ 9.970 $ 9.640 $ 10.270
OF PERIOD

INCOME FROM INVESTMENT .698 C .687 C .639 .690 .332
OPERATIONS
NET INVESTMENT INCOME

NET REALIZED AND UNREALIZED .100 .271 (.181) .347 (.359)
GAIN (LOSS)

TOTAL FROM INVESTMENT .798 .958 .458 1.037 (.027)
OPERATIONS

LESS DISTRIBUTIONS

FROM NET INVESTMENT INCOME (.668) (.678) (.648) (.707) (.533)

FROM NET REALIZED GAIN - - - - -

IN EXCESS OF NET REALIZED GAIN - - - - (.070)

TOTAL DISTRIBUTIONS (.668) (.678) (.648) (.707) (.603)

NET ASSET VALUE, END OF PERIOD $ 10.190 $ 10.060 $ 9.780 $ 9.970 $ 9.640

TOTAL RETURN A, B 8.16% 10.07% 4.67% 11.28% (.25)%

RATIOS AND SUPPLEMENTAL DATA

NET ASSETS, END OF PERIOD $ 667,704 $ 533,555 $ 434,550 $ 419,637 $ 401,018
(000 OMITTED)

RATIO OF EXPENSES TO AVERAGE .38% D .51% D .63% D .65% .65%
NET ASSETS

RATIO OF EXPENSES TO AVERAGE .38% .51% .62% E .65% .65%
NET ASSETS AFTER EXPENSE
REDUCTIONS

RATIO OF NET INVESTMENT INCOME TO 6.88% 6.91% 6.77% 7.30% 7.36%
AVERAGE NET ASSETS

PORTFOLIO TURNOVER RATE 148% 104% 115% 229% 285%

</TABLE>

A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
B TOTAL RETURNS DO NOT INCLUDE THE FORMER ACCOUNT CLOSEOUT FEE.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D 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 (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
NOTES TO FINANCIAL STATEMENTS
For the period ended August 31, 1998

2 For quotes.*

3 For account balances and holdings.

4 To review orders and mutual
fund activity.

5 To change your PIN.

*0 To speak to a Fidelity representative.

SPARTAN(registered trademark)

(REGISTERED TRADEMARK)

MARYLAND
MUNICIPAL INCOME
FUND
ANNUAL REPORT
AUGUST 31, 1998
CONTENTS

PRESIDENT'S MESSAGE 3 NED JOHNSON ON INVESTING STRATEGIES.

PERFORMANCE 4 HOW THE FUND HAS DONE OVER TIME.

FUND TALK 7 THE MANAGER'S REVIEW OF FUND
PERFORMANCE, STRATEGY AND OUTLOOK.

INVESTMENT CHANGES 10 A SUMMARY OF MAJOR SHIFTS IN THE FUND'S
INVESTMENTS OVER THE PAST SIX MONTHS.

INVESTMENTS 11 A COMPLETE LIST OF THE FUND'S INVESTMENTS
WITH THEIR MARKET VALUES.

FINANCIAL STATEMENTS 15 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.

NOTES 19 NOTES TO THE FINANCIAL STATEMENTS.

REPORT OF INDEPENDENT 22 THE AUDITORS' OPINION.
ACCOUNTANTS

DISTRIBUTIONS 23

THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT
AUTHORIZED FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
THE
FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND
EXPENSES, CALL 1-800-544-8888
FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND
MONEY.
To reduce expenses and demonstrate respect for our environment, we
have initiated a project through which we will begin eliminating
duplicate copies of most financial reports and prospectuses to most
households, even if they have more than one account in the fund. If
additional copies of financial reports, prospectuses or historical
account information are needed, please call 1-800-544-6666.
PRESIDENT'S MESSAGE

There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). You can also look at the fund's income, as
reflected in the fund's yield, to measure performance. If Fidelity had
not reimbursed certain fund expenses, the past five years and life of
fund total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1998 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND

SPARTAN MD MUNICIPAL INCOME 8.43% 31.31% 38.52%

LB MARYLAND 4 PLUS YEAR MUNICIPAL BOND 8.40% 35.57% N/A

MARYLAND MUNICIPAL DEBT FUNDS 7.78% 29.57% N/A

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or since
the fund started on April 22, 1993. For example, if you had invested
$1,000 in a fund that had a 5% return over the past year, the value of
your investment would be $1,050. You can compare the fund's returns to
the performance of the Lehman Brothers Maryland 4 Plus Year Municipal
Bond Index - a total return performance benchmark for Maryland
investment-grade municipal bonds with maturities of at least four
years. To measure how the fund's performance stacked up against its
peers, you can compare it to the Maryland municipal debt funds
average, which reflects the performance of mutual funds with similar
objectives tracked by Lipper Analytical Services, Inc. The past one
year average represents a peer group of 38 mutual funds. These
benchmarks include reinvested dividends and capital gains, if any, and
exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1998 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND

SPARTAN MD MUNICIPAL INCOME 8.43% 5.60% 6.26%

LB MARYLAND 4 PLUS YEAR MUNICIPAL BOND 8.40% 6.28% N/A

MARYLAND MUNICIPAL DEBT FUNDS 7.78% 5.31% N/A

UNDERSTANDING
PERFORMANCE
HOW A FUND DID YESTERDAY IS
NO GUARANTEE OF HOW IT WILL
DO TOMORROW. BOND PRICES, FOR
EXAMPLE, GENERALLY MOVE IN
THE OPPOSITE DIRECTION OF
INTEREST RATES. IN TURN, THE SHARE
PRICE, RETURN AND YIELD OF A
FUND THAT INVESTS IN BONDS WILL
VARY. THAT MEANS IF YOU SELL
YOUR SHARES DURING A MARKET
DOWNTURN, YOU MIGHT LOSE
MONEY. BUT IF YOU CAN RIDE OUT
THE MARKET'S UPS AND DOWNS,
YOU MAY HAVE A GAIN.
(CHECKMARK)
TOTAL RETURN COMPONENTS
YEARS ENDED AUGUST 31,

1998 1997 1996 1995 1994

DIVIDEND RETURNS 4.69% 4.89% 5.02% 6.00% 5.22%

CAPITAL RETURNS 3.74% 3.28% 0.10% 2.07% -6.68%

TOTAL RETURNS 8.43% 8.17% 5.12% 8.07% -1.46%

TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
fund. A capital return reflects both the amount paid by the fund to
shareholders as capital gain distributions and changes in the fund's
share price. Both returns assume the dividends or capital gains, if
any, paid by the fund are reinvested.
DIVIDENDS AND YIELD

<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED AUGUST 31, 1998 PAST 1 PAST 6 PAST 1
MONTH MONTHS YEAR

DIVIDENDS PER SHARE 3.86(CENTS) 23.29(CENTS) 46.14(CENTS)

ANNUALIZED DIVIDEND RATE 4.34% 4.44% 4.44%

30-DAY ANNUALIZED YIELD 3.96% - -

30-DAY ANNUALIZED TAX-EQUIVALENT YIELD 6.71% - -

</TABLE>

DIVIDENDS per share show the income paid by the fund for a set period
and do not reflect any tax reclassifications. If you annualize this
number, based on an average share price of $10.47 over the past one
month, $10.41 over the past six months and $10.39 over the past one
year, you can compare the fund's income over these three periods. The
30-day annualized YIELD is a standard formula for all funds based on
the yields of the bonds in the fund, averaged over the past 30 days.
This figure shows you the yield characteristics of the fund's
investments at the end of the period. It also helps you compare funds
from different companies on an equal basis. The tax-equivalent yield
shows what you would have to earn on a taxable investment to equal the
fund's tax-free yield, if you're in the 40.99% combined effective 1998
federal and state income tax bracket, but does not reflect the payment
of the alternative minimum tax, if applicable.
FUND TALK: THE MANAGER'S OVERVIEW

MARKET RECAP
A glut of new municipal bond
issuance - combined with
slackened demand and strong U.S
Treasury bond performance -
caused the municipal bond market
to underperform its taxable
counterparts during the 12-month
period that ended August 31, 1998.
In this time, the Lehman Brothers
Municipal Bond Index - a measure
of muni bond performance -
returned 8.65%. In contrast, the
Lehman Brothers Aggregate Bond
Index - which gauges the
performance of the taxable bond
market - returned 10.57%. Things
were looking up for fixed-income
markets at the beginning of the
period, with positive U.S. economic
news and the Federal Reserve
Board's reluctance to raise interest
rates playing key roles. The tides
shifted, however, in the later stages of
1997 when new-issue supply began to
eclipse demand and muni bond
performance suffered. The fourth
quarter of 1997 was punctuated by
extreme volatility in Asian markets,
and concerned investors began to
consider fixed-income investments
as a more stable alternative. This
helped municipal bond
performance slightly, but a deluge of
new issuance in early 1998 -
prompted primarily by low interest
rates - took away some steam. As
the period progressed, issuers
showed no signs of letting up. In
May, for example, the largest single
deal in municipal bond history took
place - a $3.5 billion deal floated by
the Long Island Power Authority.
This supply/demand imbalance
continued to play out through the
end of August.
An interview with George Fischer, Portfolio Manager of Spartan
Maryland Municipal Income Fund
Q. HOW DID THE FUND PERFORM, GEORGE?
A. For the 12-month period that ended August 31, 1998, the fund had a
total return of 8.43%. To get a sense of how the fund did relative to
its competitors, the Maryland municipal debt funds average returned
7.78% for the same one-year period, according to Lipper Analytical
Services. Additionally, the Lehman Brothers Maryland 4 Plus Year
Municipal Bond Index - which tracks the types of securities in which
the fund invests - returned 8.40% for the same 12-month period.
Q. WHAT ROLE DOES THE LEHMAN BROTHERS MARYLAND 4 PLUS YEAR MUNICIPAL
BOND INDEX PLAY IN MANAGING THE FUND?
A. It plays a very important role. It's the fund's benchmark index and
includes most of the universe of Maryland municipal bonds with
maturities of four years or more. I use the the index as a starting
point for my investment decisions, managing the fund to be generally
as sensitive to changes in interest rates as the index. In addition, I
refer to the index when deciding how to allocate assets among
different maturities and sectors - such as general obligation, housing
and others - based on my view of the relative value of each maturity
or sector.
Q. WHAT FACTORS HELPED THE FUND OUTPACE ITS PEERS?
A. One factor was its relatively large stake in intermediate-term
bonds with maturities of between 10 and 15 years, which performed well
during the period. I emphasized those bonds because I felt they
offered the best combination of reward - or income - for the risk. For
bonds with maturities of up to about 15 years, investors were paid an
appropriate amount of added income for each additional year of
maturity. But for bonds with maturities of 15 years or longer, the
extra income for each successive year was, in my opinion, less
attractive given the level of risk inherent in longer-term bonds. The
longer a bond's maturity, the higher its interest-rate risk - that is,
the more its price will rise when interest rates fall and vice versa.
Throughout the period, I also kept the fund's duration - which
measures its sensitivity to changing interest rates - in line with the
municipal bond market as a whole, as represented by the Lehman
Brothers Maryland 4 Plus Year Municipal Bond Index.
Q. WERE THERE ANY DISAPPOINTMENTS OVER THE PAST 12 MONTHS?
A. Housing bonds turned in lackluster performance for the year.
Because mortgage holders became more likely to prepay their mortgages
as interest rates fell to a 30-year low of 5.25%, bond holders were
faced with the possibility of reinvesting the proceeds at lower
interest rates.
Q. WHY DID THE FUND MAINTAIN SUCH A HIGH OVERALL CREDIT QUALITY, WITH
MORE THAN 93% OF ITS INVESTMENTS IN BONDS RATED AAA, AA AND A AT THE
END OF THE PERIOD?
A. There were two main reasons. First, the vast majority of
Maryland's municipal bond issuers carry a relatively high credit
rating. That means there were only a few low-investment-grade
Baa-rated issuers to choose from, and what was available tended to be
very expensive. In addition, I didn't think that Baa-rated bonds
offered enough incremental yield to compensate for their added risk.
Of course, an issuer's credit rating reflects an assessment of its
ability to make interest and principal payments on its debt; the lower
the rating, the riskier the issuer. Over the past year or so,
Baa-rated bonds offered only a slight amount of additional yield over
Aaa-rated bonds. That narrow "spread" was particularly small from a
historical viewpoint.
Q. WHAT'S YOUR OUTLOOK FOR THE MUNICIPAL MARKET?
A. As a result of economic turmoil overseas, U.S. Treasuries -
considered a safe haven against global uncertainty - rallied
substantially and far outpaced the performance of municipals. The net
result is that municipals are as cheap - relative to Treasuries - as
they have been in nearly a decade. For example, the yield on a
high-quality, long-term Maryland municipal bond was about 90% of the
yield of a U.S. Treasury bond. From a historical standpoint,
municipals typically yield about 80% of Treasuries. Since bond yields
and bond prices move in the opposite direction, municipals should gain
ground on their Treasury counterparts if their yields start to fall
back in line with their historical norm.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.

GEORGE FISCHER ON
MARYLAND'S ECONOMY:
"Over much of the past decade,
Maryland's economy has lagged
the U.S. economy - primarily
due to its exposure to defense and
federal government employment.
However, the state has gained
ground on the nation as a whole
over the past year as Federal
government employment cutbacks
slowed. At the end of the period
the state's jobless rate stood at
its lowest rate this decade.
"While government and defense
cutbacks continue, they are getting
smaller. In another positive
development, Maryland has
become a major center for medical
and biomedical research, and is
increasingly recognized as a leader
in gene research. These industries
could be among the state's best
hopes for continued growth."
(solid bullet) General obligation bonds
(GOs) made up the fund's largest
sector concentration at 38.6% of
investments at the end of the period.
A GO is backed by the full faith and
credit - which includes the taxing
power - of a city, county, state
or other issuer, and is paid with
general revenue including taxes.
FUND FACTS
GOAL: high current tax-free
income for Maryland residents
FUND NUMBER: 429
TRADING SYMBOL: SMDMX
START DATE: April 22, 1993
SIZE: as of August 31, 1998,
more than $43 million
MANAGER: George Fischer,
since January 1998; manager,
various Fidelity and Spartan
municipal income funds;
joined Fidelity in 1989
(checkmark)
INVESTMENT CHANGES

TOP FIVE SECTORS AS OF AUGUST 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE SECTORS
6 MONTHS AGO

GENERAL OBLIGATION 38.6 38.0

SPECIAL TAX 12.4 10.9

ESCROWED/PRE-REFUNDED 10.8 6.1

HOUSING 9.7 7.4

HEALTH CARE 7.7 11.7

AVERAGE YEARS TO MATURITY AS OF AUGUST 31, 1998
6 MONTHS AGO

YEARS 10.8 11.1

AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY
DOLLAR AMOUNT.
DURATION AS OF AUGUST 31, 1998
6 MONTHS AGO

YEARS 6.4 6.5

DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH
A FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER
FACTORS ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE.
ACCORDINGLY, A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS
EXAMPLE.
QUALITY DIVERSIFICATION (MOODY'S RATINGS)
AS OF AUGUST 31, 1998 AS OF FEBRUARY 28, 1998
AAA 52.3%
AA, A 40.9%
BAA 2.5%
SHORT-TERM
INVESTMENTS 4.3%
AAA 48.0%
AA, A 43.2%
BAA 2.4%
SHORT-TERM
INVESTMENTS 6.4%
ROW: 1, COL: 1, VALUE: 52.3
ROW: 1, COL: 2, VALUE: 40.9
ROW: 1, COL: 3, VALUE: 2.5
ROW: 1, COL: 4, VALUE: 4.3
ROW: 1, COL: 1, VALUE: 48.0
ROW: 1, COL: 2, VALUE: 43.2
ROW: 1, COL: 3, VALUE: 2.4
ROW: 1, COL: 4, VALUE: 6.4
WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P RATINGS.
AMOUNTS SHOWN ARE AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
INVESTMENTS AUGUST 31, 1998

SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES

MUNICIPAL BONDS - 95.7%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (A) AMOUNT (NOTE 1)
MARYLAND - 94.3%
Anne Arundel County Consolidated
Wtr. & Swr. 7% 8/1/04 Aa2 $ 550,000 $ 634,132
Baltimore Consolidated Pub. Impt. Series A:
Rfdg. (Cap. Appreciation)
0% 10/15/06 (FGIC Insured) Aaa 2,000,000 1,397,120
7% 10/15/09 (MBIA Insured) Aaa 500,000 618,150
Baltimore County Gen. Oblig. Rfdg.
(Pension Funding) 4.35% 8/1/01 Aaa 485,000 493,745
Baltimore County Metropolitan Dist.:
63rd Issue, 6.125% 7/1/07
(Pre-Refunded to 7/1/02 @ 102) (e) Aaa 850,000 930,614
65th Series, 6% 6/1/05 Aaa 1,000,000 1,118,390
Baltimore Port. Facs. Rev. (Consolidated Coal
Sales Co. - duPont (EI) de Nemours & Co.)
6.50% 12/1/10 Aa3 2,000,000 2,205,360
Baltimore Rev. Rfdg. (Wtr. Proj.)
Series A, 5% 7/1/24 (FGIC Insured) Aaa 1,100,000 1,099,186
Calvert County Gen. Oblig. 5.20% 1/1/04 Aa 1,200,000 1,266,324
Frederick County Pub. Facs. Unltd. Tax
Rev. Rfdg. 5.75% 7/1/16 Aa2 1,000,000 1,049,060
Hartford County Consolidated Pub. Impt.
Unltd. Tax Rfdg. 4.90% 12/1/11 Aa2 1,000,000 1,018,840
Howard County Metropolitan Dist.
Rfdg. Series B, 6% 8/15/03 Aaa 1,000,000 1,095,260
Maryland Commty. Dev. Admin. Dept. of Hsg. &
Commty. Dev. Rev.:
(Residential) Rfdg. Series B,
5.05% 9/1/19 (d) Aa2 1,000,000 1,023,730
(Single Family Hsg. Prog.)
7th Series, 7.25% 4/1/19 (d) Aa 500,000 545,880
Maryland Gen. Oblig. State &
Local Facs. Loan Unltd. Tax:
1st Series:
4.50% 3/1/01 Aaa 615,000 626,470
5.50% 2/1/06 Aaa 1,000,000 1,063,880
2nd Series:
5% 8/1/11 Aaa 1,000,000 1,037,530
5.25% 7/15/12 Aaa 1,000,000 1,055,550
Maryland Health & Higher Edl. Facs. Auth. Rev.:
Rfdg.:
(Good Samaritan Hosp.) 5.70% 7/1/09
(AMBAC Insured) (Escrowed to Maturity) (e) A1 1,000,000 1,110,960
(Helix Health Issue) 5% 7/1/17
(AMBAC Insured) Aaa 1,000,000 1,005,340
(Howard County Gen. Hosp.) 5.50% 7/1/13
(Escrowed to Maturity) (e) Baa1 1,000,000 1,075,860
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (A) AMOUNT (NOTE 1)
MARYLAND - CONTINUED
Maryland Health & Higher Edl. Facs. Auth. Rev.: - continued
Rfdg.:
(Johns Hopkins Univ.) 6% 7/1/10 Aa2 $ 500,000 $ 567,050
(Good Samaritan Hosp.):
5.75% 7/1/13 (AMBAC Insured)
(Escrowed to Maturity) (e) A1 240,000 262,762
5.75% 7/1/13 (AMBAC Insured) Aaa 145,000 162,755
(Hosp. Charity Oblig. Group)
Series D, 4.60% 11/1/03 Aa2 1,000,000 1,020,350
Maryland Ind. Dev. Fing. Auth. Rev. Rfdg.
(Holy Cross Health Sys. Corp.)
5.70% 12/1/10 Aa3 1,000,000 1,104,730
Maryland Trans. Auth. Rev. (Trans. Facs. Proj.):
Rfdg.:
(Cap. Appreciation) 0% 7/1/04
(FGIC Insured) (b) Aaa 3,000,000 2,365,710
5.80% 7/1/06 A1 500,000 554,355
6.80% 7/1/16 (Escrowed to Maturity) (e) Aaa 1,015,000 1,217,046
Montgomery County Consolidated Pub. Impt.
Unltd. Tax Series A:
6.30% 4/1/04 Aaa 500,000 558,725
5.625% 10/1/06 Aaa 1,000,000 1,097,350
Montgomery County Hsg. Opportunity
Commission Rev. (Single Family Mtg.)
Series A, 6.60% 7/1/14 Aa2 1,000,000 1,075,550
Northeast Maryland Waste Disp. Auth.:
Resource Recovery Rev. Rfdg.
(Southwest Resource Recovery Facs.)
7.20% 1/1/05 (MBIA Insured) Aaa 1,235,000 1,434,823
Solid Waste Rev. (Montgomery County
Resource Recovery Proj.) Series A:
5.90% 7/1/05 (d) A 760,000 823,734
6% 7/1/07 (d) A 500,000 551,950
Prince Georges County Consolidated Pub. Impt.
5.50% 3/15/16 (MBIA Insured) Aaa 1,000,000 1,054,090
Prince Georges County Hsg. Auth. Rev. (Single
Family Mtg.) Series A, 6.50% 12/1/15 (d) AAA 465,000 501,126
Univ. of Maryland Sys. Auxiliary
Facs. & Tuition Rev.:
Rfdg. Series C, 5% 10/1/10 Aa3 1,000,000 1,022,040
Series A, 5.60% 4/1/16 Aa3 500,000 523,270
Washington D.C. Metropolitan Area Trans. Auth.
Gross Rev. Rfdg. 6% 7/1/10 (FGIC Insured) Aaa 1,570,000 1,799,204
Washington D.C. Suburban Sanitation
Dist. Rfdg. Second Series, 8% 1/1/02 Aa1 1,000,000 1,125,720
40,293,721
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (A) AMOUNT (NOTE 1)
PUERTO RICO - 1.4%
Puerto Rico Commonwealth Infrastructure
Fing. Auth. Spl. Tax Rev. Series A,
5% 7/1/28 (AMBAC Insured) Aaa $ 600,000 $ 600,756
TOTAL MUNICIPAL BONDS
(Cost $38,859,794) 40,894,477
MUNICIPAL NOTES (C) - 4.3%
MARYLAND - 4.3%
Maryland Commty. Dev. Admin.
Dept. of Hsg.& Commty.
Participating VRDN, Series 1997-P,
3.75% (Liquidity Facility Caisse des
Depots et Consignations) (f) Aa2 640,000 640,000
Maryland Commty. Dev. Admin. Multi-Family
Dev. Rev. Rfdg. (Avalon Lea Apts. Proj.)
Series 1997, 3.20%
(Fannie Mae Guaranteed) VRDN VMIG1 1,000,000 1,000,000
Maryland Nat'l. Cap. Park & Planning Commission
(Prince Georges County) Series V-2, 3.70%
(BPA First Union Nat'l. Bank (NC) VRDN A-1+ 200,000 200,000
TOTAL MUNICIPAL NOTES
(Cost $1,840,000) 1,840,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $40,699,794) $ 42,734,477
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
PURCHASED
9 U.S. Treasury Bond Contracts Dec. 1998 $ 1,143,000 $ 26,852
THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF TOTAL
INVESTMENT IN SECURITIES - 2.7%
SECURITY TYPE ABBREVIATIONS
VRDN - Variable Rate Demand Notes
LEGEND
(a) Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.
(b) Security or a portion of the security was pledged to cover margin
requirements for futures contracts. At the period end, the value of
securities pledged amounted to $59,143.
(c) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(d) Private activity obligations whose interest is subject to the
federal alternative minimum tax for individuals.
(e) Security collateralized by an amount sufficient to pay interest
and principal.
(f) Provides evidence of ownership in one or more underlying municipal
bonds.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total
value of investment in securities, is as follows (ratings are
unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 92.0% AAA, AA, A 83.8%
Baa 2.5% BBB 2.5%
Ba 0.0% BB 0.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The distribution of municipal securities by revenue source, as a
percentage of total value of investment in securities, is as follows:
General Obligation 38.6%
Special Tax 12.4
Escrowed/Pre-Refunded 10.8
Housing 9.7
Health Care 7.7
Resource Recovery 6.6
Industrial Development 5.2
Others (individually less than 5%) 9.0
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $40,699,794. Net unrealized appreciation
aggregated $2,034,683, of which $2,036,810 related to appreciated
investment securities and $2,127 related to depreciated investment
securities.
At August 31, 1998, the fund had a capital loss carryforward of
approximately $1,014,000 all of which will expire on August 31, 2004.
FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1998

ASSETS

INVESTMENT IN SECURITIES, AT VALUE (COST $40,699,794) - $ 42,734,477
SEE ACCOMPANYING SCHEDULE

CASH 600,791

RECEIVABLE FOR FUND SHARES SOLD 106,000

INTEREST RECEIVABLE 453,624

RECEIVABLE FOR DAILY VARIATION ON FUTURES CONTRACTS 5,906

OTHER RECEIVABLES 239

TOTAL ASSETS 43,901,037

LIABILITIES

PAYABLE FOR FUND SHARES REDEEMED $ 6,468

DISTRIBUTIONS PAYABLE 41,910

ACCRUED MANAGEMENT FEE 19,676

OTHER PAYABLES AND ACCRUED EXPENSES 223

TOTAL LIABILITIES 68,277

NET ASSETS $ 43,832,760

NET ASSETS CONSIST OF:

PAID IN CAPITAL $ 42,812,299

ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON (1,041,074)
INVESTMENTS

NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 2,061,535

NET ASSETS, FOR 4,155,865 SHARES OUTSTANDING $ 43,832,760

NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER $10.55
SHARE ($43,832,760 (DIVIDED BY) 4,155,865 SHARES)

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31, 1998

INTEREST INCOME $ 2,012,370

EXPENSES

MANAGEMENT FEE $ 222,795

NON-INTERESTED TRUSTEES' COMPENSATION 150

TOTAL EXPENSES BEFORE REDUCTIONS 222,945

EXPENSE REDUCTIONS (9,627) 213,318

NET INTEREST INCOME 1,799,052

REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:

INVESTMENT SECURITIES 183,074

FUTURES CONTRACTS 169,777 352,851

CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:

INVESTMENT SECURITIES 1,082,975

FUTURES CONTRACTS 29,157 1,112,132

NET GAIN (LOSS) 1,464,983

NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 3,264,035
FROM OPERATIONS

</TABLE>

<TABLE>
<CAPTION>
<S> <S> <S>
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
AUGUST 31, 1998 AUGUST 31, 1997

INCREASE (DECREASE) IN NET ASSETS

OPERATIONS $ 1,799,052 $ 2,057,228
NET INTEREST INCOME

NET REALIZED GAIN (LOSS) 352,851 387,545

CHANGE IN NET UNREALIZED APPRECIATION 1,112,132 1,012,810
(DEPRECIATION)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 3,264,035 3,457,583
FROM OPERATIONS

DISTRIBUTIONS TO SHAREHOLDERS (1,799,052) (2,057,228)
FROM NET INTEREST INCOME

FROM NET REALIZED GAIN - (13,585)

TOTAL DISTRIBUTIONS (1,799,052) (2,070,813)

SHARE TRANSACTIONS 9,360,492 5,101,188
NET PROCEEDS FROM SALES OF SHARES

REINVESTMENT OF DISTRIBUTIONS 1,411,279 1,626,626

COST OF SHARES REDEEMED (8,636,037) (13,244,371)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 2,135,734 (6,516,557)
FROM SHARE TRANSATIONS

REDEMPTION FEES 1,113 1,270

TOTAL INCREASE (DECREASE) IN NET ASSETS 3,601,830 (5,128,517)

NET ASSETS

BEGINNING OF PERIOD 40,230,930 45,359,447

END OF PERIOD $ 43,832,760 $ 40,230,930

OTHER INFORMATION
SHARES

SOLD 896,788 509,301

ISSUED IN REINVESTMENT OF DISTRIBUTIONS 135,699 162,086

REDEEMED (833,035) (1,322,135)

NET INCREASE (DECREASE) 199,452 (650,748)

</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED AUGUST 31,

1998 1997 1996 1995 1994
SELECTED PER-SHARE DATA

NET ASSET VALUE, BEGINNING $ 10.170 $ 9.850 $ 9.840 $ 9.640 $ 10.350
OF PERIOD

INCOME FROM INVESTMENT .461 .466 .488 .541 .543
OPERATIONS
NET INTEREST INCOME

NET REALIZED AND UNREALIZED .380 .323 .009 .198 (.697)
GAIN (LOSS)

TOTAL FROM INVESTMENT .841 .789 .497 .739 (.154)
OPERATIONS

LESS DISTRIBUTIONS

FROM NET INTEREST INCOME (.461) (.466) (.488) (.541) (.543)

FROM NET REALIZED GAIN - (.003) - - -

IN EXCESS OF NET REALIZED GAIN - - - - (.020)

TOTAL DISTRIBUTIONS (.461) (.469) (.488) (.541) (.563)

REDEMPTION FEES ADDED TO PAID IN .000 .000 .001 .002 .007
CAPITAL

NET ASSET VALUE, END OF PERIOD $ 10.550 $ 10.170 $ 9.850 $ 9.840 $ 9.640

TOTAL RETURN A, B 8.43% 8.17% 5.12% 8.07% (1.46)%

RATIOS AND SUPPLEMENTAL DATA

NET ASSETS, END OF PERIOD $ 43,833 $ 40,231 $ 45,359 $ 43,489 $ 41,464
(000 OMITTED)

RATIO OF EXPENSES TO AVERAGE .55% .55% .40%C .15%C .03%C
NET ASSETS

RATIO OF EXPENSES TO AVERAGE .53%D .54%D .39%D .15% .03%
NET ASSETS AFTER EXPENSE
REDUCTIONS

RATIO OF NET INTEREST INCOME TO 4.44% 4.65% 4.91% 5.71% 5.45%
AVERAGE NET ASSETS

PORTFOLIO TURNOVER RATE 23% 41% 74% 72% 64%

</TABLE>

A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
B TOTAL RETURNS DO NOT INCLUDE THE FORMER ACCOUNT CLOSEOUT FEE.
C 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.
D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES
(SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
NOTES TO FINANCIAL STATEMENTS
For the period ended August 31, 1998

1. SIGNIFICANT ACCOUNTING POLICIES.
Spartan Maryland Municipal Income Fund (the fund) is a fund of
Fidelity Union Street Trust (the trust) and is authorized to issue an
unlimited number of shares. The trust is registered under the
Investment Company Act of 1940, as amended, as an open-end management
investment company organized as a Massachusetts business trust. The
financial statements have been prepared in conformity with generally
accepted accounting principles which require management to make
certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. Securities are valued based upon a computerized
matrix system and/or appraisals by a pricing service, both of which
consider market transactions and dealer-supplied valuations.
Securities for which quotations are not readily available are valued
at their fair value as determined in good faith under consistently
applied procedures under the general supervision of the Board of
Trustees. Short-term securities with remaining maturities of sixty
days or less for which quotations are not readily available are valued
at amortized cost or original cost plus accrued interest, both of
which approximate current value.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
INTEREST INCOME. Interest income, which includes amortization of
premium and accretion of original issue discount, is accrued as
earned.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and
paid monthly from net interest income. Distributions from realized
gains, if any, are recorded on the ex-dividend date.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for futures transactions and capital loss carryforwards.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and
may affect the per-share allocation between net interest income and
realized and unrealized gain (loss). Accumulated undistributed net
realized gain (loss) on investments may include temporary book and tax
basis differences that will reverse in a subsequent period. Any
taxable gain remaining at fiscal year end is distributed in the
following year.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
SHORT-TERM TRADING (REDEMPTION) FEES. Shares held in the fund less
than 180 days are subject to a short-term trading fee equal to .50% of
the proceeds of the redeemed shares. The fee, which is retained by the
fund, is accounted for as an addition to paid in capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
WHEN-ISSUED SECURITIES. The fund may purchase or sell securities on a
when-issued basis. Payment and delivery may take place a month or more
after the date of the transaction. The price of the underlying
securities is fixed at the time the transaction is negotiated. With
respect to purchase commitments, the fund identifies securities as
segregated in its custodial records with a value at least equal to the
amount of the commitment. Losses may arise due to changes in the
market value of the underlying securities, if the counterparty does
not perform under the contract, or if the issuer does not issue the
securities due to political, economic, or other factors.
FUTURES CONTRACTS. The fund may use futures contracts to manage its
exposure to the bond market and to fluctuations in interest rates.
Buying futures tends to increase the fund's exposure to the underlying
instrument, while selling futures tends to decrease the fund's
exposure to the underlying instrument or hedge other fund investments.
Futures contracts involve, to varying degrees, risk of loss in excess
of the futures variation margin reflected in the Statement of Assets
and Liabilities. The underlying face amount at value of any open
futures contracts at period end is shown in the schedule of
investments under the caption "Futures Contracts." This amount
reflects each contract's exposure to the underlying instrument at
period end. Losses may arise from changes in the value of the
underlying instruments or if the counterparties do not perform under
the contracts' terms. Gains (losses) are realized upon the expiration
or closing of the futures contracts. Futures contracts are valued at
the settlement price established each day by the board of trade or
exchange on which they are traded.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $11,113,535 and $8,902,140, respectively.
The market value of futures contracts opened and closed during the
period amounted to $8,385,642 and $8,456,326, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, Fidelity Management
& Research Company (FMR) pays all expenses, except the compensation of
the non-interested Trustees and certain
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
exceptions such as interest, taxes, brokerage commissions and
extraordinary expenses. FMR receives a fee that is computed daily at
an annual rate of .55% of the fund's average net assets.
5. EXPENSE REDUCTIONS.
FMR has entered into an arrangement on behalf of the fund with the
fund's custodian whereby credits realized as a result of uninvested
cash balances were used to reduce a portion of the fund's expenses.
During the period, the fund's expenses were reduced by $9,627 under
this arrangement.
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Fidelity Union Street Trust and the Shareholders of
Spartan Maryland Municipal Income Fund:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Spartan Maryland Municipal Income Fund (a fund of Fidelity Union
Street Trust) at August 31, 1998, the results of its operations, the
changes in its net assets and the financial highlights for the periods
indicated, in conformity with generally accepted accounting
principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the
responsibility of the Spartan Maryland Municipal Income Fund's
management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of
these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which
included confirmation of securities at August 31, 1998 by
correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
October 7, 1998
DISTRIBUTIONS

During fiscal year ended 1998, 100% of the fund's income dividends was
free from federal income tax, and 9.14% of the fund's income dividends
was subject to the federal alternative minimum tax.
INVESTMENT ADVISER
(registered trademark)
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Fred L. Henning, Jr., Vice President
Dwight D. Churchill, Vice President
George A. Fischer, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Stanley N. Griffith, Assistant Vice President
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Thomas J. Simpson, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
UMB Bank, n.a.
Kansas City, MO
and
Fidelity Service Company, Inc.
Boston, MA
* INDEPENDENT TRUSTEES
CUSTODIAN
UMB Bank, n.a.
Kansas City, MO
FIDELITY'S MUNICIPAL BOND FUNDS
Spartan Arizona Municipal Income
(registered trademark)
Spartan California Municipal Income
Spartan Connecticut Municipal Income
Spartan Florida Municipal Income
Spartan Intermediate Municipal Income
Spartan Maryland Municipal Income
Spartan Massachusetts Municipal Income
Spartan Michigan Municipal Income
Spartan Minnesota Municipal Income
Spartan Municipal Income
Spartan New Jersey Municipal Income
Spartan New York Municipal Income
Spartan Ohio Municipal Income
Spartan Pennsylvania Municipal Income
Spartan Short-Intermediate
Municipal Income
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
TouchTone Xpress 1-800-544-5555
(REGISTERED TRADEMARK)
AUTOMATED LINE FOR QUICKEST SERVICE

(2_FIDELITY_LOGOS)SPARTAN(registered trademark)

SHORT-INTERMEDIATE
MUNICIPAL INCOME
FUND

ANNUAL REPORT
AUGUST 31, 1998
CONTENTS

PRESIDENT'S MESSAGE 3 NED JOHNSON ON INVESTING STRATEGIES.

PERFORMANCE 4 HOW THE FUND HAS DONE OVER TIME.

FUND TALK 7 THE MANAGER'S REVIEW OF FUND
PERFORMANCE, STRATEGY AND OUTLOOK.

INVESTMENT CHANGES 10 A SUMMARY OF MAJOR SHIFTS IN THE FUND'S
INVESTMENTS OVER THE PAST SIX MONTHS.

INVESTMENTS 11 A COMPLETE LIST OF THE FUND'S INVESTMENTS
WITH THEIR MARKET VALUES.

FINANCIAL STATEMENTS 23 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.

NOTES 27 NOTES TO THE FINANCIAL STATEMENTS.

REPORT OF INDEPENDENT 30 THE AUDITORS' OPINION.
ACCOUNTANTS

DISTRIBUTIONS 31

THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL INFORMATION
OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS
IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
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.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND
EXPENSES, CALL 1-800-544-8888 FOR A
FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
To reduce expenses and demonstrate respect for our environment, we
have initiated a project through which we will begin eliminating
duplicate copies of most financial reports and prospectuses to most
households, even if they have more than one account in the fund. If
additional copies of financial reports, prospectuses or historical
account information are needed, please call 1-800-544-6666.
PRESIDENT'S MESSAGE

There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). You can also look at the fund's income, as
reflected in the fund's yield, to measure performance. If Fidelity had
not reimbursed certain fund expenses, the past five year, and past 10
year total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS

SPARTAN SHORT-INTERMEDIATE MUNICIPAL INCOME 5.37% 24.70% 74.73%

LB 1-5 YEAR MUNICIPAL BOND 5.80% 27.00% N/A

SHORT-INTERMEDIATE MUNICIPAL DEBT FUNDS 5.25% 23.50% 76.74%

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be
$1,050. You can compare the fund's returns to the performance of the
Lehman Brothers 1-5 Year Muncipal Bond Index - a total return
performance benchmark for investment-grade municipal bonds with
maturities between one and five years. To measure how the fund's
performance stacked up against its peers, you can compare it to the
short-intermediate municipal debt funds average, which reflects the
performance of mutual funds with similar objectives tracked by Lipper
Analytical Services, Inc. The past one year average represents a peer
group of 31 mutual funds. These benchmarks include reinvested
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS

SPARTAN SHORT-INTERMEDIATE MUNICIPAL INCOME 5.37% 4.51% 5.74%

LB 1-5 YEAR MUNICIPAL BOND 5.80% 4.90% N/A

SHORT-INTERMEDIATE MUNICIPAL DEBT FUNDS 5.25% 4.31% 5.86%

AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and
show you what would have happened if the fund had performed at a
constant rate each year. (Note: Lipper calculates average annual total
returns by annualizing
each fund's total return, then taking an arithmetic average. This may
produce a slightly different figure than that obtained by averaging
the cumulative total returns and annualizing the result.)
$10,000 OVER 10 YEARS
Spartan Short-Int. Muni LB Municipal Bond
00404 LB015
1988/08/31 10000.00 10000.00
1988/09/30 10071.19 10181.00
1988/10/31 10132.94 10360.19
1988/11/30 10119.86 10265.29
1988/12/31 10182.10 10370.30
1989/01/31 10242.32 10584.76
1989/02/28 10206.03 10463.99
1989/03/31 10188.83 10438.98
1989/04/30 10248.48 10686.80
1989/05/31 10362.51 10908.76
1989/06/30 10444.28 11056.90
1989/07/31 10548.36 11207.39
1989/08/31 10574.40 11097.67
1989/09/30 10591.50 11064.60
1989/10/31 10673.62 11199.92
1989/11/30 10747.10 11395.92
1989/12/31 10823.70 11489.13
1990/01/31 10829.21 11434.79
1990/02/28 10916.53 11536.56
1990/03/31 10959.43 11540.02
1990/04/30 10941.93 11456.47
1990/05/31 11042.39 11706.57
1990/06/30 11096.98 11809.47
1990/07/31 11185.83 11983.07
1990/08/31 11204.39 11809.07
1990/09/30 11271.06 11815.80
1990/10/31 11354.90 12030.14
1990/11/30 11460.29 12272.07
1990/12/31 11518.14 12325.45
1991/01/31 11624.30 12490.86
1991/02/28 11695.67 12599.53
1991/03/31 11742.68 12604.07
1991/04/30 11853.44 12771.70
1991/05/31 11924.81 12885.24
1991/06/30 11957.73 12872.48
1991/07/31 12039.77 13029.27
1991/08/31 12135.49 13200.87
1991/09/30 12231.61 13372.74
1991/10/31 12312.72 13493.10
1991/11/30 12367.27 13530.74
1991/12/31 12537.70 13821.11
1992/01/31 12590.83 13852.62
1992/02/29 12641.21 13857.06
1992/03/31 12647.41 13862.18
1992/04/30 12729.77 13985.56
1992/05/31 12800.04 14150.17
1992/06/30 12905.79 14387.61
1992/07/31 13103.92 14818.95
1992/08/31 13050.94 14674.46
1992/09/30 13116.04 14770.43
1992/10/31 13114.83 14625.24
1992/11/30 13232.72 14887.18
1992/12/31 13313.00 15039.18
1993/01/31 13446.91 15214.08
1993/02/28 13683.57 15764.38
1993/03/31 13641.52 15597.75
1993/04/30 13706.56 15755.13
1993/05/31 13759.71 15843.67
1993/06/30 13851.93 16108.10
1993/07/31 13863.01 16129.20
1993/08/31 14012.19 16465.01
1993/09/30 14104.98 16652.55
1993/10/31 14130.43 16684.69
1993/11/30 14111.24 16537.70
1993/12/31 14261.11 16886.81
1994/01/31 14356.16 17079.66
1994/02/28 14207.19 16637.29
1994/03/31 13962.88 15959.82
1994/04/30 14015.61 16095.16
1994/05/31 14099.01 16234.71
1994/06/30 14121.76 16135.51
1994/07/31 14247.17 16431.28
1994/08/31 14299.98 16488.13
1994/09/30 14263.62 16246.08
1994/10/31 14213.68 15957.55
1994/11/30 14134.72 15669.04
1994/12/31 14248.99 16013.91
1995/01/31 14407.08 16471.59
1995/02/28 14574.42 16950.59
1995/03/31 14672.15 17145.35
1995/04/30 14724.90 17165.58
1995/05/31 14898.84 17713.33
1995/06/30 14921.22 17559.23
1995/07/31 15005.45 17725.69
1995/08/31 15150.69 17950.45
1995/09/30 15203.56 18064.08
1995/10/31 15288.17 18326.73
1995/11/30 15386.08 18630.77
1995/12/31 15455.90 18809.81
1996/01/31 15556.60 18951.83
1996/02/29 15561.01 18823.90
1996/03/31 15506.42 18583.33
1996/04/30 15513.11 18530.74
1996/05/31 15537.39 18523.33
1996/06/30 15606.43 18725.05
1996/07/31 15694.14 18895.44
1996/08/31 15718.88 18890.91
1996/09/30 15805.84 19155.38
1996/10/31 15910.41 19372.03
1996/11/30 16061.45 19726.54
1996/12/31 16055.40 19643.69
1997/01/31 16113.88 19680.81
1997/02/28 16198.88 19861.48
1997/03/31 16111.56 19596.73
1997/04/30 16168.38 19760.75
1997/05/31 16308.83 20057.96
1997/06/30 16415.05 20271.57
1997/07/31 16621.65 20833.10
1997/08/31 16581.74 20637.89
1997/09/30 16688.42 20882.86
1997/10/31 16747.72 21017.14
1997/11/30 16805.00 21140.72
1997/12/31 16930.90 21449.16
1998/01/31 17040.58 21670.52
1998/02/28 17061.17 21677.02
1998/03/31 17088.00 21696.09
1998/04/30 17062.24 21598.24
1998/05/31 17207.83 21940.15
1998/06/30 17249.53 22026.59
1998/07/31 17310.05 22081.88
1998/08/31 17472.79 22423.04
IMATRL PRASUN SHR__CHT 19980831 19980909 110439 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Spartan Short-Intermediate Municipal Income Fund on August
31, 1988. As the chart shows, by August 31, 1998, the value of the
investment would have grown to $17,473 - a 74.73% increase on the
initial investment. For comparison, look at how the Lehman Brothers
Municipal Bond Index did over the same period. With dividends and
capital gains, if any, reinvested, the same $10,000 would have grown
to $22,423 - a 124.23% increase.
UNDERSTANDING
PERFORMANCE
HOW A FUND DID YESTERDAY IS
NO GUARANTEE OF HOW IT WILL
DO TOMORROW. BOND PRICES, FOR
EXAMPLE, GENERALLY MOVE IN
THE OPPOSITE DIRECTION OF
INTEREST RATES. IN TURN, THE SHARE
PRICE, RETURN AND YIELD OF A
FUND THAT INVESTS IN BONDS WILL
VARY. THAT MEANS IF YOU SELL
YOUR SHARES DURING A MARKET
DOWNTURN, YOU MIGHT LOSE
MONEY. BUT IF YOU CAN RIDE OUT
THE MARKET'S UPS AND DOWNS,
YOU MAY HAVE A GAIN.
(CHECKMARK)
TOTAL RETURN COMPONENTS
YEARS ENDED AUGUST 31,

1998 1997 1996 1995 1994

DIVIDEND RETURN 4.27% 4.38% 4.25% 4.53% 4.43%

CAPITAL RETURN 1.10% 1.11% -0.50% 1.42% -2.38%

TOTAL RETURN 5.37% 5.49% 3.75% 5.95% 2.05%

TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
fund. A capital return reflects both the amount paid by the fund to
shareholders as capital gain distributions and changes in the fund's
share price. Both returns assume the dividends or capital gains, if
any, paid by the fund are reinvested.
DIVIDENDS AND YIELD

<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED AUGUST 31, 1998 PAST 1 PAST 6 PAST 1
MONTH MONTHS YEAR

DIVIDENDS PER SHARE 3.49(CENTS) 21.12(CENTS) 41.92(CENTS)

ANNUALIZED DIVIDEND RATE 4.06% 4.15% 4.15%

30-DAY ANNUALIZED YIELD 3.57% - -

30-DAY ANNUALIZED TAX-EQUIVALENT YIELD 5.58% - -

</TABLE>

DIVIDENDS per share show the income paid by the fund for a set period.
If you annualize this number, based on an average share price of
$10.11 over the past one month, $10.09 over the past six months and
$10.09 over the past one year, you can compare the fund's income over
these three periods. The 30-day annualized YIELD is a standard formula
for all funds based on the yields of the bonds in the fund, averaged
over the past 30 days. This figure shows you the yield characteristics
of the fund's investments at the end of the period. It also helps you
compare funds from different companies on an equal basis. The
tax-equivalent yield shows what you would have to earn on a taxable
investment to equal the fund's tax-free yield, if you're in the 36%
federal tax bracket, but does not reflect payment of the federal
alternative minimum tax, if applicable.
FUND TALK: THE MANAGER'S OVERVIEW

MARKET RECAP
A glut of new municipal bond
issuance - combined with
slackened demand and strong U.S
Treasury bond performance -
caused the municipal bond market
to underperform its taxable
counterparts during the 12-month
period that ended August 31, 1998.
In this time, the Lehman Brothers
Municipal Bond Index - a measure
of muni bond performance -
returned 8.65%. In contrast, the
Lehman Brothers Aggregate Bond
Index - which gauges the
performance of the taxable bond
market - returned 10.57%. Things
were looking up for fixed-income
markets at the beginning of the
period, with positive U.S. economic
news and the Federal Reserve
Board's reluctance to raise interest
rates playing key roles. The tides
shifted, however, in the later stages of
1997 when new-issue supply began to
eclipse demand and muni bond
performance suffered. The fourth
quarter of 1997 was punctuated by
extreme volatility in Asian markets,
and concerned investors began to
consider fixed-income investments
as a more stable alternative. This
helped municipal bond
performance slightly, but a deluge of
new issuance in early 1998 -
prompted primarily by low interest
rates - took away some steam. As
the period progressed, issuers
showed no signs of letting up. In
May, for example, the largest single
deal in municipal bond history took
place - a $3.5 billion deal floated by
the Long Island Power Authority.
This supply/demand imbalance
continued to play out through the
end of August.
An interview with Norm Lind, Portfolio Manager of Spartan
Short-Intermediate Municipal Income Fund
Q. HOW DID THE FUND PERFORM, NORM?
A. For the 12-month period that ended August 31, 1998, the fund had a
total return of 5.37%. To get a sense of how the fund did relative to
its competitors, the short-intermediate municipal debt funds average
returned 5.25% for the same 12-month period, according to Lipper
Analytical Services. Additionally, the Lehman Brothers 1-5 Year
Municipal Bond Index - which tracks the types of securities in which
the fund invests - returned 5.80%.
Q. WHAT WERE SOME POSITIVES FOR THE FUND'S PERFORMANCE?
A. At several points throughout the year, I altered the way the fund
was invested in bonds with various maturities, mainly to the benefit
of the fund. At the beginning of 1998, for example, I sold some bonds
with very short maturities - those maturing in the year 2000 - when
demand for them was strong and the prices paid for them were quite
good. To replace them, I bought bonds maturing in 2005, because I
thought they were priced below their fair value and their yields were
attractive given their maturity. More recently, bonds maturing in 2005
rose to what I believed to be fair value, so I sold some at a profit
to the fund and replaced them with more attractively priced bonds
maturing in 2006. At about the same time, I bought back some bonds
maturing in 2000 because I believed they once again represented a good
value. In addition, bonds issued by New York City and some bonds
issued by New York state performed exceptionally well thanks in large
part to their strong economies and improved fiscal health.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. The most disappointing thing was that there were very few
opportunities to buy Baa-rated bonds that were attractively priced and
that also offered relatively high yields. The market hasn't - in my
view - rewarded investors for taking on the added risk associated with
lower-quality bonds. At the end of the period, a Baa-rated bond paid
only about 35 basis points (0.35%) more in yield than the
highest-quality Aaa-rated bond. I didn't feel that yield differential
- - or spread - was enough to compensate for the additional risk.
Q. WHAT SECTORS DID YOU TURN TO FOR ATTRACTIVE, HIGH-YIELDING
OPPORTUNITIES?
A. Housing and student loan bonds were two areas where I generally
look for bonds with relatively high yields. Because they run the risk
of being pre-paid before their maturity as borrowers refinance or pay
their loans off early, these types of bonds generally offer higher
yields as compensation for that prepayment risk. That said, student
loan bonds have been in strong demand lately and I sold some to lock
in gains for the fund.
Q. THE FUND'S STAKE IN FLORIDA BONDS INCREASED WHILE ITS HOLDINGS IN
MASSACHUSETTS BONDS FELL. WHAT EXPLAINS THOSE SHIFTS?
A. Most of the changes I made regarding the fund's allocation among
various states had less to do with my outlook for a given state and
more to do with finding attractively priced bonds with the structure I
needed. For example, I added to the fund's stake in Florida bonds
because I found a specific security that offered the maturity range I
was looking for, and because I was able to buy it at a relatively
cheap price. The decrease in Massachusetts bonds came primarily from
the sale of some student loan bonds, which I explained previously. But
generally speaking, I tend to emphasize investments in those states
where taxes are high because the demand for municipals issued in those
states generally is strong.
Q. WHAT'S AHEAD FOR THE MUNICIPAL MARKET AND THE FUND?
A. While issuance may not reach first half 1998 levels, I don't see
the supply of municipal bonds tapering off. A large supply of
municipals - which has muted their gains relative to Treasuries over
the past year - will likely continue to limit municipal returns unless
demand perks up. As long as interest rates remain low, we're likely to
see more issuers refinance older, more costly debt, which will
probably add - at least temporarily - to the supply of municipal
securities available. As far as the fund is concerned, I'll continue
to emphasize bonds that I think offer good value given their yields
and their risk. For example, I'm comfortable sticking with a fairly
large weighting in high-quality bonds for the time being, because I
feel that lower-quality securities currently do not offer enough
additional yield given their risks.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.

NORM LIND ON THE RELATIVE
ATTRACTIVENESS OF MUNICIPAL
BONDS:
"At the end of the period,
municipals were priced attractively
relative to their Treasury
counterparts. One reason for the
low prices of munis is that they
haven't benefited from the `flight
to quality' that boosted Treasuries.
While Treasuries are seen by global
investors as a safe haven in times
of uncertainty, municipals are not.
Rather, municipals appeal
primarily to U.S. investors who can
benefit from their tax-free status.
Another factor that curtailed munis'
performance was swelling supply
from state and local governments
taking advantage of low interest
rates by issuing new debt or
refinancing old debt.
"How cheap are municipals? At the
end of the period, municipals yielded
roughly 95% as much as Treasuries,
compared to the more historical
65% - 80% range. As a review,
municipal bond yields and bond
prices move in the opposite
direction of one another. If
municipals return to their more
typical relationship with
Treasuries by falling in yield, their
prices will likely rise in response. "
FUND FACTS
GOAL: to provide high current
income free from federal taxes
FUND NUMBER: 404
TRADING SYMBOL: FSTFX
START DATE: December 24, 1986
SIZE: as of August 31, 1998,
more than $649 million
MANAGER: Norm Lind, since
1995; manager, various Fidelity
and Spartan municipal income
funds; joined Fidelity in 1986
(checkmark)
INVESTMENT CHANGES

TOP FIVE STATES AS OF AUGUST 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE STATES
6 MONTHS AGO

NEW YORK 13.9 17.0

FLORIDA 11.7 7.1

TEXAS 6.7 7.2

MASSACHUSETTS 6.4 11.2

CALIFORNIA 6.0 7.3

TOP FIVE SECTORS AS OF AUGUST 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE SECTORS
6 MONTHS AGO

GENERAL OBLIGATION 30.0 27.6

ELECTRIC REVENUE 15.4 12.8

EDUCATION 12.2 16.6

ESCROWED/PRE-REFUNDED 10.4 19.0

SPECIAL TAX 7.4 6.5

AVERAGE YEARS TO MATURITY AS OF AUGUST 31, 1998
6 MONTHS AGO

YEARS 3.2 3.1

AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY
DOLLAR AMOUNT.
DURATION AS OF AUGUST 31, 1998
6 MONTHS AGO

YEARS 2.9 2.9

DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH
A FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER
FACTORS ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE.
ACCORDINGLY, A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS
EXAMPLE.
QUALITY DIVERSIFICATION (MOODY'S RATINGS)
AS OF AUGUST 31, 1998 AS OF FEBRUARY 28, 1998
ROW: 1, COL: 1, VALUE: 82.8
ROW: 1, COL: 2, VALUE: 7.0
ROW: 1, COL: 3, VALUE: 2.2
ROW: 1, COL: 4, VALUE: 8.0
AAA, AA, A 93.5%
BAA 5.2%
NON-RATED 0.6%
SHORT-TERM
INVESTMENTS 0.7%
AAA, AA, A 82.8%
BAA 7.6%
NON-RATED 1.2%
SHORT-TERM
INVESTMENTS 8.4%
ROW: 1, COL: 1, VALUE: 91.40000000000001
ROW: 1, COL: 2, VALUE: 5.0
ROW: 1, COL: 3, VALUE: 1.7
ROW: 1, COL: 4, VALUE: 1.9
WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P RATINGS.
AMOUNTS SHOWN ARE AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
INVESTMENTS AUGUST 31, 1998

SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES

MUNICIPAL BONDS - 91.6%
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
ALASKA - 0.8%
Alaska Student Loan Corp. Student Loan Rev. Series A:
5% 7/1/03 (AMBAC Insured) (c) $ 500 $ 510
5.55% 7/1/03 (AMBAC Insured) (c) 1,000 1,043
5.10% 7/1/04 (AMBAC Insured) (c) 2,300 2,359
North Slope Borough (Cap. Appreciation) Series A,
0% 6/30/99 (MBIA Insured) 1,500 1,454
5,366
ARIZONA - 2.0%
Arizona Trans. Board Hwy. Rev. Sub Series A,
6.60% 7/1/08 (Pre-Refunded to 7/1/01 @ 101.50) (d) 2,800 3,048
Maricopa County Edl. Facs. Auth. (Washington
Elementary School Dist.) Series 1996 C,
5% 7/1/05 (FGIC Insured) 3,850 4,059
Maricopa County Gen. Oblig. Series C, 8.90% 7/1/99
(Escrowed to Maturity) (d) 4,000 4,166
Phoenix Civic Impt. Corp. Excise Tax Rev. Rfdg. (Arpt. Impts.)
Series A, 5.85% 7/1/01 (c) 1,000 1,052
Univ. of Arizona Board of Regents Rev. Series B,
6.90% 6/1/16 (Pre-Refunded to 6/1/00 @ 102) (d) 1,000 1,072
13,397
ARKANSAS - 1.4%
Arkansas Student Loan Auth. Rev. Sr. Series A-1:
6.05% 6/1/02 (c) 4,700 4,933
6.05% 12/1/02 (c) 4,455 4,706
9,639
CALIFORNIA - 6.0%
California Rural Home Mtg. Fin. Auth. Lease Rev. (Rural
Lease Purp.) Series A, 4.45% 8/1/01 (MBIA Insured) 3,500 3,550
California Statewide Commtys. Dev. Auth. Rev. Ctfs. of
Prtn. Rfdg. (St. Joseph Health Sys.) 5% 7/1/04 1,000 1,043
Clovis Unified School Dist. Spl. Tax (Cap Appreciation)
Series B, 0% 8/1/00 (MBIA Insured) 5,725 5,335
Long Beach Hbr. Rev. Rfdg. Series A, 5.50% 5/15/05
(FGIC Insured) (c) 6,000 6,465
Los Angeles Dept. of Wtr. & Pwr. Elec. Plant Rev.
Second Issue:
9% 10/15/00 1,300 1,438
9% 10/15/01 2,000 2,300
Metropolitan Wtr. Dist. Rev. (Southern California Wtrwks.)
Series A, 5.50% 7/1/06 6,000 6,554
Rosemead Redev. Agcy. Sub. Lien Tax Allocation Proj. Area 1
(Cap. Appreciation) 0% 10/1/98 (Escrowed to Maturity) (d) 1,000 997
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
CALIFORNIA - CONTINUED
San Bernardino County Ctfs. of Prtn. Rfdg.
(Med. Ctr. Fin. Proj.) 4.75% 8/1/00 $ 4,000 $ 4,049
San Joaquin Hills Trans. Corridor Agcy. Toll Road Rev. Rfdg.
(Cap. Appreciation) Series A, 0% 1/15/02
(MBIA Insured) 5,650 4,895
Santa Ana Commty. Redev. Agcy. Tax Allocation
(Santa Ana Redev. Proj. Area) Series B, 6.50% 12/15/14
(Pre-Refunded to 12/15/00 @ 102) (d) 1,160 1,230
Southern California Pub. Pwr. Auth. (Palo Verde Proj.)
Series A, 5% 7/1/00 (FSA Insured) (a) 3,300 3,359
41,215
COLORADO - 0.7%
Denver City & County Arpt. Rev. Rfdg.:
Series C, 5.10% 11/15/01 (c) 2,320 2,367
Series D, 5% 11/15/98 (c) 2,000 2,005
Pueblo Wtr. Rev. Rfdg. Series 1984 B, 9.50% 11/1/98,
(MBIA Insured) 390 393
4,765
CONNECTICUT - 0.9%
Connecticut Spl. Assessment Unemployment Compensation
Advanced Fund Rev. Rfdg. 5.50% 5/15/00
(AMBAC Insured) 6,000 6,180
DISTRICT OF COLUMBIA - 0.6%
District of Columbia Gen. Oblig.:
Rfdg. Series 1, 4.65% 6/1/02 (MBIA Insured) 3,090 3,155
Series A, 7.50% 6/1/10 (AMBAC Insured)
(Pre-Refunded to 6/1/00 @ 102) (d) 1,000 1,080
4.65% 6/1/02 (MBIA Insured) (Escrowed to Maturity) (d) 160 164
4,399
FLORIDA - 11.5%
Dade County Aviation Rev. Rfdg. (Miami Int'l. Arpt.)
Series A, 5.25 10/01/01 (FSA Insured) (c) 3,500 3,636
Dade County School Dist. Series 95, 6.875% 8/1/00
(MBIA Insured) 5,910 6,257
Escambia County Util. Auth. Sys. Rfdg. Series D:
4.10% 1/1/00 (FGIC Insured) (a) 2,570 2,579
4.20% 1/1/01 (FGIC Insured) (a) 2,900 2,921
4.20% 1/1/02 (FGIC Insured) (a) 2,835 2,855
Florida Board of Ed. Cap. Outlay:
Series A, 5% 6/1/06 3,725 3,936
Series B, 5% 6/1/05 25,105 26,513
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
FLORIDA - CONTINUED
Florida Dept. of Envir. Protection 5% 7/1/06 (FSA Insured) $ 2,000 $
2,107
Florida Dept. of Trans. Gen. Oblig. 6.50% 7/1/02 1,975 2,157
Hillsborough County Aviation Auth. Rev. (Tampa Int'l. Arpt.)
Series B, 7.10% 10/1/09 (AMBAC Insured)
(Pre-Refunded to 10/1/99 @ 102) (d) 2,000 2,115
Jacksonville Elec. Auth. Rev.:
Rfdg. (St. John River Issue 2) Series 10, 6.50% 10/1/03 1,500 1,674
(Third Installment) 5.20% 7/1/01
(Escrowed to Maturity) (d) 1,270 1,293
Lakeland Elec. & Wtr. Rev. Rfdg. (Jr. Sub. Lien):
6.25% 10/1/00 (FGIC Insured) 9,175 9,638
6.25% 10/1/01 (FGIC Insured) 9,255 9,921
Tampa Health Sys. Rev. (Catholic Health East) Series A-3,
5.50%, 11/15/02 (MBIA Insured) 1,000 1,060
78,662
GEORGIA - 0.7%
Atlanta Arpt. Facs. Rev. Rfdg. 5% 1/1/01,
(AMBAC Insured) 1,500 1,538
Monroe County Dev. Auth. Poll. Cont. Rev. Rfdg. (Oglethorpe
Pwr. Scherer) Series A, 6.05% 1/1/02 (MBIA Insured) 2,825 3,005
4,543
HAWAII - 1.9%
Hawaii Arpts. Sys. Rev. Second Series, 7.40% 7/1/02,
(FGIC Insured) (c) 1,000 1,077
Hawaii Gen. Oblig.:
Rfdg. Series CO, 4.63% 9/1/01 (FGIC Insured) 5,000 5,100
Series CN, 6.25% 3/1/02 (FGIC Insured) 2,000 2,148
Honolulu City & County Gen. Oblig. Series B,
5.50% 11/1/04 (FGIC Insured) 4,625 4,971
13,296
KANSAS - 0.6%
Kansas Dev. Fin. Auth. Rev. 5.50% 10/1/05
(AMBAC Insured) 3,000 3,241
Kansas Tpk. Auth. Tpk. Rev. Rfdg. 5% 9/1/99
(AMBAC Insured) 1,080 1,093
4,334
KENTUCKY - 2.1%
Kentucky Property & Bldgs. Commission Rev. Rfdg.
6% 11/1/00 9,000 9,397
Owensboro Elec. Lt. & Pwr. Rev. Rfdg. Series B, 0% 1/1/01
(AMBAC Insured) 5,450 4,987
14,384
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
LOUISIANA - 2.0%
Louisiana Pub. Facs. Auth. Rev.:
Rfdg. (Student Loan) Sr. Series A-1, 6.20% 3/1/01 $ 1,900 $ 1,976
(Supplemental Student Loan):
Series B, 8.125% 12/1/99 (AMBAC Insured)
(BPA The First Nat'l. Bank of Chicago) 7,830 8,129
Series C, 8.125% 12/1/99 (AMBAC Insured)
(BPA The First Nat'l. Bank of Chicago) 3,720 3,862
13,967
MARYLAND - 2.4%
Maryland Gen. Oblig. First Series 6.60% 3/1/00 2,000 2,087
Maryland State & Local Facs. Rev. Second Series,
5% 7/15/02 11,820 12,321
Montgomery County Consolidated Pub. Impt. Series A,
7% 4/1/07 (Pre-Refunded to 4/1/00 @ 102) (d) 2,000 2,140
16,548
MASSACHUSETTS - 6.4%
Boston Gen. Oblig. Series A, 4.50% 1/1/01
(FGIC Insured) 1,575 1,599
Holyoke Gen. Oblig. 5.25% 8/1/06 (FSA Insured) 500 536
Massachusetts Consolidated Loan:
Series B, 9.25% 7/1/00 4,500 4,935
Series C, 6.75% 8/1/06 (Pre-Refunded 8/1/01 @ 102) (d) 1,000 1,100
Massachusetts Gen. Oblig. Rfdg. Series A, 5% 8/1/01 1,000 1,032
Massachusetts Health & Edl. Facs. Auth. Rev. Rfdg.
(Fairview Extended Care) Series B, 4.55% 7/14/02
(MBIA Insured) LOC BankBoston N.A 4,000 4,032
Massachusetts Ind. Fin. Agcy. Rev. (Massachusetts
Biomedical Research):
Series A-1, 7.10% 8/1/99 1,385 1,423
(Cap. Appreciation) Series A-1, 0% 8/1/00 4,510 4,183
Massachusetts Ind. Resource Recovery Rev.
(Ogden Haverhill Proj.) Series 1992 A, 4.50% 12/1/01 3,000 3,008
Massachusetts Wtr. Resources Auth.:
Rfdg. Series C, 5.25% 12/1/01 2,000 2,079
Series A, 7.125% 4/1/00 1,500 1,575
New England Edl. Loan Marketing Corp. Rfdg.
(Massachusetts Student Loan):
Sr. Issue D, 6% 9/1/99 7,000 7,128
Sr. Issue D, 6.20% 9/1/00 2,000 2,073
Series B, 5.40% 6/1/00 8,500 8,661
43,364
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
MICHIGAN - 2.1%
Detroit Convention Facs. Rev. Rfdg.
(Cobo Hall Expansion Project):
4.75% 9/30/00 $ 5,220 $ 5,302
4.80% 9/30/01 1,000 1,020
Michigan Hosp. Fin. Auth. Rev. Rfdg.:
(Genesys Reg'l. Medical Center):
Series A, 5.25% 10/1/02 2,040 2,101
Series A, 5.25% 10/1/03 1,000 1,032
(Mercy Health Services):
Series S, 5.75% 8/15/05 1,275 1,381
Series T, 5.75 8/15/05 3,070 3,325
14,161
MINNESOTA - 1.3%
Maplewood Health Care Facs. Rev.
(Health East Proj.) 5.70% 11/15/02 1,000 1,049
Minneapolis Gen. Oblig. (Cap. Appreciation) Series B:
0% 12/1/02 1,300 1,103
0% 12/1/03 500 407
0% 12/1/04 1,500 1,167
0% 12/1/05 1,500 1,118
Minnesota Gen. Oblig. 6.40% 8/1/01 1,310 1,406
Rosemount Ind. School Dist. Rfdg. 4% 3/1/01 2,610 2,622
8,872
MONTANA - 0.7%
Montana Higher Ed. Student Loan Assistance Corp.
Student Loan Rev. Series B:
6.40% 12/1/98 (c) 3,975 3,998
6.60% 12/1/99 (c) 460 473
4,471
NEBRASKA - 0.5%
Nebraska Pub. Pwr. Dist. Rev. 5.40% 7/1/01 3,085 3,205
NEVADA - 0.5%
Clark County Flood Cont. (Group 1) 6% 11/1/01 1,000 1,065
Clark County Hwy. Impt. Rev. (Motor Vehicle Fuel Tax)
5% 7/1/01 (AMBAC Insured) 2,000 2,058
3,123
NEW JERSEY - 1.2%
New Jersey Gen. Oblig. Rfdg. Series B,
6.25% 1/15/01 1,500 1,585
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
NEW JERSEY - CONTINUED
New Jersey Health Care Facs. Fin. Auth. Rev.
(Atlantic City Med. Ctr.) Series C, 6.45% 7/1/02 $ 3,500 $ 3,761
New Jersey Trans. Corp. Capital Grant Anticipation Notes
Series A, 4.625% 9/1/99 2,675 2,691
8,037
NEW MEXICO - 1.6%
Albuquerque Arpt. Rev. Rfdg.:
6.25% 7/1/99 (AMBAC Insured) (c) 540 551
6.25% 7/1/00 (AMBAC Insured) (c) 660 688
6.25% 7/1/01 (AMBAC Insured) (c) 980 1,038
7.35% 7/1/01 (AMBAC Insured) (Pre-Refunded to
10/15/98 @ 101) (d) 1,015 1,030
New Mexico Edl. Assistance Foundation Student Loan
Rev. Sr. Series IV-A1:
6.40% 3/1/03 (c) 4,560 4,792
6.50% 3/1/04 (c) 2,765 2,933
11,032
NEW YORK - 13.9%
Long Island Pwr. Auth. (NY Elec. Sys. Rev.) Series A, 5.50%
12/1/06 (AMBAC Insured) 4,000 4,339
New York City Gen. Oblig.:
Rfdg.:
Series A, 5.70% 8/1/02 1,500 1,585
Series D, 6.60% 2/1/03 1,000 1,098
Series H, 7.87% 8/1/00 (Escrowed to Maturity) (d) 2,500 2,692
Series H, 5.40% 8/1/04 3,935 4,169
Series F:
8.10% 11/15/99 550 579
8.10% 11/15/99 (Escrowed to Maturity) (d) 2,740 2,888
Series H:
6.90% 2/1/01 400 426
6.90% 2/1/01 (Escrowed to Maturity) (d) 2,635 2,826
5% 8/1/05 8,050 8,359
Series J, 6% 2/15/04 3,000 3,252
New York City Muni. Assistance Corp. Rfdg.:
Series E, 5.50% 7/1/00 1,000 1,032
Series M, 5% 7/1/02 3,000 3,118
New York City Muni. Wtr. Fin. Auth. Wtr. & Swr. Rev.
Series 93-B, 6.50% 6/15/20
(Pre-Refunded to 6/15/02 @ 101) (d) 2,000 2,204
New York State Dorm. Auth. Rev. (Mental Health Services Facs.)
Series A, 6% 2/15/01 1,500 1,572
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
NEW YORK - CONTINUED
New York State Envir. Facs. Corp. Resources Recovery Rev.
(Huntington Proj.) Series A, 7.50% 10/1/12
(Pre-Refunded to 10/1/99 @ 102) (c)(d) $ 5,000 $ 5,269
New York State Local Gov't. Assistance Corp.:
Rfdg.:
Series A, 5.50% 4/1/04 (AMBAC Insured) 2,700 2,892
Series E, 5.50% 7/1/01 20,400 21,332
Series B:
7.50% 4/1/20 (Pre-Refunded to 4/1/01 @ 102) (d) 10,000 11,102
7% 4/1/21 (Pre-Refunded to 4/1/01 @ 100) (d) 5,150 5,561
New York State Med. Care Facs. Fin. Agcy. Rev.
(Mental Health Svc. Facs.) Series C, 7.30% 2/15/21
(Pre-Refunded to 8/15/01 @ 102) (d) 1,785 1,991
New York State Thruway Auth. Svc. Contract Rev.
(Local Hwy. & Bridge):
6% 4/1/01 1,100 1,152
5.40% 4/1/03 2,750 2,894
6% 4/1/03 2,300 2,478
94,810
NORTH CAROLINA - 2.3%
North Carolina Eastern Muni. Pwr. Agcy. Pwr. Sys.
Rev. Rfdg.:
Series A:
5.20% 1/1/01 3,000 3,056
7.875% 1/1/02 9,255 10,228
Series B, 5.50% 1/1/02 1,000 1,032
North Carolina Muni. Pwr. Agcy. #1 Rev. Rfdg. (Catawba Elec.)
5.75% 1/1/02 1,000 1,047
15,363
OHIO - 2.7%
Butler County Trans. Impt. Dist. Series A, 5% 4/1/04
(FSA Insured) 2,605 2,727
Cleveland Arpt. Sys. Rev. Series A, 5.50% 1/1/05
(FSA Insured) (c) 1,000 1,071
Franklin County Ltd. Tax (Courthouse) 6.375% 12/1/17,
(Pre-Refunded to 12/1/01 @ 102) (d) 3,800 4,161
Montgomery County Hosp. Rev. Rfdg. (Grandview Hosp. &
Med. Center):
5.25% 12/1/02 2,000 2,060
5.25% 12/1/03 2,000 2,064
Ohio Bldg. Auth. State Facs. (Administration Bldg. Fund Proj.)
Series A, 5.50% 10/1/01 2,175 2,274
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
OHIO - CONTINUED
Ohio Wtr. Dev. Auth. Rev. (Fresh Water Proj.) 5.40%
6/1/05 (AMBAC Insured) $ 1,350 $ 1,447
Ohio Wtr. Dev. Auth. Pollution Ctrl. Facs. Rev. 5.25%
6/1/06 (MBIA Insured) 2,310 2,466
18,270
OKLAHOMA - 1.6%
Tulsa County Independent School Dist. #1 4.40% 2/1/02 10,875 11,061
PENNSYLVANIA - 2.9%
Erie County School Dist. (Cap. Appreciation) 0% 12/1/98,
(Escrowed to Maturity) (d) 1,770 1,755
Pennsylvania Gen. Oblig. Second Series, 5% 10/15/01 3,000 3,104
Pennsylvania Higher Ed. Facs. Auth. Health Svcs. Rev. Rfdg.
(Penn. Univ.) Series A, 5.125% 1/1/01 4,000 4,102
Philadelphia Gas Wks. Rev. Series A, 5.25% 7/1/05
(FSA Insured) 5,000 5,327
Philadelphia Wtr. & Swr. Rev. 16th Series, 7% 8/1/21,
(FSA Insured) (Pre-Refunded to 8/1/01 @ 102) (d) 1,000 1,106
Somerset County Gen. Auth. Commonwealth Lease Rev.
6.25% 10/15/11 (Pre-Refunded to 10/15/01 @ 100) (d) 4,000 4,283
19,677
SOUTH CAROLINA - 2.8%
Richland County School Dist. #2 Series B, 5.60% 3/1/02
(MBIA Insured) 1,100 1,165
South Carolina Ed. Assistance Auth. Rev.:
(Insured Student Loan):
6.60% 9/1/99 (c) 2,845 2,919
6.30% 9/1/01 (c) 1,400 1,479
Rfdg. (Guaranteed Student Loan) Sub. Lien B, 5% 9/1/99 (c) 7,045
7,119
South Carolina Pub. Svc. Auth. Rfdg.:
(Santee Cooper) Series B, 6.50% 7/1/26
(Pre-Refunded to 7/1/01 @ 102) (d) 4,145 4,520
Series A, 6.25% 1/1/01 (AMBAC Insured) 2,005 2,111
19,313
SOUTH DAKOTA - 0.5%
South Dakota Student Loan Fin. Corp. Student Loan Rev.
Series A, 5.70% 8/1/99 (Escrowed to Maturity) (c)(d) 3,575 3,638
TENNESSEE - 0.8%
Memphis-Shelby County Arpt. Auth. Arpt. Rev. Rfdg.
Series A:
5.25% 2/15/01 (MBIA Insured) (c) 800 823
5.25% 2/15/02 (MBIA Insured) (c) 1,000 1,039
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
TENNESSEE - CONTINUED
Metropolitan Nashville Arpt. Auth. Arpt. Rev.
Series A, 6.25% 7/1/00 (FGIC Insured) (c) $ 2,000 $ 2,086
Tennessee Gen. Oblig. Series B, 6.10% 6/1/00 1,425 1,485
5,433
TEXAS - 6.7%
Alamo Commty. College Dist. Rfdg. (Cap. Appreciation):
0% 2/15/99 (AMBAC Insured) 2,530 2,490
0% 2/15/00 (AMBAC Insured) 3,350 3,173
Alief Independent School Dist. Rfdg. (Cap. Appreciation)
0% 2/15/02 (PSF Guaranteed) 1,000 873
Brazos Higher Ed. Auth. Inc. Student Loan Rev. Rfdg.:
Series A, 5.70% 12/1/99 (c) 1,210 1,230
Series C-1, 5.15% 6/1/99 (c) 7,600 7,651
Conroe Independent School Dist. School House & Rfdg.
0% 2/1/00 (MBIA Insured) (Escrowed to Maturity) (d) 1,190 1,129
Corpus Christi Independent. School Dist. Rfdg.
(Cap. Appreciation) 0% 8/15/01 (PSF Guaranteed) 1,600 1,431
Dallas County Gen. Oblig. 7% 8/15/01 1,750 1,906
Deer Park Independent School Dist. Rfdg. 0% 2/15/03
(PSF Guaranteed) 2,240 1,875
Harris County Toll Road Sub. Lien. Rev. Rfdg.
(Cap. Appreciation) 0% 8/1/01 3,490 3,127
Irving Independent School Dist. Cap. Appreciation
0% 2/15/04 (PSF Guaranteed) 3,985 3,191
North Texas Health Facs. Dev. Corp. Rfdg.
(United Reg'l. Health Care Sys. Inc. Proj.)
4.50% 9/1/02 (MBIA Insured) 2,050 2,088
San Antonio Gen. Oblig. Rfdg. (Gen. Impt.)
5.50% 8/1/02 2,875 3,046
Texas A&M Univ. Rev. Rfdg. (Fing. Sys.) 5.25% 5/15/01 2,300 2,375
Texas Gen. Oblig. Superconducting (Cap. Appreciation)
Series C, 0% 4/1/02 (FGIC Insured) 2,750 2,389
Texas Pub. Fin. Auth. Rfdg. (Cap. Appreciation)
Series A, 0% 10/1/01 (AMBAC Insured) 9,000 8,008
45,982
U.S. VIRGIN ISLANDS - 0.8%
Virgin Islands Pub. Fin. Auth. Rev. Series C:
5% 10/1/01 2,225 2,267
5.50% 10/1/04 2,745 2,870
5,137
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
UTAH - 5.0%
Intermountain Pwr. Agcy. Pwr. Supply Rev.:
Rfdg. (Cap. Appreciation):
Series 1, 0% 7/1/15 (AMBAC Insured)
(Escrowed to Maturity) (d) $ 7,500 $ 7,062
Series B:
0% 7/1/00 (MBIA Insured) 3,500 3,274
0% 7/1/01 (AMBAC Insured) 5,000 4,488
Rfdg. Series C, 6% 7/1/01 (MBIA Insured) 2,000 2,114
Series B, 5.50% 7/1/01 (MBIA Insured) 13,825 14,430
Provo City Energy Sys. Rev. Series A, 7.625% 11/1/12,
(FGIC Insured) (Pre-Refunded to 11/1/99 @ 100) (d) 1,000 1,046
Salt Lake Wtr. & Swr. Rev. Rfdg. 6% 2/1/01,
(AMBAC Insured) 1,650 1,735
34,149
VERMONT - 0.4%
Vermont Student Assistance Corp.
Edl. Loan Rev. Rfdg. Fin. Prog.
Series A, 6.35% 6/15/99 (AMBAC Insured) 2,500 2,543
VIRGINIA - 0.6%
Virginia Pub. School Auth.:
Rfdg. Series I, 5% 8/1/05 2,000 2,117
Series A, 6% 8/1/02 2,000 2,152
4,269
WASHINGTON - 2.5%
Clark County Pub. Util. Dist. #1 Generating Sys.
Rev. 6% 1/1/02 (FGIC Insured) 2,000 2,125
Washington Gen. Oblig. Rfdg. Series R-96B,
5.50% 7/1/03 1,000 1,067
Washington Pub. Pwr. Supply Sys. Rev. Rfdg.:
(Nuclear Proj. #1) Series A:
7.25% 7/1/99 3,010 3,097
6.50% 7/1/02 1,000 1,085
(Nuclear Proj #2):
Series A, 6.50% 7/1/02 2,220 2,408
Series B, 5.50% 7/1/03 2,000 2,123
(Nuclear Proj. #3) 5% 7/1/06 (FSA Insured) 5,000 5,221
17,126
WISCONSIN - 0.2%
Wisconsin Gen. Oblig. Series C, 5.25% 5/1/01 1,370 1,419
TOTAL MUNICIPAL BONDS
(Cost $612,035) 625,150
MUNICIPAL NOTES (B) - 0.4%
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
FLORIDA - 0.2%
Dade County Ind. Dev. Auth. Rev. (Florida Pwr. & Lt. Co.
Proj.) Series 1993, 3.35%, VRDN $ 1,000 $ 1,000
SOUTH CAROLINA - 0.2%
Charleston County Ind. Rev. (Zeigler Coal Holding Proj.)
3.50%, LOC Bank of America Nat'l. Trust & Savings, NA,
VRDN (c) 1,400 1,400
TOTAL MUNICIPAL NOTES
(Cost $2,400) 2,400
CASH EQUIVALENTS - 8.0%
SHARES
(000S)
Municipal Central Cash Fund (e)(f) (Cost $54,885) 54,885 54,885
TOTAL INVESTMENTS IN SECURITIES - 100%
(Cost $669,320) $ 682,435
SECURITY TYPE ABBREVIATIONS
VRDN - Variable Rate Demand Notes
LEGEND
(a) Security purchased on a delayed delivery or when-issued basis (see
Note 2 of Notes to Financial Statements).
(b) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(c) Private activity obligations whose interest is subject to the
federal alternative minimum tax for individuals.
(d) Security collateralized by an amount sufficient to pay interest
and principal.
(e) Information in this report regarding holdings by state and
security types do not reflect the holdings of the Municipal Central
Cash Fund. A listing of the Municipal Central Cash Fund's holdings as
of its most recent fiscal period end is available upon request.
(f) At the period end, the seven-day yield of the Municipal Central
Cash Fund was 3.53%. The yield refers to the income earned by
investing in the fund over the seven-day period, expressed as an
annual percentage.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total
value of investment in securities, is as follows (ratings are
unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 78.3% AAA, AA, A 73.7%
Baa 5.8% BBB 6.9%
Ba 0.0% BB 0.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by Moody's or S&P amounted to 1.3%.
The distribution of municipal securities by revenue source, as a
percentage of total value of investment in securities, is as follows:
General Obligation 30.0%
Electric Revenue 15.4
Education 12.2
Escrowed/Pre-Refunded 10.4
Special Tax 7.4
Healthcare 5.1
Transportation 5.0
Others 14.5
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $669,320,000. Net unrealized appreciation
aggregated $13,115,000, all of which related to appreciated investment
securities.
At August 31, 1998, the fund had a capital loss carryforward of
approximately $1,749,000 of which $837,000, and $912,000 will expire
on August 31, 2003, and 2004, respectively.
At August 31, 1998, the fund was required to defer approximately
$380,000 of losses on futures contracts.
FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) AUGUST 31, 1998

ASSETS

INVESTMENT IN SECURITIES, AT VALUE (COST $669,320) - $ 682,435
SEE ACCOMPANYING SCHEDULE

CASH 1,403

RECEIVABLE FOR FUND SHARES SOLD 1,171

INTEREST RECEIVABLE 8,021

OTHER RECEIVABLES 2

TOTAL ASSETS 693,032

LIABILITIES

PAYABLE FOR INVESTMENTS PURCHASED $ 29,658
REGULAR DELIVERY

DELAYED DELIVERY 11,637

PAYABLE FOR FUND SHARES REDEEMED 1,922

DISTRIBUTIONS PAYABLE 487

ACCRUED MANAGEMENT FEE 303

OTHER PAYABLES AND ACCRUED EXPENSES 6

TOTAL LIABILITIES 44,013

NET ASSETS $ 649,019

NET ASSETS CONSIST OF:

PAID IN CAPITAL $ 638,032

ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON (2,128)
INVESTMENTS

NET UNREALIZED APPRECIATION (DEPRECIATION) ON 13,115
INVESTMENTS

NET ASSETS, FOR 63,952 SHARES OUTSTANDING $ 649,019

NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE $10.15

PER SHARE ($649,019 (DIVIDED BY) 63,952 SHARES)

STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS YEAR ENDED AUGUST 31, 1998

INTEREST INCOME $ 32,533

EXPENSES

MANAGEMENT FEE $ 3,801

NON-INTERESTED TRUSTEES' COMPENSATION 3

TOTAL EXPENSES BEFORE REDUCTIONS 3,804

EXPENSE REDUCTIONS (7) 3,797

NET INTEREST INCOME 28,736

REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:

INVESTMENT SECURITIES 3,845

FUTURES CONTRACTS (171) 3,674

CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON 3,903
INVESTMENT SECURITIES

NET GAIN (LOSS) 7,577

NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 36,313
FROM OPERATIONS
</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
AUGUST 31, 1998 AUGUST 31, 1997

INCREASE (DECREASE) IN NET ASSETS

OPERATIONS $ 28,736 $ 31,324
NET INTEREST INCOME

NET REALIZED GAIN (LOSS) 3,674 1,491

CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 3,903 6,297

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 36,313 39,112
FROM OPERATIONS

DISTRIBUTIONS TO SHAREHOLDERS FROM NET INTEREST INCOME (28,736) (31,324)

SHARE TRANSACTIONS 218,070 249,129
NET PROCEEDS FROM SALES OF SHARES

REINVESTMENT OF DISTRIBUTIONS FROM NET INTEREST INCOME 23,954 26,370

COST OF SHARES REDEEMED (326,250) (348,515)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING (84,226) (73,016)
FROM SHARE TRANSACTIONS

TOTAL INCREASE (DECREASE) IN NET ASSETS (76,649) (65,228)

NET ASSETS

BEGINNING OF PERIOD 725,668 790,896

END OF PERIOD $ 649,019 $ 725,668

OTHER INFORMATION
SHARES

SOLD 21,596 24,897

ISSUED IN REINVESTMENT OF DISTRIBUTIONS 2,373 2,638

REDEEMED (32,320) (34,878)

NET INCREASE (DECREASE) (8,351) (7,343)

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED AUGUST 31,

1998 1997 1996 1995 1994
SELECTED PER-SHARE DATA

NET ASSET VALUE, BEGINNING $ 10.040 $ 9.930 $ 9.980 $ 9.840 $ 10.090
OF PERIOD

INCOME FROM INVESTMENT .419 .425 .418 .429 .443
OPERATIONS
NET INTEREST INCOME

NET REALIZED AND UNREALIZED .110 .110 (.050) .140 (.240)
GAIN (LOSS)

TOTAL FROM INVESTMENT .529 .535 .368 .569 .203
OPERATIONS

LESS DISTRIBUTIONS

FROM NET INTEREST INCOME (.419) (.425) (.418) (.429) (.443)

IN EXCESS OF NET REALIZED GAIN - - - - (.010)

TOTAL DISTRIBUTIONS (.419) (.425) (.418) (.429) (.453)

NET ASSET VALUE, END OF PERIOD $ 10.150 $ 10.040 $ 9.930 $ 9.980 $ 9.840

TOTAL RETURN A, B 5.37% 5.49% 3.75% 5.95% 2.05%

RATIOS AND SUPPLEMENTAL DATA

NET ASSETS, END OF PERIOD $ 649 $ 726 $ 791 $ 909 $ 1,083
(IN MILLIONS)

RATIO OF EXPENSES TO AVERAGE .55% .55% .54% C .55% .47% C
NET ASSETS

RATIO OF NET INTEREST INCOME TO 4.15% 4.25% 4.17% 4.38% 4.45%
AVERAGE NET ASSETS

PORTFOLIO TURNOVER RATE 33% 32% 78% 51% 44%

</TABLE>

A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT INCLUDE THE FORMER ACCOUNT CLOSEOUT FEE.
C 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.
NOTES TO FINANCIAL STATEMENTS
For the period ended August 31, 1998

1. SIGNIFICANT ACCOUNTING
POLICIES.
Spartan Short-Intermediate Municipal Income Fund (the fund) is a fund
of Fidelity Union Street Trust (the trust) and is authorized to issue
an unlimited number of shares. The trust is registered under the
Investment Company Act of 1940, as amended, as an open-end management
investment company organized as a Massachusetts business trust. The
financial statements have been prepared in conformity with generally
accepted accounting principles which require management to make
certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. Securities are valued based upon a computerized
matrix system and/or appraisals by a pricing service, both of which
consider market transactions and dealer-supplied valuations.
Securities for which quotations are not readily available are valued
at their fair value as determined in good faith under consistently
applied procedures under the general supervision of the Board of
Trustees. Short-term securities with remaining maturities of sixty
days or less for which quotations are not readily available are valued
at amortized cost or original cost plus accrued interest, both of
which approximate current value.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information
regarding income taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of
premium and accretion of original issue discount, is accrued as
earned.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and
paid monthly from net interest income. Distributions from realized
gains, if any, are recorded on the ex-dividend date.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for futures transactions, market discount, and capital loss
carryforwards. The fund also utilized earnings and profits distributed
to shareholders on redemption of shares as a part of the dividends
paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and
may affect the per-share allocation between net interest income and
realized and unrealized gain (loss). Accumulated undistributed net
realized gain (loss) on investments may include temporary book and tax
basis differences that will reverse in a subsequent period. Any
taxable gain remaining at fiscal year end is distributed in the
following year.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
MUNICIPAL CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the Securities and Exchange Commission, the fund may invest in the
Municipal Central Cash Fund (the Cash Fund) managed by Fidelity
Investments Money Management, Inc., an affiliate of Fidelity
Management & Research Company (FMR). The Cash Fund is an open-end
money market fund available only to investment companies and other
accounts managed by FMR and its affiliates. The Cash Fund seeks
preservation of capital, liquidity, and current income by investing in
high-quality, short-term municipal securities of various states and
municipalities. Income distributions from the Cash Fund are declared
daily and paid monthly from net interest income. Income distributions
earned by the fund are recorded as interest income in the accompanying
financial statements.
WHEN-ISSUED SECURITIES. The fund may purchase or sell securities on a
when-issued basis. Payment and delivery may take place a month or more
after the date of the transaction. The price of the underlying
securities is fixed at the time the transaction is negotiated. The
market values of the securities purchased on a when-issued or forward
commitment basis are identified as such in the fund's schedule of
investments. The fund may receive compensation for interest forgone in
the purchase of a when-issued security. With respect to purchase
commitments, the fund identifies securities as segregated in its
custodial records with a value at least equal to the amount of the
commitment. Losses may arise due to changes in the market value of the
underlying securities, if the counterparty does not perform under the
contract, or if the issuer does not issue the securities due to
political, economic, or other factors.
FUTURES CONTRACTS. The fund may use futures contracts to manage its
exposure to the bond markets and to fluctuations in interest rates.
Buying futures tends to increase the fund's exposure to the underlying
instrument, while selling futures tends to decrease the fund's
exposure to the underlying instrument or hedge other fund investments.
Losses may arise from changes in the value of the underlying
instruments or if the counterparties do not perform under the
contracts' terms. Gains (losses) are realized upon the expiration or
closing of the futures contracts. Futures contracts are valued at the
settlement price established each day by the board of trade or
exchange on which they are traded.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $228,029,000 and $325,844,000, respectively.
3. PURCHASES AND SALES OF INVESTMENTS - CONTINUED
The market value of futures contracts opened and closed during the
period amounted to $31,118,000 and $31,242,000, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR pays all
expenses, except the compensation of the non-interested Trustees and
certain exceptions such as interest, taxes, brokerage commissions and
extraordinary expenses. FMR receives a fee that is computed daily at
an annual rate of .55% of the fund's average net assets.
5. EXPENSE REDUCTIONS.
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 were used to reduce a portion of
the fund's expenses. During the period, the fund's expenses were
reduced by $7,000 under these arrangements.
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Fidelity Union Street Trust and the Shareholders of
Spartan Short-Intermediate Municipal Income Fund:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Spartan Short-Intermediate Municipal Income Fund (a fund of Fidelity
Union Street Trust) at August 31, 1998, and the results of its
operations, the changes in its net assets and the financial highlights
for the periods indicated, in conformity with generally accepted
accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Spartan Short-Intermediate Municipal Income
Fund's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe
that our audits, which included confirmation of securities at August
31, 1998 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
October 7, 1998
DISTRIBUTIONS

During fiscal year ended 1998, 100% of the fund's income dividends was
free from federal income tax, and 13.81% of the fund's income
dividends was subject to the federal alternative minimum tax.
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Fred L. Henning, Jr., Vice President
Dwight D. Churchill, Vice President
Norman Lind, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Stanley N. Griffith, Assistant Vice President
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Thomas J. Simpson, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
UMB Bank, n.a.
Kansas City, MO and
Fidelity Service Company, Inc.
Boston, MA
* INDEPENDENT TRUSTEES
CUSTODIAN
UMB Bank, n.a.
Kansas City, MO
FIDELITY'S MUNICIPAL BOND FUNDS
Spartan Arizona Municipal Income
(registered trademark)
Spartan California Municipal Income
Spartan Connecticut Municipal Income
Spartan Florida Municipal Income
Spartan Intermediate Municipal Income
Spartan Maryland Municipal Income
Spartan Massachusetts Municipal Income
Spartan Michigan Municipal Income
Spartan Minnesota Municipal Income
Spartan Municipal Income
Spartan New Jersey Municipal Income
Spartan New York Municipal Income
Spartan Ohio Municipal Income
Spartan Pennsylvania Municipal Income
Spartan Short-Intermediate
Municipal Income
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
TouchTone Xpress 1-800-544-5555
(REGISTERED TRADEMARK)
CORPORATE HEADQUARTERS
82 DEVONSHIRE ST., BOSTON, MA 02109
WWW.FIDELITY.COM
(REGISTERED TRADEMARK)
AUTOMATED LINE FOR QUICKEST SERVICE

SPARTAN(REGISTERED TRADEMARK)

(REGISTERED TRADEMARK)

ARIZONA
MUNICIPAL
FUNDS

ANNUAL REPORT
AUGUST 31, 1998
CONTENTS

<TABLE>
<CAPTION>
<S> <C> <C>
PRESIDENT'S MESSAGE 3 NED JOHNSON ON INVESTING STRATEGIES.

SPARTAN ARIZONA MUNICIPAL INCOME FUND

PERFORMANCE 4 HOW THE FUND HAS DONE OVER TIME.

FUND TALK 7 THE MANAGER'S REVIEW OF FUND
PERFORMANCE, STRATEGY AND OUTLOOK.

INVESTMENT CHANGES 10 A SUMMARY OF MAJOR SHIFTS IN THE FUND'S
INVESTMENTS OVER THE PAST SIX MONTHS.

INVESTMENTS 11 A COMPLETE LIST OF THE FUND'S INVESTMENTS
WITH THEIR MARKET VALUES.

FINANCIAL STATEMENTS 16 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.

SPARTAN ARIZONA MUNICIPAL MONEY MARKET FUND

PERFORMANCE 20 HOW THE FUND HAS DONE OVER TIME.

FUND TALK 22 THE MANAGER'S REVIEW OF FUND
PERFORMANCE, STRATEGY AND OUTLOOK.

INVESTMENT CHANGES 24 A SUMMARY OF MAJOR SHIFTS IN THE FUND'S
INVESTMENTS OVER THE PAST SIX MONTHS
AND ONE YEAR.

INVESTMENTS 25 A COMPLETE LIST OF THE FUND'S INVESTMENTS.

FINANCIAL STATEMENTS 28 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.

NOTES 32 NOTES TO THE FINANCIAL STATEMENTS.

REPORT OF INDEPENDENT 35 THE AUDITORS' OPINION.
ACCOUNTANTS

DISTRIBUTIONS 36

</TABLE>

THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUNDS. THIS REPORT IS NOT
AUTHORIZED FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUNDS UNLESS PRECEDED OR ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS.
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.
NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND
EXPENSES, CALL 1-800-544-8888
FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND
MONEY.
To reduce expenses and demonstrate respect for our environment, we
have initiated a project through which we will begin eliminating
duplicate copies of most financial reports and prospectuses to most
households, even if they have more than one account in the fund. If
additional copies of financial reports, prospectuses or historical
account information are needed, please call 1-800-544-6666.
PRESIDENT'S MESSAGE

PERFORMANCE: THE BOTTOM LINE

There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). You can also look at the fund's income, as
reflected in the fund's yield, to measure performance. If Fidelity had
not reimbursed certain fund expenses, the life of fund total returns
would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1998 PAST 1 LIFE OF
YEAR FUND

SPARTAN ARIZONA MUNICIPAL INCOME 7.16% 35.63%

LB ARIZONA ENHANCED MUNICIPAL BOND 7.98% N/A

ARIZONA MUNICIPAL DEBT FUNDS AVERAGE 7.87% N/A

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, or since the fund
started on October 11, 1994. For example, if you had invested $1,000
in a fund that had a 5% return over the past year, the value of your
investment would be $1,050. You can compare the fund's returns to the
performance of the Lehman Brothers Arizona Enhanced Municipal Bond
Index - a total return performance benchmark for Arizona
investment-grade municipal bonds with maturities of at least one year.
To measure how the fund's performance stacked up against its peers,
you can compare it to the Arizona municipal debt funds average, which
reflects the performance of mutual funds with similar objectives
tracked by Lipper Analytical Services, Inc. The past one year average
represents a peer group of 39 mutual funds. These benchmarks will
include reinvested dividends and capital gains, if any, and exclude
the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1998 PAST 1 LIFE OF
YEAR FUND

SPARTAN ARIZONA MUNICIPAL INCOME 7.16% 8.15%

LB ARIZONA ENHANCED MUNICIPAL BOND 7.98% N/A

ARIZONA MUNICIPAL DEBT FUNDS AVERAGE 7.87% N/A

Spartan AZ Muni Income LB Municipal Bond
00434 LB015
1994/10/31 10000.00 10000.00
1994/11/30 9820.11 9819.20
1994/12/31 10064.35 10035.32
1995/01/31 10414.23 10322.13
1995/02/28 10773.06 10622.30
1995/03/31 10866.46 10744.35
1995/04/30 10885.64 10757.03
1995/05/31 11219.72 11100.28
1995/06/30 11111.21 11003.71
1995/07/31 11215.14 11108.03
1995/08/31 11372.18 11248.88
1995/09/30 11463.33 11320.08
1995/10/31 11631.80 11484.67
1995/11/30 11820.94 11675.21
1995/12/31 11925.02 11787.40
1996/01/31 12041.15 11876.40
1996/02/29 11942.15 11796.23
1996/03/31 11779.23 11645.48
1996/04/30 11735.76 11612.52
1996/05/31 11716.16 11607.88
1996/06/30 11827.94 11734.29
1996/07/31 11918.94 11841.07
1996/08/31 11908.53 11838.23
1996/09/30 12056.07 12003.96
1996/10/31 12194.14 12139.73
1996/11/30 12400.73 12361.88
1996/12/31 12343.01 12309.96
1997/01/31 12367.61 12333.23
1997/02/28 12469.45 12446.45
1997/03/31 12294.99 12280.54
1997/04/30 12389.13 12383.32
1997/05/31 12544.70 12569.57
1997/06/30 12675.15 12703.44
1997/07/31 13009.98 13055.32
1997/08/31 12880.60 12932.99
1997/09/30 13024.85 13086.51
1997/10/31 13097.69 13170.65
1997/11/30 13156.84 13248.10
1997/12/31 13326.81 13441.39
1998/01/31 13437.65 13580.10
1998/02/28 13445.37 13584.18
1998/03/31 13446.17 13596.13
1998/04/30 13383.32 13534.81
1998/05/31 13544.37 13749.07
1998/06/30 13579.60 13803.24
1998/07/31 13616.10 13837.88
1998/08/31 13803.11 14051.68
IMATRL PRASUN SHR__CHT 19980831 19980909 102554 R00000000000049
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Spartan Arizona Municipal Income Fund on October 31, 1994,
shortly after the fund started. As the chart shows, by August 31,
1998, the value of the investment would have grown to $13,803 - a
38.03% increase on the initial investment. For comparison, look at how
the Lehman Brothers Municipal Bond Index - which reflects the
performance of the investment-grade municipal bond market - did over
the same period. With dividends and capital gains, if any, reinvested,
the same $10,000 would have grown to $14,052 - a 40.52% increase.

UNDERSTANDING
PERFORMANCE
HOW A FUND DID YESTERDAY IS
NO GUARANTEE OF HOW IT WILL
DO TOMORROW. BOND PRICES, FOR
EXAMPLE, GENERALLY MOVE IN THE
OPPOSITE DIRECTION OF INTEREST RATES.
IN TURN, THE SHARE PRICE, RETURN
AND YIELD OF A FUND THAT INVESTS
IN BONDS WILL VARY. THAT MEANS
IF YOU SELL YOUR SHARES DURING
A MARKET DOWNTURN, YOU MIGHT
LOSE MONEY. BUT IF YOU CAN
RIDE OUT THE MARKET'S UPS AND
DOWNS, YOU MAY HAVE A GAIN.
(CHECKMARK)
TOTAL RETURN COMPONENTS
YEARS ENDED AUGUST 31, OCTOBER 11, 1994
(COMMENCEMENT
OF OPERATIONS) TO
AUGUST 31,

1998 1997 1996 1995

DIVIDEND RETURNS 4.55% 4.80% 4.92% 5.34%

CAPITAL RETURNS 2.61% 3.36% -0.20% 6.40%

TOTAL RETURNS 7.16% 8.16% 4.72% 11.74%

TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
fund. A capital return reflects both the amount paid by the fund to
shareholders as capital gain distributions and changes in the fund's
share price. Both returns assume the dividends or capital gains, if
any, paid by the fund are reinvested.
DIVIDENDS AND YIELD

<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED AUGUST 31, 1998 PAST 1 PAST 6 PAST 1
MONTH MONTHS YEAR

DIVIDENDS PER SHARE 3.93(CENTS) 23.66(CENTS) 47.34(CENTS)

ANNUALIZED DIVIDEND RATE 4.24% 4.32% 4.36%

30-DAY ANNUALIZED YIELD 3.88% - -

30-DAY ANNUALIZED TAX-EQUIVALENT YIELD 6.39% - -

</TABLE>

DIVIDENDS per share show the income paid by the fund for a set period
and do not reflect any tax reclassifications. If you annualize this
number, based on an average share price of $10.91 over the past one
month, $10.87 over the past six months and $10.87 over the past one
year, you can compare the fund's income over these three periods. The
30-day annualized YIELD is a standard formula for all funds based on
the yields of the bonds in the fund, averaged over the past 30 days.
This figure shows you the yield characteristics of the fund's
investments at the end of the period. It also helps you compare funds
from different companies on an equal basis. The tax-equivalent yield
shows what you would have to earn on a taxable investment to equal the
fund's tax-free yield, if you're in the 39.26% combined effective 1998
federal and state income tax bracket, but does not reflect the payment
of the federal alternative minimum tax, if applicable.
SPARTAN ARIZONA MUNICIPAL INCOME FUND

FUND TALK: THE MANAGER'S OVERVIEW

MARKET RECAP
A glut of new municipal bond
issuance - combined with
slackened demand and strong U.S
Treasury bond performance -
caused the municipal bond market
to underperform its taxable
counterparts during the 12-month
period that ended August 31, 1998.
In this time, the Lehman Brothers
Municipal Bond Index - a measure
of muni bond performance -
returned 8.65%. In contrast, the
Lehman Brothers Aggregate Bond
Index - which gauges the
performance of the taxable bond
market - returned 10.57%. Things
were looking up for fixed-income
markets at the beginning of the
period, with positive U.S. economic
news and the Federal Reserve
Board's reluctance to raise interest
rates playing key roles. The tides
shifted, however, in the later stages of
1997 when new-issue supply began to
eclipse demand and muni bond
performance suffered. The fourth
quarter of 1997 was punctuated by
extreme volatility in Asian markets,
and concerned investors began to
consider fixed-income investments
as a more stable alternative. This
helped municipal bond
performance slightly, but a deluge of
new issuance in early 1998 -
prompted primarily by low interest
rates - took away some steam. As
the period progressed, issuers
showed no signs of letting up. In
May, for example, the largest single
deal in municipal bond history took
place - a $3.5 billion deal floated by
the Long Island Power Authority.
This supply/demand imbalance
continued to play out through the
end of August.
NOTE TO SHAREHOLDERS: Christine Thompson became Portfolio Manager of
Spartan Arizona Municipal Income Fund on July 13, 1998.
Q. HOW DID THE FUND PERFORM, CHRISTINE?
A. For the 12-month period that ended August 31, 1998, the fund had a
total return of 7.16%. To get a sense of how the fund did relative to
its competitors, the Arizona municipal debt funds average returned
7.87% for the same one-year period, according to Lipper Analytical
Services. Additionally, the Lehman Brothers Arizona Enhanced Municipal
Bond Index - a broad measure of the performance of the state's
municipal bond market - returned 7.98% for the same 12-month period.
Q. WHAT ROLE DOES THE LEHMAN BROTHERS ARIZONA ENHANCED MUNICIPAL BOND
INDEX PLAY IN MANAGING THE FUND?
A. It plays a very important role. It's the fund's benchmark index and
includes most of the universe of Arizona municipal bonds with
maturities of four years or more. I use the index as a starting point
for my investment decisions, managing the fund to be generally as
sensitive to changes in interest rates as the index. In addition, I
refer to the index when deciding how to allocate assets among
different maturities and market sectors - such as general obligation,
housing and others - based on my view of the relative value of each
maturity or sector.
Q. WHY DID THE FUND LAG ITS PEERS AND THE LEHMAN BROTHERS ARIZONA
ENHANCED MUNICIPAL BOND INDEX?
A. The primary reason for the fund's lag was its relatively heavy
concentration in Aaa-rated insured bonds and its relatively light
stake in higher-yielding Baa-rated bonds. Because they were in fairly
strong demand and short supply, Baa-rated bonds outpaced their
higher-quality counterparts during much of the year. The fund's
emphasis on higher-quality bonds had to do with the fact that the
spread - or difference - in yield between higher- and lower-quality
bonds was quite small, especially when viewed from a historical basis.
Using Fidelity's quantitative and fundamental research as a guide, it
was determined that the small amount of extra yield offered by
Baa-rated bonds generally wasn't enough to compensate for the
additional risk associated with lower-quality securities.
Q. WHAT EXPLAINS THE FUND'S RELATIVELY HEAVY EMPHASIS ON BONDS WITH
MATURITIES OF BETWEEN 10 AND 20 YEARS?
A. That maturity range offered an attractive amount of reward - or
yield - given their interest-rate sensitivity. Generally speaking, the
longer a bond's maturity the more yield it should pay. That extra
yield reflects compensation for added "interest-rate" sensitivity,
which is how much a bond's price will fluctuate when interest rates
change. Over the past year, bonds with maturities of 20 years and
longer generally weren't offering enough incremental yield for their
added interest-rate sensitivity. By emphasizing intermediate bonds of
between 10 and 20 years, the fund was able to capture most of the
yield offered by longer-term bonds, and improve its risk/reward
profile.
Q. THE FUND HAD A SMALL POSITION IN PUERTO RICO BONDS DURING THE YEAR.
WHAT ROLE DO THEY PLAY IN AN ARIZONA FUND?
A. As a territory of the United States, Puerto Rico can issue bonds
that are free from taxes in all 50 states. When the supply of Arizona
municipals is tight or their prices look expensive, the fund
occasionally turns to Puerto Rico for more attractively priced
securities.
Q. WHAT'S YOUR OUTLOOK FOR THE MUNICIPAL MARKET?
A. From historical measures, municipals are priced quite attractively
compared to their U.S. Treasury counterparts. One indication of
municipals' cheap prices is that their yields are roughly 90% of
Treasury yields; historically, municipals yield between 65% and 80% of
Treasuries. If municipal bond yields - which move in the opposite
direction of their prices - move back to their historical relationship
with Treasuries because of more favorable supply and demand
conditions, I believe they are likely to perform relatively well.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.

CHRISTINE THOMPSON ON THE
ARIZONA ECONOMY:
"Arizona's economy is one of the
strongest in the United States. Job
growth has been quite good and
unemployment stands at about 4%.
Once heavily dependent on resources
such as citrus, copper and cattle -
as well as tourism - the state's
business base is more diversified
today, which is a plus. That said, the
economic turmoil in Asia - which
accounts for a good portion of the
state's exports - could slow the
economy's growth somewhat. Arizona
companies export a variety of goods
to Asia, including electronics and
electronic equipment as well as
transportation equipment. Despite
a potential slowdown, the state
is expected to remain one of the
nation's fastest-growing economies."
(solid bullet) General obligation bonds (GOs)
made up the fund's largest sector
concentration at 26.4% of
investments at the end of the
period. A GO is backed by the full
faith and credit - which includes
the taxing power - of a city, county,
state or other issuer, and is repaid
with general revenue including taxes.
FUND FACTS
GOAL: high current tax-free
income for Arizona residents
by investing in investment-grade
municipal securities whose
interest is free from federal
and Arizona income taxes
FUND NUMBER: 434
TRADING SYMBOL: FSAMI
START DATE: October 11, 1994
SIZE: as of August 31, 1998,
more than $24 million
MANAGER: Christine Thompson,
since July 1998; manager,
various Fidelity and Spartan
municipal income funds;
joined Fidelity in 1985
(checkmark)
SPARTAN ARIZONA MUNICIPAL INCOME FUND

INVESTMENT CHANGES

TOP FIVE SECTORS AS OF AUGUST 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE SECTORS
6 MONTHS AGO

GENERAL OBLIGATION 26.4 30.5

SPECIAL TAX 17.3 16.4

ELECTRIC REVENUE 12.4 10.7

WATER & SEWER 10.6 7.1

ESCROWED/PRE-REFUNDED 8.2 9.3

AVERAGE YEARS TO MATURITY AS OF AUGUST 31, 1998
6 MONTHS AGO

YEARS 11.2 9.8

AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY
DOLLAR AMOUNT.
DURATION AS OF AUGUST 31, 1998
6 MONTHS AGO

YEARS 6.1 6.0

DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH
A FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER
FACTORS ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE.
ACCORDINGLY, A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS
EXAMPLE.
QUALITY DIVERSIFICATION (MOODY'S RATINGS)
AS OF AUGUST 31, 1998 AS OF FEBRUARY 28, 1998
AAA 57.9%
AA, A 32.5%
BAA 3.9%
SHORT-TERM
INVESTMENTS 5.7%
AAA 52.7%
AA, A 33.9%
BA 7.4%
SHORT-TERM
INVESTMENTS 6.0%
ROW: 1, COL: 1, VALUE: 57.9
ROW: 1, COL: 2, VALUE: 32.5
ROW: 1, COL: 3, VALUE: 3.9
ROW: 1, COL: 4, VALUE: 5.7
ROW: 1, COL: 5, VALUE: NIL
ROW: 1, COL: 6, VALUE: NIL
ROW: 1, COL: 1, VALUE: 52.7
ROW: 1, COL: 2, VALUE: 33.9
ROW: 1, COL: 3, VALUE: 7.4
ROW: 1, COL: 4, VALUE: 6.0
ROW: 1, COL: 5, VALUE: NIL
ROW: 1, COL: 6, VALUE: NIL
WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P RATINGS.
AMOUNTS SHOWN ARE AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
SPARTAN ARIZONA MUNICIPAL INCOME FUND

INVESTMENTS AUGUST 31, 1998

SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES

MUNICIPAL BONDS - 94.3%
MOODY'S RATINGS (C) PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 1)
ARIZONA - 87.9%
Arizona Health Facs. Auth. Hosp. Sys. Rev.
Rfdg. (St. Lukes Health Sys.) 7.25% 11/1/14
(Pre-Refunded to 11/1/03 @ 102) (d) Aaa $ 375,000 $ 425,996
Arizona Trans. Board Excise Tax Rev.
(Maricopa County Reg. Area):
Rfdg.:
Series A, 6.50% 7/1/04 (AMBAC Insured) Aaa 100,000 112,528
Series B, 6% 7/01/05 (AMBAC Insured) Aaa 150,000 166,250
Series A:
5.40% 7/1/01 (AMBAC Insured) Aaa 1,000,000 1,042,190
5.75% 7/1/04 (AMBAC Insured) Aaa 440,000 478,144
5.75% 7/1/05 (AMBAC Insured) Aaa 400,000 437,436
Arizona Trans. Board Hwy. Rev. Rfdg.
Sub Series A:
6.60% 7/1/08 (Pre-Refunded to
7/1/01 @ 101.5) (d) Aaa 200,000 217,734
6.50% 7/1/11 (Pre-Refunded to
7/1/01 @ 101.5) (d) Aaa 300,000 325,803
Arizona Univ. Rev.:
Rfdg. 6% 7/1/06 A1 1,000,000 1,109,960 7% 7/1/15
(Pre-Refunded to 7/1/02 @ 101) (d) Aaa 500,000 559,465
Central Arizona Wtr. Conservation Dist. Contract
Rev. Rfdg. (Central Arizona Proj.):
Series A, 5.50% 11/1/10 A1 375,000 407,501
Series B, 6.30% 11/1/02 (MBIA Insured) Aaa 200,000 215,618
Chandler Gen. Oblig.:
6.50% 7/1/10 (MBIA Insured) Aaa 200,000 238,756
6.50% 7/1/11 (MBIA Insured) Aaa 225,000 269,415
Chandler Wtr. & Swr. Rev.
5.50% 7/1/15 (MBIA Insured) Aaa 1,000,000 1,052,150
Cochise County Union School Dist. #68
(Sierra Vista) 9% 7/1/02 (FGIC Insured) (e) Aaa 200,000 235,614
Flagstaff Gen. Oblig. 4.50%
7/1/13 (FGIC Insured) Aaa 200,000 195,084
Glendale Ind. Dev. Auth. Edl. Facs.
Rev. Rfdg. (American Graduate School Int'l.)
6.55% 7/1/06 (Connie Lee Insured)
(Pre-Refunded to 7/1/05 @ 101) (d) Aaa 150,000 172,820
Maricopa County Ctfs. of Prtn. 5.625% 6/1/00 Baa1 310,000 315,608
Maricopa County Hosp. Rev. Rfdg.
(Sun Health Corp.) 6.125% 4/1/18 Baa1 300,000 321,969
Maricopa County Ind. Dev. Auth. Hosp. Facs.
Rev. (Mayo Clinic Hosp.) 5.25% 11/15/37 AA+ 1,000,000 1,007,380
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 1)
ARIZONA - CONTINUED
Maricopa County School Dist. Rfdg.:
#1 Phoenix Elementary (Cap. Appreciation)
Second Series, 0% 7/1/05 (MBIA Insured) Aaa $ 500,000 $ 378,615
#3 Tempe Elementary (Cap. Appreciation)
0% 7/1/08 (AMBAC Insured) Aaa 500,000 326,625
#4 Mesa Univ. 5.25% 7/1/04 (FSA Insured) Aaa 300,000 319,251
#14 Creighton 6.50% 7/1/04
(FGIC Insured) (b) Aaa 200,000 225,720
Maricopa County Unified School Dist. #80
(Chandler) 6.60% 7/1/06 (FGIC Insured) Aaa 400,000 465,272
Mesa Gen. Oblig. Rfdg. 5.70% 7/1/03
(FGIC Insured) Aaa 250,000 269,300
Mohave County Ind. Dev. Auth. Ind. Dev. Rev.
(North Star Steel Co. Proj.) Series B,
5.50% 12/1/20 AA- 250,000 261,090
Navajo County Poll. Cont. Corp. Rev. Rfdg.
(Arizona Pub. Svc. Co.) Series A,
5.875% 8/15/28 Baa1 200,000 208,244
Phoenix Arpt. Rev. Series D,
6.40% 7/1/12 (MBIA Insured) (b) Aaa 810,000 896,459
Phoenix Civic Impt. Corp. Arpt. Rev. Rfdg.
(Sr. Lien) 5.25% 7/1/09 (b) Aa2 400,000 427,088
Phoenix Civic Impt. Corp. Wtr. Sys.
Rev. (Jr. Lien) 5.45% 7/1/19 Aa3 500,000 517,695
Phoenix Gen. Oblig.:
Rfdg. Series A, 7.50% 7/1/08 AA1 100,000 125,022 4.50% 7/1/18 AA1
400,000 374,980
Phoenix Str. & Hwy. User Rev. Rfdg.
(Jr. Lien) 6.25% 7/1/11 (MBIA Insured) Aaa 250,000 272,660
Phoenix Wtr. Sys. Rev. Rfdg. 4.75% 7/1/01 Aa3 400,000 408,676
Pima County Ind. Dev. Auth. Rev.
Rfdg. (Healthpartners) Series A,
5.625% 4/1/14 (MBIA Insured) Aaa 200,000 215,542
Pima County Unified School Dist. Rfdg.
#1 Tucson:
7.50% 7/1/10 (FGIC Insured) Aaa 250,000 321,340
5% 7/1/11 (FGIC Insured) Aaa 500,000 515,815
#10 Amphitheater (Cap Appreciation)
0% 7/1/00 (FGIC Insured) Aaa 300,000 280,605
Salt River Proj. Agric. Impt. & Pwr. Dist. Elec.
Sys. Rev.:
Rfdg.:
Series A, 5.75% 1/1/07 Aa2 300,000 331,110
Series B, 6.50% 1/1/04 Aa2 400,000 447,232
Series C, 6.25% 1/1/19 Aa2 500,000 533,265
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 1)
ARIZONA - CONTINUED
Scottsdale Gen. Oblig. Rfdg.:
Series C, 6.375% 7/1/01 AA1 $ 250,000 $ 267,368
5.50% 7/1/09 AA1 100,000 110,352
Scottsdale Str. & Hwy. User Rev. Rfdg.
5.50% 7/1/07 A1 800,000 873,768
Tempe Unified High School Dist. #213:
Rfdg. & Impt. 7% 7/1/08 (FGIC Insured) Aaa 310,000 375,271
(Project of 1994):
Series B, 7% 7/1/03 (FGIC Insured) Aaa 400,000 452,616
Series C, 4% 7/1/12 (MBIA Insured) Aaa 200,000 186,202
Tucson Gen. Oblig. Rfdg. 6.75% 7/1/03
(FGIC Insured) Aaa 200,000 224,598
Tucson Str. & Hwy. User Rev. (Senior Lien) Series A:
Rfdg. 6% 7/1/10 (MBIA Insured) Aaa 400,000 461,196
7% 7/1/11 (MBIA Insured) Aaa 300,000 375,441
Univ. of Arizona Rev. Rfdg. (Univ. Rev. Sys.)
6.375% 6/1/05 A1 400,000 437,252
Yuma County Hosp. Dist. #001,
6.35% 11/15/07 (Escrowed to Maturity) (d) A 265,000 299,967
21,493,058
PUERTO RICO - 6.4%
Puerto Rico Commonwealth Hwy. & Trans.
Auth. Hwy. Rev.:
Series W, 5.50% 7/1/17 Baa1 100,000 102,555
Series Y, 6.25% 7/1/08 (MBIA Insured) Aaa 400,000 463,195
Puerto Rico Elec. Pwr. Auth. Pwr. Rev. Series DD,
5% 7/1/28 (MBIA Insured) Aaa 1,000,000 1,002,230
1,567,980
TOTAL MUNICIPAL BONDS
(Cost $21,949,863) 23,061,038
MUNICIPAL NOTES (A) - 5.7%
ARIZONA - 5.7%
Coconino County Poll. Cont. Corp. Rev.
(Arizona Pub. Svc. Co. Navajo Proj.)
Series A, 3.65%, LOC Bank of America
Nat'l. Trust & Savings, VRDN (b) P-1 500,000 500,000
MUNICIPAL NOTES (A) - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 1)
ARIZONA - CONTINUED
Pinal County Ind. Dev. Auth. Poll. Cont. Rev.
(Magma Copper Co./Newmont Mining Corp.)
3.50% LOC National Westminster Bank, VRDN P-1 $ 600,000 $ 600,000
Tempe Excise Tax Rev. 3.65% (BPA State Street Bank
& Trust Co.) VRDN VMIG-1 300,000 300,000
TOTAL MUNICIPAL NOTES
(Cost $1,400,000) 1,400,000
TOTAL INVESTMENTS - 100%
(Cost $23,349,863) $ 24,461,038
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
SOLD
3 Municipal Bond Contracts Dec. 1998 $ 379,219 $ (3,487)
THE FACE VALUE OF FUTURES SOLD AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 1.6%
SECURITY TYPE ABBREVIATIONS
VRDN - Variable Rate Demand Notes
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) Private activity obligations whose interest is subject to the
federal alternative minimum tax for individuals.
(c) Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.
(d) Security collateralized by an amount sufficient to pay interest
and principal.
(e) A portion of the security was pledged to cover margin requirements
for futures contracts. At the period end, the value of securities
pledged amounted to $23,561.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total
value of investment in securities, is as follows (ratings are
unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 84.5% AAA, AA, A 88.7%
Baa 3.9% BBB 2.6%
Ba 0.0% BB 0.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The distribution of municipal securities by revenue source, as a
percentage of total value of investment in securities, is as follows:
General Obligation 26.4%
Special Tax 17.3
Electric Revenue 12.4
Water and Sewer 10.6
Escrowed/Pre-Refunded 8.2
Transportation 7.7
Education 6.3
Health Care 6.3
Others (individually less than 5%) 4.8
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $23,349,863. Net unrealized appreciation
aggregated $1,111,175, of which $1,118,956 related to appreciated
investment securities and $7,781 related to depreciated investment
securities.
The fund hereby designates approximately $59,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
SPARTAN ARIZONA MUNICIPAL INCOME FUND

FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1998
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (COST $23,349,863) - $ 24,461,038

SEE ACCOMPANYING SCHEDULE

RECEIVABLE FOR FUND SHARES SOLD 15,943

INTEREST RECEIVABLE 218,714

OTHER RECEIVABLES 731

TOTAL ASSETS 24,696,426

LIABILITIES

PAYABLE TO CUSTODIAN BANK $ 54,815

PAYABLE FOR FUND SHARES REDEEMED 24

DISTRIBUTIONS PAYABLE 22,676

ACCRUED MANAGEMENT FEE 11,476

PAYABLE FOR DAILY VARIATION ON FUTURES CONTRACTS 1,500

OTHER PAYABLES AND ACCRUED EXPENSES 37

TOTAL LIABILITIES 90,528

NET ASSETS $ 24,605,898

NET ASSETS CONSIST OF:

PAID IN CAPITAL $ 23,461,246

ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) 36,964
ON INVESTMENTS

NET UNREALIZED APPRECIATION (DEPRECIATION) ON 1,107,688
INVESTMENTS

NET ASSETS, FOR 2,240,414 SHARES OUTSTANDING $ 24,605,898

NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE $10.98
PER SHARE ($24,605,898 (DIVIDED BY) 2,240,414 SHARES)

STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31, 1998

INTEREST INCOME $ 1,053,581

EXPENSES

MANAGEMENT FEE $ 118,342

NON-INTERESTED TRUSTEES' COMPENSATION 78

TOTAL EXPENSES BEFORE REDUCTIONS 118,420

EXPENSE REDUCTIONS (2,189) 116,231

NET INTEREST INCOME 937,350

REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:

INVESTMENT SECURITIES 158,312

FUTURES CONTRACTS (29,356) 128,956

CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION)
ON:

INVESTMENT SECURITIES 430,328

FUTURES CONTRACTS (9,943) 420,385

NET GAIN (LOSS) 549,341

NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 1,486,691
FROM OPERATIONS
</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
AUGUST 31, AUGUST 31,
1998 1997

INCREASE (DECREASE) IN NET ASSETS

OPERATIONS $ 937,350 $ 1,000,100
NET INTEREST INCOME

NET REALIZED GAIN (LOSS) 128,956 42,751

CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 420,385 652,990

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 1,486,691 1,695,841
FROM OPERATIONS

DISTRIBUTIONS TO SHAREHOLDERS (937,350) (1,002,153)
FROM NET INTEREST INCOME

FROM NET REALIZED GAIN (74,308) (139,099)

TOTAL DISTRIBUTIONS (1,011,658) (1,141,252)

SHARE TRANSACTIONS 7,504,699 4,675,739
NET PROCEEDS FROM SALES OF SHARES

REINVESTMENT OF DISTRIBUTIONS 861,678 961,326

COST OF SHARES REDEEMED (4,003,772) (6,814,492)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 4,362,605 (1,177,427)
FROM SHARE TRANSACTIONS

REDEMPTION FEES 1,870 1,023

TOTAL INCREASE (DECREASE) IN NET ASSETS 4,839,508 (621,815)

NET ASSETS

BEGINNING OF PERIOD 19,766,390 20,388,205

END OF PERIOD $ 24,605,898 $ 19,766,390

OTHER INFORMATION
SHARES

SOLD 689,025 441,693

ISSUED IN REINVESTMENT OF DISTRIBUTIONS 79,146 90,544

REDEEMED (368,079) (640,912)

NET INCREASE (DECREASE) 400,092 (108,675)

</TABLE>

FINANCIAL HIGHLIGHTS
YEARS ENDED AUGUST 31, OCTOBER 11, 1994
(COMMENCEMENT
OF OPERATIONS) TO
AUGUST 31,

1998 1997 1996 1995

SELECTED PER-SHARE DATA

NET ASSET VALUE, BEGINNING OF $ 10.740 $ 10.460 $ 10.640 $ 10.000
PERIOD

INCOME FROM INVESTMENT OPERATIONS .473 .483 .514 .504
NET INTEREST INCOME

NET REALIZED AND UNREALIZED GAIN .279 .351 (.022) .637
(LOSS)

TOTAL FROM INVESTMENT OPERATIONS .752 .834 .492 1.141

LESS DISTRIBUTIONS

FROM NET INTEREST INCOME (.473) (.484) (.514) (.504)

FROM NET REALIZED GAIN (.040) (.070) (.160) -

TOTAL DISTRIBUTIONS (.513) (.554) (.674) (.504)

REDEMPTION FEES ADDED TO PAID IN .001 .000 .002 .003
CAPITAL

NET ASSET VALUE, END OF PERIOD $ 10.980 $ 10.740 $ 10.460 $ 10.640

TOTAL RETURN B, C 7.16% 8.16% 4.72% 11.74%

RATIOS AND SUPPLEMENTAL DATA

NET ASSETS, END OF PERIOD $ 24,606 $ 19,766 $ 20,388 $ 13,448
(000 OMITTED)

RATIO OF EXPENSES TO AVERAGE NET .55% .55% .30%D .06%A,D
ASSETS

RATIO OF EXPENSES TO AVERAGE NET .54%E .53%E .30% .06%A
ASSETS AFTER EXPENSE REDUCTIONS

RATIO OF NET INTEREST INCOME TO 4.35% 4.55% 4.82% 5.54%A
AVERAGE NET ASSETS

PORTFOLIO TURNOVER RATE 25% 27% 32% 56%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 THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
D 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.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES
(SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
SPARTAN ARIZONA MUNICIPAL MONEY MARKET FUND

PERFORMANCE: THE BOTTOM LINE

To measure a money market fund's historical performance, you can look
at either total return or yield. Total return reflects the change in
the value of an investment, assuming reinvestment of the fund's
dividend income and the effect of the fund's $5 account closeout fee
on an average size account. Yield measures the income paid by a fund.
Since a money market fund tries to maintain a $1 share price, yield is
an important measure of performance. If Fidelity had not reimbursed
certain fund expenses, the total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1998 PAST 1 LIFE OF
YEAR FUND

SPARTAN AZ MUNICIPAL MONEY MARKET 3.41% 14.49%

ALL TAX-FREE MONEY MARKET FUNDS AVERAGE 3.08% N/A

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year or since the fund
started on October 11, 1994. For example, if you had invested $1,000
in a fund that had a 5% return over the past year, the value of your
investment would be $1,050. To measure how the fund's performance
stacked up against its peers, you can compare it to the all tax-free
money market funds average, which reflects the performance of all
tax-free money market funds with similar objectives tracked by IBC
Financial Data, Inc. The past one year average represents a peer group
of 436 money market funds.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1998 PAST 1 LIFE OF
YEAR FUND

SPARTAN AZ MUNICIPAL MONEY MARKET 3.41% 3.54%

ALL TAX-FREE MONEY MARKET FUNDS AVERAGE 3.08% N/A

AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and
show you what would have happened if the fund had performed at a
constant rate each year.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
YIELDS
8/31/98 6/1/98 3/2/98 12/1/97 9/1/97

SPARTAN ARIZONA MUNICIPAL 3.01% 3.52% 3.20% 3.62% 3.21%
MONEY MARKET

IF FIDELITY HAD NOT REIMBURSED 3.01% 3.37% 3.05% 3.47% 3.06%
CERTAIN FUND EXPENSES

ALL TAX-FREE MONEY 2.80% 3.22% 2.92% 3.28% 2.98%
MARKET FUNDS AVERAGE

SPARTAN ARIZONA MUNICIPAL 4.96% 5.80% 5.27% 5.96% 5.29%
MONEY MARKET - TAX-EQUIVALENT

IF FIDELITY HAD NOT REIMBURSED 4.96% 5.55% 5.03% 5.72% 5.04%
CERTAIN FUND EXPENSES

</TABLE>

Row: 1, Col: 1, Value: 3.01
Row: 1, Col: 2, Value: 2.8
Row: 2, Col: 1, Value: 3.52
Row: 2, Col: 2, Value: 3.22
Row: 3, Col: 1, Value: 3.2
Row: 3, Col: 2, Value: 2.92
Row: 4, Col: 1, Value: 3.62
Row: 4, Col: 2, Value: 3.28
Row: 5, Col: 1, Value: 3.21
Row: 5, Col: 2, Value: 2.98
Spartan Arizona
Municipal Money
Market
All Tax-Free
Money Market
Funds Average
5% -
4% -
3% -
2% -
1% -
0%
YIELD refers to the income paid by the fund over a given period.
Yields for money market funds are usually for seven-day periods,
expressed as annual percentage rates. A yield that assumes income
earned is reinvested or compounded is called an effective yield. The
chart above shows the fund's current seven-day yield at quarterly
intervals over the past year. You can compare these yields to the all
tax-free money market funds average tracked by IBC Financial Data,
Inc. Or you can look at the fund's tax-equivalent yield, which is
based on a combined effective 1998 federal and state income tax rate
of 39.26%. A portion of the fund's income may be subject to the
alternative minimum tax.
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS WILL VARY, AND REFLECT
PAST RESULTS RATHER THAN PREDICT FUTURE PERFORMANCE.

COMPARING
PERFORMANCE
Yields on tax-free investments
are usually lower than yields on
taxable investments. However, a
straight comparison between the
two may be misleading because
it ignores the way taxes reduce
taxable returns. Tax-equivalent
yield - the yield you'd have to
earn on a similar taxable
investment to match the tax-free
yield - makes the comparison
more meaningful. Keep in mind
that the U.S. government
neither insures nor guarantees a
money market fund. In fact,
there is no assurance that a
money fund will maintain a $1
share price.
(checkmark)
SPARTAN ARIZONA MUNICIPAL MONEY MARKET FUND

FUND TALK: THE MANAGER'S OVERVIEW

An interview with Scott Orr, Portfolio Manager of Spartan Arizona
Municipal Money Market Fund
Q. SCOTT, WHAT WAS THE INVESTMENT ENVIRONMENT LIKE OVER THE PAST YEAR?
A. Investors spent much of the period trying to determine whether the
Federal Reserve Board would raise the fed funds rate - the rate banks
charge each other for overnight loans - as a way to slow the economy
and head off inflation. The economy continued to chug along at a
fairly strong pace and unemployment numbers were incredibly low on an
historical basis, dropping to 4.3% in April and ticking up only to
4.5% in July. But despite this period of continuing expansion, wage
pressures - which can arise during periods of low unemployment when
employers hike pay to attract or retain employees - did not emerge and
inflation remained benign. Under normal circumstances, the possibility
of future inflation created by this tight labor market likely would
have led the Federal Reserve Board to raise the fed funds rate. But
economic and financial turmoil in Asia and Russia - which intensified
late in the period - kept the Fed on the sidelines during the year. In
fact, the fed funds rate has remained unchanged at 5.5% for more than
a year now.
Q. WHY WAS THE INTERNATIONAL TURMOIL ABLE TO OFFSET U.S. ECONOMIC
STRENGTH IN THE FED'S DECISION ON MONETARY POLICY?
A. There were two reasons. For most of the year, the Fed didn't want
to make the situation for international economies worse by raising
short-term interest rates here. Higher U.S. interest rates would
likely strengthen the U.S. dollar even more versus other nations'
currencies, which could further harm their financial markets. In other
words, the Fed was asking itself, "Why make the international markets
more volatile by raising rates in the U.S.?" The other factor was the
possibility that the international turmoil would translate into a
reduction of U.S. net exports, which would likely have a dampening
effect of its own on the U.S. economy and inflation. By the end of the
period, this turmoil led many market participants to begin to expect
that the Fed would actually lower rates to calm global financial
markets and keep the U.S. economy on track.
Q. WHAT WAS THE FUND'S STRATEGY DURING THIS PERIOD?
A. The fund's average maturity started the period at 32 days, a
moderately defensive posture given the chance that interest rates
might have moved higher. For much of the period, I purchased one-year
fixed-rate bonds when I felt that their yields incorporated the
possibility of an interest-rate increase. But as the international
disruptions heated up, the yields on fixed-rate bonds offered less
value because the market no longer expected the Fed to act. Initially,
I focused more on short-term variable-rate securities, whose yields
move up and down with rates as they change in the market. However, as
the summer wore on and the likelihood of higher rates began to wane, I
again purchased fixed-rate bonds to extend the fund's maturity. Given
the uncertainty of the market, I wanted to maintain a neutral stance.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on August 31, 1998, was 3.01%, compared
to 3.21% one year ago. The more recent seven-day yield was the
equivalent of a 4.96% taxable rate of return for Arizona investors in
the 39.26% combined state and federal income tax bracket. Through
August 31, 1998, the fund's 12-month total return was 3.41%, compared
to 3.08% for the all tax-free money market funds average, according to
IBC Financial Data, Inc.
Q. WHAT'S YOUR OUTLOOK?
A. As the international financial turmoil escalates, I believe the Fed
has become much more concerned that the U.S. economy may eventually
suffer. As the economy slows and inflation fears subside, the Fed may
be much more likely to lower rates to keep the economy on solid
ground. Therefore, I have adjusted my view and now feel that lower
rates are very much a possibility. Typically, given this outlook I
would further extend the fund's average maturity by buying longer-term
fixed-rate bonds to lock in current rates. However, because of
continued uncertainty in the markets, I plan to take a cautious
approach, maintaining a neutral position relative to the fund's
competitors until clearer evidence of a slowdown emerges.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.

FUND FACTS
GOAL: high current tax-free
income for Arizona residents
by investing in investment-grade
municipal securities whose
interest is free from federal
and Arizona income taxes
FUND NUMBER: 434
TRADING SYMBOL: FSAMI
START DATE: October 11, 1994
SIZE: as of August 31, 1998,
more than $24 million
MANAGER: Scott Orr,
since 1997; manager,
various Fidelity and Spartan
municipal income funds;
joined Fidelity in 1989
(checkmark)
SPARTAN ARIZONA MUNICIPAL MONEY MARKET FUND

INVESTMENT CHANGES

MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
8/31/98 2/28/98 8/31/97

0 - 30 60 68 79

31 - 90 24 14 15

91 - 180 4 10 0

181 - 397 12 8 6

WEIGHTED AVERAGE MATURITY
8/31/98 2/28/98 8/31/97

SPARTAN ARIZONA MUNICIPAL 55 DAYS 38 DAYS 32 DAYS
MONEY MARKET

ALL TAX-FREE MONEY MARKET 44 DAYS 43 DAYS 50 DAYS
FUNDS AVERAGE*

ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF AUGUST 31, 1998 AS OF FEBRUARY 28, 1998
Row: 1, Col: 1, Value: 53.0
Row: 1, Col: 2, Value: 19.0
Row: 1, Col: 3, Value: 1.6
Row: 1, Col: 4, Value: 1.6
Row: 1, Col: 5, Value: 25.0
Variable rate demand
notes (VRDNs) 63%
Commercial paper
(including CP mode) 27%
Tender bonds 1%
Municipal
notes 2%
Other 7%
Variable rate demand
notes (VRDNs) 54%
Commercial paper
(including CP mode) 19%
Tender bonds 1%
Municipal
notes 1%
Other 25%
Row: 1, Col: 1, Value: 62.0
Row: 1, Col: 2, Value: 27.0
Row: 1, Col: 3, Value: 1.6
Row: 1, Col: 4, Value: 2.6
Row: 1, Col: 5, Value: 7.0
*SOURCE: IBC'S MONEY FUND REPORT(registered trademark)
SPARTAN ARIZONA MUNICIPAL MONEY MARKET FUND

INVESTMENTS AUGUST 31, 1998
Showing Percentage of Total Value of Investment in Securities

MUNICIPAL SECURITIES (A) - 100%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
ARIZONA - 95.3%
Apache County Ind. Dev. Auth. Rev.
(Imperial Components, Inc.) Series 1996, 3.40%,
LOC Harris Trust & Savings Bank, Chicago, VRDN (b) $ 2,000,000 $
2,000,000
Arizona Trans. Board Hwy. Rev. Bonds
Series A, 5.90% 7/1/99 2,000,000 2,037,155
Arizona Trans. Excise Board Bonds (Maricopa County Reg.
Area Road Fund) 5.50% 7/1/99 2,000,000 2,031,045
Chandler Gen. Oblig. Bonds 5.50% 7/1/99 2,150,000 2,182,990
Cochise County Poll. Cont. Solid Waste Rev. Bonds
(Arizona Elec. Pwr. Coop.) 3.55%, tender 9/1/98
(CFC Nat'l. Rural Util. Coop. Guaranteed) (b) 1,000,000 1,000,000
Flagstaff Ind. Dev. Auth. (Norton Envir., Inc.)
Series 1997, 3.50%, LOC Keybank, NA, VRDN (b) 2,600,000 2,600,000
Glendale Ind. Dev. Auth. Rev. (Superior Bedding Co.)
Series 1994, 3.40%, LOC Harris Trust & Savings Bank,
Chicago, VRDN (b) 1,900,000 1,900,000
Maricopa County Commty. College Dist.:
Bonds 4.50% 7/1/99 4,900,000 4,937,984
Participating VRDN, Series BTP-295, 3.35%
(Liquidity Facility Bankers Trust Co.) (c) 1,305,000 1,305,000
Maricopa County Ind. Dev. Auth.
Multi-Family Hsg. Auth. Rev., VRDN:
(Privado Park Apt. Proj.) Series 1994 A, 3.40%
(Prime MFP VI LP)(Fannie Mae Guaranteed) (b) 2,000,000 2,000,000
(Shadow Creek Apt. Proj.) Series 1994 C, 3.40%
(Prime MFP VI LP)(Fannie Mae Guaranteed) (b) 500,000 500,000
Maricopa County Poll. Cont. Rev.:
Bonds (Southern California Edison Co.)
Series 1985 E, 3.65% 9/11/98, CP Mode 1,000,000 1,000,000
(Arizona Pub. Svc.) Series 1994 E,
3.30%, LOC Bank of America, VRDN 400,000 400,000
Mesa Ind. Dev. Auth. Western Health Network, Inc.
Participating VRDN, Series 1997 B, 3.41% (MBIA Insured)
(Liquidity Facility Caisse des Depots et Consignations) (c) 7,280,000
7,280,000
Mesa Muni. Dev. Corp. Bonds Series 1996 A-B, 3.85%
10/6/98, LOC Westdeutsche Landesbank, CP mode 5,000,000 5,000,000
Mohave County Ind. Dev. Auth. Ind. Dev. Rev. Bonds
(Citizens Util. Co.) Series 1993 E :
3.65% 10/8/98, CP mode (b) 2,500,000 2,500,000
3.60% 10/15/98, CP mode (b) 500,000 500,000
3.60% 11/6/98, CP mode (b) 2,400,000 2,400,000
Phoenix Civic Impt. Senior Lien Arpt. Rev. Participating VRDN,
Series ML PA-405, 3.45% (FSA Insured)
(Liquidity Facility Merrill Lynch & Co.) (c) 1,920,000 1,920,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
ARIZONA - CONTINUED
Phoenix Gen. Oblig. Rfdg. Participating VRDN,
Series ML PA-236, 3.45%
(Liquidity Facility Merrill Lynch & Co.) (c) $ 2,430,000 $ 2,430,000
Phoenix Ind. Dev. Auth., VRDN:
Ind. Dev. Rev.:
Rfdg. (V.A.W. of America Proj.) Series 1997,
3.45%, LOC Nationsbank, NA (b) 1,000,000 1,000,000
(Plastican Proj.) Series 1997, 3.40%,
LOC Fleet Nat'l. Bank (b) 4,000,000 4,000,000
Multi-Family Hsg. Rev.:
(Bell Square Apt. Proj.) Series 1995, 3.45%
(OEC the Lakes) LOC Gen. Elec. Cap. Corp. 2,000,000 2,000,000
(Heather Ridge Apt. Proj.) Series 1988, 3.40%
(Ambassador VIII) (Fannie Mae Guaranteed) (b) 1,000,000 1,000,000
(Ventana Palms Apt.) Series 1994, 3.35%
(Columbia Group) LOC Wells Fargo Bank (b) 5,310,000 5,310,000
Phoenix Ind. Dev. Auth. Multi-Family Hsg. Rev. Bonds
Series 1998 B, 3.75% 10/1/98 (FGIC Guaranteed) (b) 8,000,000
8,000,000
Phoenix Multi-Family Hsg. Rev.
(Paradise Shadows II Apt. Proj.) Series 1989, 3.40%,
LOC Citibank, NA, VRDN 1,900,000 1,900,000
Pima County Ind. Dev. Auth. Multi-Family Hsg. Rev.
(Quail Ridge Apt. B) 3.40% (Prime MFP VI LP)
(Fannie Mae Guaranteed) VRDN (b) 1,400,000 1,400,000
Pinal County Ind. Dev. Auth., VRDN:
Hosp. Rev. (Casa Grande Medical Ctr. Proj.) Series 1995,
3.40%, LOC Chase Manhattan Bank 3,940,000 3,940,000
Ind. Dev. Rev. (Sunbelt Refining Co. LP Proj.) Series 1988,
3.40%, LOC Bankers Trust Co. (b) 1,240,000 1,240,000
Pinal County Ind. Dev. Poll. Cont. (Newmont Mining Corp./
Magma Copper Co. Proj.) Series 1984,
3.35%, LOC Nat'l. Westminster Bank PLC, VRDN 400,000 400,000
Salt River Proj. Agric. Impt. & Pwr. Dist., CP:
3.80% 9/8/98 (Liquidity Facility Wells Fargo Bank,
First Nat'l. Bank of Chicago) 1,000,000 1,000,000
3.80% 9/9/98 (Liquidity Facility Wells Fargo Bank,
First Nat'l. Bank of Chicago) 2,000,000 2,000,000
Sierra Vista Ind. Dev. Auth. Hosp. Rev. Bonds
(Sierra Vista Commty. Hosp. Proj.) 8.75% 12/1/98 4,000,000 4,167,223
Univ. of Arizona Sys. Rev. BAN Series 1997,
3.95% 10/1/98 1,000,000 1,000,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
ARIZONA - CONTINUED
Yavapi County Ind. Dev. Auth. Ind. Dev. Rev. Bonds
(Citizens Util. Co.) Series1993:
3.60% 10/15/98, CP mode (b) $ 1,800,000 $ 1,800,000
3.60% 11/6/98, CP mode (b) 1,200,000 1,200,000
Yuma Ind. Dev. Auth. (Meadowcraft, Inc. Proj.) Series 1997,
3.45%, LOC Nationsbank, NA, VRDN (b) 2,000,000 2,000,000
89,281,397
PUERTO RICO - 4.7%
Puerto Rico Pub. Impt. Rev.
Participating VRDN, Series ML PT-1025, 3.16%
(Liquidity Facility Merrill Lynch & Co.) (c) 4,425,000 4,425,000
TOTAL INVESTMENTS - 100% $ 93,706,397
Total Cost for Income Tax Purposes $ 93,706,397
SECURITY TYPE ABBREVIATIONS
BAN - Bond Anticipation Notes
CP - Commercial Paper
VRDN - Variable Rate Demand Notes
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) Private activity obligations whose interest is subject to the
federal alternative minimum tax for individuals.
(c) Provides evidence of ownership in one or more underlying municipal
bonds.
INCOME TAX INFORMATION
The fund hereby designates approximately $27,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
During the fiscal year ended August 31, 1998 100% of the funds income
dividends was free from federal income tax and 46.95% of the funds
income dividends was subject to the federal alternative minimum tax
(unaudited).
SPARTAN ARIZONA MUNICIPAL MONEY MARKET FUND

FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1998

ASSETS
INVESTMENT IN SECURITIES, AT VALUE - $ 93,706,397
SEE ACCOMPANYING SCHEDULE

RECEIVABLE FOR FUND SHARES SOLD 582,617

INTEREST RECEIVABLE 865,079

TOTAL ASSETS 95,154,093

LIABILITIES

PAYABLE TO CUSTODIAN BANK $ 452,472

PAYABLE FOR FUND SHARES REDEEMED 121,534

DISTRIBUTIONS PAYABLE 16,713

ACCRUED MANAGEMENT FEE 40,017

OTHER PAYABLES AND ACCRUED EXPENSES 138

TOTAL LIABILITIES 630,874

NET ASSETS $ 94,523,219

NET ASSETS CONSIST OF:

PAID IN CAPITAL $ 94,496,577

ACCUMULATED NET REALIZED GAIN (LOSS) ON INVESTMENTS 26,642

NET ASSETS, FOR 94,496,579 SHARES OUTSTANDING $ 94,523,219

NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE $1.00
PER SHARE ($94,523,219 (DIVIDED BY) 94,496,579 SHARES)

STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31, 1998

INTEREST INCOME $ 3,376,348

EXPENSES

MANAGEMENT FEE $ 453,461

NON-INTERESTED TRUSTEES' COMPENSATION 333

TOTAL EXPENSES BEFORE REDUCTIONS 453,794

EXPENSE REDUCTIONS (126,981) 326,813

NET INTEREST INCOME 3,049,535

NET REALIZED GAIN (LOSS) ON INVESTMENTS 39,199

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 3,088,734
</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
AUGUST 31, AUGUST 31,
1998 1997

INCREASE (DECREASE) IN NET ASSETS

OPERATIONS $ 3,049,535 $ 2,830,812
NET INTEREST INCOME

NET REALIZED GAIN (LOSS) 39,199 (1,821)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 3,088,734 2,828,991
FROM OPERATIONS

DISTRIBUTIONS TO SHAREHOLDERS FROM NET INTEREST INCOME (3,049,535) (2,830,812)

SHARE TRANSACTIONS AT NET ASSET VALUE OF $1.00 PER SHARE 86,116,142 105,703,895
PROCEEDS FROM SALES OF SHARES

REINVESTMENT OF DISTRIBUTIONS FROM NET INTEREST INCOME 2,968,682 2,737,679

COST OF SHARES REDEEMED (82,735,176) (103,046,509)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 6,349,648 5,395,065
FROM SHARE TRANSACTIONS

TOTAL INCREASE (DECREASE) IN NET ASSETS 6,388,847 5,393,244

NET ASSETS

BEGINNING OF PERIOD 88,134,372 82,741,128

END OF PERIOD $ 94,523,219 $ 88,134,372

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED AUGUST 31, OCTOBER 11, 1994
(COMMENCEMENT
OF OPERATIONS) TO
AUGUST 31,

1998 1997 1996 1995

SELECTED PER-SHARE DATA

NET ASSET VALUE, BEGINNING OF $ 1.000 $ 1.000 $ 1.000 $ 1.000
PERIOD

INCOME FROM INVESTMENT OPERATIONS .034 .033 .035 .034
NET INTEREST INCOME

LESS DISTRIBUTIONS

FROM NET INTEREST INCOME (.034) (.033) (.035) (.034)

NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000

TOTAL RETURN B, C 3.41% 3.39% 3.52% 3.43%

RATIOS AND SUPPLEMENTAL DATA

NET ASSETS, END OF PERIOD (000 $ 94,523 $ 88,134 $ 82,741 $ 52,566
OMITTED)

RATIO OF EXPENSES TO AVERAGE NET .36%D .35%D .22%D .06%A,D
ASSETS

RATIO OF NET INTEREST INCOME TO 3.36% 3.34% 3.44% 3.91%A
AVERAGE NET ASSETS

A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
D 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 (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
NOTES TO FINANCIAL STATEMENTS
For the period ended August 31, 1998

1. SIGNIFICANT ACCOUNTING POLICIES.
Spartan Arizona Municipal Income Fund (the income fund) is a fund of
Fidelity Union Street Trust. Spartan Arizona Municipal Money Market
Fund (the money market fund) is a fund of Fidelity Union Street Trust
II. Each trust is registered under the Investment Company Act of 1940,
as amended (the 1940 Act), as an open-end management investment
company. Fidelity Union Street Trust and Fidelity Union Street Trust
II (the trusts) are organized as a Massachusetts business trust and a
Delaware business trust, respectively. Each fund is authorized to
issue an unlimited number of shares. The financial statements have
been prepared in conformity with generally accepted accounting
principles which require management to make certain estimates and
assumptions at the date of the financial statements. The following
summarizes the significant accounting policies of the income fund and
the money market fund:
SECURITY VALUATION.
INCOME FUND. Securities are valued based upon a computerized matrix
system and/or appraisals by a pricing service, both of which consider
market transactions and dealer-supplied valuations. Securities for
which quotations are not readily available are valued at their fair
value as determined in good faith under consistently applied
procedures under the general supervision of the Board of Trustees.
Short-term securities with remaining maturities of sixty days or
less for which quotations are not readily available are valued at
amortized cost or original cost plus accrued interest, both of which
approximate current value.
MONEY MARKET FUND. As permitted under Rule 2a-7 of the 1940 Act, and
certain conditions therein, securities are valued initially at cost
and thereafter assume a constant amortization to maturity of any
discount or premium.
INCOME TAXES. As a qualified regulated company under Subchapter M of
the Internal Revenue Code, each fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income
for its fiscal year. The schedules of investments include information
regarding income taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of
premium and accretion of original issue discount, is accrued as
earned. For the municipal money market fund, accretion of market
discount represents unrealized gain until realized at the time of a
security disposition or maturity.
EXPENSES. Most expenses of each trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid
monthly from net interest income. Distributions from realized gains,
if any, are recorded on the ex-dividend date.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS -
CONTINUED
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for futures transactions, market discount and losses
deferred due to futures . The income fund also utilized earnings and
profits distributed to shareholders on redemption of shares as a part
of the dividends paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and
may affect the per-share allocation between net interest income and
realized and unrealized gain (loss). Accumulated undistributed net
realized gain (loss) on investments may include temporary book and tax
basis differences that will reverse in a subsequent period. Any
taxable gain remaining at fiscal year end is distributed in the
following year.
SHORT-TERM TRADING (REDEMPTION) FEES. Shares held in the income fund
less than 180 days are subject to a short-term trading fee equal to
.50% of the proceeds of the redeemed shares. The fee, which is
retained by the fund, is accounted for as an addition to paid in
capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
FUTURES CONTRACTS. The income fund may use futures contracts to manage
its exposure to the bond market and to fluctuations in interest rates.
Buying futures tends to increase the fund's exposure to the underlying
instrument, while selling futures tends to decrease the fund's
exposure to the underlying instrument or hedge other fund investments.
Futures contracts involve, to varying degrees, risk of loss in excess
of the futures variation margin reflected in the Statement of Assets
and Liabilities. The underlying face amount at value of any open
futures contracts at period end is shown in the schedule of
investments under the caption "Futures Contracts." This amount
reflects each contract's exposure to the underlying instrument at
period end. Losses may arise from changes in the value of the
underlying instruments or if the counterparties do not perform under
the contracts' terms. Gains (losses) are realized upon the expiration
or closing of the futures contracts. Futures contracts are valued at
the settlement price established each day by the board of trade or
exchange on which they are traded.
3. PURCHASES AND SALES OF INVESTMENTS.
INCOME FUND. Purchases and sales of securities, other than short-term
securities, aggregated $8,211,399 and $5,016,816, respectively.
3. PURCHASES AND SALES
OF INVESTMENTS - CONTINUED
INCOME FUND - CONTINUED
The market value of futures contracts opened and closed during the
period amounted to $2,918,274 and $3,058,516, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, Fidelity Management
& Research Company (FMR) pays all expenses, except the compensation of
the non-interested Trustees and certain exceptions such as interest,
taxes, brokerage commissions and extraordinary expenses. FMR receives
a fee that is computed daily at an annual rate of .55% and .50% of
average net assets for the income fund and money market fund,
respectively.
FMR also bears the cost of providing shareholder services to the money
market fund. To offset the cost of providing these services, FMR or
its affiliates collected certain transaction fees from shareholders
which amounted to $870 for the period.
SUB-ADVISER FEE. As the money market fund's investment sub-adviser,
Fidelity Investments Money Management, Inc., a wholly owned subsidiary
of FMR, receives a fee from FMR of 50% of the management fee payable
to FMR. The fee is paid prior to any voluntary expense reimbursements
which may be in effect.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse the money market fund's operating
expenses (excluding interest, taxes, brokerage commissions and
extraordinary expenses) above an annual rate of .35% of average net
assets. For the period, the reimbursement reduced the expenses by
$124,133.
In addition, FMR has entered into arrangements on behalf of each
fund with the funds' custodian and transfer agent whereby credits
realized as a result of uninvested cash balances were used to reduce a
portion of each applicable fund's expenses. During the period, the
fund's expenses were reduced by $2,189 and $2,848 for the income and
money market fund, respectively, under these arrangements.
Effective August 1, 1998, the money market fund's expense limitation
was eliminated.
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Fidelity Union Street Trust and Fidelity Union
Street Trust II and the Shareholders of Spartan Arizona Municipal
Income Fund and Spartan Arizona Municipal Money Market Fund:
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Spartan Arizona Municipal Income Fund (a fund of Fidelity Union Street
Trust) and Spartan Arizona Municipal Money Market Fund (a fund of
Fidelity Union Street Trust II) at August 31, 1998, the results of
their operations, the changes in their net assets and the financial
highlights for the periods indicated, in conformity with generally
accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements")
are the responsibility of the funds' management; our responsibility is
to express an opinion on these financial statements based on our
audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require
that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used
and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our audits,
which included confirmation of securities at August 31, 1998 by
correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
October 12, 1998
DISTRIBUTIONS

The Board of Trustees of Spartan Arizona Municipal Income Fund voted
to pay to shareholders of record at the opening of business on record
date, the following distributions derived from capital gains realized
from sales of portfolio securities, and dividends derived from net
investment income:

PAY DATE 10/05/98
RECORD DATE 10/02/98
CAPITAL GAINS $.04

The fund will notify shareholders in January 1999 of the applicable
percentage for use in preparing 1998 income tax returns.
During fiscal year ended 1998, 100% of the fund's income dividends was
free from federal income tax, and 7.92% of the fund's income dividends
was subject to the federal alternative minimum tax.
MANAGING YOUR INVESTMENTS

2 For quotes.*

3 For account balances and holdings.

4 To review orders and mutual
fund activity.

5 To change your PIN.

*0 To speak to a Fidelity representative.

INVESTMENT ADVISER
(registered trademark)
Fidelity Management & Research Company
Boston, MA
SUB-ADVISER
Fidelity Investments
Money Management, Inc.
Merrimack, NH
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Fred L. Henning, Jr., Vice President
Boyce I. Greer, Vice President -
MONEY MARKET FUND
Scott A. Orr, Vice President -
MONEY MARKET FUND
Dwight D. Churchill, Vice President -
INCOME FUND
Christine J. Thompson, Vice President -
INCOME FUND
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Stanley N. Griffith, Assistant Vice President
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Thomas J. Simpson, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
* INDEPENDENT TRUSTEES
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
UMB Bank, n.a.
Kansas City, MO
and
Fidelity Service Company, Inc.
Boston, MA
CUSTODIAN
UMB Bank, n.a.
Kansas City, MO
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
TouchTone Xpress(registered trademark) 1-800-544-5555
AUTOMATED LINE FOR QUICKEST SERVICE

</TABLE>