N-30D/A 1 main.htm

Spartan®

Tax-Free Bond

Fund

Annual Report

January 31, 2002

(2_fidelity_logos)(registered trademark)

Contents

President's Message

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Ned Johnson on investing strategies.

Performance

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How the fund has done over time.

Fund Talk

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The manager's review of fund performance, strategy and outlook.

Investment Summary

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A summary of the fund's investments.

Investments

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

Financial Statements

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

Notes

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Notes to the financial statements.

Independent Auditors' Report

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The auditors' opinion.

Trustees and Officers

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Distributions

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Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.

Other third party marks appearing herein are the property of their respective owners.

All other marks appearing herein are registered or unregistered trademarks or service marks of FMR Corp. or an affiliated company.

(Recycle graphic)   This report is printed on recycled paper using soy-based inks.

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 1-800-544-6666 for a free prospectus. Read it carefully before you invest or send money.

Annual Report

President's Message

(photo_of_Edward_C_Johnson_3d)

Dear Shareholder:

After three consecutive months of steady buying, equity investors took a breather in the first month of the New Year to assess the degree of any real economic turnaround. As a result, most major stock market benchmarks declined - albeit slightly - for the first time since September 2001. Investor uncertainty gave a boost to the fixed-income markets in January, as nearly all categories of investment-grade bonds rebounded from their fourth-quarter lull.

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 an investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although money market funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in these types of funds.

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. Of course, you should consider your financial ability to continue your purchases through periods of low price levels before undertaking such a strategy.

If you have questions, please call us at 1-800-544-6666, or visit our web site at www.fidelity.com. 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,

/s/Edward C. Johnson 3d

Edward C. Johnson 3d

Annual Report

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 its yield, to measure performance. If Fidelity had not reimbursed certain fund expenses, the total returns and dividends would have been lower.

Cumulative Total Returns

Period ended January 31, 2002

Life of
Fund

Spartan® Tax-Free Bond

6.05%

LB 3 Plus Year Muni - Non AMT

5.14%

Cumulative total returns show the fund's performance in percentage terms over a set period - in this case, since the fund started on April 10, 2001. 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® 3 Plus Year Non AMT Municipal Bond Index - a market capitalization-weighted index for investment-grade Non Alternative Minimum Tax (AMT) municipal bonds with maturities of three years or more. The benchmark includes reinvested dividends and capital gains, if any.

Average Annual Total Returns

Average annual total returns take the fund's cumulative return and show you what would happen if the fund had performed at a constant rate each year. These numbers will be reported once the fund is a year old.

Annual Report

Performance - continued

$10,000 Over Life of Fund



$10,000 Over Life of Fund: Let's say hypothetically that $10,000 was invested in Spartan® Tax-Free Bond Fund on April 10, 2001. As the chart shows, by January 31, 2002, the value of the investment would have grown to $10,605 - a 6.05% increase on the initial investment. For comparison, look at how the LB 3 Plus Year Muni - Non AMT Index did over the same period. With dividends and capital gains, if any, reinvested, the same $10,000 would have grown to $10,514 - a 5.14% increase.

The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

Understanding
Performance

How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of long-term growth and short-term volatility. In turn, the share price and return of a fund that invests in stocks 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.

3

Annual Report

Total Return Components

Period ended A

January 31, 2002

Dividend returns

3.57%

Capital returns

2.48%

Total returns

6.05%

A The fund commenced operations on April 10, 2001.

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

Periods ended January 31, 2002

Past 1
month

Past 6
months

Dividends per share

3.79¢

22.11¢

Annualized dividend rate

4.36%

4.26%

30-day annualized yield

4.33%

-

30-day annualized tax-equivalent yield

6.66%

-

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 $10.23 over the past one month, and $10.29 over the past six months, you can compare the fund's income over these two periods. The 30-day annualized yield is a standard formula for all bond 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 35% federal tax bracket, but does not reflect payment of the federal alternative minimum tax, if applicable. If Fidelity had not reimbursed certain fund expenses the yield and tax-equivalent yield would have been 3.44% and 5.29%, respectively.

Annual Report

Fund Talk: The Manager's Overview

Market Recap

The municipal bond market enjoyed fairly steady performance throughout the 12-month period ending January 31, 2002, riding out some mild volatility on occasion to return 5.93% for the year, according to the Lehman Brothers® Municipal Bond Index, which measures the performance of approximately 40,000 investment-grade, fixed-rate, tax-exempt bonds. The unprecedented number of interest-rate reductions during 2001 was mostly a positive for muni bond investors. The Fed slashed rates 11 times during the year, lowering the fed funds target rate from 6.50% to 1.75%. Muni bonds - as most bonds do - typically perform well in a falling rate environment. Munis also benefited as a haven from stormy equity markets and from their attractively high tax-adjusted yields. But municipal bonds did struggle at times. The tragic events of September 11 resulted in a rush to the security of Treasuries in the weeks that followed. Recovery bonds issued by the state and city of New York added volume to an already supply-heavy muni market, which further tempered their performance. Investors also grew wary when it became apparent that the Fed had lowered rates about as much as they could. While these conditions caused a slight decline in muni prices, the securities held relatively steady and, in fact, outperformed all categories of investment-grade bonds in the final three months of the one-year period.

(Portfolio Manager photograph)
An interview with Christine Thompson, Portfolio Manager of Spartan Tax-Free Bond Fund

Q. How did the fund perform, Christine?

A. Since its inception on April 10, 2001, through January 31, 2002, the fund had a total return of 6.05%. In comparison, the Lehman Brothers 3 Plus Year Non AMT Municipal Bond Index, which tracks the types of securities in which the fund invests, returned 5.14% during the same time frame. Going forward, we'll compare the fund's performance to its benchmark and a Lipper peer group average at six- and 12-month intervals.

Q. What factors worked in the fund's favor since its inception?

A. The fund benefited from my focus on securities that offered better value relative to other bonds based on credit quality, state and structure criteria. Throughout the period, for example, I took advantage of short-term market aberrations to buy bonds of a selected maturity within various maturity ranges that I felt were cheap relative to others in the category. In doing so, I anticipated selling them as their prices moved back into alignment with other municipal securities. Generally speaking, these trades were a plus for performance.

Annual Report

Fund Talk: The Manager's Overview - continued

Q. How did your choices among bonds in various sectors affect performance?

A. Bonds issued by transportation, electric, water and sewer entities - which are backed by economically resilient fees, rather than taxes - were a major area of emphasis. That focus aided the fund's performance because bonds backed by taxes - such as general obligations - often lagged revenue bonds as tax receipts declined amid the slumping economy. Although general obligation bonds were the fund's top sector concentration at the end of the period, I kept the fund underweighted in them relative to the municipal market overall as measured by the Lehman Brothers 3 Plus Year Non AMT Municipal Bond Index.

Q. How did your choices regarding states and credit quality affect performance?

A. I maintained an underweighting relative to the Lehman Brothers index in states that struggled during the period, such as California, which was hard hit by the technology bust and electricity problems, and New York, which suffered from a decline in the financial services industry and challenges stemming from the events of September 11. Instead, I focused on states that benefited from more stable economic environments and more attractively priced municipal bonds, including Texas and Illinois. With regard to credit quality, I maintained a defensive stance and focused on high-quality bonds, with nearly 94% of the fund's investments in bonds rated A or higher by Moody's Investors Service or Standard & Poor's®.

Q. The fund did not invest in bonds subject to the Alternative Minimum Tax (AMT) during the period. How did that decision affect performance?

A. Actually, it worked in the fund's favor during the period. Many of the municipal bond sectors dominated by AMT bonds were those that came under the most pressure. Corporate-backed bonds, which are bonds issued for a project deemed in the public good, slumped as corporate profits declined. Airport- and airline-backed bonds also performed poorly in response to the dramatic decline in air travel after the events of September 11.

Q. Were there any disappointments?

A. Yes, there was one frustrating aspect of the municipal bond market during the period. Even though the supply of municipals was up substantially compared to the previous year, what was issued wasn't always in keeping with my overall strategies or priced attractively. For example, the majority of what was issued came at par, or face value, which are more attractive to individual investors. I tend to avoid par bonds; they're often priced higher than other bonds because there is such strong demand for them and, more importantly, their potential appreciation can result in negative tax implications under some circumstances. The lack of newly issued discount and premium bonds, which trade below and above face value, respectively, often curtailed my ability to add attractively priced bonds.

Q. What's ahead for the municipal market?

A. For many municipal bond issuers across the country, the current economic climate is likely to result in a continued decline in tax receipts as well as expanding costs - such as stepped up security spending in the wake of the events of September 11 and increased unemployment benefits. So I'll proceed with a great deal of caution in choosing investments for the fund, continuing my focus on high-quality, economically resilient segments of the market.

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 and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.

Fund Facts

Goal: to provide high current income exempt from federal income tax

Fund number: 090

Trading symbol: FTABX

Start date: April 10, 2001

Size: as of January 31, 2002, more than $159 million

Manager: Christine Thompson, since inception; manager, various Fidelity and Spartan municipal income funds; joined Fidelity in 1985

3

Christine Thompson on trends in credit quality:

"The economic slump and the tragic events of September 11 have forced many issuers across the country - most notably state governments - to confront the dual challenges of declining revenues and increased spending. After years of enhancing services and building up their rainy day funds, municipal issuers are faced with the difficult choice of where to make up for revenue shortfalls and rising expenditures. In recognition of this trend, Moody's Investors Service, one of the main municipal credit rating agencies, downgraded the outlook, but not the credit ratings, of more than a dozen states. While the challenges of declining revenues and higher costs currently are most acute at the state level, I expect there to be a ´trickle down' effect at the local level in the months to come. The severity of these challenges will be dictated by the strength of the economy as well as issuers' response to them. These developments serve to highlight how important it is for an investor to ascertain an issuer's ability to weather the storm. Fidelity's credit research team pays very close attention to a variety of considerations, including the cyclicality of an issuer's revenues - that is, how sensitive those revenues are to an economic slowdown; the size of available reserves or rainy day funds and how much flexibility the issuer has to draw on them to close budgetary gaps; and how actively the issuer is scaling back spending in response to reduced revenues."

Annual Report

Investment Changes

Top Five States as of January 31, 2002

% of fund's
net assets

% of fund's net assets
6 months ago

Texas

11.9

19.7

Illinois

9.6

2.5

Florida

5.4

6.3

Washington

5.4

6.3

Michigan

4.9

2.0

Top Five Sectors as of January 31, 2002

% of fund's
net assets

% of fund's net assets
6 months ago

General Obligations

35.4

44.0

Health Care

12.3

14.4

Transportation

11.8

10.9

Electric Utilities

9.8

6.3

Water & Sewer

6.5

4.8

Average Years to Maturity as of January 31, 2002

6 months ago

Years

13.1

11.6

Average years to maturity is based on the average time remaining until principal payments are expected from each of the fund's bonds, weighted by dollar amount.

Duration as of January 31, 2002

6 months ago

Years

7.2

7.4

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 January 31, 2002

As of July 31, 2001

Aaa 66.0%

Aaa 55.6%

Aa, A 27.6%

Aa, A 25.7%

Baa 6.4%

Baa 4.1%

Short-term Investments 0.0%

Short-term Investments 14.6%



Where Moody's ratings are not available, we have used S&P® ratings. Amounts shown are as a percentage of the fund's investments.

Annual Report

Investments January 31, 2002

Showing Percentage of Net Assets

Municipal Bonds - 94.6%

Moody's Ratings
(unaudited) (a)

Principal
Amount

Value
(Note 1)

Alabama - 0.7%

Jefferson County Swr. Rev. Series D, 5.75% 2/1/27 (FGIC Insured)

Aaa

$ 1,000,000

$ 1,034,840

Alaska - 4.5%

North Slope Borough Gen. Oblig.:

Series A, 0% 6/30/07 (MBIA Insured)

Aaa

5,000,000

4,037,000

Series B, 0% 6/30/05 (FSA Insured)

Aaa

3,000,000

2,681,100

Northern Tobacco Securitization Corp. Tobacco Settlement Rev. Series 2001, 5.5% 6/1/29

Aa3

500,000

481,545

7,199,645

Arkansas - 0.5%

Arkansas Gen. Oblig. (College Savings Prog.) Series 2001 A, 0% 6/1/12

Aa2

1,415,000

867,183

California - 2.5%

California Gen. Oblig.:

6.6% 2/1/09

A1

150,000

171,420

6.6% 2/1/10

A1

2,190,000

2,519,989

6.75% 6/1/06

A1

600,000

679,374

6.75% 8/1/10

A1

500,000

582,630

3,953,413

Colorado - 3.9%

Broomfield Coliseum City & County Ctfs. of Prtn. 6% 12/1/29 (AMBAC Insured)

Aaa

1,750,000

1,880,918

Clear Creek School District #RE1 6.25% 12/1/15 (FSA Insured)

Aaa

190,000

214,035

Colorado Dept. of Trans. Rev. 6% 6/15/08 (AMBAC Insured)

Aaa

150,000

168,387

Denver City & County Gen. Oblig. Series A, 5% 8/1/03

Aa1

200,000

208,878

E-470 Pub. Hwy. Auth. Rev.:

Series 2000 A, 5.75% 9/1/29 (MBIA Insured)

Aaa

1,000,000

1,065,640

Series 2000 B, 0% 9/1/06 (MBIA Insured)

Aaa

2,200,000

1,861,068

Series B, 0% 9/1/13 (MBIA Insured)

Aaa

1,415,000

803,593

6,202,519

Connecticut - 0.1%

Connecticut Health & Edl. Facilities Auth. Rev. (Greenwich Hosp. Proj.) Series A, 5.8% 7/1/26 (MBIA Insured)

Aaa

205,000

214,428

Florida - 5.4%

Broward County Gen. Oblig. Series B, 5% 1/1/04

Aa1

3,000,000

3,141,510

Municipal Bonds - continued

Moody's Ratings
(unaudited) (a)

Principal
Amount

Value
(Note 1)

Florida - continued

Dade County Spl. Oblig. Series 1996 B, 0% 10/1/28 (AMBAC Insured) (Pre-Refunded to 10/1/08 @ 28.9349) (d)

Aaa

$ 5,000,000

$ 1,102,150

Florida Board of Ed. Lottery Rev. Series A, 5.5% 7/1/09 (AMBAC Insured)

Aaa

1,780,000

1,942,603

Highlands County Health Facilities Auth. Rev. (Adventist Health Sys./Sunbelt Proj.) Series 2001 A, 6% 11/15/31

Baa1

500,000

506,295

Hillsborough County Util. Rev. 5% 8/1/05 (AMBAC Insured)

Aaa

815,000

869,442

Orange County Health Facilities Auth. Rev. (Adventist Health Sys./Sunbelt Oblig. Group Proj.) 5.75% 11/15/05 (AMBAC Insured)

Aaa

1,000,000

1,092,990

8,654,990

Georgia - 2.6%

Georgia Gen. Oblig. Series C, 6.5% 7/1/07

Aaa

3,670,000

4,181,892

Hawaii - 1.2%

Hawaii Gen. Oblig.:

Series 1998 CR, 5.75% 4/1/09 (MBIA Insured)

Aaa

1,000,000

1,101,420

6% 12/1/10 (FGIC Insured)

Aaa

775,000

874,107

1,975,527

Idaho - 1.0%

Cassia & Twin Falls Counties Joint School District #151 5.5% 8/1/12 (FGIC Insured)

Aaa

1,500,000

1,639,605

Illinois - 9.6%

Chicago Gen. Oblig.:

(Neighborhoods Alive 21 Prog.) Series 2000 A, 6% 1/1/28 (FGIC Insured)

Aaa

1,000,000

1,079,680

0% 1/1/15 (MBIA Insured)

Aaa

1,840,000

955,917

5.6% 1/1/05 (AMBAC Insured)

Aaa

1,325,000

1,418,611

Chicago Midway Arpt. Rev. Series 2001 B, 5% 1/1/09 (FSA Insured)

Aaa

1,250,000

1,303,988

Chicago Motor Fuel Tax Rev. 6.125% 1/1/09 (AMBAC Insured)

Aaa

1,000,000

1,117,510

Chicago Tax Increment Rev. Series A, 0% 12/1/05 (AMBAC Insured)

Aaa

1,300,000

1,144,117

Coles & Cumberland Counties Cmnty.
Unit School District #2 5.35% 2/1/19
(FGIC Insured)

Aaa

1,495,000

1,517,649

Municipal Bonds - continued

Moody's Ratings
(unaudited) (a)

Principal
Amount

Value
(Note 1)

Illinois - continued

Illinois Dev. Fin. Auth. Rev. (Adventist Health
Sys. Proj.) Series 1997 A, 5.5% 11/15/13 (MBIA Insured)

Aaa

$ 1,000,000

$ 1,065,730

Illinois Edl. Facilities Auth. Revs. (DePaul Univ. Proj.) 5.65% 10/1/13 (AMBAC Insured)

Aaa

100,000

107,422

Kendall, Kane & Will Counties Cmnty. Unit School District #308 5.25% 10/1/07
(FGIC Insured)

Aaa

830,000

894,466

McHenry County Conservation District Series A, 5.625% 2/1/21 (FGIC Insured)

Aaa

750,000

778,808

Metro. Pier & Exposition Auth. Dedicated State Tax Rev. (McCormick Place Expansion Proj.) Series A, 0% 6/15/15 (FGIC Insured)

Aaa

5,000,000

2,538,300

Univ. of Illinois Univ. Revs. (Auxiliary Facilities Sys. Proj.):

Series 2001 A, 5.25% 4/1/10
(AMBAC Insured)

Aaa

1,095,000

1,169,153

Series A, 6% 4/1/15 (MBIA Insured) (Pre-Refunded to 4/1/10 @ 101) (d)

Aaa

155,000

175,998

15,267,349

Indiana - 4.2%

Clark Pleasant Cmnty. School Bldg. Corp. 5.5% 7/15/16 (AMBAC Insured)

Aaa

685,000

717,305

Indiana Health Facilities Fing. Auth. Hosp. Rev. 5.5% 2/15/30 (MBIA Insured)

Aaa

1,000,000

1,020,380

Petersburg Poll. Cont. Rev. 5.75% 8/1/21

A3

3,000,000

3,007,500

Richland-Beanblossom Ind. School Bldg. Corp. 5.5% 7/15/15 (FGIC Insured)

Aaa

1,885,000

1,986,243

6,731,428

Iowa - 1.7%

Tobacco Settlement Auth. Tobacco Settlement Rev. 5.3% 6/1/25

A1

3,000,000

2,717,640

Kansas - 1.1%

Kansas Dev. Fin. Auth. Rev. (Sisters of Charity Leavenworth Health Svc. Co. Proj.) 5.25% 12/1/09 (MBIA Insured)

Aaa

225,000

239,693

La Cygne Envir. Impt. Rev. (Kansas City Pwr. & Lt. Co. Proj.) Series 1994, 3.9%, tender 9/1/04 (c)

A1

1,000,000

1,010,970

Saline County Unified School District #305 Salina 5.5% 9/1/13 (FSA Insured)

Aaa

500,000

541,135

1,791,798

Municipal Bonds - continued

Moody's Ratings
(unaudited) (a)

Principal
Amount

Value
(Note 1)

Kentucky - 2.9%

Kentucky Property & Bldgs. Commission Revs. (#71 Proj.) 5.5% 8/1/09

Aa3

$ 3,025,000

$ 3,293,953

Owensboro Elec. Lt. & Pwr. Rev. Series B, 0% 1/1/07 (AMBAC Insured)

Aaa

1,505,000

1,245,147

4,539,100

Maine - 3.3%

Maine Tpk. Auth. Tpk. Rev. Series 2000, 5.75% 7/1/28 (FGIC Insured)

Aaa

5,000,000

5,291,392

Maryland - 0.4%

Prince Georges County Ctfs. of Prtn.
(Equip. Acquisition Prog.) 4.5% 6/15/04 (MBIA Insured)

Aaa

580,000

606,419

Massachusetts - 2.5%

Massachusetts Bay Trans. Auth. Series 2000 A, 5.25% 7/1/30

Aa1

1,580,000

1,582,196

Massachusetts Gen. Oblig. Series 2001 A, 5.5% 1/1/10

Aa2

275,000

299,063

Massachusetts Health & Edl. Facilities Auth. Rev. (Boston College Issue Proj.) Series 1998 L, 5.25% 6/1/13

Aa3

850,000

890,435

Massachusetts Muni. Wholesale Elec. Co. Pwr. Supply Sys. Rev. Series A, 5.1% 7/1/07 (AMBAC Insured) (Escrowed to Maturity) (d)

Aaa

200,000

215,120

Massachusetts Wtr. Poll. Abatement Trust (Pooled Ln. Prog.) Series 7, 5.25% 2/1/12

Aaa

1,000,000

1,066,500

4,053,314

Michigan - 4.9%

Ann Arbor Bldg. Auth. Series 2000, 5.75% 3/1/15 (FGIC Insured)

Aaa

20,000

21,567

Detroit City School District 5.375% 5/1/15 (FGIC Insured)

Aaa

375,000

390,919

Detroit Swr. Disp. Rev. Series A, 5.875% 7/1/22 (FGIC Insured) (Pre-Refunded to 1/1/10 @ 101) (d)

Aaa

135,000

152,014

Detroit Wtr. Supply Sys. Rev.:

Series 1995 A, 5.4% 7/1/11 (MBIA Insured)

Aaa

3,380,000

3,674,398

Series 2001 A, 5.25% 7/1/33 (FGIC Insured)

Aaa

2,000,000

1,994,340

Oakland Univ. Rev. 5.75% 5/15/26
(MBIA Insured)

Aaa

50,000

52,267

Municipal Bonds - continued

Moody's Ratings
(unaudited) (a)

Principal
Amount

Value
(Note 1)

Michigan - continued

Royal Oak Hosp. Fin. Auth. Hosp. Rev.
(William Beaumont Hosp. Proj.) Series M, 5.25% 11/15/31 (MBIA Insured)

Aaa

$ 1,295,000

$ 1,279,797

Sterling Heights Bldg. Auth. 5.75% 10/1/15 (FGIC Insured)

Aaa

160,000

171,206

7,736,508

Minnesota - 2.2%

Robbinsdale Independent School District #281 5% 2/1/12

Aa1

200,000

207,634

Saint Paul Gen. Oblig. Series 2001 B, 4.75% 3/1/03

Aa2

170,000

175,576

Suburban Hennepin Reg'l. Park District 5% 2/1/12

Aa1

325,000

335,621

Univ. of Minnesota 4.8% 8/15/03

Aa2

2,600,000

2,702,986

3,421,817

Missouri - 0.3%

Missouri Highways & Trans. Commisson State Road Rev. Series 2001 A, 5.625% 2/1/13

Aa2

500,000

545,605

Nebraska - 0.3%

Omaha Gen. Oblig. 5.75% 12/1/14

Aaa

380,000

416,336

New Hampshire - 0.7%

New Hampshire Muni. Bond Bank Series C, 5.75% 8/15/14 (MBIA Insured)

Aaa

1,000,000

1,070,030

New Mexico - 0.7%

Univ. of New Mexico Univ. Revs. Series A, 6% 6/1/25 (MBIA Insured)

Aaa

1,000,000

1,080,210

New York - 3.9%

Metro. Trans. Auth. Commuter Facilities Rev.:

Series 1992 B, 6.1% 7/1/09 (MBIA Insured)

Aaa

5,000

5,671

Series 1997 B, 5% 7/1/20 (AMBAC Insured)

Aaa

500,000

498,755

Series 1997 E, 5% 7/1/16 (AMBAC Insured)

Aaa

10,000

10,129

Series B, 4.875% 7/1/18 (FGIC Insured)

Aaa

500,000

495,175

Series D, 5.125% 7/1/22 (MBIA Insured)

Aaa

800,000

803,608

Metro. Trans. Auth. Svc. Contract Rev. (Trans. Facilities Proj.) Series 7, 4.75% 7/1/19

A3

35,000

33,165

Metro. Trans. Auth. Transit Facilities Rev.
Series B2, 5% 7/1/17 (MBIA Insured)

Aaa

250,000

251,523

Triborough Bridge & Tunnel Auth. Revs.:

Series 1999 A, 5.125% 1/1/18

Aa3

3,000,000

3,032,070

Municipal Bonds - continued

Moody's Ratings
(unaudited) (a)

Principal
Amount

Value
(Note 1)

New York - continued

Triborough Bridge & Tunnel Auth. Revs.: - continued

Series A, 5.25% 1/1/17

Aa3

$ 1,000,000

$ 1,026,030

Series Y, 6% 1/1/12

Aa3

100,000

113,121

6,269,247

North Carolina - 2.5%

North Carolina Eastern Muni. Pwr. Agcy. Pwr. Sys. Rev. Series B:

6% 1/1/05

Baa3

2,000,000

2,081,960

6% 1/1/06

Baa3

175,000

186,879

6.125% 1/1/09

Baa3

75,000

80,639

North Carolina Muni. Pwr. Agcy. #1 Catawba Elec. Rev. Series B, 6.25% 1/1/07

Baa1

750,000

807,248

Union County Gen. Oblig. Series B, 5.3% 3/1/13 (FGIC Insured)

Aaa

750,000

796,455

3,953,181

Ohio - 1.1%

Columbus Gen. Oblig. Series 2000 1, 5.5% 11/15/10

Aaa

300,000

329,376

Hilliard School District 5.75% 12/1/28
(FGIC Insured)

Aaa

25,000

26,563

Ohio Gen. Oblig. (Higher Ed. Cap. Facilities Proj.) Series 2001 IIA, 5.5% 12/1/09

Aa2

1,000,000

1,094,370

Toledo Wtrwks. Rev. 6% 11/15/06 (FGIC Insured)

Aaa

275,000

307,340

1,757,649

Oklahoma - 1.2%

Midwest City Muni. Auth. Cap. Impt. Rev.
Series 2001, 5.5% 6/1/13 (FSA Insured)

Aaa

1,730,000

1,839,284

Oregon - 1.3%

Jackson County School District #9 Eagle Point 5.625% 6/15/16

Aa2

350,000

372,194

Morrow County School District #1 5.625% 6/15/14 (FSA Insured)

Aaa

1,500,000

1,629,375

2,001,569

Pennsylvania - 2.5%

Canon-McMillan School District Series 2001 B, 5.75% 12/1/33 (FGIC Insured)

Aaa

1,000,000

1,050,190

Municipal Bonds - continued

Moody's Ratings
(unaudited) (a)

Principal
Amount

Value
(Note 1)

Pennsylvania - continued

Pennsylvania Higher Edl. Facilities Auth. Rev. (UPMC Health Sys. Proj.) Series 2001 A, 6% 1/15/22

A+

$ 1,000,000

$ 1,023,810

Philadelphia Wtr. & Wastewtr. Rev. Series A, 5.25% 8/1/09 (AMBAC Insured)

Aaa

450,000

483,692

Pittsburgh Gen. Oblig. Series 1999 A, 5.75% 9/1/12 (FGIC Insured)

Aaa

465,000

505,395

Westmoreland County Muni. Auth. Muni. Svc. Rev. Series A, 0% 8/15/20 (FGIC Insured)

Aaa

2,500,000

920,025

3,983,112

Puerto Rico - 0.3%

Puerto Rico Commonwealth Hwy. & Trans. Auth. Rev. Series 2000 C, 6% 7/1/29

Baa1

500,000

543,805

South Carolina - 2.1%

Greenwood County Hosp. Rev. (Self Memorial Hosp. Proj.):

5.5% 10/1/26

A2

1,500,000

1,454,730

5.5% 10/1/31

A2

1,450,000

1,390,956

Tobacco Settlement Rev. Mgmt. Auth.
Series 2001 B, 6.375% 5/15/28

A1

455,000

471,571

3,317,257

Texas - 11.9%

Austin Elec. Util. Sys. Rev. 7.25% 11/15/10 (FSA Insured)

Aaa

1,000,000

1,201,090

Eagle Mountain & Saginaw Independent School District 5.125% 8/15/33 (b)

Aaa

2,000,000

1,935,200

Eanes Independent School District Series 2001, 5.5% 8/1/13

Aaa

1,000,000

1,065,730

Garland Independent School District 5.5% 2/15/19

Aaa

515,000

530,172

Harris County Gen. Oblig. 0% 10/1/13
(MBIA Insured)

Aaa

2,000,000

1,123,500

Harris County Health Facilities Dev. Corp. Rev. (Saint Lukes Episcopal Hosp. Proj.) Series 2001 A, 5.5% 2/15/12

AA

1,375,000

1,452,000

Houston Arpt. Sys. Rev. 5.5% 7/1/19
(FSA Insured)

Aaa

1,500,000

1,545,885

La Joya Independent School District:

5.75% 2/15/17

Aaa

2,000,000

2,121,440

5.75% 2/15/19

Aaa

600,000

629,100

Mercedes Independent School District
Series 2000, 5.625% 8/15/15

Aaa

275,000

290,573

Municipal Bonds - continued

Moody's Ratings
(unaudited) (a)

Principal
Amount

Value
(Note 1)

Texas - continued

New Braunfels Independent School District 6% 2/1/09

AAA

$ 725,000

$ 807,063

Odessa Wtr. & Swr. Rev. 5.5% 4/1/11
(FSA Insured)

Aaa

750,000

807,705

Red River Ed. Fin. Corp. Ed. Rev. (Hockaday School Proj.) 5.75% 5/15/19

AA

200,000

207,874

Sabine River Auth. Poll. Cont. Rev. (Texas Utils. Elec. Co. Proj.) Series A, 5.5%, tender 11/1/11 (c)

Baa1

3,000,000

2,947,830

Tarrant County Health Facilities Dev. Corp. Hosp. Rev. 5.375% 11/15/20

Baa1

500,000

475,135

Texas Pub. Fin. Auth. Rev. (Texas Parks & Wildlife Dept. Projs.) 5.5% 2/1/12 (FSA Insured)

Aaa

150,000

159,992

Tyler Health Facilities Dev. Corp. Hosp. Rev. (Mother Francis Hosp. Reg'l Health Care Proj.) 6% 7/1/27

Baa1

1,000,000

973,260

Univ. of Texas Univ. Revs. (Fing. Sys. Proj.)
Series A, 5.5% 8/15/09

Aaa

100,000

108,795

Waller Consolidated Independent School District 6% 2/15/12

Aaa

175,000

195,454

Weatherford Independent School District 0% 2/15/23 (Pre-Refunded to 2/15/10 @ 42.135) (d)

Aaa

1,500,000

442,875

19,020,673

Utah - 2.1%

Salt Lake County Hosp. Rev. (IHC Health Svcs., Inc. Proj.) 5.5% 5/15/12 (AMBAC Insured)

Aaa

3,100,000

3,335,507

Vermont - 0.2%

Vermont Edl. & Health Bldgs. Fing. Agcy. Rev. (Fletcher Allen Health Care Proj.) Series 2000 A, 6.125% 12/1/27 (AMBAC Insured)

Aaa

300,000

325,827

Washington - 5.4%

Washington Gen. Oblig.:

Series 1997 C, 6.5% 1/1/05

Aa1

1,340,000

1,467,957

Series 2001 RA, 5.25% 9/1/06

Aa1

2,000,000

2,156,420

Washington Health Care Facilities Auth. Rev. (Providence Health Systems Proj.) Series 2001 A, 5.5% 10/1/13 (MBIA Insured)

Aaa

1,750,000

1,842,855

Washington Pub. Pwr. Supply Sys. Nuclear Proj. #2 Rev. Series A, 5% 7/1/12 (FSA Insured)

Aaa

3,000,000

3,087,420

8,554,652

Municipal Bonds - continued

Moody's Ratings
(unaudited) (a)

Principal
Amount

Value
(Note 1)

West Virginia - 0.2%

West Virginia Univ. Revs. (West Virginia Univ. Projs.) Series 2001 A, 5.5% 4/1/14 (MBIA Insured)

Aaa

$ 330,000

$ 357,948

Wisconsin - 1.2%

Wisconsin Health & Edl. Facilities Auth. Rev.:

(Marshfield Clinic Proj.) Series B, 6% 2/15/25

BBB+

1,000,000

990,080

(Wheaton Franciscan Svcs. Proj.) 5.75% 8/15/30 (b)

A2

1,000,000

966,180

1,956,260

Wyoming - 1.5%

Gillette Spl. Purp. Wtr. & Swr. Utils. Sys. Rev. 7.7% 12/1/10 (Escrowed to Maturity) (d)

Aaa

1,965,000

2,376,707

TOTAL INVESTMENT PORTFOLIO - 94.6%

(Cost $150,288,509)

150,785,666

NET OTHER ASSETS - 5.4%

8,571,632

NET ASSETS - 100%

$ 159,357,298

Legend

(a) S&P® credit ratings are used in the absence of a rating by Moody's Investors Service, Inc.

(b) Security or a portion of the security purchased on a delayed delivery or when-issued basis.

(c) The coupon rate shown on floating or adjustable rate securities represents the rate at period end.

(d) Security collateralized by an amount sufficient to pay interest and principal.

Other Information

The composition of long-term debt holdings as a percentage of total value of investments in securities, is as follows (ratings are unaudited):

Moody's Ratings

S&P Ratings

Aaa, Aa, A

91.3%

AAA, AA, A

88.0%

Baa

5.7%

BBB

6.7%

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 net assets, is as follows:

General Obligations

35.4%

Health Care

12.3

Transportation

11.8

Electric Utilities

9.8

Water & Sewer

6.5

Special Tax

5.5

Others* (individually less than 5%)

18.7

100.0%

*Includes net other assets

Purchases and sales of securities, other than short-term securities, aggregated $174,011,450 and $23,895,673, respectively.

Income Tax Information

At January 31, 2002, the aggregate cost of investment securities for income tax purposes was $150,286,206. Net unrealized appreciation aggregated $499,460, of which $1,306,787 related to appreciated investment securities and $807,327 related to depreciated investment securities.

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

Annual Report

Financial Statements

Statement of Assets and Liabilities

January 31, 2002

Assets

Investment in securities, at value (cost $150,288,509) - See accompanying schedule

$ 150,785,666

Cash

9,267,837

Receivable for investments sold

812,176

Receivable for fund shares sold

321,615

Interest receivable

1,689,445

Other receivables

7,237

Total assets

162,883,976

Liabilities

Payable for investments purchased
Regular delivery

$ 329,349

Delayed delivery

2,947,691

Payable for fund shares redeemed

34,796

Distributions payable

143,897

Accrued management fee

21,464

Other payables and accrued expenses

49,481

Total liabilities

3,526,678

Net Assets

$ 159,357,298

Net Assets consist of:

Paid in capital

$ 158,744,367

Undistributed net investment income

5,418

Accumulated undistributed net realized gain (loss) on investments

110,356

Net unrealized appreciation (depreciation) on investments

497,157

Net Assets, for 15,561,160 shares outstanding

$ 159,357,298

Net Asset Value, offering price and redemption price per share ($159,357,298 ÷ 15,561,160 shares)

$10.24

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

Annual Report

Financial Statements - continued

Statement of Operations

April 10, 2001 (commencement of operations) to January 31, 2002

Investment Income

Interest

$ 3,685,110

Expenses

Management fee

$ 318,359

Transfer agent fees

55,639

Accounting fees and expenses

51,857

Non-interested trustees' compensation

241

Custodian fees and expenses

2,857

Registration fees

99,181

Audit

21,814

Legal

4,756

Miscellaneous

456

Total expenses before reductions

555,160

Expense reductions

(500,545)

54,615

Net investment income

3,630,495

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on investment securities

236,009

Change in net unrealized appreciation (depreciation) on investment securities

497,157

Net gain (loss)

733,166

Net increase (decrease) in net assets resulting
from operations

$ 4,363,661

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

Annual Report

Statement of Changes in Net Assets

April 10, 2001
(commencement
of operations) to
January 31,
2002

Increase (Decrease) in Net Assets

Operations
Net investment income

$ 3,630,495

Net realized gain (loss)

236,009

Change in net unrealized appreciation (depreciation)

497,157

Net increase (decrease) in net assets resulting from operations

4,363,661

Distributions to shareholders
From net investment income

(3,624,784)

From net realized gain

(125,654)

Total distributions

(3,750,438)

Share transactions
Net proceeds from sales of shares

233,577,184

Reinvestment of distributions

2,984,739

Cost of shares redeemed

(77,830,511)

Net increase (decrease) in net assets resulting from share transactions

158,731,412

Redemption fees

12,663

Total increase (decrease) in net assets

159,357,298

Net Assets

Beginning of period

-

End of period (including undistributed net investment income of $5,418)

$ 159,357,298

Other Information

Shares

Sold

22,879,755

Issued in reinvestment of distributions

291,371

Redeemed

(7,609,966)

Net increase (decrease)

15,561,160

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

Annual Report

Financial Highlights

Year ended January 31,

2002 E

Selected Per-Share Data

Net asset value, beginning of period

$ 10.000

Income from Investment Operations
Net investment income D

.352

Net realized and unrealized gain (loss)

.245

Total from investment operations

.597

Less Distributions

From net investment income

(.350)

From net realized gain

(.008)

Total distributions

(.358)

Redemption fees added to paid in capital D

.001

Net asset value, end of period

$ 10.240

Total Return B, C

6.05%

Ratios to Average Net Assets F

Expenses before expense reductions

.66% A

Expenses net of voluntary waivers, if any

.10% A

Expenses net of all reductions

.06% A

Net investment income

4.30% A

Supplemental Data

Net assets, end of period (000 omitted)

$ 159,357

Portfolio turnover rate

28% A

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns would have been lower had certain expenses not been reduced during the periods shown.

D Calculated based on average shares outstanding during the period.

E For the period April 10, 2001 (commencement of operations) to January 31, 2002.

F Expense ratios reflect operating expenses of the fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from directed brokerage or other expense offset arrangements and do not represent the amount paid by the fund during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of voluntary waivers reflects expenses after reimbursements by the investment adviser but prior to reductions from directed brokerage or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the fund.

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

Annual Report

Notes to Financial Statements

For the period ended January 31, 2002

1. Significant Accounting Policies.

Spartan Tax-Free Bond Fund (the fund) is a fund of Fidelity Devonshire 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 accounting principles generally accepted in the United States of America which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the fund:

Security Valuation. Net asset value per share is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. 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 (including restricted 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. Investments in open-end investment companies are valued at their net asset value each business day.

Income Taxes. The fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code. By so qualifying, the fund will not be subject to income taxes to the extent that it distributes all of its taxable income for its fiscal year. The Schedule of Investments includes information, if any, regarding income taxes under the caption "Income Tax Information."

Investment Income. Interest income, which includes amortization of premium and accretion of discount on debt securities, as required, 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 are primarily due to differing treatments for short-term capital gains and market discount.

Annual Report

Notes to Financial Statements - continued

1. Significant Accounting Policies - continued

Distributions to Shareholders - continued

In addition, the fund will treat a portion of the proceeds from shares redeemed as a distribution from net investment income and realized gain for income tax purposes.

Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications to paid in capital. Temporary book and tax basis differences will reverse in a subsequent period.

As of January 31, 2002, undistributed net income on a tax basis was as follows:

Undistributed ordinary income

$ 642,744

The tax character of distributions paid during the year was as follows:

Ordinary income

$ 3,750,438

Short-Term Trading (Redemption) Fees. Shares held in the fund less than 30 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.

Delayed Delivery Transactions and When-Issued Securities. The fund may purchase or sell securities on a delayed delivery or when-issued basis. Payment and delivery may take place after the customary settlement period for that security. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. During the time a delayed delivery sell is outstanding, the contract is "marked to market" daily and equivalent deliverable securities are held for the transaction. The values of the securities purchased on a delayed delivery or when-issued basis are identified as such in the fund's Schedule of Investments. The fund may receive compensation for interest forgone in the purchase of a delayed delivery or when-issued security. With respect to purchase commitments, the fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment. Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract, or if the issuer does not issue the securities due to political, economic, or other factors.

Annual Report

3. Purchases and Sales of Investments.

Information regarding purchases and sales of securities is included under the caption "Other Information" at the end of the fund's Schedule of Investments.

4. Fees and Other Transactions with Affiliates.

Management Fee. Fidelity Management & Research Company (FMR) and its affiliates provide the fund with investment management related services for which the fund pays a monthly management fee.

The management fee is the sum of an individual fund fee rate of .25% of the fund's average net assets and a group fee rate that averaged .13% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annualized management fee rate was .38% of the fund's average net assets.

Transfer Agent and Accounting Fees. Citibank, N.A.(Citibank) is the custodian, transfer agent and shareholder servicing agent for the fund. Citibank has entered into a sub-contract with Fidelity Service Company, Inc. (FSC), an affiliate of FMR, under which FSC performs the activities associated with the fund's transfer and shareholder servicing agent and accounting functions. The fund pays 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. The accounting fee is based on the level of average net assets for the month plus out-of-pocket expenses.

For the period, the transfer agent fees were equivalent to an annualized rate of .07% of average net assets.

5. Expense Reductions.

FMR agreed to reimburse the fund to the extent operating expenses exceeded .10% of average net assets. Some expenses, for example interest expense, are excluded from this reimbursement. During the period, this reimbursement reduced the fund's expenses by $470,678.

In addition, through arrangements with the fund's custodian and transfer agent, credits realized as a result of uninvested cash balances were used to reduce the fund's expenses. During the period, these credits reduced the fund's custody, transfer agent and accounting expenses by $2,852, $26,054 and $961, respectively.

Annual Report

Independent Auditors' Report

To the Trustees of Fidelity Devonshire Trust and Shareholders of Spartan Tax-Free Bond Fund:

We have audited the accompanying statement of assets and liabilities of Spartan Tax-Free Bond Fund, (the Fund), a fund of Fidelity Devonshire Trust, including the portfolio of investments, as of January 31, 2002, and the related statements of operations, changes in net assets, and financial highlights for the period April 10, 2001 (commencement of operations) to January 31, 2002. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of January 31, 2002, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Spartan Tax-Free Bond Fund as of January 31, 2002, and the results of its operations, the changes in its net assets, and its financial highlights for the period April 10, 2001 (commencement of operations) to January 31, 2002, in conformity with accounting principles generally accepted in the United States of America.

/s/DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Boston, Massachusetts
March 1, 2002

Annual Report

Trustees and Officers

The Trustees, Members of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, and review the fund's performance. Except for William O. McCoy, each of the Trustees oversees 262 funds advised by FMR. Mr. McCoy oversees 264 funds advised by FMR.

The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any Special Meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. The executive officers and Advisory Board Members hold office without limit in time, except that any officer or Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.

The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.

Interested Trustees*:

The business address of each Trustee who is an "interested person" (as defined in the 1940 Act) is 82 Devonshire Street, Boston, Massachusetts 02109.

Name, Age; Principal Occupation

Edward C. Johnson 3d (71)**

Year of Election or Appointment: 1984

President of Spartan Tax-Free Bond (2001). Mr. Johnson also serves as President of other Fidelity funds. He is Chief Executive Officer, Chairman, and a Director of FMR Corp.; a Director and Chairman of the Board and of the Executive Committee of FMR; a Director of Fidelity Management & Research (U.K.) Inc.; Chairman and a Director of Fidelity Management & Research (Far East) Inc.; Chairman (1998) and a Director (1997) of Fidelity Investments Money Management, Inc.; and Chairman (2001) and a Director (2000) of FMR Co., Inc.

Abigail P. Johnson (40)**

Year of Election or Appointment: 2001

Senior Vice President of Spartan Tax-Free Bond (2001). Ms. Johnson also serves as Senior Vice President of other Fidelity funds (2001). She is President and a Director of FMR (2001), Fidelity Investments Money Management, Inc. (2001), FMR Co., Inc. (2001), and a Director of FMR Corp. Previously, Ms. Johnson managed a number of Fidelity funds.

Peter S. Lynch (58)

Year of Election or Appointment: 1990

Vice Chairman and a Director of FMR, and Vice Chairman (2001) and a Director (2000) of FMR Co., Inc. Prior to May 31, 1990, he was a Director of FMR and Executive Vice President of FMR (a position he held until March 31, 1991), Vice President of Fidelity ® Magellan® Fund and FMR Growth Group Leader, and Managing Director of FMR Corp. Mr. Lynch was also Vice President of Fidelity Investments Corporate Services. In addition, he serves as a Trustee of Boston College, Massachusetts Eye & Ear Infirmary, Historic Deerfield, John F. Kennedy Library, and the Museum of Fine Arts of Boston.

* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with one or more of the trust, the fund's investment adviser, FMR, and the fund's distribution agent, FDC.

** Edward C. Johnson 3d, Trustee and President of the funds, is Abigail P. Johnson's father.

Annual Report

Non-Interested Trustees:

The business address of each non-interested Trustee (that is, the Trustees other than the Interested Trustees) is Fidelity Investments, P. O. Box 55235, Boston, Massachusetts 02205-5235.

Name, Age; Principal Occupation

J. Michael Cook (59)

Year of Election or Appointment: 2001

Prior to Mr. Cook's retirement in May 1999, he served as Chairman and Chief Executive Officer of Deloitte & Touche LLP (accounting/consulting), Chairman of the Deloitte & Touche Foundation, and a member of the Board of Deloitte Touche Tohmatsu. He currently serves as a Director of AT&T (2001), International Flavors & Fragrances, Inc. (2000), Rockwell Automation International (2000), The Dow Chemical Company (2000), and HCA - The Healthcare Company (1999). He is a Member of the Advisory Board of the Securities Regulation Institute, Chairman Emeritus of the Board of Catalyst (a leading organization for the advancement of women in business), a Director of the STAR Foundation (Society to Advance the Retarded and Handicapped), and is Chairman of the Accountability Advisory Panel to the Comptroller General of the United States. He also serves as a member of the Board of Overseers of the Columbia Business School and a Member of the Advisory Board of the Graduate School of Business of the University of Florida.

Ralph F. Cox (69)

Year of Election or Appointment: 1991

President of RABAR Enterprises (management consulting for the petroleum industry). Prior to February 1994, he was President of Greenhill Petroleum Corporation (petroleum exploration and production). Until March 1990, Mr. Cox was President and Chief Operating Officer of Union Pacific Resources Company (exploration and production). He is a Director of Waste Management Inc. (non-hazardous waste), CH2M Hill Companies (engineering), and Abraxas Petroleum (petroleum exploration and production, 1999). In addition, he is a member of advisory boards of Texas A&M University and the University of Texas at Austin.

Phyllis Burke Davis (70)

Year of Election or Appointment: 1992

Mrs. Davis is retired from Avon Products, Inc. (cosmetics) where she held various positions including Senior Vice President of Corporate Affairs and Group Vice President of U.S. product marketing, sales, distribution, and manufacturing. Previously, she served as a Director of BellSouth Corporation (telecommunications), Eaton Corporation (industrial conglomerate), the TJX Companies, Inc. (retail stores), Hallmark Cards, Inc., Nabisco Brands, Inc., and Standard Brands, Inc. In addition, she is a member of the Board of Directors of the Southampton Hospital in Southampton, N.Y. (1998).

Robert M. Gates (58)

Year of Election or Appointment: 1997

Consultant, educator, and lecturer. Mr. Gates was Director of the Central Intelligence Agency (CIA) from 1991 to 1993. From 1989 to 1991, Mr. Gates served as Assistant to the President of the United States and Deputy National Security Advisor. Mr. Gates is a Director of Charles Stark Draper Laboratory (non-profit), NACCO Industries, Inc. (mining and manufacturing), TRW Inc. (automotive, space, defense, and information technology), and Parker Drilling Co., Inc. (drilling and rental tools for the energy industry, 2001). He also serves as a member of the Advisory Board of VoteHere.net (secure internet voting, 2001). Previously, Mr. Gates served as a Director of LucasVarity PLC (automotive components and diesel engines) and Dean of the George Bush School of Government and Public Service at Texas A&M University (1999-2001). Mr. Gates also is a Trustee of the Forum for International Policy.

Donald J. Kirk (69)

Year of Election or Appointment: 1987

Vice Chairman of the Public Oversight Board of the American Institute of Certified Public Accountants' SEC Practice Section, a Public Governor of the National Association of Securities Dealers, Inc. (1996), and of the American Stock Exchange (2001), a Director and former Chairman of the Board of Directors of National Arts Stabilization Inc., a Trustee and former Chairman of the Board of Trustees of the Greenwich Hospital Association, and a Director of the Yale-New Haven Health Services Corp. (1998). Mr. Kirk was an Executive-in-Residence (1995-2000) and a Professor (1987-1995) at Columbia University Graduate School of Business. Prior to 1987, he was Chairman of the Financial Accounting Standards Board. Previously, Mr. Kirk served as a Director of General Re Corporation (reinsurance, 1987-1998) and as a Director of Valuation Research Corp. (appraisals and valuations).

Marie L. Knowles (55)

Year of Election or Appointment: 2001

Prior to Ms. Knowles' retirement in June 2000, she served as Executive Vice President and Chief Financial Officer of Atlantic Richfield Company (ARCO) (diversified energy, 1996-2000). From 1993 to 1996, she was a Senior Vice President of ARCO and President of ARCO Transportation Company. She served as a Director of ARCO from 1996 to 1998. She currently serves as a Director of Phelps Dodge Corporation (copper mining and manufacturing), URS Corporation (multidisciplinary engineering, 1999), and America West Holdings Corporation (aviation and travel services, 1999) and previously served as a Director of ARCO Chemical Corporation and Vastar Resources, Inc. Ms. Knowles is a Trustee of the Brookings Institution and serves as a member of the Advisory Board for the School of Engineering of the University of Southern California.

Ned C. Lautenbach (57)

Year of Election or Appointment: 2000

Partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm) since September 1998. Previously, Mr. Lautenbach was with the International Business Machines Corporation ("IBM") from 1968 until his retirement in 1998. He was most recently Senior Vice President and Group Executive of Worldwide Sales and Services. From 1993 to 1995, he was Chairman of IBM World Trade Corporation, and from 1994 to 1998 was a member of IBM's Corporate Executive Committee. Mr. Lautenbach serves as Chairman and Chief Executive Officer (1999) and as a Director (1998) of Acterna Corporation (telecommunications testing and management). He is also Co-Chairman and a Director of Covansys, Inc. (global provider of business and technology solutions, 2000). In addition, he is a Director of Eaton Corporation (industrial conglomerate, 1997), Axcelis Technologies (semiconductors, 2000), and the Philharmonic Center for the Arts in Naples, Florida (1999). He also serves on the Board of Trustees of Fairfield University and is a member of the Council on Foreign Relations.

Marvin L. Mann (68)

Year of Election or Appointment: 1993

Chairman of the non-interested Trustees (2001), Chairman Emeritus of Lexmark International, Inc. (computer peripherals) where he remains a member of the Board. Prior to 1991, he held the positions of Vice President of IBM and President and General Manager of various IBM divisions and subsidiaries. Mr. Mann is a Director of Imation Corp. (imaging and information storage, 1997). He is also a Board member of Acterna Corporation (telecommunications testing and management, 1999).

William O. McCoy (68)

Year of Election or Appointment: 1997

Prior to his retirement in December 1994, Mr. McCoy was Vice Chairman of the Board of BellSouth Corporation (telecommunications) and President of BellSouth Enterprises. He is currently a Director of Liberty Corporation (holding company), Duke Realty Corporation (real estate), Progress Energy, Inc. (electric utility, 1996), and Acterna Corporation (telecommunications testing and management, 1999). He is also a partner of Franklin Street Partners (private investment management firm, 1997) and a member of the Research Triangle Foundation Board. In addition, Mr. McCoy served as the Interim Chancellor (1999-2000) and a member of the Board of Visitors (1994-1998) for the University of North Carolina at Chapel Hill and currently serves on the Board of Directors of the University of North Carolina Health Care System and the Board of Visitors of the Kenan-Flagler Business School (University of North Carolina at Chapel Hill). He also served as Vice President of Finance for the University of North Carolina (16-school system, 1995-1998).

Advisory Board Member and Executive Officers:

The business address of the Advisory Board Member is Fidelity Investments, P. O. Box 55235, Boston, Massachusetts 02205-5235. The business address of each executive officer is 82 Devonshire Street, Boston, Massachusetts 02109.

Name, Age; Principal Occupation

William S. Stavropoulos (62)

Year of Election or Appointment: 2000

Member of the Advisory Board of Fidelity Devonshire Trust. Mr. Stavropoulos also serves as a Trustee (2001) or Member of the Advisory Board (2000) of other investment companies advised by FMR. He is Chairman of the Board and Chairman of the Executive Committee (2000) and a Director of The Dow Chemical Company. Since joining The Dow Chemical Company in 1967, Mr. Stavropoulos served in numerous senior management positions, including President (1993-2000) and Chief Executive Officer (1995-2000). Currently, he is a Director of NCR Corporation (data warehousing and technology solutions, 1997), BellSouth Corporation (telecommunications, 1997), and the Chemical Financial Corporation. He also serves as a member of the Board of Trustees of the American Enterprise Institute for Public Policy Research and Fordham University. In addition, Mr. Stavropoulos is a member of the American Chemical Society, The Business Council, J.P. Morgan International Council, World Business Council for Sustainable Development, and the University of Notre Dame Advisory Council for the College of Science.

Dwight D. Churchill (48)

Year of Election or Appointment: 2001

Vice President of Spartan Tax-Free Bond. He serves as Head of Fidelity's Fixed-Income Division (2000), Vice President of Fidelity's Money Market Funds (2000), Vice President of Fidelity's Bond Funds (1997), and Senior Vice President of FIMM (2000), and FMR (1997). Mr. Churchill joined Fidelity in 1993 as Vice President and Group Leader of Taxable Fixed-Income Investments.

David L. Murphy (54)

Year of Election or Appointment: 2001

Vice President of Spartan Tax-Free Bond. He serves as Senior Vice President (2000) and Bond Group Leader (2000) of Fidelity's Fixed-Income Division, and Vice President of Fidelity's Municipal Bond Funds (2001) and Fidelity's Taxable Bond Funds (2000). Mr. Murphy is also Vice President of FIMM (2000) and FMR (1998). Mr. Murphy joined Fidelity in 1989 as a portfolio manager in the Bond Group.

Christine J. Thompson (43)

Year of Election or Appointment: 2001

Vice President of Spartan Tax Free Bond and other funds advised by FMR. Prior to assuming her current responsibilities, Ms. Thompson managed a variety of Fidelity funds.

Eric D. Roiter (53)

Year of Election or Appointment: 2001

Secretary of Spartan Tax Free Bond. He also serves as Secretary of other Fidelity funds (1998); Vice President, General Counsel, and Clerk of FMR Co., Inc. (2001) and FMR (1998); Vice President and Clerk of FDC (1998); Secretary of Fidelity Southwest Company (1998); Assistant Clerk of Fidelity Management & Research (U.K.) Inc. (2001) and Fidelity Management & Research (Far East) Inc. (2001); and Assistant Secretary of Fidelity Investments Money Management Inc. (2001). Prior to joining Fidelity, Mr. Roiter was with the law firm of Debevoise & Plimpton, as an associate (1981-1984) and as a partner (1985-1997), and served as an Assistant General Counsel of the U.S. Securities and Exchange Commission (1979-1981). Mr. Roiter was an Adjunct Member, Faculty of Law, at Columbia University Law School (1996-1997).

Robert A. Dwight (43)

Year of Election or Appointment: 2001

Treasurer of Spartan Tax Free Bond. Mr. Dwight also serves as Treasurer of other Fidelity funds (2000) and Vice President of FMR (2000). Prior to becoming Treasurer of the Fidelity funds, he served as President of Fidelity Accounting and Custody Services (FACS). He also served as Vice President of FMR Co., Inc. (2001). Before joining Fidelity, Mr. Dwight was Senior Vice President of fund accounting operations for The Boston Company.

Maria F. Dwyer (43)

Year of Election or Appointment: 2001

Deputy Treasurer of Spartan Tax Free Bond. She also serves as Deputy Treasurer of other Fidelity funds (2000) and is a Vice President (1999) and an employee (1996) of FMR. Prior to joining Fidelity, Ms. Dwyer served as Director of Compliance for MFS Investment Management.

John H. Costello (55)

Year of Election or Appointment: 2001

Assistant Treasurer of Spartan Tax Free Bond. Mr. Costello also serves as Assistant Treasurer of other Fidelity funds and is an employee of FMR.

Paul F. Maloney (52)

Year of Election or Appointment: 2001

Assistant Treasurer of Spartan Tax Free Bond. Mr. Maloney also serves as Assistant Treasurer of other Fidelity funds (2001) and is an employee of FMR. Previously, Mr. Maloney served as Vice President of Fidelity Reporting, Accounting and Pricing Services (FRAPS).

Thomas J. Simpson (43)

Year of Election or Appointment: 2001

Assistant Treasurer of Spartan Tax Free Bond. Mr. Simpson is Assistant Treasurer of other Fidelity funds (2000) and an employee of FMR (1996). Prior to joining FMR, Mr. Simpson was Vice President and Fund Controller of Liberty Investment Services (1987-1995).

Annual Report

Distributions

The Board of Trustees of Spartan Tax-Free Bond Fund voted to pay on March 11, 2002, to shareholders of record at the opening of business on March 8, 2002, a distribution of $.005 per share derived from capital gains realized from sales of portfolio securities.

During fiscal year ended 2002, 100% of the fund's income dividends was free from federal income tax, and 0.0% of the fund's income dividends was subject to the federal alternative minimum tax.

The fund will notify shareholders in January 2003 of amounts for use in preparing 2002 income tax returns.

Annual Report

Managing Your Investments

Fidelity offers several ways to conveniently manage your personal investments via your telephone or PC. You can access your account information, conduct trades and research your investments 24 hours a day.

By Phone

Fidelity Automated Service Telephone provides a single toll-free number to access account balances, positions, quotes and trading. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security.

(phone_graphic)

Fidelity Automated
Service Telephone (FAST®)
1-800-544-5555

Press

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 EarthLink Sprint at 1-800-288-2967, and be sure to ask for registration number SMD004 to receive a special Fidelity package that includes 30 days of free Internet access. EarthLink is North America's #1 independent Internet access provider.

(computer_graphic)

Fidelity On-line Xpress+®

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 1-800-544-0240 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.

Annual Report

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 75039-5587

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 - CP5L

400 East Las Colinas Blvd.
Irving, TX 75039-5587

General Correspondence

Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500

Annual Report

Investment Adviser

Fidelity Management & Research Company

Boston, MA

Investment Sub-Adviser

Fidelity Investments Money
Management, Inc.

Transfer and Shareholder
Servicing Agent

Citibank, N.A.

New York, NY

Fidelity Service Company, Inc.

Boston, MA

Custodian

Citibank, N.A.

New York, NY

Fidelity's Municipal Bond Funds

Spartan® Arizona Municipal Income

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
and Account Assistance 1-800-544-6666

Product Information 1-800-544-6666

Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)

TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)

Fidelity Automated Service
Telephone (FAST®) (automated graphic)    1-800-544-5555

(automated graphic)    Automated line for quickest service

SFB-ANN-0302 155008
1.769635.100

(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com