FIDELITY SCHOOL STREET TRUST/, N-30D, 1996-02-12

FIDELITY SCHOOL STREET TRUST/
N-30D, 1996-02-12

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(2_FIDELITY_LOGOS)FIDELITY

LIMITED TERM MUNICIPAL
INCOME FUND
(FORMERLY FIDELITY LIMITED TERM MUNICIPALS)
ANNUAL REPORT
DECEMBER 31, 1995
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 24 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.

NOTES 28 Notes to the financial statements.

REPORT OF INDEPENDENT 31 The auditors' opinion.
ACCOUNTANTS

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.
PRESIDENT'S MESSAGE

DEAR SHAREHOLDER:
Although the markets were fairly positive in 1995, no one can predict what
lies ahead for investors. The previous year, stocks posted below-average
returns and bonds had one of the worst years in history. This downturn
followed a period in which the investing environment was generally very
positive.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
Keeping in mind that the effects of interest rate changes on your bond
investments will only be "paper" gains or losses unless you sell your
shares, staying in your bond fund may be appropriate if your investment
horizon is at least a year or more. The longer your investing time frame,
the more likely it is that you will retain your principal investment
through both up and down markets. For example, a 10-year time frame, such
as saving
for a college education, enables you to weather these ups and downs in a
long-term fund, which has higher potential returns. An intermediate-length
fund could be appropriate if your investment horizon is two to four years,
and 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, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
No matter what your investment horizon or portfolio diversity, it makes
good sense to follow a regular investment plan - investing a certain amount
of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
If you have any questions, please call us at 1-800-544-8888. We stand ready
to provide 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. A fund's total
return includes changes in a fund's share price, plus reinvestment of any
dividends (or income) and capital gains (the profits the fund earns when it
sells securities that have grown in value). You can also look at the fund's
income to measure performance.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1995 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS

Limited Term Municipal Income Fund 14.84% 47.64% 114.69%

Lehman Brothers Municipal Bond Index 17.45% 52.61% 142.03%

Average Intermediate Municipal Bond Fund 12.89% 42.86% 108.29%

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 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 Municipal Bond
Index - a broad gauge of the municipal bond market. To measure how the
fund's performance stacked up against its peers, you can compare it to the
average intermediate municipal bond fund, which reflects the performance of
121 intermediate municipal bond funds with similar objectives tracked by
Lipper Analytical Services over the past 12 months. Both benchmarks include
reinvested dividends and capital gains, if any. Recent U.S. Consumer Price
Index information is not available from the U.S. Department of Labor.
Therefore, the CPI comparison has not been included in this report.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1995 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS

Limited Term Municipal Income Fund 14.84% 8.10% 7.94%

Lehman Brothers Municipal Bond Index 17.45% 8.82% 9.24%

Average Intermediate Municipal Bond Fund 12.89% 7.39% 7.59%

AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
$10,000 OVER 10 YEARS
Ltd. Term (0LB Munici
12/31/85 10000.00 10000
01/31/86 10337.84 10589
02/28/86 10506.76 11008.96
03/31/86 10529.28 11012.48
04/30/86 10472.97 11020.85
05/31/86 10281.53 10841.43
06/30/86 10349.10 10944.86
07/31/86 10326.58 11011.3
08/31/86 10686.94 11504.27
09/30/86 10641.89 11533.15
10/31/86 10844.59 11732.32
11/30/86 10900.90 11964.74
12/31/86 10788.29 11931.72
01/31/87 10990.99 12290.98
02/28/87 11069.82 12351.45
03/31/87 10957.21 12220.53
04/30/87 10304.05 11607.3
05/31/87 10225.23 11549.73
06/30/87 10394.14 11888.83
07/31/87 10461.71 12010.1
08/31/87 10439.19 12037.12
09/30/87 9977.48 11593.31
10/31/87 9977.48 11634.35
11/30/87 10157.66 11938.12
12/31/87 10247.75 12111.35
01/31/88 10596.85 12542.75
02/29/88 10585.59 12675.33
03/31/88 10349.10 12527.66
04/30/88 10360.36 12622.87
05/31/88 10337.84 12586.39
06/30/88 10371.62 12770.53
07/31/88 10360.36 12853.79
08/31/88 10315.32 12865.11
09/30/88 10382.88 13097.96
10/31/88 10461.71 13329.14
11/30/88 10349.10 13207.05
12/31/88 10394.14 13342.16
01/31/89 10450.45 13618.07
02/28/89 10315.32 13462.69
03/31/89 10213.96 13430.51
04/30/89 10337.84 13749.35
05/31/89 10450.45 14034.93
06/30/89 10495.50 14225.52
07/31/89 10540.54 14419.13
08/31/89 10427.93 14277.97
09/30/89 10360.36 14235.42
10/31/89 10394.14 14409.52
11/30/89 10461.71 14661.69
12/31/89 10484.23 14781.62
01/31/90 10394.14 14711.7
02/28/90 10416.67 14843.37
03/31/90 10394.14 14847.83
04/30/90 10247.75 14740.33
05/31/90 10349.10 15062.11
06/30/90 10371.62 15194.5
07/31/90 10439.19 15418.62
08/31/90 10360.36 15194.74
09/30/90 10371.62 15203.41
10/31/90 10416.67 15479.2
11/30/90 10495.50 15790.48
12/31/90 10439.19 15859.17
01/31/91 10495.50 16072
02/28/91 10540.54 16211.83
03/31/91 10529.28 16217.66
04/30/91 10585.59 16434.17
05/31/91 10608.11 16580.27
06/30/91 10551.80 16563.85
07/31/91 10608.11 16765.6
08/31/91 10653.15 16986.41
09/30/91 10731.98 17207.57
10/31/91 10777.03 17362.44
11/30/91 10731.98 17410.88
12/31/91 10720.72 17784.51
01/31/92 10720.72 17825.06
02/29/92 10709.46 17830.77
03/31/92 10630.63 17837.36
04/30/92 10664.41 17996.12
05/31/92 10698.20 18207.93
06/30/92 10765.77 18513.46
07/31/92 11024.77 19068.49
08/31/92 10889.64 18882.58
09/30/92 10889.64 19006.07
10/31/92 10686.94 18819.24
11/30/92 10855.86 19156.29
12/31/92 10810.81 19351.88
01/31/93 10889.64 19576.94
02/28/93 11216.22 20285.04
03/31/93 11058.56 20070.62
04/30/93 11114.86 20273.14
05/31/93 11137.39 20387.07
06/30/93 11238.74 20727.33
07/31/93 11216.22 20754.49
08/31/93 11396.40 21186.59
09/30/93 11475.23 21427.91
10/31/93 11441.44 21469.26
11/30/93 11317.57 21280.12
12/31/93 11250.00 21729.34
01/31/94 11328.83 21977.49
02/28/94 11002.25 21408.28
03/31/94 10506.76 20536.53
04/30/94 10518.02 20710.68
05/31/94 10563.06 20890.24
06/30/94 10461.71 20762.6
07/31/94 10608.11 21143.18
08/31/94 10596.85 21216.34
09/30/94 10416.67 20904.88
10/31/94 10225.23 20533.61
11/30/94 9977.48 20162.36
12/31/94 10123.87 20606.14
01/31/95 10337.84 21195.06
02/28/95 10540.54 21811.41
03/31/95 10596.85 22062.03
04/30/95 10551.80 22088.06
05/31/95 10765.77 22792.89
06/30/95 10664.41 22593.45
07/31/95 10698.20 22807.64
08/31/95 10799.55 23096.84
09/30/95 10844.59 23243.04
10/31/95 10923.42 23580.99
11/30/95 11002.25 23972.2
12/31/95 11036.04 24202.58

$10,000 OVER 10 YEARS: Let's say you invested $10,000 in Fidelity Limited
Term Municipal Income Fund on December 31, 1985. As the chart shows, by
December 31, 1995, the value of your investment would have grown to $21,469
- - a 114.69% increase on your initial investment. For comparison, look at
how the Lehman Brothers Municipal Bond Index did over the same period. With
dividends reinvested, the same $10,000 would have grown to $24,203 - a
142.03% 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 DECEMBER 31,

1995 1994 1993 1992 1991

Dividend return 5.83% 5.07% 5.54% 6.21% 6.77%

Capital appreciation return 9.01% -9.83% 6.70% 1.96% 4.42%

Total return 14.84% -4.76% 12.24% 8.17% 11.19%

DIVIDEND returns and capital appreciation returns are both part of a bond
fund's total return. A dividend return reflects the actual dividends paid
by the fund. A capital appreciation 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 gains are
reinvested.
DIVIDENDS AND YIELD

<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED DECEMBER 31, 1995 PAST PAST 6 PAST 1
MONTH MONTHS YEAR

Dividends per share 4.10(cents) 24.57(cents) 49.75(cents)

Annualized dividend rate 4.94% 5.06% 5.24%

30-day annualized yield 4.46% - -

30-day annualized tax-equivalent yield 6.97% - -

</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 $9.78 over
the past month, $9.63 over the past six months and $9.50 over the past
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% 1995 federal tax bracket.
FUND TALK: THE MANAGER'S OVERVIEW

MARKET RECAP
In sharp contrast to much of
1994, the municipal bond market
posted strong returns for the 12
months ended December 31,
1995. For the period, the Lehman
Brothers Municipal Bond Index -
a broad measure of the tax-free
market - had a total return of
17.45%. By comparison, the
Lehman Brothers Aggregate
Bond Index - a proxy for
investment-grade taxable bonds
- - had a total return of 18.47%.
Tax-free bonds kicked off 1995
by surging ahead of their taxable
counterparts in the first quarter on
signs of a slowing economy and
tamer inflation expectations. By
spring, however, the muni bond
market began to underperform
U.S. Treasury securities when
Congress began consideration of
tax-code changes, some of
which threatened the tax-exempt
status of municipal securities.
This threat of tax reform
dampened enthusiasm in the
municipal bond market, stalling
the rally and helping shorter
maturity bonds to outperform their
longer counterparts throughout
the spring and summer months.
By the fourth quarter, historically
attractive valuations relative to
Treasuries, continued low
issuance, and stronger demand
from insurance companies and
retail buyers helped longer-term
tax-free bonds rebound.
An interview with David Murphy, Portfolio Manager of Fidelity Limited Term
Municipal Income Fund
Q. DAVID, HOW DID THE FUND DO IN 1995?
A. Fairly well. For the 12 months ended December 31, 1995, the fund had a
total return of 14.84%. The average intermediate municipal bond fund, as
tracked by Lipper Analytical Services, returned 12.89% for the period.
Q. WHAT WERE SOME OF YOUR STRATEGIES THAT HELPED THE FUND'S PERFORMANCE?
A. I think the major factor was the fund's barbelled coupon structure - or
emphasis on premium- and discount-coupon bonds, rather than par (face
value) bonds. First, I added more non-callable intermediate premium coupon
bonds. Because they are non-callable, these bonds offer price appreciation
potential should the municipal market continue to rally. And the fact that
they carry premium coupons helps to give them some downside protection
should the market fall. Also, I will not be forced to reinvest at lower
rates if a bond is called - or paid back earlier than expected. Secondly, I
continued to hold bonds that were trading at a discount to face value.
These discount bonds appreciate rapidly in price in a market rally.
Q. DURING THE FEDERAL BUDGET PROCESS, THERE WAS A LOT OF TALK ABOUT
PROPOSED CUTBACKS IN MEDICARE AND MEDICAID. DID THAT HAVE ANY IMPACT ON THE
FUND'S HEALTH CARE HOLDINGS?
A. Not really. Most of the fund's health care holdings performed fairly
well during 1995, and two in particular were standouts. When PorterCare
Adventist Health Systems, a Denver-based hospital system, affiliated with a
stronger hospital system, the price of its bonds appreciated. The bonds of
Tulsa Regional Medical Center in Oklahoma also moved higher on the news
that the medical center would be acquired by Columbia Health Care Systems,
a leading national health care company.
Q. HAVE YOU CHANGED ANY OF THE FUND'S ALLOCATIONS IN STATES OVER THE PAST
SIX MONTHS?
A. Yes. For one, I increased the fund's exposure to bonds issued by New
York municipalities, primarily by adding bonds issued by New York City. In
my opinion, many New York City bonds were cheap relative to higher-quality
bonds. The fund's New York City bonds now stand at 2.8% - up from 1.2% six
months ago. I've also added to the fund's position in Texas because of its
improving fiscal situation. Finally, I increased the fund's holdings in
California. The situation in Orange County took a great toll on a state
that had already weathered a plummeting real estate market and cutbacks in
federal defense spending. I believe, however, there are some reasons
investors can be optimistic about California. For example, the state is
currently finding that tax receipts are running higher than anticipated
earlier this year, and it is clear the entertainment and technology
businesses have supplanted defense as the state's major engines of growth.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Any disappointments I had were limited to small positions the fund had
in certain areas of the market. For example, housing bonds underperformed
this year, as they normally do in up markets. But the fund's position was
low at 2.5% at the end of the period.
Q. HOW DID CHANGES TO THE FUND'S INVESTMENT POLICY AFFECT YOUR STRATEGY?
A. The fund is now permitted to buy any amount of municipal securities
subject to the alternative minimum tax (AMT). The removal of the AMT
restriction allows me more latitude in selecting specific securities.
Instead of being constrained to specific sectors, I will be able to focus
on all marketplace opportunities - including areas dominated by AMT
securities, such as student loans and airports.
Q. WHAT'S YOUR OUTLOOK?
A. It's likely that, as the presidential election approaches, tax-reform
talk could re-emerge. Should tax-reform move to the forefront of political
debate, it could be a source of future volatility in the municipal bond
market. Shareholders should also keep in mind that, unlike in the past, 75%
of the municipal bond market is controlled by individuals and mutual funds.
With demand so dependent on individual buying, there is the possibility
that any future volatility caused by tax reform talk could be more
pronounced.
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: a high current income
free from federal income tax
with preservation of capital
START DATE: April 15, 1977
SIZE: as of December 31,
1995, more than $943 million
MANAGER: David Murphy,
since 1989; manager, Fidelity
High Yield Tax-Free Fund,
and Spartan Municipal
Income Portfolio, since
October 1, 1995; manager,
Fidelity Advisor Intermediate
Municipal Income Fund, since
March 27, 1995; manager,
Spartan Intermediate
Municipal Fund, 1993 to
1995; manager, Spartan New
York Intermediate Municipal
Portfolio,1993 to 1995;
manager, Spartan
Short-Intermediate Municipal
Fund, 1989 to 1995; joined
Fidelity in 1989
(checkmark)
DAVID MURPHY ON HIS
INVESTMENT STYLE:
"I describe myself as a total
return investor. That said,
however, I choose my
investments knowing that
income is extremely important
both as a component of total
return and for its tax
advantages to municipal bond
investors. I only go after bonds
whose return justifies the
risks taken. My goal is to
provide returns above the
overall market.
"In determining the risks and
rewards available in the
market, I use the Lehman
Brothers Municipal Bond 1-17
Year Index as a proxy for the
overall market. I believe this
index is the best available for
managing a national
intermediate municipal bond
fund."
DISTRIBUTIONS
The Board of Trustees of
Fidelity Limited Term
Municipal Income Fund voted
to pay on February 5, 1996, to
shareholders of record at the
opening of business on
February 2, 1996, a
distribution of $.001 derived
from capital gains realized
from sales of portfolio
securities.
INVESTMENT CHANGES

TOP FIVE STATES AS OF DECEMBER 31, 1995
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO

Texas 17.6 13.9

Massachusetts 10.8 7.5

California 6.6 4.4

Pennsylvania 5.5 5.3

New York 5.0 4.3

TOP FIVE SECTORS AS OF DECEMBER 31, 1995
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO

General Obligation 28.4 23.4

Health Care 14.7 14.6

Education 9.1 10.4

Escrowed/Pre-Refunded 8.8 14.1

Electric Revenue 8.2 10.8

AVERAGE YEARS TO MATURITY AS OF DECEMBER 31, 1995
6 MONTHS AGO

Years 7.8 8.1

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 DECEMBER 31, 1995
6 MONTHS AGO

Years 6.1 6.7

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 DECEMBER 31, 1995 AS OF JUNE 30, 1995
Row: 1, Col: 1, Value: 8.5
Row: 1, Col: 2, Value: 2.1
Row: 1, Col: 3, Value: 16.2
Row: 1, Col: 4, Value: 23.5
Row: 1, Col: 5, Value: 49.7
Aaa 50.3%
Aa, A 26.5%
Baa 15.5%
Non-rated 2.1%
Short-term
investments 5.6%
Aaa 49.7%
Aa, A 23.5%
Baa 16.2%
Non-rated 2.1%
Short-term
investments 8.5%
Row: 1, Col: 1, Value: 5.6
Row: 1, Col: 2, Value: 2.1
Row: 1, Col: 3, Value: 15.5
Row: 1, Col: 4, Value: 26.5
Row: 1, Col: 5, Value: 50.3
SHOWN AS A PERCENTAGE OF THE FUND'S INVESTMENTS. WHERE MOODY'S RATINGS ARE
NOT AVAILABLE, WE HAVE USED S&P RATINGS.
INVESTMENTS DECEMBER 31, 1995

Showing Percentage of Total Value of Investments in Securities

MUNICIPAL BONDS - 91.5%
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
ALABAMA - 1.2%
Alabama Gen. Oblig. Rfdg. (Cap. Appreciation):
0% 3/1/01 $ 10,000 $ 7,963
0% 9/1/01 5,000 3,893
Alabama Hsg. Fin. Auth. Single Family Mtg. Rev.
(Cap. Appreciation) Series B, 0% 10/1/14 535 80
11,936
ALASKA - 3.3%
Anchorage Hosp. Rev. Rfdg. (Sisters of Providence Proj.)
Series 1991, 6.75% 10/1/02 2,575 2,865
North Slope Borough (Cap. Appreciation):
Series A:
0% 6/30/02 (MBIA Insured) 20,000 14,700
0% 6/30/03 (MBIA Insured) 10,000 6,988
Series B:
0% 1/1/02 (MBIA Insured) 8,500 6,407
0% 1/1/03 (MBIA Insured) 3,200 2,287
33,247
ARIZONA - 2.2%
Arizona Trans. Board Excise Tax Rev. (Maricopa County Reg'l.
Area Road-B Proj.) 6% 7/1/03 (AMBAC Insured) 2,260 2,468
Maricopa County Rfdg. 6.25% 7/1/02 (FGIC Insured) 5,800 6,409
Phoenix Arpt. Rev. Rfdg. Series A:
5.50% 7/1/00 (MBIA Insured) 7,685 8,088
5.75% 7/1/02 (MBIA Insured) 2,250 2,408
Scottsdale Gen. Oblig. Rfdg. Series A, 4.90% 7/1/09 1,000 973
Univ. of Arizona Rev. Rfdg. (Univ. Rev. Sys.) 6.375% 6/1/05 2,100 2,326
22,672
CALIFORNIA - 6.6%
California Hsg. Fin. Agcy. Rev. (Home Mtg.)
(Cap. Appreciation) Series 1983 A, 0% 2/1/15 19,346 2,904
California St. Pub. Wks. Brd. Lease Rev.
5.25% 6/1/08 (MBIA Insured) 8,000 8,070
California Statewide Commtys. Dev. Auth. Rev. Ctfs. of Prtn.
Rfdg. (Hosp. Triad Healthcare):
5.90% 8/1/01 3,300 3,395
6% 8/1/02 4,145 4,290
California University Rev. Rfdg. (Multiple Purp. Projs.)
Series C, 4.80% 9/1/07 (AMBAC Insured) 1,700 1,672
East Bay Muni. Util. Dist. Wtr. Sys. Rev. Rfdg. Sub.
5% 6/1/10 (MBIA Insured) 2,000 1,953
Modesto Irr. Dist. Elec. Rev. 9.625% 1/1/11
(Escrowed to Maturity) (c) 4,390 6,030
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
CALIFORNIA - CONTINUED
Sacramento Pwr. Auth. Cogeneration Proj. Rev.:
6% 7/1/99 $ 3,000 $ 3,109
6% 7/1/00 3,100 3,228
6% 7/1/01 3,300 3,449
6.50% 7/1/08 2,000 2,140
San Bernardino County Ctfs. of Prtn. (Med. Ctr. Fing. Proj.):
5.25% 8/1/05 4,000 3,915
5.25% 8/1/06 3,000 2,921
San Francisco City & County Arpts. Commty. Intl. Arpt. Rev.:
Series 9B, 5.25% 5/1/11 (FGIC Insured) 1,700 1,702
5.25% 5/1/12 (FGIC Insured) 1,000 996
Southern California Pub. Pwr. Auth. Pwr. Proj. Rev.:
0% 7/1/15 (Pre-Refunded to 7/1/00 @ 101) (b)(c) 2,000 2,308
Series 11, 0% 7/1/15 (Pre-Refunded to 7/1/00 @ 101) (c) 13,820 11,487
West Covina Ctfs. of Prtn. (Queen of the Valley
Hospital) 6.50% 8/15/09 3,425 3,601
67,170
COLORADO - 3.8%
Colorado Health Facs. Auth. Rev. (PorterCare
Adventist Health System) 6.25% 2/1/04 26,100 27,079
Colorado Student Oblig. Bond Auth. Student Loan
Rev. Series A, 6.75% 9/1/99 3,450 3,657
Denver City & County Arpt. Rev. Series A:
6.875% 11/15/00 1,950 2,113
7.25% 11/15/03 1,000 1,130
7.50% 11/15/06 4,000 4,515
38,494
CONNECTICUT - 0.4%
Connecticut Gen. Oblig. 6% 10/1/04 2,400 2,631
Connecticut Hsg. Fin. Auth. (Hsg. Mtg. Fin. Prog.)
Series D, 8.50% 11/15/01 1,150 1,181
3,812
DISTRICT OF COLUMBIA - 2.4%
District of Columbia Gen. Oblig.
Series E, 5% 6/1/04 (FGIC Insured) 1,000 1,001
District of Columbia Hosp. Rev. Rfdg. (Medlantic Healthcare
Group Washington Hosp. Ctr.):
Series A:
6.50% 8/15/96 1,100 1,110
6.75% 8/15/98 2,600 2,688
6.80% 8/15/99 2,600 2,714
Series B:
5.80% 8/15/97 4,035 4,070
6% 8/15/98 4,265 4,329
6.25% 8/15/00 4,805 4,937
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
DISTRICT OF COLUMBIA - CONTINUED
District of Columbia Rev. (Georgetown Univ.)
Series A, 7.25% 4/1/11 $ 3,500 $ 3,776
24,625
FLORIDA - 2.3%
Alachua County Health Facs. Auth. Health Facs. Rev. Rfdg.
(Santa Fe Healthcare Facs. Proj.) 6% 11/15/09 1,750 1,768
Broward County Resources Recovery Rev.
(SES Broward Co. South Proj.) 7.95% 12/1/08 2,385 2,677
Dade County Aviation Rev. Rfdg. Series E,
6% 10/1/09 (AMBAC Insured) 2,870 3,161
Dade County School Dist. Series 95,
6.50% 8/1/03 (MBIA Insured) 2,040 2,310
Florida State Tpk. Auth. Rev. (Dept. of Trans.)
Series A, 5.50% 7/1/06 (AMBAC Insured) 3,355 3,527
Lakeland Elec. & Wtr. Rev. Rfdg. Jr. Sub Lien
6.25% 10/1/03 (FGIC Insured) (e) 6,000 6,577
Sarasota Wtr. & Swr. Util. Rev. Rfdg.:
6.25% 10/1/03 (FGIC Insured) (e) 1,365 1,496
6.25% 10/1/08 (FGIC Insured) (e) 1,845 2,016
23,532
GEORGIA - 1.2%
Atlanta Arpt. Facs. Rev. 6.30% 1/1/07 (AMBAC Insured) 2,500 2,496
Fulton County Wtr. & Sew. Rev. Rfdg.:
6.25% 1/1/06 (FGIC Insured) 2,500 2,813
6.25% 1/1/09 (FGIC Insured) 2,250 2,531
Georgia Gen. Oblig. Impt., Series B:
7.20% 3/1/04 2,900 3,444
7.20% 3/1/05 1,000 1,199
12,483
IDAHO - 0.5%
Idaho Falls Elec. Rev. Rfdg. 0% 4/1/05 (FGIC Insured) 7,000 4,550
ILLINOIS - 1.7%
Chicago Pk. Dist. Rfdg. 5.50% 1/1/00 (FGIC Insured) (e) 1,000 1,039
Lake County Commty. Cons. School Dist.
8.50% 1/1/07 (MBIA Insured) 1,000 1,269
Lake County Forest Preserve Dist.
(Cap. Appreciation) 0% 12/1/04 5,850 3,759
Metropolitan Pier & Exposition Auth. Dedicated
State Tax Rev. (McCormick Place Expansion Proj.) (Cap.
Appreciation) Series A, 0% 6/15/07 (FGIC Insured) (b) 5,000 4,912
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
ILLINOIS - CONTINUED
Rolling Meadows Multi-Family Mtg. Rev. Rfdg.
(Woodfield Garden Apts. Proj.) 7.75% 2/1/04,
LOC Banque Paribas $ 5,000 $ 5,374
South Beloit Ind. Dev. Rev. Rfdg. (Beloit Corp. Proj.)
7.60% 12/1/11 1,000 1,110
17,463
INDIANA - 3.1%
Indiana Employment Dev. Commission Poll. Cont. Rev.
(Chrysler Corp. Proj.) 5.70% 10/1/99 5,000 5,156
Indianapolis Loc. Pub. Impt. Rfdg. Series B, 5% 2/1/01 2,000 2,060
Indianapolis Resource Rec. Rev. Rfdg. (Ogden Martin Sys.,
Inc. Proj.) 6.50% 12/1/03 (AMBAC Insured) (e) 6,015 6,594
Indianapolis Resource Rec. Rfdg. (e):
6.75% 12/1/04 (AMBAC Insured) 2,195 2,439
6.75% 12/1/05 (AMBAC Insured) 5,510 6,137
6.75% 12/1/08 (AMBAC Insured) 3,485 3,864
Marion County Ind. Hosp. Auth. Facs. Rev. (c):
Rfdg. (Univ. Heights Hosp.) 8.625% 10/1/99
(AMBAC Insured) (Escrowed to Maturity) 2,845 3,254
(Commty. Hosp. Indianapolis Proj.) 9.25% 5/1/98
(Escrowed to Maturity) 1,910 2,068
31,572
IOWA - 0.5%
Iowa Student Loan Liquidity Corp. Student Loan Rev.
Series A, 6.25% 3/1/00 5,080 5,354
KANSAS - 0.6%
Kansas City Util. Sys. Rev. (Cap. Appreciation):
0% 3/1/04 (AMBAC Insured) (Escrowed to Maturity) (c) 5,015 3,510
0% 3/1/04 (AMBAC Insured) 3,735 2,512
6,022
KENTUCKY - 0.2%
Kentucky Tpk. Auth. Economic Dev. Rd. Rev. Rfdg.
6.50% 7/1/07 (AMBAC Insured) 2,000 2,278
LOUISIANA - 1.3%
Louisiana Pub. Facs. Auth. Rev. (Student Loan) Sr. Series A-1:
6.10% 3/1/00 1,500 1,581
6.10% 9/1/00 3,000 3,176
New Orleans Gen. Oblig. Rfdg. (Cap. Appreciation)
0% 9/1/05 (AMBAC Insured) 13,500 8,387
13,144
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
MARYLAND - 0.3%
Prince George's County Hosp. Rev.:
(Dimensions Health Corp.):
Rfdg. 5% 7/1/05 $ 1,130 $ 1,096
7% 7/1/01 1,250 1,368
7.20% 7/1/06 305 339
2,803
MASSACHUSETTS - 10.8%
Lowell Univ. Bldg. Auth. Fifth Series A,
6.75% 11/1/05 (AMBAC Insured) 1,705 1,974
Massachusetts Ed. Loan Auth. Ed. Loan Rev. Issue C,
7.40% 6/1/98, LOC Rabobank Nederland 2,435 2,467
Massachusetts Gen. Oblig.:
Rfdg. Series C, 6.50% 8/1/11 2,000 2,163
(Cap. Appreciation) 0% 12/1/00 3,500 3,378
Massachusetts Health & Edl. Facs. Auth. Rev.:
(Lawrence Gen. Hosp.) Series B, 7.25% 7/1/01 5,715 6,094
(Waltham/Weston Hosp. & Med. Ctr.) Series B, 8% 7/1/02 3,300 3,622
Massachusetts Ind. Fin. Agcy. Ind. Rev. Rfdg.
(Beloit Corp. Proj.):
Series A, 7.60% 12/1/11 1,000 1,116
Series B, 6.50% 12/1/96 204 208
Massachusetts Ind. Fin. Agcy. Rev.
(Massachusetts Biomedical Research) (Cap. Appreciation):
Series A-1:
0% 8/1/01 10,800 8,303
0% 8/1/02 5,700 4,154
Series A-2:
0% 8/1/04 10,800 6,858
0% 8/1/05 5,100 3,060
0% 8/1/07 5,800 3,016
Massachusetts Muni. Wholesale Elec. Co. Pwr.
Supply Sys. Rev. Rfdg. Series A, 6.75% 7/1/05 3,610 4,052
New England Ed. Loan Marketing Corp. Rev. Rfdg.
(Massachusetts Student Loan):
Sr. Issue Series A, 6.50% 9/1/02 35,525 38,544
Sr. Issue Series D, 6% 9/1/99 3,000 3,195
Sr. Issue Series D, 6.30% 9/1/02 7,815 8,390
Series G, 5.20% 8/1/02 8,250 8,436
109,030
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
MICHIGAN - 2.6%
Detroit Convention Facs. Rev. Rfdg. (Cobo Hall Expansion Proj.):
5.10% 9/30/04 $ 8,050 $ 8,040
5.25% 9/30/06 11,380 11,366
Michigan Muni. Bond Auth. Rev. (Local Gov't. Loan
Prog. G) 6.30% 11/1/05 (AMBAC Insured) 1,000 1,116
Michigan Strategic Fund Ltd. Oblig. Rev. Rfdg.
(Eaton Township K mart Corp. Proj.) 5.90% 9/1/01 750 662
Michigan Strategic Fund Poll. Cont. Rev.
(Chrysler Corp. Proj.) 5.70% 10/1/99 5,000 5,169
26,353
MINNESOTA - 0.1%
Breckenridge Hosp. Facs. Rev. (Franciscan Sisters Healthcare)
Series B1, 8.25% 9/1/97 (Escrowed to Maturity) (c) 590 621
MISSOURI - 0.6%
Missouri Hsg. Dev. Commission (Cap. Appreciation)
0% 9/1/25 (FHA Insured) 28,305 1,097
Missouri Regional Convention & Sports Complex Auth.
Rfdg. (Convention & Sports Proj.) Series A 5.50% 8/15/13 4,900 4,881
5,978
NEBRASKA - 0.4%
Nebraska Investment Fin. Auth. Hosp. Rev. (Nebraska
Methodist Health Sys.) 6.85% 3/1/02 (MBIA Insured) 2,000 2,228
Nebraska Pub. Pwr. Dist. Rev. Rfdg. (Pwr. Supply Sys.)
Series B, 5.25% 1/1/13 2,000 1,970
4,198
NEVADA - 0.4%
Clark County School Dist. Ltd. Tax (Cap. Appreciation)
Series B, 0% 3/1/05 (FGIC Insured) 6,195 3,988
NEW HAMPSHIRE - 0.1%
New Hampshire Higher Edl. & Health Facs. Auth. Rev.
(Androscoggin Valley Hosp.) Series A,
7.90% 11/1/98 (GNMA Coll.) 530 536
NEW JERSEY - 1.6%
New Jersey Econ. Auth. Mkt. Transition Facs. Rev.
Sr. Lien Series A, 7% 7/1/03 (MBIA Insured) 5,000 5,750
New Jersey Health Care Facs. Fin. Auth. Rfdg.
(Atlantic City Med. Ctr.) Series C:
6.55% 7/1/03 2,200 2,387
6.80% 7/1/05 2,750 3,008
New Jersey Trans. Auth. Rfdg. Series A,
6% 6/15/03 (AMBAC Insured) 5,000 5,431
16,576
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
NEW MEXICO - 0.3%
Santa Fe Util. Rev. Rfdg. Series A, 8% 6/1/08
(AMBAC Insured) $ 2,000 $ 2,528
NEW YORK - 4.8%
Metropolitan Trans. Auth. Svc. Contract (Trans. Facs.)
Rfdg. Series 7, 5.20% 7/1/04 5,280 5,379
New York City Gen. Oblig.:
Series B, 7.50% 2/1/04 5,000 5,519
Unltd. Tax. Series B, 7.50% 2/1/05 2,620 2,885
Series H, 7% 2/1/06 3,000 3,199
New York City:
Series B, 8.25% 6/1/07 1,775 2,112
Rfdg. Series H, 6% 8/1/07 3,000 3,026
New York City Series G, 5.40% 2/1/01 11,235 11,277
New York State Dorm Auth. Rev:
(City Univ. Sys. Consolidated) Series D, 8.75% 7/1/02 1,700 2,068
(State Univ. Edl. Facs.):
Series A, 5.20% 5/15/06 3,000 2,989
Series B, 5.25% 5/15/09 1,670 1,635
Series C, 5.20% 5/15/04 4,185 4,237
New York State Local Gov't. Assistance Corp.:
Series B, 6% 4/1/18 2,500 2,559
Series D, 5.10% 4/1/07 1,500 1,500
48,385
NORTH CAROLINA - 1.7%
High Point Gen. Oblig. Unltd. Tax 6.90% 6/1/05 1,000 1,106
North Carolina Eastern Muni. Pwr. Agcy. Pwr. Sys. Rev. Rfdg.:
Series A, 4.25% 1/1/00 (AMBAC Insured) 8,975 8,964
Series C, 5.25% 1/1/04 6,885 6,816
16,886
OHIO - 1.5%
Franklin County Rev. (Online Computer Library Ctr. Proj.):
5.65% 4/15/01 500 522
5.75% 4/15/02 1,030 1,080
5.90% 4/15/04 500 525
6% 4/15/09 4,500 4,607
Series 1991:
6.50% 7/15/98 745 783
6.60% 7/15/99 895 955
6.70% 7/15/00 960 1,043
6.80% 7/15/01 800 880
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
OHIO - CONTINUED
Lake County Hosp. Impt. Facs. Rev. (Lake Hosp. Sys., Inc.)
6.875% 8/15/11 (AMBAC Insured)
(Escrowed to Maturity) (c) $ 3,800 $ 4,337
14,732
OKLAHOMA - 2.3%
Grand River Dam Auth. Rev. Rfdg.:
8% 6/1/02 3,890 4,658
5.875% 6/1/07 3,775 4,091
Tulsa Ind. Auth. Hosp. Rev. (Tulsa Reg'l. Med. Ctr.):
Series A, 7.625% 6/1/06 10,750 12,215
7% 6/1/06 2,080 2,324
23,288
PENNSYLVANIA - 5.5%
Allegheny County Gen. Oblig. (Cap. Appreciation)
Series C-34, 0% 2/15/02 (MBIA Insured) (b) 21,000 21,945
Allegheny County Hosp. Dev. Auth. Rev.
(Southside Hosp.) Series A, 8.50% 6/1/01 4,730 4,907
Allentown Area Hosp. Auth. Rev. (Sacred Heart Hosp.)
7.25% 7/1/96 870 880
Delaware County Gen. Oblig. Unltd. Tax Rfdg.
(Cap. Appreciaton) 0% 11/15/03 5,500 3,726
Northampton County Hosp. Auth. Rev. (Easton Hosp.)
Series B, 6.90% 1/1/02 3,030 3,170
Pennslyvania Convention Ctr. Auth. Rev. Rfdg.
Series A, 6.60% 9/1/09 1,000 1,073
Pennsylvania Gen. Oblig.:
5% 9/1/09 5,000 4,913
6.25% 5/5/12 (MBIA Insured) 3,610 3,899
Philadelphia Hosp. & Higher Ed. Facs. Auth. Hosp.
Rev. (Temple Univ. Hosp.) Series A:
5.10% 11/15/96 2,245 2,259
5.40% 11/15/97 2,290 2,321
5.75% 11/15/99 2,675 2,745
Philadelphia Wtr. & Wastewtr. 5.50% 6/15/03 (FGIC Insured) 3,300 3,477
55,315
RHODE ISLAND - 0.2%
Rhode Island Student Loan Auth Student Loan Rev.
Rfdg. Series A, 6.40% 12/1/99 2,340 2,463
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
SOUTH CAROLINA - 1.0%
Aiken County Hosp. Ind. Rev. Rfdg. (Beloit Corp. Proj.)
7.60% 12/1/11 $ 1,500 $ 1,691
South Carolina Pub. Svc. Auth. Rev. Rfdg. Series A (e):
6% 1/1/99 (MBIA Insured) 6,000 6,195
6% 1/1/00 (MBIA Insured) 2,565 2,690
10,576
TENNESSEE - 3.6%
Nashville & Davidson County Metropolitan Wtr. & Swr.
Rev. Rfdg. (Cap. Appreciation) 0% 1/1/12
(FGIC Insured) (b) 34,645 36,550
TEXAS - 14.0%
Alief Independent School Dist. Rfdg. Gen. Oblig.:
5.25% 2/15/10 2,200 2,222
5.25% 2/15/11 1,000 1,004
Austin Util. Sys. Rev. Rfdg. Series A, (Cap. Appreciation)
0% 5/15/02 (MBIA Insured) 16,130 12,017
Dallas County Gen. Oblig. Rfdg. Unltd. Tax (Cap. Appreciation)
Series A:
0% 8/15/05 7,125 4,507
0% 8/15/06 6,700 3,978
0% 8/15/07 3,605 2,028
Dallas-Fort Worth Reg'l. Arpt. Rev. Rfdg. (Joint Dallas-Fort
Worth) Series A, 5.90% 11/1/08 (MBIA Insured) 5,225 5,525
Harris County Unltd. Tax Rev. Rfdg.
(Toll Road Subordinated Lien) (Cap Appreciation):
0% 8/1/05 16,275 10,233
0% 8/1/06 13,000 7,654
Series 1991:
0% 8/1/02 8,485 6,290
0% 8/1/03 12,570 8,830
Harris County Gen. Oblig. (Cap. Appreciation)
0% 10/1/01 (MBIA Insured) 11,890 9,170
Houston Wtr. & Swr. Sys. Rev. Rfdg. (Jr. Lien) 0% 12/1/15
(FGIC Insured) (Pre-Refunded to12/1/00 @ 103) (b)(c) 36,000 39,286
Humble Independent School Dist. 8% 2/15/05 1,300 1,610
Katy Independent School Dist. Gen. Oblig. Ltd. Tax Rfdg. (Cap.
Appreciation) Series A, 0% 2/15/07 (PSF Guaranteed) 2,550 1,434
Leander Independent School Dist. Unltd. Tax:
7.50% 8/15/04 (PSF Guaranteed) 500 598
7.50% 8/15/05 (PSF Guaranteed) 600 722
7.50% 8/15/06 (PSF Guaranteed) 800 969
7.50% 8/15/07 (PSF Guaranteed) 800 973
Lewisville Independent School Dist. Gen. Oblig. Rfdg.
(Cap. Appreciation) 0% 8/15/08 (PSF Guaranteed) 5,000 2,556
Memorial Villages Wtr. Auth. 7% 9/1/00 1,740 1,881
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
TEXAS - CONTINUED
Northside Independent School Dist. Rfdg.
(Cap. Appreciation) 0% 2/1/05 (PSF Guaranteed) $ 6,155 $ 3,916
Round Rock Independent School Dist.:
Unltd. Tax Rfdg. (Cap. Appreciation)
0% 2/15/07 (PSF Guaranteed) 7,645 4,348
Series B, 7% 8/1/04 (PSF Guaranteed) 1,000 1,176
Spring Independent School Dist. Unltd. Tax Rfdg.
(Cap. Appreciation) 0% 2/15/07 (PSF Guaranteed) 5,900 3,348
Texas A & M Univ. Permanent Univ. Fund 5.40% 7/1/03 (e) 5,300 5,525
141,800
UTAH - 3.3%
Intermountain Pwr. Agcy. Pwr. Supply Sys. Rev. Rfdg.:
Series B, 6.50% 7/1/04 (MBIA Insured) (e) 7,500 8,250
Series G, 0% 7/1/12 (Pre-Refunded to 1/1/03
@ 101) (b)(c) 17,000 16,405
Jordan School Dist. Gen. Oblig. 7.625% 6/15/04 1,000 1,214
Salt Lake County Wtr. Conservancy Dist. Rev.
(Cap. Appreciation) Series A, 0% 10/1/06 (AMBAC Insured) 3,500 2,021
Utah Board of Regents Student Loan Series A,
7.60% 11/1/00 (AMBAC Insured) 4,900 5,372
33,262
VIRGINIA - 0.2%
Virginia Hsg. Dev. Auth. Residential Mtg. (Single Family Mtg.)
(Cap. Appreciation) Series 1983 B, 0% 9/1/14 2,705 395
Virginia Pub. School Auth. Series B, 6% 8/1/05 1,160 1,272
1,667
WASHINGTON - 4.8%
Washington Gen. Oblig. Series A, 6.50% 7/1/03 2,000 2,250
Washington Motor Vehicle Fuel Tax Gen. Oblig.
Series B, 6.50% 9/1/03 2,300 2,593
Washington Pub. Pwr. Supply Sys. Rev.:
Rfdg. (Nuclear Proj. #1) Series A, 7% 7/1/08 3,000 3,409
(Nuclear Proj. #2):
Series A, 14.375% 7/1/01 2,000 2,598
5% 7/1/09 (MBIA Insured) 5,000 4,825
(Nuclear Proj. #3):
Series B Rfdg.:
0% 7/1/05 (MBIA Insured) 10,000 6,213
(Cap. Appreciation) 0% 7/1/07 11,000 5,871
(Cap. Appreciation) 0% 7/1/10 16,000 6,960
0% 7/1/04 (MBIA Insured) 5,450 3,590
Rfdg. Series C, 7.50% 7/1/08 (MBIA Insured) (d) 6,940 8,440
Washington State Series 96-A 6.75% 7/1/04 1,500 1,725
48,474
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
WISCONSIN - 0.1%
Beloit Ind. Dev. Rev. Rfdg. (Beloit Corp. Proj.) 7% 12/1/01 $ 1,000 $ 1,083
TOTAL MUNICIPAL BONDS
(Cost $874,243) 925,446
MUNICIPAL NOTES (A) - 8.5%
ARIZONA - 0.2%
Maricopa Arizona Poll. Cont. Rev.
(Arizona Pub. Svcs.) Series 1994-B, 5.95%,
LOC Morgan Guaranty Trust Co., VRDN 1,100 1,100
Pinal County Ind. Dev. Poll. Cont. Rev.
(Newmont Mining Corp.) (Magna Copper Co. Proj.)
5.95%, LOC National Westminter Bank, VRDN 700 700
1,800
FLORIDA - 1.8%
Florida Hsg. Fin. Agency Multi-Family Hsg. Rev.
(Brandon-Oxford) Series 1990 C, 5.50%, VRDN 14,600 14,600
Sunshine St. Gov't. Fin. Comm. Rev. Series B,
3.70% 4/4/96, CP 4,000 4,000
18,600
GEORGIA - 0.1%
Burke County Dev. Auth. Poll. Cont. Rev.
(Georgia Pwr. Co.) Series 1994, 6%, VRDN 600 600
IDAHO - 0.9%
Idaho Health Facs. Auth. Rev. 5.95%,
LOC Credit Suisse, VRDN 8,900 8,900
INDIANA - 0.6%
Indiana Hosp. Equip. Fing. Auth. Rev. Series 1985 A,
5.60% (MBIA Insured), BPA Bank of New York, VRDN 4,765 4,765
Purdue Univ. Rev. (Student Fee) Series E, 5.50%, VRDN 1,400 1,400
6,165
MINNESOTA - 0.0%
St. Paul Port Auth. (Westgate Office & Ind.Ctr. Proj.)
Tax Increment Bonds Series 1991, 5.25%,
LOC First Bank, VRDN 500 500
MISSISSIPPI - 0.1%
Jackson County Port Facs. Rev. Rfdg. (Chevron USA, Inc.)
Series 1993, 5.95%, VRDN 600 600
MUNICIPAL NOTES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
NEW JERSEY - 0.2%
New Jersey Econ. Dev. Auth. Rev. (Danic Urban
Renewal Co. Proj.) Series 1985, 4.80%,
LOC Marine Midland Bank, VRDN $ 2,000 $ 2,000
NEW YORK - 0.2%
New York State Energy & Research Dev. Auth. Poll.
Cont. Rev. (Niagra Mohawk Pwr.) Series 1987 A,
6%, LOC Toronto-Dominion Bank, VRDN 1,760 1,760
SOUTH CAROLINA - 0.0%
South Carolina Jobs Econ. Dev. Auth. (St. Francis Hosp.
Sys. Proj.) 5.95%, LOC Chemical Bank, VRDN 100 100
TEXAS - 3.6%
Harris County Health Facs. Dev. Corp. Hosp. Rev.
(St. Luke's Episcopal Hosp. Proj.) Series D, 6%,
(Morgan Guaranty Trust Co.), VRDN 1,800 1,800
Houston Wtr. & Swr. Sys. Rev. Rfdg. Series A,
3.55% 3/15/96, CP 5,000 5,000
Texas Gen. Oblig. TRAN Series 1995 A, 4.75% 8/30/96 24,500 24,713
Texas Pub. Fin. Auth. Series 93A, 3.60% 4/4/96, CP 4,500 4,499
36,012
WASHINGTON - 0.1%
Washington Health Care Facs. Auth. (Fred Hutchinson
Cancer Research) Series 1991 B, 6%,
LOC Morgan Guaranty Trust Insured, VRDN 1,460 1,460
WISCONSIN - 0.7%
Wisconsin Gen. Oblig. TRAN 4.50% 6/17/96 7,000 7,035
WYOMING - 0.0%
Platte County Poll. Cont. Rev. Rfdg. Series 1984 B,
6%, LOC Society Generale France, VRDN 300 300
TOTAL MUNICIPAL NOTES
(Cost $85,832) 85,832
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $960,075) $ 1,011,278
FUTURES CONTRACTS
DOLLAR AMOUNTS IN THOUSANDS EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
SOLD
100 U.S. Treasury Bond Futures Mar. 96 $ 12,147 $ (132)
THE FACE VALUE OF FUTURES SOLD AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 1.2%
SECURITY TYPE ABBREVIATIONS
TRAN - Tax and Revenue Anticipation Notes
VRDN - Variable Rate Demand Notes
CP - Commercial Paper
LEGEND
1. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
2. Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
3. Security collateralized by an amount sufficient to pay interest and
principal.
4. 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 $7,298,000.
5. Security purchased on a delayed delivery basis (see Note 2 of Notes to
Financial Statements).
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 68.8% AAA, AA, A 66.2%
Baa 12.4% BBB 15.6%
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 percentage not rated by either S&P or Moody's amounted to
2.1%.
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
General Obligation 28.4%
Health Care 14.7
Education 9.1
Escrowed/Pre-Refunded 8.8
Electric Revenue 8.2
Water Sewer 6.2
Others (individually less than 5%) 24.6
TOTAL 100.0%
INCOME TAX INFORMATION
At December 31, 1995, the aggregate cost of investment securities for
income tax purposes was $960,075,000. Net unrealized appreciation
aggregated $51,203,000, of which $52,127,000 related to appreciated
investment securities and $924,000 related to depreciated investment
securities.
At December 31, 1995, the fund had a capital loss carryforward of
approximately $5,210,000 of which $4,136,000 and $1,074,000 will expire on
December 31, 2002 and 2003, respectively.
At December 31, 1995, the fund was required to defer approximately
$5,114,000 of losses on futures contracts and options.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) DECEMBER 31, 1995

ASSETS

Investment in securities, at value (cost $960,075) - $ 1,011,278
See accompanying schedule

Interest receivable 10,334

TOTAL ASSETS 1,021,612

LIABILITIES

Payable to custodian bank $ 24

Payable for investments purchased 25,695
Regular delivery

Delayed delivery 50,832

Payable for fund shares redeemed 373

Distributions payable 948

Accrued management fee 293

Payable for daily variation on futures contracts 34

Other payables and accrued expenses 193

TOTAL LIABILITIES 78,392

NET ASSETS $ 943,220

Net Assets consist of:

Paid in capital $ 902,355

Accumulated undistributed net realized gain (loss) on (10,206)
investments and foreign currency transactions

Net unrealized appreciation (depreciation) on 51,071
investments

NET ASSETS, for 96,200 shares outstanding $ 943,220

NET ASSET VALUE, offering price and redemption price per $9.80
share ($943,220 (divided by) 96,200 shares)

</TABLE>

STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED DECEMBER 31, 1995

INVESTMENT INCOME $ 54,283
Interest

EXPENSES

Management fee $ 3,640

Transfer agent, accounting and custodian fees and 1,558
expenses

Non-interested trustees' compensation 7

Registration fees 57

Audit 55

Legal 8

TOTAL EXPENSES 5,325

NET INVESTMENT INCOME 48,958

REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:

Investment securities 3,422

Futures contracts (2,757) 665

Change in net unrealized appreciation (depreciation) on:

Investment securities 80,135

Futures contracts (240) 79,895

NET GAIN (LOSS) 80,560

NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 129,518
FROM OPERATIONS

STATEMENT OF CHANGES IN NET ASSETS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1995 1994

INCREASE (DECREASE) IN NET ASSETS

Operations $ 48,958 $ 55,464
Net investment income

Net realized gain (loss) 665 (4,912)

Change in net unrealized appreciation (depreciation) 79,895 (106,068)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 129,518 (55,516)
FROM OPERATIONS

Distributions to shareholders (48,958) (55,464)
From net interest income

From net realized gain - (1,449)

In excess of net realized gain - (989)

TOTAL DISTRIBUTIONS (48,958) (57,902)

Share transactions 352,371 476,696
Net proceeds from sales of shares

Reinvestment of distributions 36,449 43,615

Cost of shares redeemed (404,518) (727,907)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING (15,698) (207,596)
FROM SHARE TRANSACTIONS

TOTAL INCREASE (DECREASE) IN NET ASSETS 64,862 (321,014)

NET ASSETS

Beginning of period 878,358 1,199,372

End of period $ 943,220 $ 878,358

OTHER INFORMATION
Shares

Sold 37,366 50,770

Issued in reinvestment of distributions 3,829 4,647

Redeemed (42,708) (77,752)

Net increase (decrease) (1,513) (22,335)

</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED DECEMBER 31,

1995 1994 1993 A 1992 1991

SELECTED PER-SHARE DATA

Net asset value, beginning $ 8.990 $ 9.990 $ 9.600 $ 9.520 $ 9.270
of period

Income from Investment .497 .512 .516 .573 .603
Operations
Net interest income

Net realized and .810 (.980) .630 .180 .400
unrealized gain (loss)

Total from investment 1.307 (.468) 1.146 .753 1.003
operations

Less Distributions (.497) (.512) (.516) (.573) (.603)
From net investment income

From net realized gain - (.010) (.220) (.100) (.150)

In excess of net realized gain - (.010) (.020) - -

Total distributions (.497) (.532) (.756) (.673) (.753)

Net asset value, end of period $ 9.800 $ 8.990 $ 9.990 $ 9.600 $ 9.520

TOTAL RETURN 14.84% (4.76) 12.24% 8.17% 11.19%
%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period $ 943 $ 878 $ 1,199 $ 976 $ 696
(in millions)

Ratio of expenses to average .57% .56% .57% .64% .68%
net assets

Ratio of net investment income 5.25% 5.42% 5.19% 5.94% 6.41%
to average net assets

Portfolio turnover rate 31% 30% 111% 50% 42%

</TABLE>

A EFFECTIVE JANUARY 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF INCOME,
CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES."
AS A RESULT, NET INTEREST INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
NOTES TO FINANCIAL STATEMENTS
For the period ended December 31, 1995

1. SIGNIFICANT ACCOUNTING POLICIES.
On December 14, 1995, the Board of Trustees approved a change in the fund's
name from Fidelity Limited Term Municipals to Fidelity Limited Term
Municipal Income Fund. The fund's name change will be effective in 1996
with the next prospectus revision. Fidelity Limited Term Municipal Income
Fund (the fund) is a fund of Fidelity School 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 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. Short-term securities
maturing within sixty days of their purchase date are valued either at
amortized cost or original cost plus accrued interest, both of which
approximate current value. Securities for which quotations are not readily
available through the pricing service are valued at their fair value as
determined in good faith under consistently applied procedures under the
general supervision of the Board of Trustees.
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 between 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 futures
and options transactions, market discount and losses deferred due to
futures and options.
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 investment income and realized
and unrealized gain (loss). Accumulated undistributed net realized gain
(loss) on investments may include temporary book and tax basis differences
which 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.
DELAYED DELIVERY TRANSACTIONS. The fund may purchase or sell securities on
a when-issued or forward commitment 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 when-issued or
forward commitment basis are identified as such in the fund's schedule of
investments. Losses may arise due to changes in the market value of the
underlying securities or if the counterparty does not perform under the
contract.
FUTURES CONTRACTS AND OPTIONS. The fund may use futures and options
contracts to manage its exposure to the bond market and to fluctuations in
interest rates. Buying futures, writing puts, and buying calls tend to
increase the fund's exposure to the underlying instrument. Selling futures,
buying puts, and writing calls tend 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, if there is an illiquid
secondary market for the contracts, or if the counterparties do not perform
under the contracts' terms.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Exchange-traded
options are valued using the last sale price or, in the absence of a sale,
the last offering price. Options traded over-the-counter are valued using
dealer-supplied valuations.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $271,969,000 and $319,790,000, respectively.
The market value of futures contracts opened and closed during the period
amounted to $487,770,000 and $496,661,000, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, Fidelity Management &
Research Company (FMR) receives a monthly fee computed daily and paid
monthly, based on the fund's gross income at the rate of 5% of the gross
income and
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
.10% of average net assets. Gross income includes interest accrued less
amortization of premium excluding accretion of discount. For the period,
the management fee was equivalent to an annual rate of .39% of average net
asset.
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service
Plan (the Plan), and in accordance with Rule 12b-1 of the 1940 Act, FMR or
the fund's distributor, Fidelity Distributors Corporation (FDC), an
affiliate of FMR, may use their resources to pay administrative and
promotional expenses related to the sale of the fund's shares. Subject to
the approval of the Board of Trustees, the Plan also authorizes payments to
third parties that assist in the sale of the fund's shares or render
shareholder support services. FMR or FDC has informed the fund that
payments made to third parties under the Plan amounted to $33,000 for the
period.
TRANSFER AGENT AND ACCOUNTING FEES. UMB Bank, n.a. (UMB) is the custodian
and transfer and shareholder servicing agent for the fund. The Bank has
entered into a sub-contract with Fidelity Service Co. (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, FSC received transfer agent and accounting fees
amounting to $1,211,000 and $312,000, respectively. For the period the
transfer agent fees were equivalent to an annual rate of .13% of average
net assets.
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Fidelity School Street Trust and the Shareholders of
Fidelity Limited Term Municipals:
We have audited the accompanying statement of assets and liabilities of
Fidelity School Street Trust: Fidelity Limited Term Municipals, including
the schedule of portfolio investments, as of December 31, 1995, and the
related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended
and the financial highlights for each of the five years in the period then
ended. 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 December 31, 1995 by correspondence with the
custodian and brokers. 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 audits provide 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 Fidelity School Street Trust: Fidelity Limited Term Municipals as of
December 31, 1995, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the
period then ended, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 2, 1996
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Fred L. Henning, Jr., Vice President
David Murphy, Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
UMB Bank, n.a.
Kansas City, MO
(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
and
Fidelity Service Co.
Boston, MA
CUSTODIAN
UMB Bank, n.a.
Kansas City, MO
(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
FIDELITY'S MUNICIPAL BOND FUNDS
Aggressive Municipal
California Municipal Income
California Insured Municipal Income
High Yield Tax-Free
Insured Municipal Income
Limited Term Municipal Income
Massachusetts Municipal Income
Michigan Municipal Income
Minnesota Municipal Income
Municipal Bond
New York Municipal Income
New York Insured Municipal Income
Ohio Municipal Income
SpartanAggressive Municipal
(registered trademark)
Spartan Arizona Municipal Income
Spartan California Intermediate Municipal Income
Spartan California Municipal Income
Spartan Connecticut Municipal Income
Spartan Florida Municipal Income
Spartan Intermediate Municipal Income
Spartan Maryland Municipal Income
Spartan Municipal Income
Spartan New Jersey Municipal Income
Spartan New York Intermediate Municipal Income
Spartan New York Municipal Income
Spartan Pennsylvania Municipal Income
Spartan Short-Intermediate
Municipal Income
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
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)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE

(2_FIDELITY_LOGOS)

SPARTAN(registered trademark)
BOND STRATEGIST(trademark)
ANNUAL REPORT
DECEMBER 31, 1995
CONTENTS

PRESIDENT'S MESSAGE 3 Ned Johnson on bond market
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 23 The auditors' opinion.
ACCOUNTANTS

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. A fund's total
return includes changes in a fund's share price, plus reinvestment of any
dividends (or income) and capital gains (the profits the fund earns when it
sells bonds that have grown in value) and the effect of the fund's
$5 account closeout fee. You can also look at the fund's income to measure
performance.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1995 PAST 1 YEAR LIFE OF FUND

Spartan Bond Strategist 16.51% 8.92%

Spartan Bond Strategist - After Taxes 12.33% 8.93%

Lehman Brothers Municipal Bond Index 17.45% n/a

Lehman Brothers Aggregate Bond Index 18.47% 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
September 9, 1993. For example, if you invested $1,000 in a fund that had a
5% return over the past year, the value of your investment would be $1,050.
After-tax returns reflect what you would have after taxes (at the 36%
federal tax rate for income and short-term gains and 28% for long-term
gains). They assume that taxes were withdrawn in the year that any
distributions were taxable, and that you closed the account at the end of
the period. If you did not close your account, the after-tax return would
have been 16.29% for the past year and 8.17% for the life of the fund. The
life of fund after-tax return is higher if you closed your account because
you would have realized a capital loss which is a tax benefit. You can
compare the fund's returns to those of the Lehman Brothers Municipal Bond
Index - a broad gauge of the municipal bond market, or to the Lehman
Brothers Aggregate Bond Index - a broad measure of the taxable bond market.
These benchmarks include reinvested dividends and capital gains, if any.
Recent U.S. Consumer Price Index (CPI) information is not available from
the U.S. Department of Labor. Therefore, the CPI comparison has not been
included in this report.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1995 PAST 1 YEAR LIFE OF FUND

Spartan Bond Strategist 16.51% 3.77%

Spartan Bond Strategist - After Taxes 12.33% 3.77%

Lehman Brothers Municipal Bond Index 17.45% n/a

Lehman Brothers Aggregate Bond Index 18.47% n/a

AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the
fund had performed at a constant rate each year.
$10,000 OVER LIFE OF FUND
Spartan Bond StratLB Municipal BLB Aggregate Bon
09/30/93 10000.00 10000.00 10000.00
10/31/93 10005.23 10019.30 10037.37
11/30/93 9900.08 9931.03 9951.98
12/31/93 10199.26 10140.67 10005.92
01/31/94 10322.83 10256.48 10141.01
02/28/94 9981.38 9990.84 9964.83
03/31/94 9479.35 9584.01 9719.16
04/30/94 9459.72 9665.28 9641.55
05/31/94 9596.28 9749.08 9640.19
06/30/94 9521.87 9689.51 9618.89
07/31/94 9720.61 9867.12 9809.95
08/31/94 9752.57 9901.26 9822.13
09/30/94 9603.82 9755.91 9677.56
10/31/94 9424.85 9582.65 9668.94
11/30/94 9233.36 9409.39 9647.46
12/31/94 9418.81 9616.49 9714.08
01/31/95 9692.14 9891.33 9906.33
02/28/95 9939.45 10178.97 10141.86
03/31/95 10031.59 10295.93 10204.08
04/30/95 10053.47 10308.08 10346.62
05/31/95 10392.81 10637.01 10747.00
06/30/95 10302.48 10543.94 10825.80
07/31/95 10401.43 10643.89 10801.62
08/31/95 10534.20 10778.86 10931.98
09/30/95 10576.53 10847.09 11038.33
10/31/95 10710.20 11004.80 11181.88
11/30/95 10886.66 11187.37 11349.44
12/29/95 10986.38 11294.88 11508.72

$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Spartan Bond
Strategist on September 30, 1993, shortly after the fund started. As the
chart shows, by December 31, 1995, the value of your investment, with
dividends reinvested, would have grown to $10,975 - a 9.75% increase on
your initial investment. This assumes you still owned the fund on December
31, 1995 and therefore does not include the effect of the $5 account
closeout fee. For comparison, look at how the Lehman Brothers Municipal
Bond Index and Lehman Brothers Aggregate Bond Index did over the same
period. With dividends reinvested, the same $10,000 investment would have
grown to $11,295 and $11,509 - a 12.95% and 15.09% increase, respectively.
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)

INCOME
1995 TOTAL PERCENT
TAX-FREE

January $.044 89.75%

February $.038 86.63%

March $.045 73.42%

April $.040 88.96%

May $.039 98.30%

June $.038 92.17%

July $.039 94.43%

August $.040 92.75%

September $.038 89.65%

October $.039 91.04%

November $.037 96.14%

December $.038 94.37%

The amounts shown above reflect the total income distributed for each fund
share and the percentage that was federally tax-free.

YIELD
PERIOD ENDED DECEMBER 31, 1995
30-day annualized yield 4.51%
Tax-equivalent yield 6.92%
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. It
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 yield, if you're in the 36% federal tax
bracket.
FUND TALK: THE MANAGER'S OVERVIEW

MARKET RECAP
In sharp contrast to much of 1994,
the municipal bond market posted
strong returns for the 12 months
ended December 31, 1995. For
the period, the Lehman Brothers
Municipal Bond Index - a broad
measure of the tax-free market -
had a total return of 17.45%. By
comparison, the Lehman Brothers
Aggregate Bond Index - a proxy
for investment-grade taxable
bonds - had a total return of
18.47%. Tax-free bonds kicked
off 1995 by surging ahead of
their taxable counterparts in the
first quarter on signs of a slowing
economy and tamer inflation
expectations. By spring, however,
the muni bond market began to
underperform U.S. Treasury
securities when Congress began
consideration of tax-code changes,
some of which threatened the
tax-exempt status of municipal
securities. This threat of tax reform
dampened enthusiasm in the
municipal bond market, stalling
the rally and helping shorter
maturity bonds to outperform their
longer counterparts throughout
the spring and summer months.
By the fourth quarter, historically
attractive valuations relative to
Treasuries, continued low
issuance, and stronger demand
from insurance companies and
retail buyers helped longer-term
tax-free bonds rebound.
An interview with George Fischer, Portfolio Manager of Spartan Bond
Strategist
Q. GEORGE, HOW DID THE FUND DO?
A. For the 12 months ended December 31, 1995, Spartan Bond Strategist
returned 16.51%. During the same time period, the Lehman Brothers Aggregate
Bond Index, which tracks taxable issues, had a total return of 18.47%
before taxes. The Lehman Brothers Municipal Bond Index, which measures
tax-free bond performance, returned 17.45%. The fund's strategy is to
maximize after-tax returns for investors in the 36% tax bracket. This
after-tax return was 12.33% for the same 12-month period.
Q. WHY DID YOU KEEP THE FUND NEARLY FULLY INVESTED IN MUNICIPAL SECURITIES
DURING THE YEAR?
A. My view was that, on an after-tax basis, municipal bonds continued to
represent a good value for investors in the 36% and above tax brackets
throughout the year. With 1995's strong bond market rally, corporate bonds
traded at historically rich values - that is, expensive relative to what I
believed their value to be. What's more, Treasury bonds didn't offer as
much yield - on an after-tax basis - relative to municipals.
Q. WHAT CONTRIBUTED TO THE FUND'S PERFORMANCE?
A. While the fund's performance was helped by the overall rise in the
municipal market, there were some specific holdings that did particularly
well. Philadelphia general obligation bonds were one example. I purchased
these bonds in 1994 in anticipation of the city receiving a credit upgrade.
When that upgrade materialized in 1995, the fund's Philadelphia holdings
appreciated significantly. The fund also benefited from my trading in and
out of New York City bonds. The supply of New York City municipals issued
tends to fluctuate quite significantly and, as a result, price
inefficiencies tend to develop. We were successful in buying New York City
bonds at times when supply was heavy and their prices were cheap, and
selling them once supply diminished and their prices appreciated. While New
York City's bonds were downgraded by one of the major credit rating
agencies last year, it didn't seem to have much of an impact on the City's
bonds, since the downgrade had been anticipated and already had been
factored into prices.
Q. WHAT WAS YOUR STRATEGY?
A. Throughout the year, the fund had a heavy emphasis on municipal bonds
with maturities between 10 and 20 years. In my view, securities in that
maturity range offered a good combination of yield relative to the risk
involved. Bonds with shorter maturities tended to offer much less
incremental yield, while many bonds with longer-maturities carried the risk
that they would be called, or redeemed early, by their issuer.
Q. THE FUND'S STAKE IN BONDS ISSUED IN TEXAS HAS GROWN OVER THE PERIOD.
WHAT TYPES OF BONDS WERE ATTRACTIVE?
A. Bonds backed by the Texas Permanent School Fund, which made up about 8%
of the fund's investments at the end of the year. This program allows Texas
school districts to borrow and get a guarantee from this state entity,
which serves as a type of insurance that the bond's principal and interest
payments will be paid. In my view, these bonds are very high-quality, but
generally traded cheaper than the other higher-rated bonds. In light of
that, I believed that they offered good value.
Q. DO YOU HAVE ANY REGRETS?
A. Although California bonds made up 5.4% of the fund's investments at the
end of the period, the fund was underweighted - relative to the Lehman
Brothers Municipal Bond Index - in bonds issued in the state. These bonds
tended to do well last year. Their performance was driven primarily by
improvements in the state's economy. California has recouped nearly all of
the job losses it had sustained as a result of the defense industry's
downsizing in the previous few years. Also, the state's fiscal situation
improved throughout 1995, which proved to be a pleasantly surprising
development.
Q. WHAT'S YOUR OUTLOOK?
A. The value of municipals has a lot to do with tax policy. With tax reform
a hot topic of debate, the performance of municipals could be uncertain
until the issue is resolved or fades from view. In light of that, the
municipal market could face some continued volatility over the foreseeable
future.
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: maximum total return
after federal income taxes by
investing in both taxable and
tax-free bonds
START DATE: September 9,
1993
SIZE: as of December 31,
1995, more than $18 million
MANAGER: George Fischer,
since September 1993;
manager, Fidelity Municipal
Bond Fund, since October 1,
1995; Fidelity Insured Municipal
Income Fund, since August
1995; municipal bond analyst
1989 to 1993; joined Fidelity in
1989
(checkmark)
GEORGE FISCHER ON HIS
INVESTMENT STRATEGY:
"There are a variety of ways
investors approach the
municipal market. One
strategy is to try to buy the
highest yielding bonds in an
attempt to maximize tax-free
income. The problem with
emphasizing income is that
investors often are tempted to
do it at the expense of total
return. In other words,
investors may own bonds
that carry a high level of
income, but not enough to
justify the risk to principal
those bonds may carry. I
focus on total return,
emphasizing bonds whose
return justifies the risks
taken."
DISTRIBUTIONS
A total of 16.46% of the
dividends distributed during
the fiscal year was derived
from interest on U.S.
Government securities which
is generally exempt from state
income tax.
The fund notified shareholders
in January 1996 of the
applicable percentage for use
in preparing 1995 income tax
returns.
INVESTMENT CHANGES

TOP TEN FIXED-INCOME SECURITIES AS OF DECEMBER 31, 1995
(BY ISSUER) % OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO

Knox County, Tennessee, Health Educational & 6.2 5.9
Housing Facilities Board

Georgia, General Obligation 6.2 5.9

Lakeland, Florida, Electric & Water 5.7 5.4

Connecticut, General Obligation 5.6 0.0

New York, United Nations Development 5.4 5.4

Gainesville, Georgia, Water & Sewer 5.2 4.9

Leander, Texas, Independent School 5.0 4.8

Niagara Falls, New York, Public Improvement 3.2 3.1

Austin, Texas, Independent School 3.1 3.0

Indiana, Health Facilities Financing Authority 3.0 2.8

AVERAGE YEARS TO MATURITY AS OF DECEMBER 31, 1995
6 MONTHS AGO

Years 11.4 12.0

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 DECEMBER 31, 1995
6 MONTHS AGO

Years 7.4 7.6

Municipal
securities 94.5%
Short-term taxable
investments 5.5%

Row: 1, Col: 1, Value: 3.8
Row: 1, Col: 2, Value: 56.2
Row: 1, Col: 3, Value: 40.0
INVESTMENTS DECEMBER 31, 1995

Showing Percentage of Total Value of Investment in Securities

MUNICIPAL BONDS - 94.5%
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
ARIZONA - 2.6%
Arizona Trans. Board Hwy. Rev. Sub-Series A,
5% 7/1/09 Aa $ 500,000 $ 498,125
CALIFORNIA - 5.4%
Alameda County Ctfs. of Prtn. Rfdg.
(Santa Rita Jail Proj.) 5.375% 6/1/09,
(MBIA Insured) Aaa 500,000 511,875
Rancho Wtr. Dist. Fing. Auth. Rev. Rfdg.
5.875% 11/1/10, (FGIC Insured) Aaa 500,000 530,000
1,041,875
COLORADO - 2.7%
Aurora Ctfs. of Prtn. Rfdg. 6% 12/1/06 A 500,000 526,875
CONNECTICUT - 8.1%
Connecticut Gen. Oblig. Series A,
6.10% 3/15/02 Aa 1,000,000 1,088,750
Connecticut Health & Ed. Facs. Auth. Rev. Rfdg.
(Quinnipiac College) Series D, 6% 7/1/13 BBB- 500,000 486,875
1,575,625
FLORIDA - 8.5%
Broward County Resources Recovery Rev.
(SES Broward Co. LP South Proj.)
7.95% 12/1/08 A 490,000 550,025
Lakeland Elec. & Wtr. Rev. Rfdg. (Jr. Sub. Lien)
6.50% 10/1/06, (FGIC Insured) (d) Aaa 1,000,000 1,110,000
1,660,025
GEORGIA - 11.3%
Gainsville Wtr. & Swr. Rev. Rfdg.
5.25% 11/15/10, (FGIC Insured) Aaa 1,000,000 1,006,250
Georgia Gen. Oblig. Impt. Series B,
7.20% 3/1/05 Aaa 1,000,000 1,198,750
2,205,000
INDIANA - 3.0%
Indiana Health Facs. Fing. Auth. Hosp. Rev. Rfdg.
(Columbus Gen'l. Hosp.) 7% 8/15/15,
(Cap. Guaranty Insured) Aaa 500,000 590,625
KENTUCKY - 2.6%
Owensboro Elec. Lt. & Pwr. Rev. Rfdg. Series B,
0% 1/1/08, (AMBAC Insured) Aaa 925,000 497,187
MASSACHUSETTS - 4.8%
Massachusetts Gen. Oblig. Consolidated
Loan Series C, 5.625% 8/1/13, (MBIA Insured) Aaa 500,000 513,125
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
MASSACHUSETTS - CONTINUED
Massachusetts Ind. Fin. Agcy. Rev.
(Massachusetts Biomedical Research)
Series A-1, 7.10% 8/1/99 A1 $ 400,000 $ 427,000
940,125
MICHIGAN - 1.3%
Michigan Strategic Fund Ltd. Gen. Oblig. Rev.
(Great Lakes Pulp & Fiber Proj.) 10.25%
12/1/16 (b) - 250,000 258,438
NEW JERSEY - 2.8%
Union County Util. Auth. Solid Waste Rev.
Series A, 7.15% 6/15/09 (b) A- 500,000 535,000
NEW YORK - 13.9%
Hempstead Town Ind. Dev. Agcy. Resources
Recovery Rev. (American Rfdg. Fuel Co.)
7.40% 12/1/10 Baa1 500,000 521,240
New York State Dorm. Auth. Rev. (Consolidated
City Univ. Sys.) 2nd Gen. Series A,
5.75% 7/1/09 Baa1 500,000 509,375
Niagra Fall Pub Impt. 7.50% 3/1/18,
(MBIA Insured) Aaa 500,000 628,750
United Nations Dev. Corp. Rev. Rfdg.
(Phase 2&3 Sr. Lien) Series A, 7.875%
7/1/26, (BIG Insured) (Pre-Refunded to
7/1/96 @ 102) (c) Aaa 1,000,000 1,040,790
2,700,155
PENNSYLVANIA - 2.7%
Philadelphia Muni. Auth. Rev. Rfdg. Lease
Series D, 6% 7/15/03 Baa 500,000 516,250
SOUTH CAROLINA - 2.2%
South Carolina Pub. Svc. Auth. Rev. Rfdg.
Series A, 6.50% 1/1/08, (MBIA Insured) (d) Aaa 400,000 437,500
TENNESSEE - 6.2%
Knox County Health Ed. & Hsg. Facs. Board.
Hosp. Facs. Rev. Rfdg. (Ft. Sanders Alliance)
Series C, 7.25% 1/1/09, (MBIA Insured) Aaa 1,000,000 1,211,250
TEXAS - 11.0%
Austin Independent School Dist. School Bldg.
8.125% 8/1/01, (PSF Guaranteed) Aaa 500,000 595,000
Leander Independant School Dist. Unltd. Tax
7.50% 8/15/08, (PSF Guaranteed) Aaa 800,000 980,000
San Antonio Elec. & Gas Rev. 6.375% 2/1/06 Aa1 500,000 561,875
2,136,875
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
VIRGINIA - 2.5%
Virginia Beach Dev. Auth. Hosp. Facs. Rev.
(Virginia Beach Gen. Hosp. Proj.)
5.125% 2/15/18, (AMBAC Insured) Aaa $ 500,000 $ 487,500
WASHINGTON - 2.9%
Washington Pub. Pwr. Supply Sys. Nuclear
Proj. #1 Rev. Rfdg. Series A, 7% 7/1/08 Aa 500,000 568,125
TOTAL MUNICIPAL BONDS
(Cost $17,723,311) 18,386,555
REPURCHASE AGREEMENTS - 5.5%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account at 5.88%,
dated 12/29/95 due 1/2/96 $ 1,061,693 1,061,000
TOTAL INVESTMENTS IN SECURITIES - 100%
(Cost $18,784,311) $ 19,447,555
LEGEND
1. Standard & Poor's Corporation credit ratings are used in the absence of
a rating by Moody's Investors Service, Inc.
2. Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
3. Security collateralized by an amount sufficient to pay interest and
principal.
4. Security purchased on a delayed delivery basis (see Note 2 of Notes to
Financial Statements).
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 80.0% AAA, AA, A 80.1%
Baa 8.0% BBB 7.8%
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 either S&P or Moody's 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 31.0%
Health Care 14.0
Others (individually less than 10%) 49.5
Repurchase Agreements 5.5
TOTAL 100.0%
INCOME TAX INFORMATION
At December 31, 1995, the aggregate cost of investment securities for
income tax purposes was $18,784,311. Net unrealized appreciation aggregated
$663,244, of which $718,020 related to appreciated investment securities
and $54,776 related to depreciated investment securities.
At December 31, 1995, the fund had a capital loss carryforward of
approximately $1,755,000 of which $26,000, $1,196,000, and $533,000 will
expire on December 31, 2001, 2002, and 2003, respectively.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS DECEMBER 31, 1995

ASSETS

Investment in securities, at value (including repurchase $ 19,447,555
agreements of $1,061,000) (cost $18,784,311) -
See accompanying schedule

Cash 717

Interest receivable 363,773

TOTAL ASSETS 19,812,045

LIABILITIES

Payable for investments purchased $ 1,473,673
Delayed delivery

Payable for fund shares redeemed 209,168

Distributions payable 888

Accrued management fee 10,751

TOTAL LIABILITIES 1,694,480

NET ASSETS $ 18,117,565

Net Assets consist of:

Paid in capital $ 19,210,434

Distributions in excess of net investment income (1,359)

Accumulated undistributed net realized gain (loss) on (1,755,144)
investments and foreign currency transactions

Net unrealized appreciation (depreciation) on 663,634
investments and assets and liabilities in foreign
currencies

NET ASSETS, for 1,871,239 shares outstanding $ 18,117,565

NET ASSET VALUE, offering price and redemption price per $9.68
share ($18,117,565 (divided by) 1,871,239 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED DECEMBER 31, 1995

INVESTMENT INCOME $ 1,060,506
Interest

EXPENSES

Management fee $ 127,871

Non-interested trustees' compensation 87

TOTAL EXPENSES 127,958

NET INVESTMENT INCOME 932,548

REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:

Investment securities (368,289)

Futures contracts 2,630 (365,659)

Change in net unrealized appreciation (depreciation) on 2,247,015
investment securities

NET GAIN (LOSS) 1,881,356

NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 2,813,904
FROM OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1995 1994

INCREASE (DECREASE) IN NET ASSETS

Operations $ 932,548 $ 1,131,884
Net investment income

Net realized gain (loss) (365,659) (1,199,686)

Change in net unrealized appreciation (depreciation) 2,247,015 (1,860,879)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 2,813,904 (1,928,681)
FROM OPERATIONS

Distributions to shareholders from net investment income (933,950) (1,135,626)

Share transactions 1,122,275 11,393,624
Net proceeds from sales of shares

Reinvestment of distributions 849,550 999,399

Cost of shares redeemed (3,456,410) (12,707,084)

Redemption fees 484 20,540

NET INCREASE (DECREASE) IN NET ASSETS RESULTING (1,484,101) (293,521)
FROM SHARE TRANSACTIONS

TOTAL INCREASE (DECREASE) IN NET ASSETS 395,853 (3,357,828)

NET ASSETS

Beginning of period 17,721,712 21,079,540

End of period (including distributions in excess of net $ 18,117,565 $ 17,721,712
investment income of $1,359 and $33,070,
respectively)

OTHER INFORMATION
Shares

Sold 120,939 1,183,452

Issued in reinvestment of distributions 90,999 109,164

Redeemed (369,485) (1,376,527)

Net increase (decrease) (157,547) (83,911)

</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
<S> <C> <C> <C>
YEARS ENDED SEPTEMBER 9, 1993
DECEMBER 31, (COMMENCEMENT OF
OPERATIONS) TO
DECEMBER 31,

1995 1994 1993

SELECTED PER-SHARE DATA

Net asset value, beginning of period $ 8.740 $ 9.980 $ 10.000

Income from Investment Operations .491 .481 .130
Net investment income

Net realized and unrealized .924 (1.244) (.011)
gain (loss)

Total from investment operations 1.415 (.763) .119

Less Distributions (.475) (.486) (.130)
From net investment income

In excess of net investment income - - (.011)

Total distributions (.475) (.486) (.141)

Redemption fees added to paid in capital .000 .009 .002

Net asset value, end of period $ 9.680 $ 8.740 $ 9.980

TOTAL RETURN B 16.52% (7.65)% 1.23%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period (000 omitted) $ 18,118 $ 17,722 $ 21,080

Ratio of expenses to average net assets .70% .70% .70% A

Ratio of net investment income to average 5.10% 5.26% 4.44% A
net assets

Portfolio turnover rate 79% 168% 275% A

</TABLE>

A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
NOTES TO FINANCIAL STATEMENTS
For the period ended December 31, 1995

1. SIGNIFICANT ACCOUNTING POLICIES.
Spartan Bond Strategist (the fund) is a fund of Fidelity School 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 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. Short-term securities
maturing within sixty days of their purchase date are valued either at
amortized cost or original cost plus accrued interest, both of which
approximate current value. 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.
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 forward currency
contracts, disposition of foreign currencies, currency gains and losses
realized between the trade and settlement dates on securities transactions,
and the difference between the amount of net investment income accrued and
the U.S. dollar amount actually received. 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. Interest income, which includes accretion of original
issue discount, is accrued as earned.
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
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
generally accepted accounting principles. These differences, which may
result in distribution reclassifications, are primarily due to differing
treatments for futures transactions and market discount.
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 investment income and realized
and unrealized gain (loss). Distributions in excess of net investment
income and 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 income or gain remaining at fiscal year end is distributed in the
following year.
REDEMPTION FEES. Shares held in the fund less than 180 days are subject to
a redemption 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.
FORWARD FOREIGN CURRENCY CONTRACTS. The fund may use foreign currency
contracts to facilitate transactions in foreign securities and to manage
the fund's currency exposure. Contracts to buy generally are used to
acquire exposure to foreign currencies, while contracts to sell are used to
hedge the fund's investments against currency fluctuations. Also, a
contract to buy or sell can offset a previous contract. 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 forward foreign currency contracts is determined
using forward currency exchange rates supplied by a quotation service.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and any realized gain (loss) is
recognized on the date of offset; otherwise, gain (loss) is recognized on
settlement date.
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 that mature in
60 days or less from the date of purchase, and are collateralized by U.S.
Treasury or Federal Agency obligations.
2. OPERATING POLICIES - CONTINUED
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying U.S. Treasury or Federal Agency securities, the market
value of which is required to be at least equal to the repurchase price.
For term repurchase agreement transactions, the underlying securities are
marked-to-market daily and maintained at a value at least equal to the
repurchase price. 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 when-issued or forward commitment 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. Losses
may arise due to changes in the market value of the underlying securities
or if the counterparty does not perform under the contract.
FUTURES CONTRACTS AND OPTIONS. The fund may use futures and options
contracts to manage its exposure to the bond markets and to fluctuations in
interest rates. Buying futures, writing puts, and buying calls tend to
increase the fund's exposure to the underlying instrument. Selling futures,
buying puts, and writing calls tend 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, if there is an
illiquid secondary market for the contracts, or if the counterparties do
not perform under the contracts' terms.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Exchange-traded
options are valued using the last sale price or, in the absence of a sale,
the last offering price. Options traded over-the-counter are valued using
dealer-supplied valuations.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $14,052,158 and $14,453,209, respectively, of which U.S.
government and government agency obligations aggregated $3,100,109 and
$3,111,328, respectively.
The market value of futures contracts opened and closed during the period
amounted to $6,104,344 and $6,166,813, 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
.70% of the fund's average net assets.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
FMR also bears the cost of providing shareholder services to the fund. To
offset the cost of providing these services, FMR or its affiliates collect
certain transaction fees from the fund's shareholders which amounted to
$445 for the period.
5. BENEFICIAL INTEREST.
At the end of the period, FMR or its affiliates were record owner of
approximately 42% of the total outstanding shares.
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Fidelity School Street Trust and the Shareholders of
Spartan Bond Strategist:
We have audited the accompanying statement of assets and liabilities of
Fidelity School Street Trust: Spartan Bond Strategist, including the
schedule of portfolio investments, as of December 31, 1995, and the related
statement of operations for the year then ended, the statement of changes
in net assets for each of the two years in the period then ended and the
financial highlights for each of the two years in the period then ended and
for the period September 9, 1993 (commencement of operations) to December
31, 1993. 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 December 31, 1995 by correspondence with the
custodian and brokers. 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 audits provide 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 Fidelity School Street Trust: Spartan Bond Strategist as of December 31,
1995, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and the
financial highlights for each of the two years in the period then ended and
for the period September 9, 1993 (commencement of operations) to December
31, 1993, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 1, 1996
TO CALL FIDELITY

FOR FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call -
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.

(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND QUOTES*
1-800-544-8544
Just make a selection from this record-ed menu:
PRESS
For quotes on funds you own.
1.
For an individual fund quote.
2.
For the ten most frequently
requested Fidelity fund quotes.
3.
For quotes on Fidelity Select
Portfolios(registered trademark).
4.
To change your Personal
Identification Number (PIN).
5.
To speak with a Fidelity
representative.
6.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
ed menu:
PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
dividends).
2.
To change your Personal
Identification Number (PIN).
3.
To speak with a Fidelity
representative.
4.
* 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
100 Crosby Parkway - KP2C
Covington, KY 41015-4399
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 193
Boston, MA 02210-0193
(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 660602
Dallas, TX 75266-0602
TO VISIT FIDELITY

For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
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
811 Wilshire Boulevard
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
1400 Civic Drive
Walnut Creek, CA
6300 Canoga Avenue
Woodland Hills, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
185 Asylum Street
Hartford, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, 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
4001 Tamiami Trail, North
Naples, FL
1907 West State Road 434
Orlando, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
2000 66th Street, North
St. Petersburg, FL
GEORGIA
3525 Piedmont Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
215 East Erie Street
Chicago, IL
One North Franklin
Chicago, IL
540 Lake Cook Road
Deerfield, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
LOUISIANA
201 St. Charles Avenue
New Orleans, LA
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
7401 Wisconsin Avenue
Bethesda, MD
1 West Pennsylvania Ave.
Towson, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
21 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
56 South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
505 Millburn Avenue
Short Hills, NJ
NEW YORK
1050 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
10 Bank Street
White Plains, 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
1903 East Ninth Street
Cleveland, OH
OREGON
121 S.W. Morrison Street
Portland, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
5100 Poplar Avenue
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
7001 Preston Road
Dallas, TX
1155 Dairy Ashford
Houston, TX
2701 Drexel Drive
Houston, TX
1010 Lamar Street
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
UTAH
215 South State Street
Salt Lake City, UT
VERMONT
199 Main Street
Burlington, VT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
511 Pine Street
Seattle, WA
WASHINGTON, DC
1775 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
J. Gary Burkhead, Senior Vice President
Fred L. Henning, Jr., Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
The Bank of New York
New York, NY
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
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)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
(registered trademark)