SPARTAN(REGISTERED TRADEMARK)
ARIZONA
MUNICIPAL
FUNDS
SEMIANNUAL REPORT
FEBRUARY 29, 2000
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
SPARTAN ARIZONA MUNICIPAL
INCOME FUND
PERFORMANCE 4 How the fund has done over
time.
FUND TALK 7 The manager's review of fund
performance, strategy and
outlook.
INVESTMENT CHANGES 10 A summary of major shifts in
the fund's investments over
the past six months.
INVESTMENTS 11 A complete list of the fund's
investments with their
market values.
FINANCIAL STATEMENTS 16 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
SPARTAN ARIZONA MUNICIPAL
MONEY MARKET FUND
PERFORMANCE 20 How the fund has done over
time.
FUND TALK 22 The manager's review of fund
performance, strategy and
outlook.
INVESTMENT CHANGES 24 A summary of major shifts in
the fund's investments over
the past six months and one
year.
INVESTMENTS 25 A complete list of the fund's
investments.
FINANCIAL STATEMENTS 29 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 33 Notes to the financial
statements
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL INFORMATION OF THE SHAREHOLDERS OF THE
FUNDS. THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE
INVESTORS IN THE FUNDS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE
PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND
EXPENSES, CALL 1-800-544-6666 FOR A FREE PROSPECTUS. READ IT CAREFULLY
BEFORE YOU INVEST OR SEND MONEY.
Standard & Poor's, S&P and S&P 500 are registered service marks of The
McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity
Distributors Corporation.
Other third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
This report is printed on recycled paper using soy-based inks.
PRESIDENT'S MESSAGE
(PHOTO_OF_EDWARD_C_JOHNSON_3D)
DEAR SHAREHOLDER:
In February, the Dow Jones Industrial Average closed below 10,000 for
the first time in 10 months - 16% below its high set in January. A
deeper drop was avoided by a rally late in the period. Meanwhile, the
technology-focused NASDAQ Index continued its record-setting ascent,
while the bellwether 30-year Treasury benefited slightly as a haven
from volatile blue chips and the U.S. Treasury's decision to reduce
long bond supply.
While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.
The longer your investment time frame, the less likely it is that you
will be affected by short-term market volatility. A 10-year investment
horizon appropriate for saving for a college education, for example,
enables you to weather market cycles in a long-term fund, which may
have a higher risk potential, but also has a higher potential rate of
return.
An intermediate-length fund could make sense if your investment
horizon is two to four years, while a short-term bond fund could be
the right choice if you need your money in one or two years.
If your time horizon is less than a year, you might want to consider
moving some of your bond investment into a money market fund. These
funds seek income and a stable share price by investing in
high-quality, short-term investments. Of course, it's important to
remember that an investment in a money market fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although money market funds seek to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in these types of funds.
Finally, no matter what your time horizon or portfolio diversity, it
makes good sense to follow a regular investment plan, investing a
certain amount of money in a fund at the same time each month or
quarter and periodically reviewing your overall portfolio. By doing
so, you won't get caught up in the excitement of a rapidly rising
market, nor will you buy all your shares at market highs. While this
strategy - known as dollar cost averaging - won't assure a profit or
protect you from a loss in a declining market, it should help you
lower the average cost of your purchases. Of course, you should
consider your financial ability to continue your purchases through
periods of low price levels before undertaking such a strategy.
If you have questions, please call us at 1-800-544-6666, or visit our
web site at www.fidelity.com. We are available 24 hours a day, seven
days a week to provide you the information you need to make the
investments that are right for you.
Best regards,
Edward C. Johnson 3d
SPARTAN ARIZONA MUNICIPAL INCOME FUND
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). You can also look at the fund's income, as
reflected in the fund's yield, to measure performance. If Fidelity had
not reimbursed certain fund expenses, the past five year and life of
fund total returns would have been lower.
CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PERIODS ENDED PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
SPARTAN ARIZONA MUNICIPAL -0.26% -2.01% 28.28% 35.80%
INCOME
LB Arizona 4 Plus Year -0.52% -2.37% n/a n/a
Enhanced Municipal Bond
Arizona Municipal Debt Funds -1.50% -4.26% 26.12% n/a
Average
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or since the fund started on October 11, 1994. For example, if
you had invested $1,000 in a fund that had a 5% return over the past
year, the value of your investment would be $1,050. You can compare
the fund's returns to the performance of the Lehman Brothers Arizona 4
Plus Year Enhanced Municipal Bond Index - a market value-weighted
index of Arizona investment-grade municipal bonds with maturities of
four years or more. To measure how the fund's performance stacked up
against its peers, you can compare it to the Arizona municipal debt
funds average, which reflects the performance of mutual funds with
similar objectives tracked by Lipper Inc. The past six month average
represents a peer group of 39 mutual funds. These benchmarks will
include reinvested dividends and capital gains, if any, and exclude
the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
SPARTAN ARIZONA MUNICIPAL -2.01% 5.11% 5.84%
INCOME
LB Arizona 4 Plus Year -2.37% n/a n/a
Enhanced Municipal Bond
Arizona Municipal Debt Funds -4.26% 4.74% n/a
Average
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and
show you what would have happened if the fund had performed at a
constant rate each year. (Note: Lipper calculates average annual total
returns by annualizing each fund's total return, then taking an
arithmetic average. This may produce a different figure than that
obtained by averaging the cumulative total returns and annualizing the
result.)
$10,000 OVER LIFE OF FUND
Spartan AZ Muni Income LB Municipal Bond
00434 LB015
1994/10/31 10000.00 10000.00
1994/11/30 9820.11 9819.20
1994/12/31 10064.35 10035.32
1995/01/31 10414.23 10322.13
1995/02/28 10773.06 10622.30
1995/03/31 10866.46 10744.35
1995/04/30 10885.64 10757.03
1995/05/31 11219.72 11100.28
1995/06/30 11111.21 11003.71
1995/07/31 11215.14 11108.03
1995/08/31 11372.18 11248.88
1995/09/30 11463.33 11320.08
1995/10/31 11631.80 11484.67
1995/11/30 11820.94 11675.21
1995/12/31 11925.02 11787.40
1996/01/31 12041.15 11876.40
1996/02/29 11942.15 11796.23
1996/03/31 11779.23 11645.48
1996/04/30 11735.76 11612.52
1996/05/31 11716.16 11607.88
1996/06/30 11827.94 11734.29
1996/07/31 11918.94 11841.07
1996/08/31 11908.53 11838.23
1996/09/30 12056.07 12003.96
1996/10/31 12194.14 12139.73
1996/11/30 12400.73 12361.88
1996/12/31 12343.01 12309.96
1997/01/31 12367.61 12333.23
1997/02/28 12469.45 12446.45
1997/03/31 12294.99 12280.54
1997/04/30 12389.13 12383.32
1997/05/31 12544.70 12569.57
1997/06/30 12675.15 12703.44
1997/07/31 13009.98 13055.32
1997/08/31 12880.60 12932.99
1997/09/30 13024.85 13086.51
1997/10/31 13097.69 13170.65
1997/11/30 13156.84 13248.10
1997/12/31 13326.81 13441.39
1998/01/31 13437.65 13580.10
1998/02/28 13445.37 13584.18
1998/03/31 13446.17 13596.13
1998/04/30 13383.32 13534.81
1998/05/31 13544.37 13749.07
1998/06/30 13579.60 13803.24
1998/07/31 13616.10 13837.88
1998/08/31 13803.11 14051.68
1998/09/30 13964.10 14226.76
1998/10/31 13975.18 14226.48
1998/11/30 13997.25 14276.41
1998/12/31 14033.73 14312.39
1999/01/31 14186.10 14482.57
1999/02/28 14103.25 14419.28
1999/03/31 14114.92 14439.32
1999/04/30 14150.56 14475.27
1999/05/31 14071.05 14391.46
1999/06/30 13885.53 14184.22
1999/07/31 13962.06 14235.85
1999/08/31 13856.00 14121.97
1999/09/30 13867.02 14127.76
1999/10/31 13759.81 13974.61
1999/11/30 13876.02 14123.30
1999/12/31 13776.83 14018.08
2000/01/31 13673.24 13957.11
2000/02/29 13819.95 14119.01
IMATRL PRASUN SHR__CHT 20000229 20000313 102201 R00000000000067
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Spartan Arizona Municipal Income Fund on October 31, 1994,
shortly after the fund started. As the chart shows, by February 29,
2000, the value of the investment would have grown to $13,820 - a
38.20% increase on the initial investment. For comparison, look at how
the Lehman Brothers Municipal Bond Index - a market-value oriented
index of investment-grade municipal bonds with maturities of one year
or more - did over the same period. With dividends and capital gains,
if any, reinvested, the same $10,000 would have grown to $14,119 - a
41.19% 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
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS ENDED FEBRUARY 29, YEARS ENDED AUGUST 31, OCTOBER 11, 1994
(COMMENCEMENT OF OPERATIONS)
TO AUGUST 31,
2000 1999 1998 1997 1996 1995
Dividend returns 2.27% 4.13% 4.55% 4.80% 4.92% 5.34%
Capital returns -2.53% -3.75% 2.61% 3.36% -0.20% 6.40%
Total returns -0.26% 0.38% 7.16% 8.16% 4.72% 11.74%
</TABLE>
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
fund. A capital return reflects both the amount paid by the fund to
shareholders as capital gain distributions and changes in the fund's
share price. Both returns assume the dividends or capital gains, if
any, paid by the fund are reinvested.
DIVIDENDS AND YIELD
PERIODS ENDED PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR
Dividends per share 3.93(cents) 23.81(cents) 46.86(cents)
Annualized dividend rate 4.84% 4.61% 4.43%
30-day annualized yield 4.96% - -
30-day annualized 8.15% - -
tax-equivalent yield
DIVIDENDS per share show the income paid by the fund for a set period.
If you annualize this number, based on an average share price of
$10.22 over the past one month, $10.36 over the past six months and
$10.57 over the past one year, you can compare the fund's income over
these three periods. The 30-day annualized YIELD is a standard formula
for all bond funds based on the yields of the bonds in the fund,
averaged over the past 30 days. This figure shows you the yield
characteristics of the fund's investments at the end of the period. It
also helps you compare funds from different companies on an equal
basis. The tax-equivalent yield shows what you would have to earn on a
taxable investment to equal the fund's tax-free yield, if you're in
the 39.23% combined effective 2000 federal and state income tax
bracket. The tax-equivalent yield also reflects that a portion of the
fund's income was subject to state taxes, but does not reflect the
payment of the federal alternative minimum tax, if applicable.
SPARTAN ARIZONA MUNICIPAL INCOME FUND
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Two more interest-rate hikes by the
U.S. Federal Reserve board during the
six-month period ending February
29, 2000 - on top of the two rates
hikes that occurred shortly before the
period began - continued to
detract from the performance of
municipal bonds. For the six-month
period, the Lehman Brothers
Municipal Bond Index - an index
of over 35,000 investment-grade,
fixed-rate, tax-exempt bonds -
turned in a flat return of -0.02%.
Several other factors also contributed
to the municipal bond industry's
lackluster performance. The health
care sector, a prominent issuer of
muni bonds, was beleaguered by
concerns of Medicare and
government pricing reforms, which
caused health care securities to
struggle. Furthermore, as interest
rates continued to climb, many
muni bonds fell to deeply discounted
levels, which can create unfavorable
tax consequences for buyers of those
bonds. In return, investors demanded
greater yield as compensation,
causing the prices of these issues
to drop even further. Compared to
corporate and mortgage bonds,
municipal bond performance
lagged during the six-month
period. The Lehman Brothers
Corporate Bond Index returned
1.70%, while mortgage securities, one
of the best-performing domestic
debt offerings during the period,
returned 2.30%, according to the
Lehman Brothers Mortgage-Backed
Securities Index.
(photograph of Christine Thompson)
An interview with Christine Thompson, Portfolio Manager of Spartan
Arizona Municipal Income Fund
Q. HOW DID THE FUND PERFORM, CHRISTINE?
A. During the past six months, rising interest rates and continued
worries about potential future inflation caused the fund to post a
slightly negative return, although it significantly outpaced its peers
and outperformed its benchmark. For the six-month period that ended
February 29, 2000, the fund had a total return of -0.26%. To get a
sense of how the fund did relative to its competitors, the Arizona
municipal debt funds average returned -1.50% for the same six-month
period, according to Lipper Inc. Additionally, the Lehman Brothers
Arizona 4 Plus Year Enhanced Municipal Bond Index, which tracks the
types of securities in which the fund invests, returned -0.52%. For
the 12-month period that ended February 29, 2000, the fund returned
- -2.01%, while the Arizona municipal debt funds average returned -4.26%
and the Lehman Brothers index was off 2.37%.
Q. WHAT HELPED THE FUND BEAT ITS PEERS?
A. The fund's focus on intermediate-maturity bonds was one of the main
factors behind its outperformance. Throughout the past six months, I
emphasized intermediate-maturity bonds - those set to mature within
five to 15 years - because, based on Fidelity's quantitative research
models, I felt that they offered some of the best values for their
given interest-rate sensitivity and their total return potential. That
strategy proved to be beneficial and the fund's larger-than-average
stake in intermediate bonds worked in its favor when demand for them
rose and they generally outpaced longer- and shorter-term securities.
Q. WHAT OTHER FACTORS AIDED PERFORMANCE?
A. The fund was helped by its focus on premium coupon bonds, which pay
interest rates above face - or par - value. One appealing aspect of
premiums was that they were somewhat insulated from unfavorable tax
treatment that negatively affected the prices of lower coupon bonds,
or "discounts," as rates rose.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Yes, there were. Health care bonds continued their disappointing
run throughout the past six months, coming under pressure from a
variety of challenges including cutbacks in Medicare payments and
ensuing questions about many hospitals' future profitability. With the
help of Fidelity's research staff, I continue to carefully monitor the
impact these developments could have on hospitals over the long term.
My approach is to be very selective, emphasizing hospitals with a
proven track record that I believe can do well in today's evolving,
more competitive operating environment. There are a number of
hospitals in Arizona that are particularly benefiting from the state's
strong population growth. For example, one of the fund's largest
health care holdings is Phoenix Children's Hospital, which enjoys
strong demand for its services and has been able to exert more control
over its pricing than hospitals in other areas of the country where
growth is not as strong.
Q. WITH ABOUT HALF OF THE FUND'S INVESTMENTS IN BONDS RATED AAA AT THE
END OF THE PERIOD, THE FUND HAD A HIGH-QUALITY PROFILE. WHAT WAS THE
RATIONALE FOR THAT POSITIONING?
A. The fund's focus on high-quality bonds is a function of a couple of
factors. First, it's a reflection of the Arizona municipal market
overall, where high-quality bonds make up the lion's share of
available supply. Second, I didn't feel that, apart from selected
categories, lower-quality bonds offered enough incentive by way of
additional yield for owning them. One exception was education bonds,
including those backed by Arizona colleges and universities. I liked
them because they allowed me to diversify the fund away from
economically sensitive bonds such as general obligation bonds, which
depend on sales, property, income and other tax revenue collections.
Furthermore, projections call for an increasing number of students to
seek advanced degrees over the next several years. Some of the fund's
larger holdings in the education sector at the end of the period were
bonds issued by the University of Arizona.
Q. WHAT'S YOUR OUTLOOK FOR THE MUNICIPAL MARKET?
A. At the end of the period, municipals were fairly cheap compared to
their Treasury counterparts. To the extent that investors realize and
act on that relative cheapness, municipals could gain ground on
Treasuries. Of course, the major determinant of the bond market's
performance will, as always, be the direction of interest rates. But
instead of spending time trying to forecast interest-rate movements,
I'll look for attractively priced bonds that I believe will
outperform, no matter where interest rates end up.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
CHRISTINE THOMPSON ON THE
ARIZONA ECONOMY:
"Although the Arizona economy
has slowed modestly from the
red-hot pace it set in 1998, it's
expected to remain one of the
fastest-growing economies in the
United States in the coming year.
Weaker growth in the
manufacturing sector has been
offset by strength in the financial
services and government sectors,
the latter of which has been
driven primarily by adding more
teachers at both state and local
schools. In addition, the state's
unemployment rate remains low
and employment growth remains
stable. A turnaround in the
semiconductor industry has
benefited the state's technology
sector. Furthermore, exports to
Europe and Mexico have increased
while exports to Asia have
rebounded, although not to their
pre-Asian crisis of 1998 levels."
(solid bullet) At the end of the period, the
fund had 9.0% of its net assets in
bonds issued by Puerto Rico. As a
territory of the United States,
Puerto Rico can issue bonds that
are free from taxes in all 50 states.
When the supply of Arizona
municipals is limited or their
prices look expensive, the
manager occasionally invests in
Puerto Rico bonds.
FUND FACTS
GOAL: seeks a high level of
current income, exempt from
federal income tax and
Arizona personal income tax
FUND NUMBER: 434
TRADING SYMBOL: FSAZX
START DATE: October 11,
1994
SIZE: as of February 29,
2000, more than $27 million
MANAGER: Christine Thompson,
since 1998; manager,
various Fidelity and Spartan
municipal income funds;
joined Fidelity in 1985
(checkmark)
SPARTAN ARIZONA MUNICIPAL INCOME FUND
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE SECTORS AS OF
FEBRUARY 29, 2000
% OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6
MONTHS AGO
General Obligations 29.9 25.7
Special Tax 17.3 15.1
Health Care 11.6 10.1
Education 10.4 6.7
Electric Utilities 9.7 20.2
AVERAGE YEARS TO MATURITY AS
OF FEBRUARY 29, 2000
6 MONTHS AGO
Years 13.2 9.9
</TABLE>
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME REMAINING UNTIL
PRINCIPAL PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS,
WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF FEBRUARY 29,
2000
6 MONTHS AGO
Years 6.9 6.1
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 FEBRUARY 29, 2000
Row: 1, Col: 1, Value: 51.4
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 38.3
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 5.4
Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 0.0
Row: 1, Col: 8, Value: 4.9
Aaa 51.4%
Aa, A 38.3%
Baa 5.4%
Short-term
Investments 4.9%
AS OF AUGUST 31, 1999
Row: 1, Col: 1, Value: 49.1
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 39.2
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 6.8
Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 0.0
Row: 1, Col: 8, Value: 4.9
Aaa 49.1%
Aa, A 39.2%
Baa 6.8%
Short-term
Investments 4.9%
WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P (registered
trademark) RATINGS. AMOUNTS SHOWN ARE AS A PERCENTAGE OF THE FUND'S
INVESTMENTS.
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
SPARTAN ARIZONA MUNICIPAL INCOME FUND
INVESTMENTS FEBRUARY 29, 2000 (UNAUDITED)
Showing Percentage of Net Assets
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS - 95.4%
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
ARIZONA - 86.4%
Arizona Health Facilities
Auth. Hosp. Sys. Rev.:
(Phoenix Children's Hosp. A2 $ 1,000,000 $ 937,290
Proj.) Series A, 6.25%
11/15/29
Rfdg. (Saint Lukes Health Aaa 345,000 374,718
Sys. Proj.) 7.25% 11/1/14
(Pre-Refunded to 11/1/03 @
102) (e)
Arizona Student Ln. Aquistion A2 500,000 480,350
Auth. Student Ln. Rev. Rfdg.
Sub Series B1, 6.15% 5/1/29
(d)
Arizona Trans. Board Excise
Tax Rev.:
(Maricopa County Reg'l. Area Aaa 400,000 414,104
Road Proj.) Series A, 5.75%
7/1/05 (AMBAC Insured)
Rfdg. (Maricopa County Reg'l.
Area Road Proj.):
Series A, 6.5% 7/1/04 (AMBAC Aaa 100,000 106,118
Insured)
Series B, 6% 7/1/05 (AMBAC Aaa 150,000 157,026
Insured)
Arizona Trans. Board Hwy. Rev.:
Rfdg. 5.75% 7/1/19 Aa1 670,000 663,702
Series A, 6.5% 7/1/11 Aaa 300,000 311,787
(Pre-Refunded to 7/1/01 @
101.5) (e)
Arizona Univ. Rev. Rfdg. 6% A1 1,000,000 1,049,578
7/1/06
Central Arizona Wtr.
Conservation District
Contract Rev.:
(Central Arizona Proj.) Aaa 200,000 207,280
Series B, 6.3% 11/1/02 (MBIA
Insured)
Rfdg. (Central Arizona Proj.)
Series A:
5.5% 11/1/09 A1 1,000,000 1,011,380
5.5% 11/1/10 A1 375,000 378,116
Chandler Gen. Oblig.:
6.25% 7/1/10 Aa2 500,000 535,505
6.5% 7/1/10 (MBIA Insured) Aaa 200,000 217,138
6.5% 7/1/11 (MBIA Insured) Aaa 225,000 244,073
Chandler Wtr. & Swr. Rev. Aaa 1,000,000 973,420
5.5% 7/1/15 (MBIA Insured)
Cochise County Unified School Aaa 200,000 218,270
District #68 (Sierra Vista
Proj.) Series B, 9% 7/1/02
(FGIC Insured)
Flagstaff Gen. Oblig. 4.5% Aaa 200,000 178,400
7/1/13 (FGIC Insured)
Glendale Ind. Dev. Auth. Edl. AAA 150,000 161,825
Facilities Rev. Rfdg.
(American Graduate School
Int'l. Proj.) 6.55% 7/1/06
(AMBAC Insured)
(Pre-Refunded to 7/1/05 @
101) (e)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
ARIZONA - CONTINUED
Maricopa County Ctfs. of A2 $ 155,000 $ 155,284
Prtn. 5.625% 6/1/00
Maricopa County Hosp. Rev. Baa1 300,000 268,395
Rfdg. (Sun Health Corp.
Proj.) 6.125% 4/1/18
Maricopa County Ind. Dev. Baa1 500,000 482,600
Auth. Health Facilities Rev.
Rfdg. (Catholic Health Care
West Proj.) Series A, 5%
7/1/03
Maricopa County Ind. Dev. AA+ 1,000,000 843,070
Auth. Hosp. Facilities Rev.
(Mayo Clinic Hosp. Proj.)
5.25% 11/15/37
Maricopa County School Aaa 500,000 379,140
District #1 Rfdg. (Cap.
Appreciation) (Phoenix
Elementary Proj.) Second
Series, 0% 7/1/05 (MBIA
Insured)
Maricopa County School Aaa 500,000 319,155
District #3 Rfdg. (Cap.
Appreciation) (Temple
Elementary Proj.) 0% 7/1/08
(AMBAC Insured)
Maricopa County School Aaa 300,000 304,707
District #4 Rfdg. (Mesa
Univ. Proj.) 5.25% 7/1/04
(FSA Insured)
Maricopa County School Aaa 200,000 212,798
District #14 Rfdg.
(Creighton Proj.) 6.5%
7/1/04 (FGIC Insured)
Maricopa County School Aaa 955,000 645,561
District #28 Rfdg. (Cap.
Appreciation) (Kyrene
Elementary Proj.) Series C,
0% 7/1/07 (FGIC Insured)
Maricopa County Unified Aaa 1,000,000 734,730
School District #41Gilbert
Rfdg. (Cap. Appreciation) 0%
1/1/06 (FGIC Insured)
Maricopa County Unified Aaa 400,000 432,240
School District #80
(Chandler Proj.) 6.6% 7/1/06
(FGIC Insured)
Mesa Gen. Oblig. Rfdg. 5.7% Aaa 250,000 256,748
7/1/03 (FGIC Insured)
Mesa Ind. Dev. Auth. Rev. Aaa 500,000 478,395
(Discovery Health Sys.
Proj.) Series A, 5.375%
1/1/14 (MBIA Insured)
Mohave County Ind. Dev. Auth. A+ 250,000 227,490
Ind. Dev. Rev. (North Star
Steel Co. Proj.) Series B,
5.5% 12/1/20 (d)
Navajo County Poll. Cont. Baa1 200,000 186,810
Corp. Rev. Rfdg. (Pub. Svc.
Co. Proj.) Series A, 5.875%
8/15/28
Phoenix Arpt. Rev. Series D, Aaa 810,000 853,619
6.4% 7/1/12 (MBIA Insured)
(d)
Phoenix Civic Impt. Corp.
Arpt. Excise Tax Rev. Rfdg.
Sr. Lien:
5% 7/1/03 (d) Aa2 500,000 498,300
5.25% 7/1/09 (d) Aa2 400,000 387,176
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
ARIZONA - CONTINUED
Phoenix Civic Impt. Corp.
Excise Tax Rev.:
(Muni. Courthouse Proj.) Sr.
Lien Series A:
5.5% 7/1/11 Aa2 $ 200,000 $ 200,986
5.75% 7/1/15 Aa2 675,000 676,181
5.375% 7/1/29 Aa2 220,000 199,151
Phoenix Civic Impt. Corp. Aa3 500,000 471,390
Wtr. Sys. Rev. Jr. Lien,
5.45% 7/1/19
Phoenix Gen. Oblig.:
Rfdg. Series A, 7.5% 7/1/08 Aa1 100,000 115,032
4.5% 7/1/18 Aa1 400,000 331,408
Phoenix Street & Hwy. User Aaa 250,000 261,055
Rev. Rfdg. Jr. Lien, 6.25%
7/1/11 (MBIA Insured)
Pima County Ind. Dev. Auth. Aaa 200,000 197,538
Rev. Rfdg. (HealthPartners
Proj.) Series A, 5.625%
4/1/14 (MBIA Insured)
Pima County Unified School Aaa 250,000 291,023
District #1 Tucson Rfdg.
7.5% 7/1/10 (FGIC Insured)
Pima County Unified School Aaa 300,000 295,878
District #10 Amphitheater
Rfdg. (Cap. Appreciation) 0%
7/1/00 (FGIC Insured)
Scottsdale Gen. Oblig. Rfdg. Aa1 100,000 101,766
5.5% 7/1/09
Scottsdale Street & Hwy. User A1 500,000 505,645
Rev. Rfdg. 5.5% 7/1/07
Scottsdale Wtr. & Swr. Rev. Aa1 150,000 166,559
(1989 Proj.) Series E, 7%
7/1/07
Tempe Union High School
District #213:
(1994 Proj.):
Series B, 7% 7/1/03 (FGIC Aaa 400,000 425,972
Insured)
Series C, 4% 7/1/12 (MBIA Aaa 200,000 172,648
Insured)
Rfdg. & Impt. 7% 7/1/08 (FGIC Aaa 310,000 345,135
Insured)
Tucson Gen. Oblig. Rfdg. Aaa 200,000 211,782
6.75% 7/1/03 (FGIC Insured)
Tucson Street & Hwy. User Rev.:
Rfdg. Sr. Lien, 6% 7/1/10 Aaa 400,000 422,496
(MBIA Insured)
Sr. Lien Series A, 7% 7/1/11 Aaa 300,000 341,790
(MBIA Insured)
Tucson Wtr. Rev. Series 1994 Aaa 200,000 218,804
C, 6.75% 7/1/07 (FGIC
Insured)
Univ. of Arizona Ctfs. of Aaa 500,000 482,840
Prtn. (Univ. of Arizona
Packing & Hsg. Proj.) 5.75%
6/1/24 (AMBAC Insured)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
ARIZONA - CONTINUED
Univ. of Arizona Univ. Rev.
Rfdg.:
5.25% 6/1/13 (FSA Insured) Aaa $ 500,000 $ 479,505
6.375% 6/1/05 A1 400,000 419,624
Yuma County Hosp. District A 265,000 267,430
#001 6.35% 11/15/07
(Escrowed to Maturity) (e)
23,887,936
PUERTO RICO - 9.0%
Puerto Rico Commonwealth Hwy.
& Trans. Auth. Hwy. Rev.:
Rfdg. Series W, 5.5% 7/1/17 Baa1 100,000 95,876
Series Y, 5.5% 7/1/36 Baa1 500,000 455,015
Puerto Rico Commonwealth Hwy. Aaa 500,000 419,460
& Trans. Auth. Trans. Rev.
Series A, 5% 7/1/38 (MBIA
Insured)
Puerto Rico Elec. Pwr. Auth. Aaa 1,000,000 859,600
Pwr. Rev. 5% 7/1/28 (MBIA
Insured)
Puerto Rico Pub. Bldgs Auth. Aaa 750,000 646,155
Rev. Series B, 5% 7/1/27
(AMBAC Insured)
2,476,106
TOTAL MUNICIPAL BONDS 26,364,042
(Cost $26,962,888)
</TABLE>
CASH EQUIVALENTS - 5.0%
SHARES
Municipal Central Cash Fund, 1,367,394 1,367,394
3.87% (b)(c) (Cost
$1,367,394)
TOTAL INVESTMENT PORTFOLIO - 27,731,436
100.4% (Cost $28,330,282)
NET OTHER ASSETS - (0.4)% (100,213)
NET ASSETS - 100% $ 27,631,223
LEGEND
(a) S&P credit ratings are used in the absence of a rating by Moody's
Investors Service, Inc.
(b) Information in this report regarding holdings by state and
security types does not reflect the holdings of the Municipal Central
Cash Fund. A listing of the Municipal Central Cash Fund's holdings as
of its most recent fiscal period end is available upon request.
(c) The rate quoted is the annualized seven-day yield of the fund at
period end.
(d) Private activity obligations whose interest is subject to the
federal alternative minimum tax for individuals.
(e) Security collateralized by an amount sufficient to pay interest
and principal.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total
value of investments in securities, is as follows (ratings are
unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 85.3% AAA, AA, A 84.4%
Baa 5.4% BBB 3.3%
Ba 0.0% BB 0.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The distribution of municipal securities by revenue source, as a
percentage of net assets, is as follows:
General Obligations 29.9%
Special Tax 17.3
Health Care 11.6
Education 10.4
Electric Utilities 9.7
Water & Sewer 6.6
Transportation 5.0
Other * 9.5
100.0%
* Includes short-term investments and net other assets.
INCOME TAX INFORMATION
At February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $28,330,282. Net unrealized depreciation
aggregated $598,846, of which $209,995 related to appreciated
investment securities and $808,841 related to depreciated investment
securities.
SPARTAN ARIZONA MUNICIPAL INCOME FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000 (UNAUDITED)
ASSETS
Investment in securities, at $ 27,731,436
value (cost $28,330,282) -
See accompanying schedule
Cash 44,112
Receivable for fund shares 5,178
sold
Interest receivable 295,823
TOTAL ASSETS 28,076,549
LIABILITIES
Payable for investments $ 201,187
purchased
Payable for fund shares 205,318
redeemed
Distributions payable 27,050
Accrued management fee 11,723
Other payables and accrued 48
expenses
TOTAL LIABILITIES 445,326
NET ASSETS $ 27,631,223
Net Assets consist of:
Paid in capital $ 28,435,297
Undistributed net interest 4,188
income
Accumulated undistributed net (209,416)
realized gain (loss) on
investments
Net unrealized appreciation (598,846)
(depreciation) on investments
NET ASSETS, for 2,691,983 $ 27,631,223
shares outstanding
NET ASSET VALUE, offering $10.26
price and redemption price
per share ($27,631,223
(divided by) 2,691,983
shares)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED FEBRUARY
29, 2000 (UNAUDITED)
INTEREST INCOME $ 727,060
EXPENSES
Management fee $ 77,283
Non-interested trustees' 42
compensation
Total expenses before 77,325
reductions
Expense reductions (1,699) 75,626
NET INTEREST INCOME 651,434
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (87,785)
Futures contracts 3,245 (84,540)
Change in net unrealized (631,439)
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) (715,979)
NET INCREASE (DECREASE) IN $ (64,545)
NET ASSETS RESULTING FROM
OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED FEBRUARY 29, YEAR ENDED AUGUST 31,
2000 1999
(UNAUDITED)
INCREASE (DECREASE) IN NET
ASSETS
Operations Net interest income $ 651,434 $ 1,155,047
Net realized gain (loss) (84,540) (55,209)
Change in net unrealized (631,439) (1,075,095)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (64,545) 24,743
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (650,459) (1,155,047)
From net interest income
From net realized gain - (36,964)
In excess of net realized (10,717) (54,789)
gain
TOTAL DISTRIBUTIONS (661,176) (1,246,800)
Share transactions Net 4,638,092 10,812,895
proceeds from sales of shares
Reinvestment of distributions 486,723 942,439
Cost of shares redeemed (6,413,464) (5,501,589)
NET INCREASE (DECREASE) IN (1,288,649) 6,253,745
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 3,273 4,734
TOTAL INCREASE (DECREASE) (2,011,097) 5,036,422
IN NET ASSETS
NET ASSETS
Beginning of period 29,642,320 24,605,898
End of period (including $ 27,631,223 $ 29,642,320
undistributed net interest
income of $4,188 and $0,
respectively)
OTHER INFORMATION
Shares
Sold 449,739 994,437
Issued in reinvestment of 47,055 86,645
distributions
Redeemed (619,307) (507,000)
Net increase (decrease) (122,513) 574,082
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS SIX MONTHS ENDED FEBRUARY 29, YEARS ENDED AUGUST 31,
2000
(UNAUDITED) 1999 1998 1997 1996 1995 F
SELECTED PER-SHARE DATA
Net asset value,
beginning of $ 10.530 $ 10.980 $ 10.740 $ 10.460 $ 10.640 $ 10.000
period
Income from Investment .239 G .458 .473 .483 .514 .504
Operations Net interest
income
Net realized and unrealized (.268) (.412) .279 .351 (.022) .637
gain (loss)
Total from investment (.029) .046 .752 .834 .492 1.141
operations
Less Distributions
From net interest income (.238) (.458) (.473) (.484) (.514) (.504)
From net realized gain - (.016) (.040) (.070) (.160) -
In excess of net realized
gain (.004) (.024) - - - -
Total distributions (.242) (.498) (.513) (.554) (.674) (.504)
Redemption fees added to
paid .001 .002 .001 .000 .002 .003
in capital
Net asset value, end of
period $ 10.260 $ 10.530 $ 10.980 $ 10.740 $ 10.460 $ 10.640
TOTAL RETURN B, C (0.26)% 0.38% 7.16% 8.16% 4.72% 11.74%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 27,631 $ 29,642 $ 24,606 $ 19,766 $ 20,388 $ 13,448
(000 omitted)
Ratio of expenses to average .55% A .55% .55% .55% .30% D .06% A, D
net assets
Ratio of expenses to average .54% A, E .54% E .54% E .53% E .30% .06% A
net assets after expense
reductions
Ratio of net interest income 4.63% A 4.21% 4.35% 4.55% 4.82% 5.54% A
to average net assets
Portfolio turnover rate 41% A 12% 25% 27% 32% 56% A
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
F FOR THE PERIOD OCTOBER 11, 1994 (COMMENCEMENT OF OPERATIONS) TO
AUGUST 31, 1995.
G NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL
STATEMENTS.
SPARTAN ARIZONA MUNICIPAL MONEY MARKET FUND
PERFORMANCE: THE BOTTOM LINE
To evaluate a money market fund's historical performance, you can look
at either total return or yield. Total return reflects the change in
the value of an investment, assuming reinvestment of the fund's
dividend income, but does not include the effect of the fund's $5
account closeout fee on an average-sized account. Yield measures the
income paid by a fund. Since a money market fund tries to maintain a
$1 share price, yield is an important measure of performance. If
Fidelity had not reimbursed certain fund expenses, the past five year
and life of fund total returns would have been lower.
CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
PERIODS ENDED PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
SPARTAN AZ MUNICIPAL MONEY 1.58% 3.01% 17.94% 19.60%
MARKET
All Tax-Free Money Market 1.48% 2.82% 16.12% n/a
Funds Average
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or since the fund started on October 11, 1994. For example, if
you had invested $1,000 in a fund that had a 5% return over the past
year, the value of your investment would be $1,050. To measure how the
fund's performance stacked up against its peers, you can compare it to
the all tax-free money market funds average, which reflects the
performance of all tax-free money market funds with similar objectives
tracked by IBC Financial Data, Inc. The past six month average
represents a peer group of 463 money market funds.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
SPARTAN AZ MUNICIPAL MONEY 3.01% 3.36% 3.37%
MARKET
All Tax-Free Money Market 2.82% 3.03% n/a
Funds Average
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and
show you what would have happened if the fund had performed at a
constant rate each year.
YIELDS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2/28/00 11/29/99 8/30/99 5/31/99 3/1/99
Spartan Arizona Municipal 3.32% 3.27% 2.86% 2.85% 2.60%
Money Market
All Tax-Free Money Market 3.12% 3.16% 2.66% 2.70% 2.42%
Funds Average
Spartan Arizona Municipal 5.48% 5.38% 4.71% 4.69% 4.27%
Money Market - Tax-equivalent
Portion of fund's income 1.17% 5.67% 0.04% 1.14% 3.80%
subject to state taxes
</TABLE>
Row: 1, Col: 1, Value: 3.32
Row: 1, Col: 2, Value: 3.12
Row: 2, Col: 1, Value: 3.27
Row: 2, Col: 2, Value: 3.16
Row: 3, Col: 1, Value: 2.86
Row: 3, Col: 2, Value: 2.66
Row: 4, Col: 1, Value: 2.85
Row: 4, Col: 2, Value: 2.7
Row: 5, Col: 1, Value: 2.6
Row: 5, Col: 2, Value: 2.42
Spartan Arizona
Municipal Money
Market
All Tax-Free
Money Market
Funds Average
5% -
4% -
3% -
2% -
1% -
0%
YIELD refers to the income paid by the fund over a given period.
Yields for money market funds are usually for seven-day periods,
expressed as annual percentage rates. A yield that assumes income
earned is reinvested or compounded is called an effective yield. The
table above shows the fund's current seven-day yield at quarterly
intervals over the past year. You can compare these yields to the all
tax-free money market funds average tracked by IBC Financial Data,
Inc. Or you can look at the fund's tax-equivalent yield, which is
based on a combined effective 2000 federal and state income tax rate
of 39.23%. The fund's yields mentioned above reflect that a portion of
the fund's income was subject to state taxes. A portion of the fund's
income may be subject to the federal alternative minimum tax.
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS WILL VARY, AND REFLECT
PAST RESULTS RATHER THAN PREDICT FUTURE PERFORMANCE.
COMPARING
PERFORMANCE
Yields on tax-free investments
are usually lower than yields
on taxable investments.
However, a straight
comparison between the two
may be misleading because it
ignores the way taxes reduce
taxable returns. Tax-equivalent
yield - the yield you'd have to
earn on a similar taxable
investment to match the tax-free
yield - makes the comparison
more meaningful. Keep in
mind that the U.S. government
neither insures nor guarantees
a money market fund. In fact,
there is no assurance that a
money fund will maintain a $1
share price.
(checkmark)
SPARTAN ARIZONA MUNICIPAL MONEY MARKET FUND
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Scott Orr
An interview with Scott Orr, Portfolio Manager of Spartan Arizona
Municipal Money Market Fund
Q. SCOTT, WHAT WAS THE INVESTMENT ENVIRONMENT LIKE DURING THE SIX
MONTHS THAT ENDED FEBRUARY 29, 2000?
A. Economic growth was solid and unemployment reached historically low
levels. Such a tight labor market often leads to inflation, as
employers are forced to raise salaries in order to attract or retain
workers, passing on the additional cost to the consumer. While market
observers were concerned that inflation would spike upward, no real
signs of higher prices emerged with the exception of recent increases
in the price of oil. The Federal Reserve Board indicated that
improvements in worker productivity helped keep inflation at bay.
Nevertheless, with constant, broad-based economic strength and
continually tight labor markets, the Fed felt compelled to continue a
program of increasing short-term interest rates in an attempt to slow
growth and head off inflation. After raising the rate banks charge
each other for overnight loans - known as the fed funds target rate -
in June and August 1999, the Fed continued to tap the brakes on the
economy by raising the fed funds rate two more times during the period
covered by this report. In November 1999 and February 2000, the Fed
raised the fed funds rate by 0.25 percentage points, to where it stood
at 5.75% at the end of the period.
Q. WHAT WAS THE FUND'S STRATEGY DURING THE PERIOD?
A. The fund's average maturity started the period at 62 days and
gradually rolled down to 35 days at the end of February. There were
two reasons for this decline. First, it is beneficial to maintain a
shorter average maturity in a rising interest-rate environment. A
shorter maturity enables the fund to invest in securities offering
higher yields as they emerge. Second, most municipalities in the
Arizona market issue fixed-rate debt that matures each year on July 1.
As we get closer to that date, the fund's average maturity tends to
fall. I also was particularly vigilant in my search for opportunities
to invest in longer-term, fixed-rate securities with maturities other
than July 1, to avoid having a significant amount of assets to
re-invest on that date. However, I only purchased those securities
when their yields incorporated my expectations of higher rates in the
future. In addition, I turned some of my focus - within the limits set
by the fund's prospectus - to out-of-state investment opportunities
that offered more appealing after-tax yields than tax-free
alternatives in the Arizona market. Even though more of shareholders'
income will be taxable at the state level this year because of the
out-of-state investments, I pursued this strategy so the fund could
provide higher yields on a tax-adjusted basis than if I had chosen to
invest the same assets in significantly lower-yielding, tax-exempt
Arizona securities.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on February 29, 2000, was 3.33%,
compared to 2.86% six months ago. The more recent seven-day yield was
the equivalent of a 5.48% taxable rate of return for Arizona investors
in the 39.23% combined state and federal income tax bracket. The
fund's yields reflect that a portion of the fund's income was subject
to state taxes. Through February 29, 2000, the fund's six-month total
return was 1.58%, compared to 1.48% for the all tax-free money market
funds average, according to IBC Financial Data, Inc.
Q. WHAT'S YOUR OUTLOOK?
A. I expect the Fed to raise short-term interest rates at least once
more, if not two or three more times, in the coming months. I believe
the Fed will continue to take a gradual approach, making sure not to
upset the markets. At the same time, the Fed has been adamant that
rates must move higher because it feels that the current rate of
economic growth is not sustainable without resulting in some
inflation. Even if it looks as if inflationary pressures are not
building, I believe the Fed will push rates higher until it sees signs
that the economy is slowing somewhat, something that hasn't happened
thus far after several Fed rate hikes. If inflation does pick up, I
think the Fed will become even more aggressive with its interest-rate
policy.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
FUND FACTS
GOAL: seeks a high level
of current income, exempt
from federal income tax and
Arizona personal income
tax
FUND NUMBER: 433
TRADING SYMBOL: FSAXX
START DATE: October 11, 1994
SIZE: as of February 29,
2000, more than $96 million
MANAGER: Scott Orr, since
1997; manager, various Fidelity
and Spartan municipal money
market funds; joined Fidelity
in 1989
(checkmark)
SPARTAN ARIZONA MUNICIPAL MONEY MARKET FUND
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C> <C>
MATURITY DIVERSIFICATION
DAYS % OF FUND'S INVESTMENTS 2/29/00 % OF FUND'S INVESTMENTS 8/31/99 % OF FUND'S INVESTMENTS 2/28/99
0 - 30 70.7 56.5 71.7
31 - 90 11.0 14.3 12.6
91 - 180 16.3 20.7 15.7
181 - 397 2.0 8.5 0.0
WEIGHTED AVERAGE MATURITY
2/29/00 8/31/99 2/28/99
Spartan Arizona Municipal 35 DAYS 62 Days 29 Days
Money Market Fund
All Tax-Free Money Market 39 DAYS 51 Days 42 Days
Funds Average *
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ASSET ALLOCATION (% OF FUND'S
NET ASSETS)
AS OF FEBRUARY 29, 2000 AS OF AUGUST 31, 1999
Variable Rate Demand Notes Variable Rate Demand Notes
(VRDNs) 52.2% (VRDNs) 52.4%
Commercial Paper (including Commercial Paper (including
CP Mode) 29.3% CP Mode) 25.4%
Tender Bonds 1.0% Tender Bonds 0.0%
Municipal Notes 3.1% Municipal Notes 3.3%
Other Investments and Net Other Investments and Net
Other Assets 14.4% Other Assets 18.9%
</TABLE>
Row: 1, Col: 1, Value: 52.2
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 29.3
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 1.0
Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 3.1
Row: 1, Col: 8, Value: 14.4
Row: 1, Col: 1, Value: 52.4
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 25.4
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 0.0
Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 3.3
Row: 1, Col: 8, Value: 18.9
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
SPARTAN ARIZONA MUNICIPAL MONEY MARKET FUND
INVESTMENTS FEBRUARY 29, 2000 (UNAUDITED)
Showing Percentage of Net Assets
MUNICIPAL SECURITIES - 101.6%
PRINCIPAL AMOUNT VALUE (NOTE 1)
ARIZONA - 100.1%
Apache County Ind. Dev. Auth. $ 1,800,000 $ 1,800,000
(Imperial Components, Inc.
Proj.) Series 1996, 4.05%,
LOC Harris Trust & Savings
Bank, Chicago, VRDN (a)(d)
Arizona Edl. Ln. Marketing 4,000,000 4,000,000
Corp. Series 1991 A 3.9%,
LOC Dresdner Bank AG, VRDN
(a)(d)
Arizona Health Facilities 1,000,000 1,000,000
Auth. Rev. (Blood Sys., Inc.
Proj.) Series 1995, 3.9%,
LOC Bank One, Arizona NA,
VRDN (a)
Arizona School District Fing. 3,000,000 3,005,664
Prog. Ctfs. of Prtn. TAN
Series 1999 A, 4.05% 7/31/00
(AMBAC Insured) Maricopia
County Unified School
District #69
Arizona Trans. Board Excise
Tax Rev.:
Bonds (Maricopa County Reg'l. 4,455,000 4,464,723
Area Road Proj.) Series A,
4.5% 7/1/00
Rfdg. Bonds (Maricopa County 3,000,000 3,015,619
Reg'l. Area Road Proj.)
Series A, 5.5% 7/1/00 (AMBAC
Insured)
Chandler Ind. Dev. Auth. 2,775,000 2,775,000
Multi-family Hsg. Rev. Rfdg.
(South Park Apts. Proj.)
Series 1989, 3.95%, LOC
Citibank, New York NA, VRDN
(a)
Chandler Indl. Dev. Auth. 1,625,000 1,625,000
Indl. Dev. Rev. (Red Rock
Stamping Co. Proj.) Series
2000, 4.1%, LOC Key Bank NA,
VRDN (a)(d)
Cochise County Poll. Cont. 1,000,000 1,000,000
Rev. Solid Waste Disp. Rev.
Bonds (Arizona Elec. Pwr.
Coop. Proj.) 4.1%, tender
9/1/00 (Nat'l. Rural Util.
Coop. Fin. Corp. Guaranteed)
(d)
Flagstaff Indl. Dev. Auth. 2,500,000 2,500,000
(Norton Envir., Inc. Proj.)
Series 1997, 4.1%, LOC Key
Bank NA, VRDN (a)(d)
Flagstaff Indl. Dev. Auth. 2,100,000 2,100,000
Indl. Dev. Rev. Bonds
(Citizens Utils. Co. Proj.)
3.7% tender 3/8/00, CP mode
(d)
Glendale Indl. Dev. Auth. 1,500,000 1,500,000
Rev. (Superior Bedding Co.
Proj.) Series 1994, 4.05%,
LOC Harris Trust & Savings
Bank, Chicago, VRDN (a)(d)
Maricopa County Ind. Dev.
Auth. Ind. Dev. Rev.:
Bonds (Citizens Utils. Co. 1,000,000 1,000,000
Proj.) Series 1988, 3.85%
tender 3/16/00, CP mode (d)
(Clayton Homes Proj.) Series 1,000,000 1,000,000
1998, 4.05%, LOC Wachovia
Bank NA, VRDN (a)(d)
Maricopa County Poll. Cont.
Rev.:
Bonds (Southern California
Edison Co. Proj.):
Series 1985 D:
3.5% tender 3/13/00, CP mode 1,000,000 1,000,000
3.6% tender 4/10/00, CP mode 1,000,000 1,000,000
Series 1985 E:
3.5% tender 3/13/00, CP mode 3,900,000 3,900,000
3.6% tender 4/10/00, CP mode 2,200,000 2,200,000
MUNICIPAL SECURITIES -
CONTINUED
PRINCIPAL AMOUNT VALUE (NOTE 1)
ARIZONA - CONTINUED
Maricopa County Poll. Cont.
Rev.: - continued
Bonds (Southern California
Edison Co. Proj.):
Series 1985 F, 3.65% tender $ 1,000,000 $ 1,000,000
4/12/00, CP mode
(Arizona Pub. Svc. Co. Palo 1,600,000 1,600,000
Verde Proj.) Series 1994 B,
3.8%, LOC Morgan Guaranty
Trust Co., NY, VRDN (a)
(Arizona Pub. Svc. Co. Proj.) 1,800,000 1,800,000
Series 1994 E, 3.8%, LOC
Bank of America NA, VRDN (a)
Maricopa County Unified 1,000,000 1,009,435
School District #48 Bonds
(Scottsdale Proj.) Series C,
6.6% 7/1/00
Maricopa County Union High 2,000,000 2,004,300
School District #210 Phoenix
Rfdg. Bonds 4.8% 7/1/00
Mesa Ind. Dev. Auth. Rev. 1,000,000 1,000,000
(Discovery Health Sys.
Proj.) Series B, 3.9% (MBIA
Insured), VRDN (a)
Mesa Muni. Dev. Corp. Bonds:
Series 1985:
3.6% tender 4/5/00, LOC 1,000,000 1,000,000
Westdeutsche Landesbank
Girozentrale, CP mode
3.75% tender 3/1/00, LOC 2,500,000 2,500,000
Westdeutsche Landesbank
Girozentrale, CP mode
Series 1996 A&B:
3.6% tender 3/27/00, LOC 1,900,000 1,900,000
Westdeutsche Landesbank
Girozentrale, CP mode
3.8% tender 4/17/00, LOC 2,600,000 2,600,000
Westdeutsche Landesbank
Girozentrale, CP mode
Mohave County Ind. Dev. Auth.
Ind. Dev. Rev. Bonds
(Citizens Utils. Co. Proj.):
Series 1988 B, 3.9% tender 1,000,000 1,000,000
4/14/00, CP mode (d)
Series 1993 E:
3.65% tender 4/7/00, CP mode 1,000,000 1,000,000
(d)
3.7% tender 3/8/00, CP mode 900,000 900,000
(d)
Phoenix Civic Impt. Board 1,920,000 1,920,000
Arpt. Rev. Participating
VRDN Sr. Lien Series PA 405,
4.01% (Liquidity Facility
Merrill Lynch & Co., Inc.)
(a)(e)
Phoenix Gen. Oblig. Rfdg.:
Bonds Series 1993 A, 4.7% 2,500,000 2,505,470
7/1/00
Participating VRDN Series PA 2,430,000 2,430,000
236, 4.01% (Liquidity
Facility Merrill Lynch &
Co., Inc.) (a)(e)
Phoenix Ind. Dev. Auth. 985,000 985,000
Participating VRDN Series PT
1082, 4.04% (Liquidity
Facility Merrill Lynch &
Co., Inc.) (a)(e)
Phoenix Ind. Dev. Auth. 1,000,000 1,000,000
Multi-family Hsg. Rev. (Bell
Square Apt. Proj.) Series
1995, 4%, LOC Gen. Elec.
Cap. Corp., VRDN (a)
MUNICIPAL SECURITIES -
CONTINUED
PRINCIPAL AMOUNT VALUE (NOTE 1)
ARIZONA - CONTINUED
Phoenix Ind. Dev. Auth. Rev.:
(Marlyn Nutraceuticals Proj.) $ 1,000,000 $ 1,000,000
4%, LOC Bank One, Arizona
NA, VRDN (a)(d)
(Plastican Proj.) Series 4,000,000 4,000,000
1997, 4.05%, LOC Fleet Bank
NA, VRDN (a)(d)
Rfdg. (V.A.W. of America 1,000,000 1,000,000
Proj.) Series 1997, 4.05%,
LOC Bank of America NA, VRDN
(a)(d)
Pima County Ind. Dev. Auth. 2,925,000 2,925,000
Multi-family Hsg. Rev. (La
Cholla Apt. Proj.) Series
1996, 3.9%, LOC Chase Bank
of Texas NA, VRDN (a)
Pima County Ind. Dev. Auth. 2,000,000 2,000,000
Single Family Hsg. Rev.
Participating VRDN Series
A1, 4.06% (Liquidity
Facility Bank of New York
NA) (a)(d)(e)
Pima County Indl. Dev. Auth. 1,000,000 1,000,000
Single Family Mtg. Rev.
Bonds 4.1% 9/1/00 (d)
Pinal County Ind. Dev. Auth. 4,805,000 4,805,001
Hosp. Rev. (Casa Grande Med.
Ctr. Proj.) Series 1995,
3.95%, LOC Chase Manhattan
Bank, VRDN (a)
Salt River Proj. Agric. Impt.
& Pwr. District Elec. Sys.
Rev.:
Participating VRDN Series 2,495,000 2,495,000
MSDW 00 208, 3.94%
(Liquidity Facility Morgan
Stanley Dean Witter & Co.)
(a)(e)
Series 1997 A, 3.65% 4/11/00, 1,000,000 1,000,000
CP
Series B, 3.45% 3/10/00, CP 1,000,000 1,000,000
Tucson Arpt. Auth. Spl. 1,300,000 1,300,000
Facility Rev. (LearJet, Inc.
Proj.) Series 1998 A,
4.05%, LOC Bank of America
NA, VRDN (a)(d)
Yavapai County Ind. Dev.
Auth. Ind. Dev. Rev.:
Bonds (Citizens Utils. Co.
Proj.):
Series 1993:
3.6% tender 3/6/00, CP mode 1,000,000 1,000,000
(d)
3.6% tender 3/8/00, CP mode 1,000,000 1,000,000
(d)
Series 1997, 3.65% tender 1,500,000 1,500,000
3/7/00, CP mode (d)
(Oxycal Lab. Proj.) Series 1,000,000 1,000,000
1999 A, 4%, LOC Bank One,
Arizona NA, VRDN (a)
Yuma County Ind. Dev. Auth. 3,000,000 3,000,000
Rev. (Meadowcraft, Inc.
Proj.) Series 1997, 4.05%,
LOC Bank of America NA,
VRDN (a)(d)
97,065,212
MUNICIPAL SECURITIES -
CONTINUED
SHARES VALUE (NOTE 1)
OTHER - 1.5%
Municipal Central Cash Fund, 1,425,990 $ 1,425,990
3.87% (b)(c)
TOTAL INVESTMENT PORTFOLIO - 98,491,202
101.6%
NET OTHER ASSETS - (1.6)% (1,510,071)
NET ASSETS - 100% $ 96,981,131
Total Cost for Income Tax Purposes $ 98,491,202
SECURITY TYPE ABBREVIATIONS
CP - COMMERCIAL PAPER
TAN - TAX ANTICIPATION NOTE
VRDN - VARIABLE RATE DEMAND NOTE
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) Information in this report regarding holdings by state and
security types does not reflect the holdings of the Municipal Central
Cash Fund. A listing of the Municipal Central Cash Fund's holdings as
of its most recent fiscal period end is available upon request.
(c) The rate quoted is the annualized seven-day yield of the fund at
period end.
(d) Private activity obligations whose interest is subject to the
federal alternative minimum tax for individuals.
(e) Provides evidence of ownership in one or more underlying municipal
bonds.
SPARTAN ARIZONA MUNICIPAL MONEY MARKET FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000 (UNAUDITED)
ASSETS
Investment in securities, at $ 98,491,202
value - See accompanying
schedule
Receivable for fund shares 202,566
sold
Interest receivable 546,683
TOTAL ASSETS 99,240,451
LIABILITIES
Payable for investments $ 2,009,860
purchased
Payable for fund shares 198,404
redeemed
Distributions payable 13,150
Accrued management fee 37,813
Other payables and accrued 93
expenses
TOTAL LIABILITIES 2,259,320
NET ASSETS $ 96,981,131
Net Assets consist of:
Paid in capital $ 97,020,027
Accumulated net realized gain (38,896)
(loss) on investments
NET ASSETS, for 96,993,245 $ 96,981,131
shares outstanding
NET ASSET VALUE, offering $1.00
price and redemption price
per share ($96,981,131
(divided by) 96,993,245
shares)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED FEBRUARY
29, 2000 (UNAUDITED)
INTEREST INCOME $ 1,727,971
EXPENSES
Management fee $ 236,192
Non-interested trustees' 137
compensation
Total expenses before 236,329
reductions
Expense reductions (694) 235,635
NET INTEREST INCOME 1,492,336
NET REALIZED GAIN (LOSS) ON (15,142)
INVESTMENTS
NET INCREASE IN NET ASSETS $ 1,477,194
RESULTING FROM OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED FEBRUARY 29, YEAR ENDED AUGUST 31, 1999
2000 (UNAUDITED)
INCREASE (DECREASE) IN NET
ASSETS
Operations Net interest income $ 1,492,336 $ 2,580,497
Net realized gain (loss) (15,142) (23,612)
NET INCREASE (DECREASE) IN 1,477,194 2,556,885
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (1,492,336) (2,580,497)
from net interest income
Share transactions at net 43,050,464 93,042,199
asset value of $1.00 per
share Proceeds from sales of
shares
Reinvestment of 1,401,685 2,439,841
distributions from net
interest income
Cost of shares redeemed (38,112,964) (99,324,559)
NET INCREASE (DECREASE) IN 6,339,185 (3,842,519)
NET ASSETS AND SHARES
RESULTING FROM SHARE
TRANSACTIONS
TOTAL INCREASE (DECREASE) 6,324,043 (3,866,131)
IN NET ASSETS
NET ASSETS
Beginning of period 90,657,088 94,523,219
End of period $ 96,981,131 $ 90,657,088
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS ENDED FEBRUARY 29, YEARS ENDED AUGUST 31,
2000
(UNAUDITED) 1999 1998 1997 1996 1995 E
SELECTED PER-SHARE DATA
Net asset value, beginning
of $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
period
Income from Investment .016 .028 .034 .033 .035 .034
Operations Net interest
income
Less Distributions
From net interest income (.016) (.028) (.034) (.033) (.035) (.034)
Net asset value, end of $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
period
TOTAL RETURN B, C 1.58% 2.84% 3.41% 3.39% 3.52% 3.43%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 96,981 $ 90,657 $ 94,523 $ 88,134 $ 82,741 $ 52,566
(000 omitted)
Ratio of expenses to average .50% A .50% .36% D .35% D .22% D .06% A, D
net assets
Ratio of net interest income 3.16% A 2.79% 3.36% 3.34% 3.44% 3.91% A
to average net assets
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E FOR THE PERIOD OCTOBER 11, 1994 (COMMENCEMENT OF OPERATIONS) TO
AUGUST 31, 1995.
NOTES TO FINANCIAL STATEMENTS
For the period ended February 29, 2000 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Spartan Arizona Municipal Income Fund (the income fund) is a fund of
Fidelity Union Street Trust. Spartan Arizona Municipal Money Market
Fund (the money market fund) is a fund of Fidelity Union Street Trust
II. Each trust is registered under the Investment Company Act of 1940,
as amended (the 1940 Act), as an open-end management investment
company. Fidelity Union Street Trust and Fidelity Union Street Trust
II (the trusts) are organized as a Massachusetts business trust and a
Delaware business trust, respectively. Each fund is authorized to
issue an unlimited number of shares. The financial statements have
been prepared in conformity with generally accepted accounting
principles which require management to make certain estimates and
assumptions at the date of the financial statements. Each fund may be
affected by economic and political developments in the state of
Arizona. The following summarizes the significant accounting policies
of the income fund and the money market fund:
SECURITY VALUATION.
INCOME FUND. Securities are valued based upon a computerized matrix
system and/or appraisals by a pricing service, both of which consider
market transactions and dealer-supplied valuations. Securities for
which quotations are not readily available are valued at their fair
value as determined in good faith under consistently applied
procedures under the general supervision of the Board of Trustees.
Short-term securities with remaining maturities of sixty days or less
for which quotations are not readily available are valued at amortized
cost or original cost plus accrued interest, both of which approximate
current value.
MONEY MARKET FUND. As permitted under Rule 2a-7 of the 1940 Act, and
certain conditions therein, securities are valued initially at cost
and thereafter assume a constant amortization to maturity of any
discount or premium.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, each fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for the fiscal year. The income fund's 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. For the money market fund, accretion of discount represents
unrealized gain until realized at the time of a security disposition
or maturity.
EXPENSES. Most expenses of each trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid
monthly from net interest income. Distributions to shareholders from
realized capital gains on investments, if any, are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance
with income tax
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS -
CONTINUED
regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for
futures transactions, market discount and losses deferred due to
futures and excise tax regulations.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net interest income and accumulated undistributed net
realized gain (loss) on investments may include temporary book and tax
basis differences that will reverse in a subsequent period. Any
taxable income or gain remaining at fiscal year end is distributed in
the following year.
SHORT-TERM TRADING (REDEMPTION) FEES. Shares held in the income fund
less than 180 days are subject to a short-term trading fee equal to
.50% of the proceeds of the redeemed shares. The fee, which is
retained by the fund, is accounted for as an addition to paid in
capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
MUNICIPAL CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the Securities and Exchange Commission (the SEC), the funds may invest
in the Municipal Central Cash Fund (the Cash Fund) managed by Fidelity
Investments Money Management, Inc. (FIMM), an affiliate of Fidelity
Management & Research Company (FMR). The Cash Fund is an open-end
money market fund available only to investment companies and other
accounts managed by FMR and its affiliates. The Cash Fund seeks
preservation of capital, liquidity, and current income by investing in
high-quality, short-term municipal securities of various states and
municipalities. Income distributions from the Cash Fund are declared
daily and paid monthly from net interest income. Income distributions
earned by the funds are recorded as interest income in the
accompanying financial statements.
DELAYED DELIVERY TRANSACTIONS. Each fund may purchase or sell
securities on a delayed delivery basis. Payment and delivery may take
place after the customary settlement period for that security. The
price of the underlying securities and the date when the securities
will be delivered and paid for are fixed at the time the transaction
is negotiated. Each fund may receive compensation for interest forgone
in the purchase of a delayed delivery security. With respect to
purchase commitments, each fund identifies securities as segregated in
its records with a value at least equal to the amount of the
commitment. Losses may arise due to changes in the value of the
underlying securities or if the counterparty does not perform under
the contract.
FUTURES CONTRACTS. The income fund may use futures contracts to manage
its exposure to the bond market and to fluctuations in interest rates.
Buying futures tends to
2. OPERATING POLICIES -
CONTINUED
FUTURES CONTRACTS - CONTINUED
increase the fund's exposure to the underlying instrument, while
selling futures tends to decrease the fund's exposure to the
underlying instrument or hedge other fund investments. Losses may
arise from changes in the value of the underlying instruments or if
the counterparties do not perform under the contracts' terms. Gains
(losses) are realized upon the expiration or closing of the futures
contracts. Futures contracts are valued at the settlement price
established each day by the board of trade or exchange on which they
are traded.
3. PURCHASES AND SALES OF INVESTMENTS.
INCOME FUND. Purchases and sales of securities, other than short-term
securities, aggregated $5,691,530 and $7,734,877, respectively.
The market value of futures contracts opened and closed during the
period amounted to $333,357 and $330,112, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, FMR receives a fee
that is computed daily at an annual rate of .55% and .50% of average
net assets for the income fund and the money market fund,
respectively. FMR pays all other expenses, except the compensation of
the non-interested Trustees and certain exceptions such as interest,
taxes, brokerage commissions and extraordinary expenses. The
management fee paid to FMR by each fund is reduced by an amount equal
to the fees and expenses paid by each fund to the non-interested
Trustees.
FMR also bears the cost of providing shareholder services to the money
market fund. To offset the cost of providing these services, FMR or
its affiliates collected certain transaction fees from shareholders
which amounted to $377 for the period.
SUB-ADVISER FEE. As each fund's investment sub-adviser, FIMM, a wholly
owned subsidiary of FMR, receives a fee from FMR of 50% of the
management fee payable to FMR. The fee is paid prior to any voluntary
expense reimbursements which may be in effect.
MONEY MARKET INSURANCE. Pursuant to an Exemptive Order issued by the
SEC, the money market fund, along with other money market funds
advised by FMR or its affiliates, have entered into insurance
agreements with FIDFUNDS Mutual Limited (FIDFUNDS), an affiliated
mutual insurance company. FIDFUNDS provides limited coverage for
certain loss events including issuer default as to payment of
principal or interest and bankruptcy or insolvency of a credit
enhancement provider. The insurance does not cover losses resulting
from changes in interest rates, ratings downgrades or other market
conditions. The fund may be subject to a special assessment of up to
approximately 2.5 times the fund's annual gross premium if covered
losses exceed certain levels. During the period, FMR has borne the
cost of the fund's premium payable to FIDFUNDS.
5. EXPENSE REDUCTIONS.
Through arrangements with the funds' custodian and transfer agent,
credits realized as a result of uninvested cash balances were used to
reduce a portion of each applicable fund's expenses. For the period
the credits reduced expenses by $1,699 and $694 for the income fund
and the money market fund, respectively, under these arrangements.
MANAGING YOUR INVESTMENTS
Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a
day.
BY PHONE
Fidelity Automated Service Telephone provides a single toll-free
number to access account balances, positions, quotes and trading. It's
easy to navigate the service, and on your first call, the system will
help you create a personal identification number (PIN) for security.
(PHONE_GRAPHIC)
FIDELITY AUTOMATED
SERVICE TELEPHONE (FAST SM)
1-800-544-5555
PRESS
1 For mutual fund and brokerage trading.
2 For quotes.*
3 For account balances and holdings.
4 To review orders and mutual fund activity.
5 To change your PIN.
*0 To speak to a Fidelity representative.
BY PC
Fidelity's web site on the Internet provides a wide range of
information, including daily financial news, fund performance,
interactive planning tools and news about Fidelity products and
services.
(COMPUTER_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call EarthLink Sprint at
1-800-288-2967, and be sure to ask for registration number SMD004 to
receive a special Fidelity package that includes 30 days of free
Internet access. EarthLink is North America's #1 independent Internet
access provider.
(COMPUTER_GRAPHIC)
FIDELITY ON-LINE XPRESS+(registered trademark)
Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools . . . all on your desktop. Call Fidelity
at 1-800-544-0240 or visit our web site for more information on how to
manage your investments via your PC.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD
AND RETURN WILL VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE
WILL ALSO VARY. THIS MEANS THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU
SELL YOUR SHARES. THERE IS NO ASSURANCE THAT MONEY MARKET FUNDS WILL
BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY
MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT. TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE,
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF ANY
SALES CHARGES.
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
815 East Birch Street
Brea, CA
851 East Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19200 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
8 Montgomery Street
San Francisco, CA
950 Northgate Drive
San Rafael, CA
1400 Civic Drive
Walnut Creek, CA
6300 Canoga Avenue
Woodland Hills, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
48 West Putnam Avenue
Greenwich, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
29 South Main Street
West Hartford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
90 Alhambra Plaza
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
1907 West State Road 434
Longwood, FL
8880 Tamiami Trail, North
Naples, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
1502 N. Westshore Blvd.
Tampa, FL
GEORGIA
3445 Peachtree Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
ILLINOIS
One North Franklin Street
Chicago, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
3232 Lake Avenue
Wilmette, IL
INDIANA
4729 East 82nd Street
Indianapolis, IN
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
7401 Wisconsin Avenue
Bethesda, MD
1 West Pennsylvania Ave.
Towson, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
155 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
29155 Northwestern Hwy.
Southfield, MI
MINNESOTA
7600 France Avenue South
Edina, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
150 Essex Street
Millburn, NJ
56 South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
NEW YORK
1055 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
1271 Avenue of the Americas
New York, NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
NORTH CAROLINA
4611 Sharon Road
Charlotte, NC
OHIO
600 Vine Street
Cincinnati, OH
28699 Chagrin Boulevard
Woodmere Village, OH
OREGON
16850 SW 72 Avenue
Tigard, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
6150 Poplar Road
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
4017 Northwest Parkway
Dallas, TX
1155 Dairy Ashford Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
19740 IH 45 North
Spring, TX
UTAH
215 South State Street
Salt Lake City, UT
VIRGINIA
1861 International Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
511 Pine Street
Seattle, WA
WASHINGTON, DC
1900 K Street, N.W.
Washington, DC
WISCONSIN
595 North Barker Road
Brookfield, WI
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
SUB-ADVISER
Fidelity Investments
Money Management, Inc.
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Fred L. Henning, Jr., Vice President
Boyce I. Greer, Vice President -
MONEY MARKET FUND
Scott A. Orr, Vice President -
MONEY MARKET FUND
Dwight D. Churchill, Vice President -
INCOME FUND
Christine J. Thompson, Vice President -
INCOME FUND
Stanley N. Griffith, Assistant Vice President
Eric D. Roiter, Secretary
Robert A. Dwight, Treasurer
Matthew N. Karstetter, Deputy Treasurer
Maria F. Dwyer, Deputy Treasurer
John H. Costello, Assistant Treasurer
Thomas J. Simpson, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
Donald J. Kirk *
Ned C. Lautenbach *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
* INDEPENDENT TRUSTEES
ADVISORY BOARD
Abigail P. Johnson -
MONEY MARKET FUND
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
Citibank, N.A.
New York, NY
and
Fidelity Service Company, Inc.
Boston, MA
CUSTODIAN
Citibank, N.A.
New York, NY
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-6666
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service SM
Telephone (FAST) 1-800-544-5555
AUTOMATED LINE FOR QUICKEST SERVICE
(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
(2_FIDELITY_LOGOS)
FIDELITY(REGISTERED TRADEMARK)
EXPORT AND MULTINATIONAL
FUND
SEMIANNUAL REPORT
FEBRUARY 29, 2000
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over
time.
FUND TALK 6 The managers' review of fund
performance, strategy and
outlook.
INVESTMENT CHANGES 9 A summary of the major shifts
in the fund's investments
over the past six months.
INVESTMENTS 10 A complete list of the fund's
investments with their
market values.
FINANCIAL STATEMENTS 16 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 20 Notes to the financial
statements.
Standard & Poor's, S&P and S&P 500 are registered service marks of The
McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity
Distributors Corporation.
Other third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
This report is printed on recycled paper using soy-based inks.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL INFORMATION OF THE SHAREHOLDERS OF THE FUND.
THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE
INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE
PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND
EXPENSES, CALL 1-800-544-6666 FOR A FREE PROSPECTUS. READ IT CAREFULLY
BEFORE YOU INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
In February, the Dow Jones Industrial Average closed below 10,000 for
the first time in 10 months - 16% below its high set in January. A
deeper drop was avoided by a rally late in the period. Meanwhile, the
technology-focused NASDAQ Index continued its record-setting ascent,
while the bellwether 30-year Treasury benefited slightly as a haven
from volatile blue chips and the U.S. Treasury's decision to reduce
long bond supply.
While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.
First, investors are encouraged to take a long-term view of their
portfolios. If you can afford to leave your money invested through the
inevitable up and down cycles of the financial markets, you will
greatly reduce your vulnerability to any single decline. We know from
experience, for example, that stock prices have gone up over longer
periods of time, have significantly outperformed other types of
investments and have stayed ahead of inflation.
Second, you can further manage your investing risk through
diversification. A stock mutual fund, for instance, is already
diversified, because it invests in many different companies. You can
increase your diversification further by investing in a number of
different stock funds, or in such other investment categories as
bonds. If you have a short investment time horizon, you might want to
consider moving some of your investment into a money market fund,
which seeks income and a stable share price by investing in
high-quality, short-term investments. Of course, it's important to
remember that an investment in a money market fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although money market funds seek to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in these types of funds.
Finally, no matter what your time horizon or portfolio diversity, it
makes good sense to follow a regular investment plan, investing a
certain amount of money in a fund at the same time each month or
quarter and periodically reviewing your overall portfolio. By doing
so, you won't get caught up in the excitement of a rapidly rising
market, nor will you buy all your shares at market highs. While this
strategy - known as dollar cost averaging - won't assure a profit or
protect you from a loss in a declining market, it should help you
lower the average cost of your purchases. Of course, you should
consider your financial ability to continue your purchases through
periods of low price levels before undertaking such a strategy.
If you have questions, please call us at 1-800-544-6666, or visit our
web site at www.fidelity.com. We are available 24 hours a day, seven
days a week to provide you the information you need to make the
investments that are right for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Total returns do not include the effect of the
3.00% sales load which was eliminated as of January 31, 2000.
CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PERIODS ENDED FEBRUARY 29, 2000 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
FIDELITY EXPORT AND 28.20% 40.02% 284.90% 304.16%
MULTINATIONAL
S&P 500 (registered trademark) 4.11% 11.73% 206.94% 232.89%
Growth Funds Average 21.94% 31.57% 206.57% n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, or since
the fund started on October 4, 1994. For example, if you had invested
$1,000 in a fund that had a 5% return over the past year, the value of
your investment would be $1,050. You can compare the fund's returns to
the performance of the Standard & Poor's 500 SM Index - a market
capitalization-weighted index of common stocks. To measure how the
fund's performance stacked up against its peers, you can compare it to
the growth funds average, which reflects the performance of mutual
funds with similar objectives tracked by Lipper Inc. The past six
months average represents a peer group of 1311 mutual funds. These
benchmarks include reinvested dividends and capital gains, if any, and
exclude the effect of sales charges. Lipper has created new comparison
categories that group funds according to portfolio characteristics and
capitalization, as well as by capitalization only. These averages are
listed on page 5 of this report.*
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 29, 2000 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
FIDELITY EXPORT AND 40.02% 30.94% 29.47%
MULTINATIONAL
S&P 500 11.73% 25.14% 24.90%
Growth Funds Average 31.57% 24.26% n/a
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and
show you what would have happened if the fund had performed at a
constant rate each year. (Note: Lipper calculates average annual total
returns by annualizing each fund's total return, then taking an
arithmetic average. This may produce a different figure than that
obtained by averaging the cumulative total returns and annualizing the
result.)
$10,000 OVER LIFE OF FUND
Export and Multinational S&P 500
00332 SP001
1994/10/04 10000.00 10000.00
1994/10/31 10570.00 10405.06
1994/11/30 10240.00 10026.11
1994/12/31 10250.34 10174.80
1995/01/31 10030.12 10438.63
1995/02/28 10500.60 10845.42
1995/03/31 10740.84 11165.47
1995/04/30 11281.38 11494.29
1995/05/31 11741.85 11953.72
1995/06/30 12973.09 12231.41
1995/07/31 13934.06 12637.00
1995/08/31 14234.36 12668.72
1995/09/30 14744.88 13203.34
1995/10/31 13488.61 13156.20
1995/11/30 13785.41 13733.76
1995/12/31 13552.69 13998.27
1996/01/31 13147.81 14474.77
1996/02/29 13510.07 14608.95
1996/03/31 13243.70 14749.64
1996/04/30 15172.19 14967.05
1996/05/31 16333.54 15353.05
1996/06/30 15257.43 15411.54
1996/07/31 14426.36 14730.66
1996/08/31 15822.12 15041.33
1996/09/30 17409.66 15887.86
1996/10/31 17457.35 16326.04
1996/11/30 18743.23 17560.13
1996/12/31 18790.02 17212.26
1997/01/31 19799.64 18287.68
1997/02/28 18632.97 18431.06
1997/03/31 17421.44 17673.73
1997/04/30 17701.88 18728.85
1997/05/31 19777.20 19869.06
1997/06/30 21168.22 20759.20
1997/07/31 22671.42 22411.01
1997/08/31 22458.28 21155.54
1997/09/30 24544.82 22314.23
1997/10/31 23588.45 21568.93
1997/11/30 23375.49 22567.36
1997/12/31 23241.51 22954.84
1998/01/31 23719.45 23208.72
1998/02/28 25030.37 24882.54
1998/03/31 26218.39 26156.77
1998/04/30 26054.53 26419.91
1998/05/31 25098.65 25965.75
1998/06/30 26860.20 27020.48
1998/07/31 26682.68 26732.71
1998/08/31 21930.59 22867.69
1998/09/30 23815.04 24332.60
1998/10/31 24500.33 26311.81
1998/11/30 25960.05 27906.57
1998/12/31 28450.15 29514.55
1999/01/31 29537.78 30748.85
1999/02/28 28865.17 29793.17
1999/03/31 30782.84 30985.20
1999/04/30 31827.53 32185.25
1999/05/31 30711.28 31425.36
1999/06/30 32471.53 33169.47
1999/07/31 31455.45 32133.92
1999/08/31 31527.00 31974.85
1999/09/30 31426.83 31098.42
1999/10/31 32979.56 33066.33
1999/11/30 34724.03 33738.57
1999/12/31 40343.04 35725.77
2000/01/31 37698.80 33930.91
2000/02/29 40416.49 33288.60
IMATRL PRASUN SHR__CHT 20000229 20000313 142632 R00000000000068
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Export and Multinational Fund on October 4, 1994,
when the fund started. As the chart shows, by February 29, 2000, the
value of the investment would have grown to $40,416 - a 304.16%
increase on the initial investment. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 would have
grown to $33,289 - a 232.89% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will
do tomorrow. The stock market,
for example, has a history of
long-term growth and short-term
volatility. In turn, the share
price and return of a fund that
invests in stocks will vary. That
means if you sell your shares
during a market downturn, you
might lose money. But if you
can ride out the market's ups
and downs, you may have a
gain.
(checkmark)
* THE LIPPER MULTI-CAP GROWTH FUNDS AVERAGE REFLECTS THE PERFORMANCE
(EXCLUDING SALES CHARGES) OF MUTUAL FUNDS WITH SIMILAR PORTFOLIO
CHARACTERISTICS AND CAPITALIZATION. THE LIPPER MULTI-CAP SUPERGROUP
AVERAGE REFLECTS THE PERFORMANCE (EXCLUDING SALES CHARGES) OF MUTUAL
FUNDS WITH SIMILAR CAPITALIZATION. AS OF FEBRUARY 29, 2000, THE SIX
MONTH, ONE YEAR, AND FIVE YEAR CUMULATIVE TOTAL RETURNS FOR THE
MULTI-CAP GROWTH FUNDS AVERAGE WERE 56.37%, 76.27%, AND 296.52%,
RESPECTIVELY. THE ONE YEAR AND FIVE YEAR AVERAGE ANNUAL TOTAL RETURNS
WERE 76.27% AND 30.81%, RESPECTIVELY. THE SIX MONTH, ONE YEAR, FIVE
YEAR CUMULATIVE TOTAL RETURNS FOR THE MULTI-CAP SUPERGROUP AVERAGE
WERE 19.14%, 30.19%, AND 179.21%, RESPECTIVELY. THE ONE YEAR AND FIVE
YEAR AVERAGE ANNUAL TOTAL RETURNS WERE 30.19% AND 21.48%,
RESPECTIVELY.
FUND TALK: THE MANAGERS' OVERVIEW
MARKET RECAP
When a business can grow from its
IPO to a multi-billion dollar
capitalization company in just one
day, it's no wonder that so many
stock market experts have
questioned their beliefs of late.
But such has been the power of the
technology sector - at least for the
six-month period ending February
29, 2000. The technology-heavy
NASDAQ Index, which has tripled
since October of 1998, returned a
stunning 71.65% during the past six
months. The broader market paled
in comparison. Blue chips,
particularly, took it on the chin:
Over the past six months the blue
chips' proxy - the Dow Jones
Industrial Average - fell 5.77%.
Meanwhile, the Standard & Poor's
500SM Index returned 4.11% - but
take away its 33% technology
weighting, which accounted for
approximately 180% of the S&P(registered trademark)'s
six-month return, and it paints a
much darker picture of the broader
market's performance. Has the new
economy changed the standards by
which valuations are measured?
Certainly, the idiom that "stock
prices follow a company's earnings"
did not necessarily hold true in the
technology sector. The industry even
laughed off the Federal Reserve
Board's interest-rate hikes - four
since June 30, 1999 - typically a
stake through the heart of growth
funds. The only certainty is that what
goes up must eventually come down.
But, then again . . .
(PHOTOGRAPHS OF Adam Hetnarski and Douglas Chase)
NOTE TO SHAREHOLDERS: The following is an interview with Adam
Hetnarski (left) who managed Fidelity Export and Multinational Fund
for most of the period covered by this report, with additional
comments from Douglas Chase (right) who became manager of the fund on
February 14, 2000.
Q. HOW DID THE FUND PERFORM, ADAM?
A.H. Very well. For the six months that ended February 29, 2000, the
fund returned 28.20%. This easily topped the Standard & Poor's 500
Index, which returned 4.11% during this time. The growth funds
average, as tracked by Lipper Inc., returned 21.94%. For the 12 months
that ended February 29, 2000, the fund returned 40.02%, while the S&P
500 and Lipper average returned 11.73% and 31.57%, respectively.
Q. TO WHAT DO YOU ATTRIBUTE THE FUND'S STRONG SHOWING?
A.H. The main factor was good security selection across key sectors.
Within technology, the fund benefited handsomely from several of its
investments in Internet infrastructure companies. The fund's
health-related positions - particularly those residing in the
biotechnology field - also registered impressive results, and my
decision to pare back the fund's finance stock exposure proved
beneficial. Given the fund's primary focus of investing in
multinational companies, as well as those that may benefit from
exporting their goods and services, the steady global economic rally
we saw during the period also helped performance.
Q. WHAT WAS YOUR GAME PLAN WITHIN THE TECHNOLOGY SECTOR?
A.H. An initial tactical error in one subsector was overshadowed by
the phenomenal performance of another. Software stocks were on the
downslope through the first half of 1999, and I felt strongly that
hardware and semiconductor stocks would be close behind. With this in
mind, I cut back on those two groups and instead set my sights on
Internet infrastructure names such as NaviSite and Vignette Corp.,
both of which were top-five holdings at the close of the period.
NaviSite provides companies with the physical resources needed for a
web site, while Vignette's software helps to build the site content.
As the period progressed, my dire outlook for semiconductor stocks
never materialized, and the group performed well. Fortunately, my
emphasis on Internet infrastructure names more than made up for the
fund's lack of semiconductor exposure.
Q. WHAT STRATEGIES DID YOU FOLLOW
WITH RESPECT TO THE FUND'S HEALTH AND FINANCE POSITIONS?
A.H. Let's take finance first. I reduced the fund's exposure to this
group from around 10% of net assets six months ago to just over 2% at
the end of the period. My reasons for doing so included the negative
trends of rising interest rates and increased competition from online
competitors. The Internet, for example, is allowing people to bypass
the traditional regional bank route and seek more attractive loan or
mortgage terms elsewhere. In terms of the fund's health-related
holdings, much of the positive performance came from biotechnology
investments such as Immunex. I was particularly drawn to the potential
for Enbrel, an Immunex product designed to treat rheumatoid arthritis.
Q. WHICH OTHER STOCKS PERFORMED WELL DURING THE PERIOD?
A.H. Internet venture capital firm CMGI was the fund's second-best
performer behind Vignette. Other positives included utility stock
Calpine - which is involved in all phases of power plant management -
and fiber optics company Advanced Fibre Communications. The fund no
longer held CMGI at the end of the period.
Q. WHICH INVESTMENTS PROVED TO BE DISAPPOINTING?
A.H. Philip Morris was the fund's biggest detractor, mostly due to
continued fallout from industry litigation. Another sore spot was
Ingram Micro, a wholesale distributor of computer equipment. Several
companies that compete in this area are now operating under bankruptcy
protection, and this has had a negative impact on the industry's
margins. Cardinal Health continued to struggle, and poor trends within
the defense industry spelled trouble for General Dynamics, a leader in
the shipbuilding field. The fund no longer owned stakes in Ingram
Micro or Cardinal Health at the end of the period.
Q. TURNING TO YOU, DOUG, WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS?
D.C. Technology is still the place to be, until proven otherwise. From
an economic perspective, the Federal Reserve Board has made it quite
clear that it is determined to slow overall growth. The interest-rate
hikes we witnessed during the period didn't get the job done, and the
Fed's mentality seems to be, "if at first you don't succeed, try, try
again." When and if the economy does indeed slow, the key question
will be where to position the fund. I may look to more defensive areas
such as nondurables. Until then, though, I'll continue to sort through
the tech sector for good opportunities.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGERS ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
DOUG CHASE COVERS A
VARIETY OF SUBJECTS:
EXPORTERS AND MULTINATIONALS:
"Economies throughout the world
seem to be getting better, which
bodes well for the fund given its
mandate to invest in companies
that can benefit from exporting
revenues. The U.S., for instance,
is the technology capital of the
world, and the products and
services offered by many smaller
tech firms are in high demand
overseas. On the other hand, I
recently bumped up the fund's
exposure to Avon, which is a great
example of a well-known,
multinational brand. At the close
of the period, Avon was the fund's
second-largest individual
position."
INVESTING EXPERTISE: "I have
plenty of experience researching and
picking technology stocks, and I've got
a strong background in picking value
and defensive-oriented stocks. This
diversity should come in handy during
technology rallies - which we're
continuing to see - as well as
through economic slowdowns, in
which value and defensive areas
become more attractive."
PORTFOLIO CHANGES: "I've reduced
the fund's media-related
investments since taking over,
mostly because I felt the stocks
were peaking. I also sold off most
of the fund's finance names, as
rising interest rates and online
competition took their toll."
FUND FACTS
GOAL: to increase the value of
the fund's shares by investing
mainly in equity securities of
U.S. companies that are
expected to benefit from
exporting or selling their
goods or services outside the
U.S.
FUND NUMBER: 332
TRADING SYMBOL: FEXPX
START DATE: October 4, 1994
SIZE: as of February 29,
2000, more than $508
million
MANAGER: Douglas Chase,
since February 2000;
manager, U.S. equities,
Fidelity Worldwide Fund,
since 1999; various Fidelity
Select Portfolios,
1994-1999; joined
Fidelity in 1993
(checkmark)
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP TEN STOCKS AS OF FEBRUARY
29, 2000
% OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6
MONTHS AGO
Vignette Corp. 4.2 0.4
Avon Products, Inc. 3.7 0.0
Dell Computer Corp. 3.7 0.0
U.S. Foodservice 3.6 0.0
NaviSite, Inc. 3.5 0.0
Texas Instruments, Inc. 3.0 0.0
Microsoft Corp. 2.9 5.0
Exodus Communications, Inc. 2.2 0.0
AT&T Corp. 2.0 0.0
Lucent Technologies, Inc. 2.0 0.0
30.8 5.4
TOP FIVE MARKET SECTORS AS OF
FEBRUARY 29, 2000
% OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6
MONTHS AGO
TECHNOLOGY 42.3 20.6
UTILITIES 9.9 5.0
HEALTH 8.6 10.0
NONDURABLES 8.3 7.1
ENERGY 5.0 5.6
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
ASSET ALLOCATION (% OF FUND'S
NET ASSETS)
AS OF FEBRUARY 29, 2000 * AS OF AUGUST 31, 1999 **
Stocks 96.0% Stocks 92.2%
Short-Term Investments and Short-Term Investments and
Net Other Assets 4.0% Net Other Assets 7.8%
* FOREIGN INVESTMENTS 2.0% ** FOREIGN INVESTMENTS 2.7%
</TABLE>
Row: 1, Col: 1, Value: 96.0
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 0.0
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 0.0
Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 0.0
Row: 1, Col: 8, Value: 4.0
Row: 1, Col: 1, Value: 92.2
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 0.0
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 0.0
Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 0.0
Row: 1, Col: 8, Value: 7.8
INVESTMENTS FEBRUARY 29, 2000 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 96.0%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 2.0%
AEROSPACE & DEFENSE - 1.0%
Honeywell International, Inc. 55,100 $ 2,651,688
United Technologies Corp. 46,200 2,353,313
5,005,001
SHIP BUILDING & REPAIR - 1.0%
General Dynamics Corp. 124,800 5,397,600
TOTAL AEROSPACE & DEFENSE 10,402,601
BASIC INDUSTRIES - 3.4%
IRON & STEEL - 0.7%
USX - U.S. Steel Group 165,000 3,609,375
METALS & MINING - 0.4%
Martin Marietta Materials, 62,800 2,229,400
Inc.
PACKAGING & CONTAINERS - 1.2%
Corning, Inc. 31,300 5,884,400
PAPER & FOREST PRODUCTS - 1.1%
Pope & Talbot, Inc. 291,600 5,576,850
TOTAL BASIC INDUSTRIES 17,300,025
CONSTRUCTION & REAL ESTATE -
1.2%
BUILDING MATERIALS - 0.1%
Florida Rock Industries, Inc. 10,000 333,125
CONSTRUCTION - 0.4%
Lennar Corp. 117,100 1,932,150
REAL ESTATE INVESTMENT TRUSTS
- - 0.7%
Pinnacle Holdings, Inc. 62,900 3,679,650
TOTAL CONSTRUCTION & REAL 5,944,925
ESTATE
DURABLES - 1.5%
AUTOS, TIRES, & ACCESSORIES -
1.5%
AutoNation, Inc. (a) 661,300 5,001,081
Sonic Automotive, Inc. (a) 288,300 2,468,569
7,469,650
ENERGY - 5.0%
ENERGY SERVICES - 3.6%
Baker Hughes, Inc. 195,700 5,063,738
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ENERGY - CONTINUED
ENERGY SERVICES - CONTINUED
BJ Services Co. (a) 37,000 $ 2,111,313
Halliburton Co. 193,200 7,377,825
Noble Drilling Corp. (a) 100,800 3,628,800
18,181,676
OIL & GAS - 1.4%
Burlington Resources, Inc. 41,600 1,149,200
Newfield Exploration Co. (a) 81,800 2,535,800
Sunoco, Inc. 98,200 2,424,313
Tosco Corp. 45,700 1,222,475
7,331,788
TOTAL ENERGY 25,513,464
FINANCE - 2.1%
FEDERAL SPONSORED CREDIT - 1.2%
Freddie Mac 140,000 5,845,000
INSURANCE - 0.9%
Ambac Financial Group, Inc. 106,800 4,692,525
TOTAL FINANCE 10,537,525
HEALTH - 8.6%
DRUGS & PHARMACEUTICALS - 7.5%
Allergan, Inc. 45,400 2,284,188
Bristol-Myers Squibb Co. 94,900 5,391,506
Eli Lilly & Co. 132,700 7,887,356
IDEC Pharmaceuticals Corp. (a) 7,200 1,014,300
Immunex Corp. (a) 29,900 5,903,381
Millennium Pharmaceuticals, 11,800 3,069,475
Inc. (a)
Schering-Plough Corp. 135,500 4,725,563
Warner-Lambert Co. 94,800 8,111,325
38,387,094
MEDICAL EQUIPMENT & SUPPLIES
- - 1.1%
Baxter International, Inc. 86,700 4,725,150
Biomet, Inc. 24,000 792,000
5,517,150
TOTAL HEALTH 43,904,244
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY &
EQUIPMENT - 3.3%
ELECTRICAL EQUIPMENT - 1.9%
Pinnacle Systems (a) 196,500 $ 9,849,563
INDUSTRIAL MACHINERY &
EQUIPMENT - 1.4%
Caterpillar, Inc. 120,000 4,207,500
Parker-Hannifin Corp. 82,500 2,990,625
7,198,125
TOTAL INDUSTRIAL MACHINERY & 17,047,688
EQUIPMENT
MEDIA & LEISURE - 2.2%
BROADCASTING - 1.4%
American Tower Corp. Class A 79,700 3,925,225
(a)
UnitedGlobalCom, Inc. (a) 29,200 3,051,400
6,976,625
PUBLISHING - 0.4%
Reader's Digest Association, 59,800 2,055,625
Inc. Class A (non-vtg.)
RESTAURANTS - 0.4%
Outback Steakhouse, Inc. (a) 87,700 2,291,163
TOTAL MEDIA & LEISURE 11,323,413
NONDURABLES - 8.3%
FOODS - 1.3%
Keebler Foods Co. (a) 79,100 2,007,163
Quaker Oats Co. 85,100 4,590,081
6,597,244
HOUSEHOLD PRODUCTS - 5.4%
Avon Products, Inc. 691,600 18,716,425
Dial Corp. 608,000 8,740,000
27,456,425
TOBACCO - 1.6%
Philip Morris Companies, Inc. 399,600 8,016,975
TOTAL NONDURABLES 42,070,644
RETAIL & WHOLESALE - 3.6%
GROCERY STORES - 3.6%
U.S. Foodservice (a) 1,025,300 18,134,994
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SERVICES - 1.6%
H&R Block, Inc. 57,200 $ 2,509,650
Insurance Auto Auctions, Inc. 1,600 25,200
(a)
NCO Group, Inc. (a) 112,100 2,620,338
Viad Corp. 131,900 3,091,406
8,246,594
TECHNOLOGY - 42.3%
COMMUNICATIONS EQUIPMENT - 5.9%
3Com Corp. (a) 20,900 2,048,200
Advanced Fibre 40,000 2,725,000
Communications, Inc. (a)
Comverse Technology, Inc. (a) 25,000 4,921,875
Ditech Communications Corp. 19,500 2,130,375
Lucent Technologies, Inc. 169,800 10,103,100
Nokia AB sponsored ADR 40,000 7,932,500
29,861,050
COMPUTER SERVICES & SOFTWARE
- - 21.3%
Ceridian Corp. (a) 87,200 1,727,650
Citrix Systems, Inc. (a) 82,799 8,730,120
Computer Associates 44,774 2,879,528
International, Inc.
Covad Communications Group, 29,200 2,635,300
Inc.
Exodus Communications, Inc. 78,326 11,151,664
(a)
Healtheon/Web Maryland Corp. 125,000 6,914,063
i2 Technologies, Inc. (a) 17,200 2,812,200
Intuit, Inc. (a) 50,500 2,651,250
MapInfo Corp. (a) 71,000 2,449,500
MatrixOne, Inc. 100 2,500
Micromuse, Inc. (a) 24,000 3,403,500
Microsoft Corp. (a) 163,600 14,621,750
NaviSite, Inc. 94,300 17,775,550
New Era of Networks, Inc. (a) 57,700 5,286,763
Onvia.com, Inc. 400 8,400
Polycom, Inc. (a) 35,800 4,163,988
Vignette Corp. 92,000 21,205,991
108,419,717
COMPUTERS & OFFICE EQUIPMENT
- - 9.1%
Advanced Digital Information 27,100 2,455,938
Corp. (a)
Dell Computer Corp. (a) 458,000 18,692,125
EMC Corp. (a) 40,000 4,760,000
Extended Systems, Inc. (a) 14,300 1,455,025
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TECHNOLOGY - CONTINUED
COMPUTERS & OFFICE EQUIPMENT
- - CONTINUED
Hewlett-Packard Co. 57,600 $ 7,747,200
Juniper Networks, Inc. 20,000 5,486,250
Lexmark International Group, 50,000 5,962,500
Inc. Class A (a)
46,559,038
ELECTRONIC INSTRUMENTS - 0.2%
Novellus Systems, Inc. (a) 17,600 1,043,900
ELECTRONICS - 5.8%
JDS Uniphase Corp. (a) 9,800 2,583,525
LSI Logic Corp. (a) 50,000 3,203,125
Motorola, Inc. 50,000 8,525,000
Texas Instruments, Inc. 90,000 14,985,000
29,296,650
TOTAL TECHNOLOGY 215,180,355
TRANSPORTATION - 1.0%
AIR TRANSPORTATION - 0.9%
AMR Corp. (a) 49,500 2,617,313
Preview Travel, Inc. (a) 45,000 2,072,813
4,690,126
SHIPPING - 0.1%
Overseas Shipholding Group, 15,000 312,188
Inc.
TOTAL TRANSPORTATION 5,002,314
UTILITIES - 9.9%
CELLULAR - 3.4%
Nextel Communications, Inc. 39,700 5,428,975
Class A (a)
QUALCOMM, Inc. (a) 37,300 5,312,919
Sprint Corp. - PCS Group 92,900 4,807,575
Series 1 (a)
Vodafone AirTouch PLC 324,305 1,870,834
17,420,303
ELECTRIC UTILITY - 2.5%
AES Corp. (a) 57,400 4,810,838
Calpine Corp. (a) 85,000 7,777,500
12,588,338
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UTILITIES - CONTINUED
GAS - 0.5%
Kinder Morgan, Inc. 85,000 $ 2,369,375
TELEPHONE SERVICES - 3.5%
AT&T Corp. 210,100 10,386,819
BellSouth Corp. 81,500 3,321,125
Intermedia Communications, 35,300 2,234,931
Inc. (a)
Time Warner Telecom, Inc. 25,000 1,925,000
17,867,875
TOTAL UTILITIES 50,245,891
TOTAL COMMON STOCKS 488,324,327
(Cost $416,973,707)
CASH EQUIVALENTS - 9.0%
Central Cash Collateral Fund, 15,236,250 15,236,250
5.75% (b)
Taxable Central Cash Fund, 30,518,147 30,518,147
5.66% (b)
TOTAL CASH EQUIVALENTS 45,754,397
(Cost $45,754,397)
TOTAL INVESTMENT PORTFOLIO - 534,078,724
105.0%
(Cost $462,728,104)
NET OTHER ASSETS - (5.0)% (25,352,488)
NET ASSETS - 100% $ 508,726,236
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
INCOME TAX INFORMATION
At February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $465,696,525. Net unrealized appreciation
aggregated $68,382,199, of which $92,581,548 related to appreciated
investment securities and $24,199,349 related to depreciated
investment securities.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000 (UNAUDITED)
ASSETS
Investment in securities, at $ 534,078,724
value (cost $462,728,104) -
See accompanying schedule
Cash 111,105
Foreign currency held at 613,501
value (cost $613,501)
Receivable for investments 27,134,533
sold
Receivable for fund shares 883,158
sold
Dividends receivable 319,532
Interest receivable 105,127
Redemption fees receivable 322
Other receivables 386,750
TOTAL ASSETS 563,632,752
LIABILITIES
Payable for investments $ 37,624,495
purchased
Payable for fund shares 1,707,083
redeemed
Accrued management fee 237,632
Other payables and accrued 101,056
expenses
Collateral on securities 15,236,250
loaned, at value
TOTAL LIABILITIES 54,906,516
NET ASSETS $ 508,726,236
Net Assets consist of:
Paid in capital $ 361,299,873
Undistributed net investment 500,138
income
Accumulated undistributed net 75,575,605
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 71,350,620
(depreciation) on investments
NET ASSETS, for 23,108,765 $ 508,726,236
shares outstanding
NET ASSET VALUE and $22.01
redemption price per share
($508,726,236 (divided by)
23,108,765 shares)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED FEBRUARY
29, 2000 (UNAUDITED)
INVESTMENT INCOME $ 1,946,068
Dividends
Interest 446,287
Security lending 37,744
TOTAL INCOME 2,430,099
EXPENSES
Management fee $ 1,315,594
Transfer agent fees 494,347
Accounting and security 96,309
lending fees
Non-interested trustees' 649
compensation
Custodian fees and expenses 16,146
Registration fees 18,180
Audit 11,225
Legal 3,387
Interest 353
Miscellaneous 842
Total expenses before 1,957,032
reductions
Expense reductions (107,120) 1,849,912
NET INVESTMENT INCOME 580,187
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 77,300,197
Foreign currency transactions 11,990 77,312,187
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 35,665,584
Assets and liabilities in 239 35,665,823
foreign currencies
NET GAIN (LOSS) 112,978,010
NET INCREASE (DECREASE) IN $ 113,558,197
NET ASSETS RESULTING FROM
OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED FEBRUARY 29, YEAR ENDED AUGUST 31, 1999
2000 (UNAUDITED)
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ 580,187 $ 916,183
income
Net realized gain (loss) 77,312,187 96,338,917
Change in net unrealized 35,665,823 44,496,311
appreciation (depreciation)
NET INCREASE (DECREASE) IN 113,558,197 141,751,411
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (930,997) -
From net investment income
From net realized gain (89,382,528) (16,806,980)
TOTAL DISTRIBUTIONS (90,313,525) (16,806,980)
Share transactions Net 53,173,166 45,652,581
proceeds from sales of shares
Reinvestment of distributions 87,478,815 16,386,066
Cost of shares redeemed (69,027,470) (130,872,505)
NET INCREASE (DECREASE) IN 71,624,511 (68,833,858)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 25,353 38,219
TOTAL INCREASE (DECREASE) 94,894,536 56,148,792
IN NET ASSETS
NET ASSETS
Beginning of period 413,831,700 357,682,908
End of period (including $ 508,726,236 $ 413,831,700
undistributed net investment
income of $500,138 and
$919,841, respectively)
OTHER INFORMATION
Shares
Sold 2,586,339 2,221,870
Issued in reinvestment of 5,106,762 1,021,577
distributions
Redeemed (3,368,880) (6,731,341)
Net increase (decrease) 4,324,221 (3,487,894)
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SIX MONTHS ENDED FEBRUARY 29, YEARS ENDED AUGUST 31,
2000
(UNAUDITED) 1999 1998 1997 1996
SELECTED PER-SHARE DATA
Net asset value, beginning $ 22.03 $ 16.06 $ 20.02 $ 14.85 $ 14.22
of period
Income from Invest- ment
Operations
Net investment income (loss) D .03 .05 (.05) (.02) (.05)
Net realized and unrealized 4.80 6.69 (.13) 6.05 1.52
gain (loss)
Total from investment 4.83 6.74 (.18) 6.03 1.47
operations
Less Distributions
From net investment income (.05) - - - -
From net realized gain (4.80) (.77) (3.79) (.86) (.84)
Total distributions (4.85) (.77) (3.79) (.86) (.84)
Redemption fees added to paid .00 .00 .01 .00 -
in capital
Net asset value, end of $ 22.01 $ 22.03 $ 16.06 $ 20.02 $ 14.85
period
TOTAL RETURN B, C 28.20% 43.76% (2.35)% 41.94% 11.15%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 508,726 $ 413,832 $ 357,683 $ 452,636 $ 267,059
(000 omitted)
Ratio of expenses to average .87% A .91% .93% .98% 1.03%
net assets
Ratio of expenses to average .83% A, F .86% F .88% F .91% F 1.00% F
net assets after expense
reductions
Ratio of net invest- ment .26% A .23% (.25)% (.13)% (.39)%
income (loss) to average
net assets
Portfolio turnover rate 371% A 265% 281% 429% 313%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
1995 E
SELECTED PER-SHARE DATA
Net asset value, beginning $ 10.00
of period
Income from Invest- ment
Operations
Net investment income (loss) D (.03)
Net realized and unrealized 4.26
gain (loss)
Total from investment 4.23
operations
Less Distributions
From net investment income -
From net realized gain (.01)
Total distributions (.01)
Redemption fees added to paid -
in capital
Net asset value, end of $ 14.22
period
TOTAL RETURN B, C 42.34%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 503,427
(000 omitted)
Ratio of expenses to average 1.22% A
net assets
Ratio of expenses to average 1.22% A
net assets after expense
reductions
Ratio of net invest- ment (.27)% A
income (loss) to average
net assets
Portfolio turnover rate 245% A
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE FORMER ONE TIME SALES CHARGE AND
FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD OCTOBER 4, 1994 (COMMENCEMENT OF SALE OF SHARES) TO
AUGUST 31, 1995.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
NOTES TO FINANCIAL STATEMENTS
For the period ended February 29, 2000 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Export and Multinational Fund (the fund) is a fund of
Fidelity Union Street Trust (the trust) and is authorized to issue an
unlimited number of shares. The trust is registered under the
Investment Company Act of 1940, as amended, as an open-end management
investment company organized as a Massachusetts business trust. The
financial statements have been prepared in conformity with generally
accepted accounting principles which require management to make
certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are
readily available are valued at the last sale price, or if no sale
price, at the closing bid price. Foreign securities are valued based
on quotations from the principal market in which such securities are
normally traded. If trading or events occurring in other markets after
the close of the principal market in which foreign securities are
traded, and before the close of the business of the fund, are expected
to materially affect the value of those securities, then they are
valued at their fair value taking this trading or these events into
account. Fair value is determined in good faith under consistently
applied procedures under the general supervision of the Board of
Trustees. Securities for which exchange quotations are not readily
available (and in certain cases debt securities which trade on an
exchange) are valued primarily using dealer-supplied valuations or at
their fair value. Short-term securities with remaining maturities of
sixty days or less for which quotations are not readily available are
valued at amortized cost or original cost plus accrued interest, both
of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
and settlement date on purchases and sales of securities. The effects
of changes in foreign currency exchange rates on investments in
securities are included with the net realized and unrealized gain or
loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INVESTMENT INCOME - CONTINUED
passed, are recorded as soon as the fund is informed of the
ex-dividend date. Non-cash dividends included in dividend income, if
any, are recorded at the fair market value of the securities received.
Interest income is accrued as earned. Investment income is recorded
net of foreign taxes withheld where recovery of such taxes is
uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for litigation proceeds, foreign currency transactions and
losses deferred due to wash sales. The fund also utilized earnings and
profits distributed to shareholders on redemption of shares as a part
of the dividends paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income and accumulated undistributed net
realized gain (loss) on investments and foreign currency transactions
may include temporary book and tax basis differences which will
reverse in a subsequent period. Any taxable income or gain remaining
at fiscal year end is distributed in the following year.
SHORT-TERM TRADING (REDEMPTION) FEES. Shares held in the fund less
than 30 days are subject to a short-term trading fee equal to .75% of
the proceeds of the redeemed shares. Redemptions on or prior to
January 31, 2000 of shares held less than 90 days were subject to a
short-term trading fee equal to .75% of the proceeds of the redeemed
shares. The fee, which is retained by the fund, is accounted for as an
addition to paid in capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated
securities. Losses may arise from changes in the value of the foreign
currency or if the counterparties do not perform under the contracts'
terms. The U.S. dollar value of foreign currency contracts is
determined using contractual currency exchange rates established at
the time of each trade.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated entities of Fidelity Management & Research Company
(FMR), may transfer uninvested cash balances into one or more joint
trading accounts. These balances are invested in one or more
repurchase agreements for U.S. Treasury or Federal Agency obligations.
2. OPERATING POLICIES - CONTINUED
REPURCHASE AGREEMENTS. The underlying U.S. Treasury, Federal Agency,
and other obligations found satisfactory by FMR are transferred to an
account of the fund, or to the Joint Trading Account, at a bank
custodian. The securities are marked-to-market daily and maintained at
a value at least equal to the principal amount of the repurchase
agreement (including accrued interest). FMR, the fund's investment
adviser, is responsible for determining that the value of the
underlying securities remains in accordance with the market value
requirements stated above.
CENTRAL CASH FUNDS. Pursuant to an Exemptive Order issued by the SEC,
the fund may invest in the Taxable Central Cash Fund and the Central
Cash Collateral Fund (the Cash Funds) managed by Fidelity Investments
Money Management, Inc., an affiliate of FMR. The Cash Funds are
open-end money market funds available only to investment companies and
other accounts managed by FMR and its affiliates. The Cash Funds seek
preservation of capital, liquidity, and current income. Income
distributions from the Cash Funds are declared daily and paid monthly
from net interest income. Income distributions earned by the fund are
recorded as either interest income or security lending income in the
accompanying financial statements.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $804,626,378 and $810,742,573, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
the fund. The group fee rate is the weighted average of a series of
rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .2167% to .5200% for the
period. The annual individual fund fee rate is .30%. In the event that
these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee. For the period, the management
fee was equivalent to an annualized rate of .59% of average net
assets.
SALES LOAD. For the period, Fidelity Distributors Corporation (FDC),
an affiliate of FMR and the general distributor of the fund, received
sales charges of $59,205 on sales of shares of the fund of which
$59,192 was retained. Effective January 31, 2000, the fund's 3% sales
charge was eliminated.
TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an
affiliate of FMR, is the fund's transfer, dividend disbursing and
shareholder servicing agent. FSC receives account fees and asset-based
fees that vary according to account size and type of account. FSC pays
for typesetting, printing and mailing of all shareholder reports,
except proxy statements. For the period, the transfer agent fees were
equivalent to an annualized rate of .22% of average net assets.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
ACCOUNTING AND SECURITY LENDING FEES. FSC maintains the fund's
accounting records and administers the security lending program. The
security lending fee is based on the number and duration of lending
transactions. The accounting fee is based on the level of average net
assets for the month plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $69,879 for the
period.
5. SECURITY LENDING.
The fund lends portfolio securities from time to time in order to earn
additional income. The fund receives collateral in the form of U.S.
Treasury obligations, letters of credit, and/or cash against the
loaned securities, and maintains collateral in an amount not less than
100% of the market value of the loaned securities during the period of
the loan. The market value of the loaned securities is determined at
the close of business of the fund and any additional required
collateral is delivered to the fund on the next business day. If the
borrower defaults on its obligation to return the securities loaned
because of insolvency or other reasons, the fund could experience
delays and costs in recovering the securities loaned or in gaining
access to the collateral. At period end, the value of the securities
loaned amounted to $15,261,122. The fund received cash collateral of
$15,236,250 which was invested in cash equivalents.
6. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or
emergency purposes to fund shareholder redemptions. The fund has
established borrowing arrangements with certain banks. The interest
rate on the borrowings is the bank's base rate, as revised from time
to time. The average daily loan balance during the period for which
the loan was outstanding amounted to $2,193,000. The weighted average
interest rate was 5.79%.
7. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $95,981 under this arrangement.
In addition, through arrangements with the fund's custodian and
transfer agent, credits realized as a result of uninvested cash
balances were used to reduce a portion of the fund's expenses. During
the period, the fund's custodian and transfer agent fees were reduced
by $3,852 and $7,287, respectively, under these arrangements.
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc.
Fidelity Management & Research
(Far East) Inc.
Fidelity Investments Japan Ltd.
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Eric D. Roiter, Secretary
Robert A. Dwight, Treasurer
Abigail P. Johnson, Vice President
Matthew N. Karstetter, Deputy Treasurer
Maria F. Dwyer, Deputy Treasurer
John H. Costello, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
Donald J. Kirk *
Ned C. Lautenbach *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
* INDEPENDENT TRUSTEES
CUSTODIAN
The Chase Manhattan Bank
New York, NY
FIDELITY'S GROWTH FUNDS
Aggressive Growth Fund
Blue Chip Growth Fund
Capital Appreciation Fund
Contrafund (registered trademark)
Contrafund(registered trademark) II
Disciplined Equity Fund
Dividend Growth Fund
Export and Multinational Fund
Fidelity Fifty SM
Growth Company Fund
Large Cap Stock Fund
Low-Priced Stock Fund
Magellan(registered trademark) Fund
Mid-Cap Stock Fund
New Millennium Fund(registered trademark)
OTC Portfolio
Retirement Growth Fund
Small Cap Selector
Small Cap Stock Fund
Stock Selector
Tax Managed Stock Fund
TechnoQuant Growth Fund SM
Trend Fund
Value Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-6666
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
Fidelity Automated Service
Telephone (FAST) 1-800-544-5555N SM
AUTOMATED LINE FOR QUICKEST SERVICE
(2_FIDELITY_LOGOS)
SPARTAN(REGISTERED TRADEMARK)
MARYLAND
MUNICIPAL INCOME
FUND
SEMIANNUAL REPORT
FEBRUARY 29, 2000
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 16 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 20 Notes to the financial
statements.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL INFORMATION OF THE SHAREHOLDERS OF THE FUND.
THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE
INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE
PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND
EXPENSES, CALL 1-800-544-6666 FOR A FREE PROSPECTUS. READ IT CAREFULLY
BEFORE YOU INVEST OR SEND MONEY.
Standard & Poor's, S&P and S&P 500 are registered service marks of The
McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity
Distributors Corporation.
Other third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
This report is printed on recycled paper using soy-based inks.
PRESIDENT'S MESSAGE
(PHOTO_OF_EDWARD_C_JOHNSON_3D)
DEAR SHAREHOLDER:
In February, the Dow Jones Industrial Average closed below 10,000 for
the first time in 10 months - 16% below its high set in January. A
deeper drop was avoided by a rally late in the period. Meanwhile, the
technology-focused NASDAQ Index continued its record-setting ascent,
while the bellwether 30-year Treasury benefited slightly as a haven
from volatile blue chips and the U.S. Treasury's decision to reduce
long bond supply.
While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.
The longer your investment time frame, the less likely it is that you
will be affected by short-term market volatility. A 10-year investment
horizon appropriate for saving for a college education, for example,
enables you to weather market cycles in a long-term fund, which may
have a higher risk potential, but also has a higher potential rate of
return.
An intermediate-length fund could make sense if your investment
horizon is two to four years, while a short-term bond fund could be
the right choice if you need your money in one or two years.
If your time horizon is less than a year, you might want to consider
moving some of your bond investment into a money market fund. These
funds seek income and a stable share price by investing in
high-quality, short-term investments. Of course, it's important to
remember that an investment in a money market fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although money market funds seek to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in these types of funds.
Finally, no matter what your time horizon or portfolio diversity, it
makes good sense to follow a regular investment plan, investing a
certain amount of money in a fund at the same time each month or
quarter and periodically reviewing your overall portfolio. By doing
so, you won't get caught up in the excitement of a rapidly rising
market, nor will you buy all your shares at market highs. While this
strategy - known as dollar cost averaging - won't assure a profit or
protect you from a loss in a declining market, it should help you
lower the average cost of your purchases. Of course, you should
consider your financial ability to continue your purchases through
periods of low price levels before undertaking such a strategy.
If you have questions, please call us at 1-800-544-6666, or visit our
web site at www.fidelity.com. We are available 24 hours a day, seven
days a week to provide you the information you need to make the
investments that are right for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). You can also look at the fund's income, as
reflected in the fund's yield, to measure performance. If Fidelity had
not reimbursed certain fund expenses, the past five year and life of
fund total returns would have been lower.
CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PERIODS ENDED FEBRUARY 29, PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
2000
SPARTAN MD MUNICIPAL INCOME 0.24% -1.99% 30.63% 38.64%
LB Maryland 4 Plus Year -0.17% -2.21% 32.56% n/a
Municipal Bond
Maryland Municipal Debt Funds -0.97% -3.76% 25.44% n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or since the fund started on April 22, 1993. For example, if you
had invested $1,000 in a fund that had a 5% return over the past year,
the value of your investment would be $1,050. You can compare the
fund's returns to the performance of the Lehman Brothers Maryland 4
Plus Year Municipal Bond Index - a market value-weighted index of
Maryland investment-grade municipal bonds with maturities of four
years or more. To measure how the fund's performance stacked up
against its peers, you can compare it to the Maryland municipal debt
funds average, which reflects the performance of mutual funds with
similar objectives tracked by Lipper Inc. The past six month average
represents a peer group of 38 mutual funds. These benchmarks include
reinvested dividends and capital gains, if any, and exclude the effect
of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 29, PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
2000
SPARTAN MD MUNICIPAL INCOME -1.99% 5.49% 4.88%
LB Maryland 4 Plus Year -2.21% 5.80% n/a
Municipal Bond
Maryland Municipal Debt Funds -3.76% 4.63% n/a
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and
show you what would have happened if the fund had performed at a
constant rate each year. (Note: Lipper calculates average annual total
returns by annualizing each fund's total return, then taking an
arithmetic average. This may produce a different figure than that
obtained by averaging the cumulative total returns and annualizing the
result.)
$10,000 OVER LIFE OF FUND
Spartan MD Muni Income LB Municipal Bond
00429 LB015
1993/04/30 10000.00 10000.00
1993/05/31 10085.91 10056.20
1993/06/30 10290.79 10224.04
1993/07/31 10265.32 10237.43
1993/08/31 10557.40 10450.57
1993/09/30 10704.98 10569.61
1993/10/31 10689.74 10590.01
1993/11/30 10529.07 10496.71
1993/12/31 10803.25 10718.29
1994/01/31 10954.65 10840.70
1994/02/28 10622.40 10559.92
1994/03/31 10073.68 10129.92
1994/04/30 10162.95 10215.82
1994/05/31 10243.70 10304.40
1994/06/30 10206.48 10241.44
1994/07/31 10384.83 10429.16
1994/08/31 10403.21 10465.25
1994/09/30 10214.51 10311.62
1994/10/31 9973.88 10128.48
1994/11/30 9719.70 9945.36
1994/12/31 9992.19 10164.26
1995/01/31 10309.68 10454.75
1995/02/28 10621.51 10758.77
1995/03/31 10738.62 10882.39
1995/04/30 10731.40 10895.23
1995/05/31 11084.16 11242.90
1995/06/30 10985.06 11145.09
1995/07/31 11091.31 11250.74
1995/08/31 11242.66 11393.40
1995/09/30 11347.30 11465.52
1995/10/31 11476.69 11632.23
1995/11/30 11651.39 11825.21
1995/12/31 11770.51 11938.85
1996/01/31 11877.96 12028.99
1996/02/29 11794.29 11947.79
1996/03/31 11643.74 11795.10
1996/04/30 11619.17 11761.72
1996/05/31 11607.45 11757.02
1996/06/30 11712.40 11885.05
1996/07/31 11818.90 11993.20
1996/08/31 11818.37 11990.33
1996/09/30 11948.97 12158.19
1996/10/31 12080.97 12295.70
1996/11/30 12308.68 12520.71
1996/12/31 12226.50 12468.12
1997/01/31 12250.97 12491.69
1997/02/28 12369.27 12606.36
1997/03/31 12172.69 12438.32
1997/04/30 12269.49 12542.43
1997/05/31 12430.49 12731.07
1997/06/30 12577.20 12866.65
1997/07/31 12924.29 13223.06
1997/08/31 12784.46 13099.16
1997/09/30 12958.06 13254.65
1997/10/31 13045.20 13339.87
1997/11/30 13118.15 13418.31
1997/12/31 13307.36 13614.08
1998/01/31 13446.78 13754.58
1998/02/28 13428.36 13758.71
1998/03/31 13427.80 13770.82
1998/04/30 13361.66 13708.71
1998/05/31 13555.17 13925.72
1998/06/30 13604.57 13980.59
1998/07/31 13615.73 14015.68
1998/08/31 13862.61 14232.22
1998/09/30 14016.32 14409.55
1998/10/31 14027.02 14409.26
1998/11/30 14049.33 14459.84
1998/12/31 14099.95 14496.28
1999/01/31 14270.38 14668.64
1999/02/28 14156.23 14604.54
1999/03/31 14167.44 14624.84
1999/04/30 14204.34 14661.25
1999/05/31 14107.55 14576.37
1999/06/30 13886.53 14366.47
1999/07/31 13938.61 14418.76
1999/08/31 13841.47 14303.41
1999/09/30 13838.49 14309.27
1999/10/31 13726.35 14154.16
1999/11/30 13862.08 14304.76
1999/12/31 13792.55 14198.19
2000/01/31 13751.33 14136.43
2000/02/29 13874.64 14300.41
IMATRL PRASUN SHR__CHT 20000229 20000313 102830 R00000000000085
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Spartan Maryland Municipal Income Fund on April 30, 1993,
shortly after the fund started. As the chart shows, by February 29,
2000, the value of the investment would have grown to $13,875 - a
38.75% increase on the initial investment. For comparison, look at how
the Lehman Brothers Municipal Bond Index - a market-value oriented
index of investment-grade municipal bonds with maturities of one year
or more - did over the same period. With dividends and capital gains,
if any, reinvested, the same $10,000 would have grown to $14,300 - a
43.00% 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
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS ENDED FEBRUARY 29, YEARS ENDED AUGUST 31,
2000 1999 1998 1997 1996 1995
Dividend returns 2.32% 4.21% 4.69% 4.89% 5.02% 6.00%
Capital returns -2.08% -4.36% 3.74% 3.28% 0.10% 2.07%
Total returns 0.24% -0.15% 8.43% 8.17% 5.12% 8.07%
</TABLE>
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
fund. A capital return reflects both the amount paid by the fund to
shareholders as capital gain distributions and changes in the fund's
share price. Both returns assume the dividends or capital gains, if
any, paid by the fund are reinvested.
DIVIDENDS AND YIELD
PERIODS ENDED FEBRUARY 29, PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR
2000
Dividends per share 3.81(cents) 23.30(cents) 46.14(cents)
Annualized dividend rate 4.87% 4.70% 4.55%
30-day annualized yield 5.00% - -
30-day annualized 8.47% - -
tax-equivalent yield
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 $9.85
over the past one month, $9.94 over the past six months and $10.15
over the past one year, you can compare the fund's income over these
three periods. The 30-day annualized YIELD is a standard formula for
all bond funds based on the yields of the bonds in the fund, averaged
over the past 30 days. This figure shows you the yield characteristics
of the fund's investments at the end of the period. It also helps you
compare funds from different companies on an equal basis. The
tax-equivalent yield shows what you would have to earn on a taxable
investment to equal the fund's tax-free yield, if you're in the 41.03%
combined effective 2000 federal and state income tax bracket. The
tax-equivalent yield also reflects that a portion of the fund's income
was subject to state taxes, but does not reflect the payment of the
federal alternative minimum tax, if applicable.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Two more interest-rate hikes by the
U.S. Federal Reserve board during the
six-month period ending February
29, 2000 - on top of the two rates
hikes that occurred shortly before the
period began - continued to
detract from the performance of
municipal bonds. For the six-month
period, the Lehman Brothers
Municipal Bond Index - an index
of over 35,000 investment-grade,
fixed-rate, tax-exempt bonds -
turned in a flat return of -0.02%.
Several other factors also contributed
to the municipal bond industry's
lackluster performance. The health
care sector, a prominent issuer of
muni bonds, was beleaguered by
concerns of Medicare and
government pricing reforms, which
caused health care securities to
struggle. Furthermore, as interest
rates continued to climb, many
muni bonds fell to deeply discounted
levels, which can create unfavorable
tax consequences for buyers of those
bonds. In return, investors demanded
greater yield as compensation,
causing the prices of these issues
to drop even further. Compared to
corporate and mortgage bonds,
municipal bond performance
lagged during the six-month
period. The Lehman Brothers
Corporate Bond Index returned
1.70%, while mortgage securities, one
of the best-performing domestic
debt offerings during the period,
returned 2.30%, according to the
Lehman Brothers Mortgage-Backed
Securities Index.
(PHOTOGRAPH OF GEORGE FISCHER)
An interview with George Fischer, Portfolio Manager of Spartan
Maryland Municipal Income Fund
Q. HOW DID THE FUND PERFORM, GEORGE?
A. Rising interest rates and persistent inflation worries put pressure
on the municipal bond market, although the fund outpaced its peers and
its benchmark during the past six months. For the six-month period
that ended February 29, 2000, the fund had a total return of 0.24%. To
get a sense of how the fund did relative to its competitors, the
Maryland municipal debt funds average returned -0.97% for the same
six-month period, according to Lipper Inc. Additionally, the Lehman
Brothers Maryland 4 Plus Year Municipal Bond Index, which tracks the
types of securities in which the fund invests, returned -0.17%. For
the 12-month period that ended February 29, 2000, the fund returned
- -1.99%. That return compared to the Maryland municipal debt funds
average's -3.76% return and the Lehman Brothers index's -2.21% return
for the same 12-month period.
Q. WHAT HELPED THE FUND BEAT ITS PEERS?
A. I positioned the fund to be fairly defensive, meaning I emphasized
bonds that tended to hold their value better under adverse market
conditions. Some of the fund's best performers over the past year were
premium coupon bonds with interest rates of 5.5% to 6.0%. Premiums, as
they are known, carry coupons higher than prevailing interest rates
and are attractive for several reasons. First, they're more likely
than discount bonds - which carry interest rates below prevailing
rates - to be advance refunded, a refinancing-like process that
generally is positive for their prices. Second, premium bonds are
somewhat protected from the unfavorable tax treatment and price
performance that can hurt discount bonds when interest rates rise, as
they did during the past six months. Finally, individual investors -
who account for a significant portion of municipal bond demand - tend
to shy away from premium coupon bonds in favor of par bonds - those
that carry coupons at prevailing rates. As a result, I'm often able to
buy premiums at attractive prices relative to comparably rated par
bonds with similar maturities.
Q. WHAT OTHER FACTORS AIDED PERFORMANCE?
A. The fund's focus on high-quality securities - roughly 56% of the
fund's net assets were in bonds rated Aaa - also helped. Problems with
scattered lower-rated Baa securities prompted investors to demand
higher yields, causing many Baa-rated securities to underperform
higher-rated securities. The fund's emphasis on intermediate-maturity
bonds also was a plus. Because intermediates are less interest-rate
sensitive than longer-term bonds, they outperformed their longer-term
counterparts as interest rates rose.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Yes, there were. Bonds issued by Northeast Maryland Waste Disposal
Authority for the support of resource recovery facilities in the state
did not do as well as expected. Those bonds performed poorly in
response to earnings disappointments and questions about the
management at Waste Management, the company that ultimately backs the
bonds.
Q. WHAT'S YOUR OUTLOOK FOR THE MUNICIPAL MARKET?
A. It's not clear at this point whether the Federal Reserve Board is
finished raising interest rates as it has during the past six months,
or whether it will continue to hike rates. But other factors - namely
supply and demand - also will play a role. If interest rates remain
stable or move higher, I would expect the supply of municipals to
continue to taper off as issuers slow down their refinancing and new
issuance activity. We've also seen somewhat of an increase in the
demand for municipal bonds as individual investors look to lock in
higher yields. To the extent that investors continue on that course,
the more municipals likely will benefit. As for Maryland's economy, it
continues to expand. Employment growth is in line with the nation as a
whole and the state's unemployment rate has fallen to its lowest level
in nearly three decades.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
GEORGE FISCHER ON CHOOSING
INVESTMENTS FOR THE FUND:
"When selecting individual bonds
for inclusion in the fund, credit
research is always the starting
point. Using a very rigorous
research process, and with the help
of Fidelity's credit research
team, I look for investment-grade
bonds from issuers that have
exhibited fiscal prudence and
are well-managed. After
completing careful credit research,
I then consider structural
characteristics, such as maturity,
call features, coupon and others.
Because so much of the municipal
market is insured, it's often
challenging to add value through
credit research. So I look for
opportunities to take advantage of
pricing anomalies that creep up due
to a fund's structural
characteristics."
(solid bullet) At the end of the period, the
fund had 8.6% of net assets in
bonds issued by Puerto Rico. As a
territory of the United States,
Puerto Rico can issue bonds that
are free from taxes in all 50 states.
When the supply of Maryland
municipals is limited or their
prices look expensive, the
manager occasionally invests in
Puerto Rico bonds.
FUND FACTS
GOAL: high current tax-free
income for Maryland residents
FUND NUMBER: 429
TRADING SYMBOL: SMDMX
START DATE: April 22, 1993
SIZE: as of February 29,
2000, more than $45 million
MANAGER: George Fischer,
since 1998; manager,
various Fidelity and Spartan
municipal income funds;
joined Fidelity in 1989
(checkmark)
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE SECTORS AS OF
FEBRUARY 29, 2000
% OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6
MONTHS AGO
General Obligations 35.3 43.6
Escrowed/Pre-Refunded 13.9 11.3
Special Tax 9.1 9.4
Transportation 8.6 4.7
Housing 6.4 6.1
AVERAGE YEARS TO MATURITY AS
OF FEBRUARY 29, 2000
6 MONTHS AGO
Years 13.8 12.4
</TABLE>
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME REMAINING UNTIL
PRINCIPAL PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS,
WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF FEBRUARY 29,
2000
6 MONTHS AGO
Years 6.9 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 FEBRUARY 29, 2000
Aaa 55.7%
Aa, A 38.3%
Baa 5.4%
Not Rated 0.0%
Short-term
Investments 0.6%
Row: 1, Col: 1, Value: 55.7
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 38.3
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 5.4
Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 0.0
Row: 1, Col: 8, Value: 0.6000000000000001
AS OF AUGUST 31, 1999
Aaa 53.9%
Aa, A 38.5%
Baa 5.5%
Not Rated 2.1%
Short-term
Investments 0.0%
Row: 1, Col: 1, Value: 53.9
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 38.5
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 5.5
Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 2.1
Row: 1, Col: 8, Value: 0.0
WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P (registered
trademark) RATINGS. AMOUNTS SHOWN ARE AS A PERCENTAGE OF THE FUND'S
INVESTMENTS.
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
INVESTMENTS FEBRUARY 29, 2000 (UNAUDITED)
Showing Percentage of Net Assets
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS - 98.5%
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
MARYLAND - 89.9%
Anne Arundel County:
(Consolidated Wtr. & Swr. Aa2 $ 550,000 $ 594,149
Proj.) 7% 8/1/04
Rfdg. (Gen. Impt. Proj.) Aa2 1,000,000 1,004,100
5.25% 8/1/08
Baltimore County Metro. Aaa 850,000 890,452
District (Spl. Assessment
Proj.) 63rd Issue 6.125%
7/1/07 (Pre-Refunded to
7/1/02 @ 102) (f)
Baltimore Gen. Oblig.:
(Consolidated Pub. Impt.
Proj.) Series A:
5.5% 10/15/14 (FGIC Insured) Aaa 500,000 495,380
7% 10/15/09 (MBIA Insured) Aaa 500,000 564,745
Rfdg. (Cap. Appreciation) Aaa 2,000,000 1,407,900
(Consolidated Pub. Impt.
Proj.) Series A, 0% 10/15/06
(FGIC Insured)
Series A:
5.5% 10/15/11 (FGIC Insured) Aaa 1,000,000 1,010,310
5.625% 10/15/13 (FGIC Insured) Aaa 1,460,000 1,471,461
Baltimore Gen. Oblig. Proj. Aaa 1,100,000 960,696
Rev. Rfdg. (Wtr. Proj.)
Series A, 5% 7/1/24 (FGIC
Insured)
Baltimore Port Facilities Aa3 2,000,000 2,111,179
Rev. (Consolidated Coal
Sales Co. Proj.) 6.5% 12/1/10
Frederick County Gen. Oblig. Aa2 1,000,000 999,790
Rfdg. 5.75% 7/1/16
Maryland Cmnty. Dev.
Administration Dept. Hsg. &
Cmnty. Dev.:
(Single Family Mtg. Prog.) Aa2 500,000 513,385
Series 7, 7.25% 4/1/19 (e)
Rfdg. (Residential Proj.) Aa2 985,000 973,180
Series B, 5.05% 9/1/19 (e)
Maryland Gen. Oblig. (State &
Local Facilities Ln. Prog.):
Series 1:
4.5% 3/1/01 Aaa 615,000 616,482
5.5% 2/1/06 Aaa 1,000,000 1,020,670
Series 2, 5% 7/15/07 Aaa 1,000,000 993,220
Maryland Health & Higher Edl.
Facilities Auth. Rev.:
(Charity Oblig. Group Proj.) Aa2 970,000 962,541
Series D, 4.6% 11/1/26
(Pre-Refunded to 11/1/03 @
100) (f)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
MARYLAND - CONTINUED
Maryland Health & Higher Edl.
Facilities Auth. Rev.: -
continued
(Good Samaritan Hosp. Proj.):
5.75% 7/1/13 (AMBAC Insured) Aaa $ 145,000 $ 146,124
(Escrowed to Maturity) (f)
5.75% 7/1/13 (Escrowed to A1 240,000 243,931
Maturity) (f)
(John Hopkins Univ. Issue Aa2 1,000,000 989,690
Proj.) 6% 7/1/39
(Loyola College Issue Proj.) A2 1,000,000 811,290
5% 10/1/39
Rfdg.:
(Good Samaritan Hosp. Proj.) A1 1,000,000 1,026,100
5.7% 7/1/09 (Escrowed to
Maturity) (f)
(Helix Health Proj.) 5% Aaa 1,000,000 916,870
7/1/17 (AMBAC Insured)
(Escrowed to Maturity) (f)
(Howard County Gen. Hosp. Aaa 1,000,000 1,000,540
Proj.) 5.5% 7/1/13 (Escrowed
to Maturity) (f)
(John Hopkins Univ. Proj.) 6% Aa2 500,000 530,165
7/1/10
Maryland Ind. Dev. Fing. Aa3 1,150,000 1,100,562
Auth. Econ. Dev. Rev. (Holy
Cross Health Sys. Corp.
Proj.) 5.5% 12/1/15
Maryland Ind. Dev. Fing. Aa3 1,000,000 1,005,840
Auth. Rev. Rfdg. (Holy
Cross Health Sys. Corp.
Proj.) 5.7% 12/1/10
Maryland Trans. Auth. Rev.:
(Trans. Facilities Projs.) Aaa 1,015,000 1,126,315
6.8% 7/1/16 (Escrowed to
Maturity) (f)
Rfdg. (Trans. Facilities Aa2 500,000 518,885
Projs.) 5.8% 7/1/06
Rfdg. (Cap. Appreciation) Aaa 2,500,000 2,004,750
(Trans. Facilities Projs.)
0% 7/1/04 (FGIC Insured) (b)
Montgomery County Gen. Oblig.:
(Consolidated Pub. Impt.
Proj.) Series A:
5.375% 5/1/12 Aaa 1,000,000 999,030
5.625% 10/1/06 Aaa 1,000,000 1,031,110
Series A, 6.3% 4/1/04 Aaa 500,000 525,130
Montgomery County Hsg. Aa2 1,000,000 1,024,900
Opportunity Commission
Single Family Mtg. Rev.
Series A, 6.6% 7/1/14
Northeast Maryland Waste
Disp. Auth. Resource
Recovery Rev.:
(Baltimore Resco Retrofit BBB+ 1,000,000 794,290
Proj.) 4.75% 1/1/12 (e)
Rfdg. (Southwest Resource Aaa 1,235,000 1,344,396
Recovery Facilities Proj.)
7.2% 1/1/05 (MBIA Insured)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
MARYLAND - CONTINUED
Northeast Maryland Waste
Disp. Auth. Solid Waste Rev.
(Montgomery County Resource
Recovery Proj.) Series A:
5.9% 7/1/05 (e) A2 $ 760,000 $ 776,378
6% 7/1/07 (e) A2 500,000 512,425
Prince Georges County Aaa 1,000,000 978,920
(Consolidated Pub. Impts.
Proj.) 5.5% 3/15/16 (MBIA
Insured)
Prince Georges County Ctfs. Aaa 2,400,000 1,273,944
of Prtn. (Cap.
Appreciation) Series A, 0%
6/30/11 (MBIA Insured)
Prince Georges County Hsg. AAA 410,000 418,831
Auth. Rev. (Single Family
Mtg. Prog.) Series A, 6.5%
12/1/15 (e)
Univ. of Maryland Sys. Aa3 500,000 500,795
Auxiliary Facility & Tuition
Rev. Series A, 5.6% 4/1/16
Washington D.C. Metro. Area Aaa 1,570,000 1,642,989
Trans. Auth. Gross Rev.
Rfdg. 6% 7/1/10 (FGIC
Insured)
Washington D.C. Suburban Aa1 1,000,000 1,056,870
Sanitation District Rfdg.
Series 2, 8% 1/1/02
40,890,710
PUERTO RICO - 8.6%
Puerto Rico Commonwealth Hwy. Aaa 1,000,000 937,650
& Trans. Auth. Hwy. Rev.
Series Y, 5.5% 7/1/36 (FSA
Insured)
Puerto Rico Commonwealth Hwy.
& Trans. Auth. Trans. Rev.
Series A:
4.75% 7/1/38 (MBIA Insured) Aaa 1,000,000 800,710
5% 7/1/38 Baa1 2,000,000 1,637,600
Puerto Rico Commonwealth Aaa 600,000 515,760
Infrastructure Fing. Auth.
Spl. Tax Rev. Series A, 5%
7/1/28 (AMBAC Insured)
3,891,720
TOTAL MUNICIPAL BONDS 44,782,430
(Cost $45,839,369)
</TABLE>
CASH EQUIVALENTS - 0.6%
SHARES VALUE (NOTE 1)
Municipal Central Cash Fund, 255,078 $ 255,078
3.87% (c)(d) (Cost $255,078)
TOTAL INVESTMENT PORTFOLIO - 45,037,508
99.1%
(Cost $46,094,447)
NET OTHER ASSETS - 0.9% 426,158
NET ASSETS - 100% $ 45,463,666
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FUTURES CONTRACTS
EXPIRATION DATE UNDERLYING FACE AMOUNT AT VALUE UNREALIZED GAIN/LOSS
PURCHASED
5 Bond Buyer Municipal Bond March 2000 $ 466,406 $ (2,374)
Index Contracts
</TABLE>
The face value of futures purchased as a percentage of net assets - 1%
LEGEND
(a) S&P credit ratings are used in the absence of a rating by Moody's
Investors Service, Inc.
(b) Security or a portion of the security was pledged to cover margin
requirements for futures contracts. At the period end, the value of
securities pledged amounted to $60,143.
(c) Information in this report regarding holdings by state and
security types does not reflect the holdings of the Municipal Central
Cash Fund. A listing of the Municipal Central Cash Fund's holdings as
of its most recent fiscal period end is available upon request.
(d) The rate quoted is the annualized seven-day yield of the fund at
period end.
(e) Private activity obligations whose interest is subject to the
federal alternative minimum tax for individuals.
(f) Security collateralized by an amount sufficient to pay interest
and principal.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total
value of investments in securities, is as follows (ratings are
unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 93.1% AAA, AA, A 87.0%
Baa 3.6% BBB 1.8%
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 distribution of municipal securities by revenue source, as a
percentage of net assets, is as follows:
General Obligations 35.3%
Escrowed/Pre-Refunded 13.9
Special Tax 9.1
Transportation 8.6
Housing 6.4
Industrial Development 6.4
Education 6.3
Resource Recovery 5.8
Others * (individually less 8.2
than 5%)
100.0%
* Includes short-term investments and net other assets.
INCOME TAX INFORMATION
At February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $46,094,447. Net unrealized depreciation
aggregated $1,056,939, of which $300,753 related to appreciated
investment securities and $1,357,692 related to depreciated investment
securities.
At August 31, 1999, the fund had a capital loss carryforward of
approximately $924,000 all of which will expire on August 31, 2004.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000 (UNAUDITED)
ASSETS
Investment in securities, at $ 45,037,508
value (cost $46,094,447) -
See accompanying schedule
Receivable for fund shares 17,012
sold
Interest receivable 549,363
Receivable for daily 1,406
variation on futures
contracts
TOTAL ASSETS 45,605,289
LIABILITIES
Payable for fund shares $ 72,589
redeemed
Distributions payable 48,997
Accrued management fee 19,877
Other payables and accrued 160
expenses
TOTAL LIABILITIES 141,623
NET ASSETS $ 45,463,666
Net Assets consist of:
Paid in capital $ 47,627,481
Undistributed net interest 27,858
income
Accumulated undistributed net (1,132,360)
realized gain (loss) on
investments
Net unrealized appreciation (1,059,313)
(depreciation) on investments
NET ASSETS, for 4,600,883 $ 45,463,666
shares outstanding
NET ASSET VALUE, offering $9.88
price and redemption price
per share ($45,463,666
(divided by) 4,600,883
shares)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED FEBRUARY
29, 2000 (UNAUDITED)
INTEREST INCOME $ 1,231,912
EXPENSES
Management fee $ 129,974
Non-interested trustees' 71
compensation
Total expenses before 130,045
reductions
Expense reductions (16,585) 113,460
NET INTEREST INCOME 1,118,452
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (196,814)
Futures contracts (11,339) (208,153)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (813,774)
Futures contracts (2,374) (816,148)
NET GAIN (LOSS) (1,024,301)
NET INCREASE (DECREASE) IN $ 94,151
NET ASSETS RESULTING FROM
OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED FEBRUARY 29, YEAR ENDED AUGUST 31, 1999
2000
(UNAUDITED)
INCREASE (DECREASE) IN NET
ASSETS
Operations Net interest income $ 1,118,452 $ 2,057,235
Net realized gain (loss) (208,153) 116,867
Change in net unrealized (816,148) (2,304,700)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 94,151 (130,598)
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (1,099,695) (2,057,235)
from net interest income
Share transactions Net 5,374,924 14,363,034
proceeds from sales of shares
Reinvestment of distributions 801,891 1,517,501
Cost of shares redeemed (8,337,499) (8,904,888)
NET INCREASE (DECREASE) IN (2,160,684) 6,975,647
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 4,263 5,057
TOTAL INCREASE (DECREASE) (3,161,965) 4,792,871
IN NET ASSETS
NET ASSETS
Beginning of period 48,625,631 43,832,760
End of period (including $ 45,463,666 $ 48,625,631
undistributed net interest
income of $27,858 and $0,
respectively)
OTHER INFORMATION
Shares
Sold 540,083 1,372,122
Issued in reinvestment of 80,757 145,212
distributions
Redeemed (839,628) (853,528)
Net increase (decrease) (218,788) 663,806
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS SIX MONTHS ENDED FEBRUARY 29, YEARS ENDED AUGUST 31,
2000
(UNAUDITED) 1999 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning
of $ 10.090 $ 10.550 $ 10.170 $ 9.850 $ 9.840 $ 9.640
period
Income from Investment .234 F .451 .461 .466 .488 .541
Operations Net interest
income
Net realized and unrealized (.212) (.461) .380 .323 .009 .198
gain (loss)
Total from investment .022 (.010) .841 .789 .497 .739
operations
Less Distributions
From net interest income (.233) (.451) (.461) (.466) (.488) (.541)
In excess of net realized
gain - - - (.003) - -
Total distributions (.233) (.451) (.461) (.469) (.488) (.541)
Redemption fees added to paid .001 .001 .000 .000 .001 .002
in capital
Net asset value, end of
period $ 9.880 $ 10.090 $ 10.550 $ 10.170 $ 9.850 $ 9.840
TOTAL RETURN B, C 0.24% (0.15)% 8.43% 8.17% 5.12% 8.07%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 45,464 $ 48,626 $ 43,833 $ 40,231 $ 45,359 $ 43,489
(000 omitted)
Ratio of expenses to average .55% A .55% .55% .55% .40% D .15% D
net assets
Ratio of expenses to average .48% A, E .49% E .53% E .54% E .39% E .15%
net assets after expense
reductions
Ratio of net interest income 4.73% A 4.34% 4.44% 4.65% 4.91% 5.71%
to average net assets
Portfolio turnover rate 22% A 12% 23% 41% 74% 72%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED .
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
F NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL
STATEMENTS.
NOTES TO FINANCIAL STATEMENTS
For the period ended February 29, 2000 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Spartan Maryland Municipal Income Fund (the fund) is a fund of
Fidelity Union Street Trust (the trust) and is authorized to issue an
unlimited number of shares. The trust is registered under the
Investment Company Act of 1940, as amended, as an open-end management
investment company organized as a Massachusetts business trust. The
financial statements have been prepared in conformity with generally
accepted accounting principles which require management to make
certain estimates and assumptions at the date of the financial
statements. The fund may be affected by economic and political
developments in the state of Maryland. The following summarizes the
significant accounting policies of the fund:
SECURITY VALUATION. Securities are valued based upon a computerized
matrix system and/or appraisals by a pricing service, both of which
consider market transactions and dealer-supplied valuations.
Securities for which quotations are not readily available are valued
at their fair value as determined in good faith under consistently
applied procedures under the general supervision of the Board of
Trustees. Short-term securities with remaining maturities of sixty
days or less for which quotations are not readily available are valued
at amortized cost or original cost plus accrued interest, both of
which approximate current value.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
INTEREST INCOME. Interest income, which includes amortization of
premium and accretion of original issue discount, is accrued as
earned.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and
paid monthly from net interest income. Distributions from realized
gains, if any, are recorded on the ex-dividend date.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for futures transactions and capital loss carryforwards.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net interest income and accumulated undistributed net
realized gain (loss) on investments may include temporary book and tax
basis differences that will reverse in a subsequent period. Any
taxable gain remaining at fiscal year end is distributed in the
following year.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
SHORT-TERM TRADING (REDEMPTION) FEES. Shares held in the fund less
than 180 days are subject to a short-term trading fee equal to .50% of
the proceeds of the redeemed shares. The fee, which is retained by the
fund, is accounted for as an addition to paid in capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
MUNICIPAL CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the Securities and Exchange Commission, the fund may invest in the
Municipal Central Cash Fund managed by Fidelity Investments Money
Management, Inc. (FIMM), an affiliate of Fidelity Management &
Research Company (FMR). The Cash Fund is an open-end money market fund
available only to investment companies and other accounts managed by
FMR and its affiliates. The Cash Fund seeks preservation of capital,
liquidity, and current income by investing in high-quality, short-term
municipal securities of various states and municipalities. Income
distributions from the Cash Fund are declared daily and paid monthly
from net interest income. Income distributions earned by the fund are
recorded as interest income in the accompanying financial statements.
FUTURES CONTRACTS. The fund may use futures contracts to manage its
exposure to the bond market and to fluctuations in interest rates.
Buying futures tends to increase the fund's exposure to the underlying
instrument, while selling futures tends to decrease the fund's
exposure to the underlying instrument or hedge other fund investments.
Futures contracts involve, to varying degrees, risk of loss in excess
of the futures variation margin reflected in the Statement of Assets
and Liabilities. The underlying face amount at value of any open
futures contracts at period end is shown in the schedule of
investments under the caption "Futures Contracts." This amount
reflects each contract's exposure to the underlying instrument at
period end. Losses may arise from changes in the value of the
underlying instruments or if the counterparties do not perform under
the contracts' terms. Gains (losses) are realized upon the expiration
or closing of the futures contracts. Futures contracts are valued at
the settlement price established each day by the board of trade or
exchange on which they are traded.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $5,022,013 and $7,463,934, respectively.
The market value of futures contracts opened and closed during the
period amounted to $1,584,153 and $1,104,034, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a fee
that is computed daily at an annual rate of .55% of the fund's average
net assets. FMR pays all other expenses, except the compensation of
the non-interested Trustees and certain exceptions such as interest,
taxes, brokerage commissions and extraordinary expenses. The
management fee paid to FMR by the fund is reduced by an amount equal
to the fees and expenses paid by the fund to the non-interested
Trustees.
SUB-ADVISER FEE. FMR, on behalf of the fund, has entered into a
sub-advisory agreement with FIMM, a wholly owned subsidiary of FMR.
For its services, FIMM receives a fee from FMR of 50% of the
management fee payable to FMR. The fee is paid prior to any voluntary
expense reimbursements which may be in effect.
5. EXPENSE REDUCTIONS.
Through arrangements with the fund's custodian and transfer agent,
credits realized as a result of uninvested cash balances were used to
reduce a portion of the fund's expenses. During the period, the fund's
expenses were reduced by $16,585 under these arrangements.
MANAGING YOUR INVESTMENTS
Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a
day.
BY PHONE
Fidelity Automated Service Telephone provides a single toll-free
number to access account balances, positions, quotes and trading. It's
easy to navigate the service, and on your first call, the system will
help you create a personal identification number (PIN) for security.
(PHONE_GRAPHIC)FIDELITY AUTOMATED
SERVICE TELEPHONE (FAST) SM
1-800-544-5555
PRESS
1 For mutual fund and brokerage trading.
2 For quotes.*
3 For account balances and holdings.
4 To review orders and mutual fund activity.
5 To change your PIN.
*0 To speak to a Fidelity representative.
BY PC
Fidelity's web site on the Internet provides a wide range of
information, including daily financial news, fund performance,
interactive planning tools and news about Fidelity products and
services.
(cOMPUTER_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call EarthLink Sprint at
1-800-288-2967, and be sure to ask for registration number SMD004 to
receive a special Fidelity package that includes 30 days of free
Internet access. EarthLink is North America's #1 independent Internet
access provider.
(COMPUTER_GRAPHIC)
FIDELITY ON-LINE XPRESS+(registered trademark)
Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools . . . all on your desktop. Call Fidelity
at 1-800-544-0240 or visit our web site for more information on how to
manage your investments via your PC.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD
AND RETURN WILL VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE
WILL ALSO VARY. THIS MEANS THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU
SELL YOUR SHARES. THERE IS NO ASSURANCE THAT MONEY MARKET FUNDS WILL
BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY
MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT. TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE,
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF ANY
SALES CHARGES.
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISER
Fidelity Investments
Money Management, Inc.
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Fred L. Henning, Jr., Vice President
Dwight D. Churchill, Vice President
George A. Fischer, Vice President
Eric D. Roiter, Secretary
Robert A. Dwight, Treasurer
Matthew N. Karstetter, Deputy Treasurer
Maria F. Dwyer, Deputy Treasurer
Stanley N. Griffith, Assistant Vice President
John H. Costello, Assistant Treasurer
Thomas J. Simpson, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
Donald J. Kirk *
Ned C. Lautenbach *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
* INDEPENDENT TRUSTEES
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
Citibank, N.A.
New York, NY
and
Fidelity Service Company, Inc.
Boston, MA
CUSTODIAN
Citibank, N.A.
New York, NY
FIDELITY'S MUNICIPAL BOND FUNDS
Spartan Arizona Municipal Income
(registered trademark)
Spartan California Municipal Income
Spartan Connecticut Municipal Income
Spartan Florida Municipal Income
Spartan Intermediate Municipal Income
Spartan Maryland Municipal Income
Spartan Massachusetts Municipal Income
Spartan Michigan Municipal Income
Spartan Minnesota Municipal Income
Spartan Municipal Income
Spartan New Jersey Municipal Income
Spartan New York Municipal Income
Spartan Ohio Municipal Income
Spartan Pennsylvania Municipal Income
Spartan Short-Intermediate
Municipal Income
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-6666
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST) 1-800-544-5555 SM
AUTOMATED LINE FOR QUICKEST SERVICE
(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
(2_FIDELITY_LOGOS)SPARTAN(REGISTERED TRADEMARK)
SHORT-INTERMEDIATE
MUNICIPAL INCOME
FUND
SEMIANNUAL REPORT
FEBRUARY 29, 2000
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.
Standard & Poor's, S&P and S&P 500 are registered service marks of The
McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity
Distributors Corporation.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL INFORMATION OF THE SHAREHOLDERS OF THE
FUNDS. THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE
INVESTORS IN THE FUNDS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE
PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND
EXPENSES, CALL 1-800-544-6666 FOR A FREE PROSPECTUS. READ IT CAREFULLY
BEFORE YOU INVEST OR SEND MONEY.
Other third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
This report is printed on recycled paper using soy-based inks.
PRESIDENT'S MESSAGE
(PHOTO_OF_EDWARD_C_JOHNSON_3D)
DEAR SHAREHOLDER:
In February, the Dow Jones Industrial Average closed below 10,000 for
the first time in 10 months - 16% below its high set in January. A
deeper drop was avoided by a rally late in the period. Meanwhile, the
technology-focused NASDAQ Index continued its record-setting ascent,
while the bellwether 30-year Treasury benefited slightly as a haven
from volatile blue chips and the U.S. Treasury's decision to reduce
long bond supply.
While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.
The longer your investment time frame, the less likely it is that you
will be affected by short-term market volatility. A 10-year investment
horizon appropriate for saving for a college education, for example,
enables you to weather market cycles in a long-term fund, which may
have a higher risk potential, but also has a higher potential rate of
return.
An intermediate-length fund could make sense if your investment
horizon is two to four years, while a short-term bond fund could be
the right choice if you need your money in one or two years.
If your time horizon is less than a year, you might want to consider
moving some of your bond investment into a money market fund. These
funds seek income and a stable share price by investing in
high-quality, short-term investments. Of course, it's important to
remember that an investment in a money market fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although money market funds seek to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in these types of funds.
Finally, no matter what your time horizon or portfolio diversity, it
makes good sense to follow a regular investment plan, investing a
certain amount of money in a fund at the same time each month or
quarter and periodically reviewing your overall portfolio. By doing
so, you won't get caught up in the excitement of a rapidly rising
market, nor will you buy all your shares at market highs. While this
strategy - known as dollar cost averaging - won't assure a profit or
protect you from a loss in a declining market, it should help you
lower the average cost of your purchases. Of course, you should
consider your financial ability to continue your purchases through
periods of low price levels before undertaking such a strategy.
If you have questions, please call us at 1-800-544-6666, or visit our
web site at www.fidelity.com. We are available 24 hours a day, seven
days a week to provide you the information you need to make the
investments that are right for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). You can also look at the fund's income, as
reflected in the fund's yield, to measure performance. If Fidelity had
not reimbursed certain fund expenses, the past five year, and past 10
year total returns would have been lower.
CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PERIODS ENDED FEBRUARY 29, PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SPARTAN SHORT-INTERMEDIATE 1.00% 1.15% 24.03% 65.59%
MUNICIPAL INCOME
LB 1-6 Year Municipal Bond 1.10% 1.18% 27.70% n/a
Short-Intermediate Municipal 0.35% -0.39% 22.01% 66.02%
Debt Funds Average
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. For example, if you had invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment
would be $1,050. You can compare the fund's returns to the performance
of the Lehman Brothers 1-6 Year Municipal Bond Index - a market
value-weighted index of investment-grade municipal bonds with
maturities between one and six years. To measure how the fund's
performance stacked up against its peers, you can compare it to the
short-intermediate municipal debt funds average, which reflects the
performance of mutual funds with similar objectives tracked by Lipper
Inc. The past six month average represents a peer group of 44 mutual
funds. These benchmarks include reinvested dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SPARTAN SHORT-INTERMEDIATE 1.15% 4.40% 5.17%
MUNICIPAL INCOME
LB 1-6 Year Municipal Bond 1.18% 5.01% n/a
Short-Intermediate Municipal -0.39% 4.05% 5.20%
Debt Funds Average
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and
show you what would have happened if the fund had performed at a
constant rate each year. (Note: Lipper calculates average annual total
returns by annualizing each fund's total return, then taking an
arithmetic average. This may produce a different figure than that
obtained by averaging the cumulative total returns and annualizing the
result.)
$10,000 OVER 10 YEARS
Spartan Short-Int. Muni LB Municipal Bond
00404 LB015
1990/02/28 10000.00 10000.00
1990/03/31 10039.30 10003.00
1990/04/30 10023.27 9930.58
1990/05/31 10115.29 10147.36
1990/06/30 10165.31 10236.56
1990/07/31 10246.69 10387.04
1990/08/31 10263.69 10236.22
1990/09/30 10324.77 10242.05
1990/10/31 10401.56 10427.84
1990/11/30 10498.11 10637.55
1990/12/31 10551.10 10683.82
1991/01/31 10648.35 10827.20
1991/02/28 10713.73 10921.39
1991/03/31 10756.79 10925.32
1991/04/30 10858.25 11070.63
1991/05/31 10923.63 11169.05
1991/06/30 10953.79 11157.99
1991/07/31 11028.94 11293.90
1991/08/31 11116.63 11442.64
1991/09/30 11204.67 11591.62
1991/10/31 11278.97 11695.94
1991/11/30 11328.94 11728.58
1991/12/31 11485.06 11980.27
1992/01/31 11533.73 12007.59
1992/02/29 11579.89 12011.43
1992/03/31 11585.56 12015.87
1992/04/30 11661.01 12122.81
1992/05/31 11725.38 12265.50
1992/06/30 11822.25 12471.31
1992/07/31 12003.74 12845.20
1992/08/31 11955.21 12719.96
1992/09/30 12014.85 12803.15
1992/10/31 12013.74 12677.30
1992/11/30 12121.74 12904.35
1992/12/31 12195.27 13036.10
1993/01/31 12317.93 13187.71
1993/02/28 12534.73 13664.71
1993/03/31 12496.21 13520.27
1993/04/30 12555.79 13656.69
1993/05/31 12604.47 13733.44
1993/06/30 12688.95 13962.66
1993/07/31 12699.11 13980.95
1993/08/31 12835.75 14272.03
1993/09/30 12920.76 14434.59
1993/10/31 12944.07 14462.45
1993/11/30 12926.50 14335.03
1993/12/31 13063.78 14637.65
1994/01/31 13150.85 14804.81
1994/02/28 13014.39 14421.36
1994/03/31 12790.59 13834.12
1994/04/30 12838.89 13951.44
1994/05/31 12915.29 14072.40
1994/06/30 12936.13 13986.41
1994/07/31 13051.01 14242.79
1994/08/31 13099.39 14292.07
1994/09/30 13066.08 14082.26
1994/10/31 13020.33 13832.16
1994/11/30 12948.00 13582.07
1994/12/31 13052.68 13881.01
1995/01/31 13197.49 14277.73
1995/02/28 13350.79 14692.93
1995/03/31 13440.31 14861.75
1995/04/30 13488.63 14879.29
1995/05/31 13647.97 15354.09
1995/06/30 13668.47 15220.51
1995/07/31 13745.62 15364.80
1995/08/31 13878.68 15559.62
1995/09/30 13927.10 15658.11
1995/10/31 14004.61 15885.78
1995/11/30 14094.30 16149.33
1995/12/31 14158.26 16304.52
1996/01/31 14250.51 16427.62
1996/02/29 14254.55 16316.74
1996/03/31 14204.54 16108.21
1996/04/30 14210.66 16062.62
1996/05/31 14232.90 16056.20
1996/06/30 14296.15 16231.05
1996/07/31 14376.49 16378.75
1996/08/31 14399.16 16374.82
1996/09/30 14478.82 16604.07
1996/10/31 14574.60 16791.86
1996/11/30 14712.97 17099.15
1996/12/31 14707.43 17027.33
1997/01/31 14761.00 17059.52
1997/02/28 14838.86 17216.12
1997/03/31 14758.87 16986.63
1997/04/30 14810.92 17128.81
1997/05/31 14939.58 17386.43
1997/06/30 15036.88 17571.59
1997/07/31 15226.14 18058.33
1997/08/31 15189.57 17889.12
1997/09/30 15287.30 18101.46
1997/10/31 15341.62 18217.85
1997/11/30 15394.10 18324.98
1997/12/31 15509.42 18592.34
1998/01/31 15609.89 18784.21
1998/02/28 15628.76 18789.85
1998/03/31 15653.33 18806.38
1998/04/30 15629.74 18721.56
1998/05/31 15763.10 19017.93
1998/06/30 15801.30 19092.86
1998/07/31 15856.74 19140.78
1998/08/31 16005.81 19436.50
1998/09/30 16122.14 19678.68
1998/10/31 16176.91 19678.29
1998/11/30 16197.94 19747.36
1998/12/31 16236.38 19797.12
1999/01/31 16386.97 20032.51
1999/02/28 16371.38 19944.97
1999/03/31 16392.88 19972.69
1999/04/30 16412.51 20022.43
1999/05/31 16417.35 19906.50
1999/06/30 16322.58 19619.84
1999/07/31 16375.41 19691.26
1999/08/31 16395.73 19533.73
1999/09/30 16447.33 19541.74
1999/10/31 16451.85 19329.90
1999/11/30 16520.83 19535.57
1999/12/31 16498.46 19390.03
2000/01/31 16505.35 19305.69
2000/02/29 16558.92 19529.63
IMATRL PRASUN SHR__CHT 20000229 20000313 103120 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Spartan Short-Intermediate Municipal Income Fund on
February 28, 1990. As the chart shows, by February 29, 2000, the value
of the investment would have grown to $16,559 - a 65.59% increase on
the initial investment. For comparison, look at how the Lehman
Brothers Municipal Bond Index - a market value-weighted index of
investment-grade municipal bonds with maturities of one year or more -
did over the same period. With dividends and capital gains, if any,
reinvested, the same $10,000 would have grown to $19,530 - a 95.30%
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
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS ENDED FEBRUARY 29, YEARS ENDED AUGUST 31,
2000 1999 1998 1997 1996 1995
Dividend returns 1.97% 3.92% 4.27% 4.38% 4.25% 4.53%
Capital returns -0.97% -1.48% 1.10% 1.11% -0.50% 1.42%
Total returns 1.00% 2.44% 5.37% 5.49% 3.75% 5.95%
</TABLE>
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
fund. A capital return reflects both the amount paid by the fund to
shareholders as capital gain distributions and changes in the fund's
share price. Both returns assume the dividends or capital gains, if
any, paid by the fund are reinvested.
DIVIDENDS AND YIELD
PERIODS ENDED FEBRUARY 29, PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR
2000
Dividends per share 3.21(cents) 19.58(cents) 39.08(cents)
Annualized dividend rate 4.08% 3.95% 3.90%
30-day annualized yield 4.28% - -
30-day annualized 6.69% - -
tax-equivalent yield
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 $9.90
over the past one month, $9.95 over the past six months and $10.02
over the past one year, you can compare the fund's income over these
three periods. The 30-day annualized YIELD is a standard formula for
all bond funds based on the yields of the bonds in the fund, averaged
over the past 30 days. This figure shows you the yield characteristics
of the fund's investments at the end of the period. It also helps you
compare funds from different companies on an equal basis. The
tax-equivalent yield shows what you would have to earn on a taxable
investment to equal the fund's tax-free yield, if you're in the 36%
federal tax bracket, but does not reflect payment of the federal
alternative minimum tax, if applicable.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Two more interest-rate hikes by the
U.S. Federal Reserve board during the
six-month period ending February
29, 2000 - on top of the two rates
hikes that occurred shortly before the
period began - continued to
detract from the performance of
municipal bonds. For the six-month
period, the Lehman Brothers
Municipal Bond Index - an index
of over 35,000 investment-grade,
fixed-rate, tax-exempt bonds -
turned in a flat return of -0.02%.
Several other factors also contributed
to the municipal bond industry's
lackluster performance. The health
care sector, a prominent issuer of
muni bonds, was beleaguered by
concerns of Medicare and
government pricing reforms, which
caused health care securities to
struggle. Furthermore, as interest
rates continued to climb, many
muni bonds fell to deeply discounted
levels, which can create unfavorable
tax consequences for buyers of those
bonds. In return, investors demanded
greater yield as compensation,
causing the prices of these issues
to drop even further. Compared to
corporate and mortgage bonds,
municipal bond performance
lagged during the six-month
period. The Lehman Brothers
Corporate Bond Index returned
1.70%, while mortgage securities, one
of the best-performing domestic
debt offerings during the period,
returned 2.30%, according to the
Lehman Brothers Mortgage-Backed
Securities Index.
(PHOTOGRAPH OF Norm Lind)
An interview with Norm Lind, Portfolio Manager of Spartan
Short-Intermediate Municipal Income Fund
Q. HOW DID THE FUND PERFORM, NORM?
A. Rising interest rates and persistent inflation worries put pressure
on municipal bonds, although the fund performed better than its peers.
For the six-month period that ended February 29, 2000, the fund had a
total return of 1.00%. To get a sense of how the fund did relative to
its competitors, the short-intermediate municipal debt funds average
returned 0.35% for the same six-month period, according to Lipper Inc.
Additionally, the Lehman Brothers 1-6 Year Municipal Bond Index, which
tracks the types of securities in which the fund invests, returned
1.10% during the same six-month period. The fund is managed to have
similar overall interest-rate risk to its benchmark index, which is
more representative of the fund's investment universe. For the
12-month period that ended February 29, 2000, the fund returned 1.15%.
That return compared to the short-intermediate municipal debt funds
average's -0.39% return and the Lehman Brothers 1-6 Year Index's 1.18%
return for the same 12-month period.
Q. WHAT HELPED THE FUND OUTPACE ITS PEERS DURING THE PAST SIX MONTHS?
A. The fact that the fund owned fewer poor-performing, high-yielding
bonds than many of its peers turned out to be one of the key reasons
for its outperformance. For example, the fund didn't hold a lot of
zero coupon bonds, which don't pay interest but are sold below their
face value. "Zeros" are especially sensitive to interest rate changes
and, as a result, fell out of favor and suffered more than
interest-paying bonds when interest rates rose. In addition, the fund
held relatively few lower-quality, investment-grade bonds - those
rated below A - which also were hit harder than higher-quality bonds
during the market's downturn.
Q. WERE THERE OTHER REASONS FOR THE FUND'S OUTPERFORMANCE?
A. Yes, there were. The fund benefited from its relatively large
position in premium coupon bonds, which pay interest rates above
prevailing market rates and trade at prices that are above their face
- - or par - value. The primary reason why I favored them is because
their premium gives them DE MINIMIS protection. This protects certain
premium bonds' gains from unfavorable tax treatment that can occur
during particular market environments. As interest rates rose and bond
prices fell, more and more bonds fell outside of DE MINIMIS, and
investors punished them accordingly by bidding their prices lower. In
addition, individual investors tend to shy away from premiums, so I'm
often able to purchase them at attractive prices compared to similarly
rated, comparable maturity bonds with coupons at or below prevailing
rates.
Q. WHICH BONDS WERE THE MOST DISAPPOINTING DURING THE PERIOD?
A. The fund's stake in health care bonds, which continued to be hurt
by cutbacks in Medicare payments and reduced managed care payments,
was probably the biggest disappointment during the past six months.
The fund's holdings in Texas ranked second among disappointments. When
the state legislature broadened Texas-based insurance companies'
ability to buy municipal bonds outside of Texas, the demand for Texas
munis weakened.
Q. WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS OVER THE PAST SIX
MONTHS?
A. I added some bonds from issuers that are less economically
sensitive - including those that provide essential services such as
water, sewer and transportation. Given that more economically
sensitive bonds - such as general obligation bonds - offered only a
small amount of additional yield, there really wasn't any penalty for
getting some measure of protection against a potential economic
slowdown.
Q. WHAT'S AHEAD FOR THE MUNICIPAL MARKET?
A. The main factor affecting the future of municipals probably will
continue to be - as it has been over the past year - the direction of
interest rates. The way bonds were priced at the end of the period
suggests that investors are expecting further interest-rate hikes in
the months to come. But since I don't spend time on interest-rate
forecasting, I'll look for attractively priced bonds that I believe
can perform well in relation to other bonds, no matter what the
interest-rate backdrop. Toward the end of the period, some types of
bonds that had been unattractive last fall and in early 2000 offered
some interesting opportunities. Select zero coupon bonds and
lower-quality, investment-grade bonds, for example, had cheapened up
quite a bit and started to look interesting. From a technical
standpoint, the municipal market is in reasonably good shape. Rising
interest rates have curtailed the supply of new issuance, and
refundings - or refinancings - of existing debt have slowed.
NORM LIND ON BOND MATURITIES:
"One of the key strategies I use in
managing the fund is to
opportunistically purchase and
sell bonds of various maturities,
and the past six months provides a
useful example of my approach.
Initially, I found value in bonds
with maturities of six, seven and
eight years, which are in the fund's
allowable range of investments.
Bonds in that range offered
attractive amounts of income over
shorter-maturity bonds. That
strategy benefited the fund
because the yields on bonds with
maturities of six, seven and eight
years rose less in percentage terms
- - and their prices fell less - than
shorter-maturity bonds. More
recently, I sold some of those bonds
and bought cheaper five-year bonds.
In addition, the fund also
benefited from its year-end stake
in securities maturing in 13-15
months, which offered an
unusually large amount of yield over
12-month securities. As we moved
into January 2000, these bonds
became 12-month securities and
were eligible for inclusion in money
market mutual funds. Once that
occurred, the demand for these
bonds increased and their
prices moved higher. I kept the
fund's duration in line with the
short-intermediate municipal
market as a whole, as measured by
the Lehman Brothers 1-6 Year
Municipal Bond Index. At the end
of the period, the fund's duration
was 2.8 years, which remained in
line with the Lehman Brothers
index."
FUND FACTS
GOAL: seeks as high a level of
current income, exempt from
federal income tax, as is
consistent with preservation of
capital
FUND NUMBER: 404
TRADING SYMBOL: FSTFX
START DATE: December 24, 1986
SIZE: as of February 29,
2000, more than $739
million
MANAGER: Norm Lind, since
1995; manager, various Fidelity
and Spartan municipal income
funds; joined Fidelity in 1986
(checkmark)
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
INVESTMENT CHANGES
TOP FIVE STATES AS OF
FEBRUARY 29, 2000
% OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6
MONTHS AGO
New York 16.9 14.5
Texas 14.1 7.8
Massachusetts 5.0 5.9
Washington 4.8 4.3
Tennessee 4.4 0.3
TOP FIVE SECTORS AS OF
FEBRUARY 29, 2000
% OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6
MONTHS AGO
General Obligations 32.2 39.0
Electric Utilities 22.3 19.3
Escrowed/Pre-Refunded 15.8 10.1
Transportation 8.9 4.7
Special Tax 7.1 7.6
AVERAGE YEARS TO MATURITY AS
OF FEBRUARY 29, 2000
6 MONTHS AGO
Years 3.3 2.9
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME REMAINING UNTIL
PRINCIPAL PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS,
WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF FEBRUARY 29,
2000
6 MONTHS AGO
Years 2.8 2.5
DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH
A FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER
FACTORS ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE.
ACCORDINGLY, A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS
EXAMPLE.
QUALITY DIVERSIFICATION
(MOODY'S RATINGS)
AS OF FEBRUARY 29, 2000
Row: 1, Col: 1, Value: 54.3
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 32.8
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 10.5
Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 0.7000000000000001
Row: 1, Col: 8, Value: 1.7
Aaa 54.3%
Aa, A 32.8%
Baa 10.5%
Not Rated 0.7%
Short-term
Investments 1.7%
AS OF AUGUST 31, 1999
Row: 1, Col: 1, Value: 52.3
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 34.0
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 8.9
Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 1.2
Row: 1, Col: 8, Value: 3.6
Aaa 52.3%
Aa, A 34.0%
Baa 8.9%
Not Rated 1.2%
Short-term
Investments 3.6%
WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P (registered
trademark) RATINGS. AMOUNTS SHOWN ARE AS A PERCENTAGE OF THE FUND'S
INVESTMENTS.
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
INVESTMENTS FEBRUARY 29, 2000 (UNAUDITED)
Showing Percentage of Net Assets
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS - 98.0%
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
ALABAMA - 2.3%
Alabama Agric. & Mechanical Aaa $ 2,000 $ 2,172
Univ. Revs. 6.5% 11/1/25
(MBIA Insured) (Pre-Refunded
to 11/1/05 @ 102) (e)
Alabama Gen. Oblig. Rfdg. Aa3 14,680 14,881
Series A, 5.5% 10/1/01
17,053
ALASKA - 0.5%
Alaska Student Ln. Corp.
Student Ln. Rev. Series A:
5% 7/1/03 (AMBAC Insured) (d) Aaa 500 501
5.1% 7/1/04 (AMBAC Insured) Aaa 2,300 2,307
(d)
5.55% 7/1/03 (AMBAC Insured) Aaa 1,000 1,020
(d)
3,828
ARIZONA - 2.2%
Arizona Trans. Board Excise Aaa 10,000 10,121
Tax Rev. (Maricopa County
Reg'l. Area Road Proj.)
5.25% 7/1/05 (AMBAC Insured)
Arizona Trans. Board Hwy. Aaa 2,800 2,914
Rev. Sub Series A, 6.6%
7/1/08 (Pre-Refunded to
7/1/01 @ 101.5) (e)
Phoenix Civic Impt. Corp. Aa2 1,000 1,016
Excise Tax Rev. Rfdg.
(Arpt. Impts. Proj.) Series
A, 5.85% 7/1/01 (d)
Salt River Proj. Agric. Impt. Aa2 1,000 1,025
& Pwr. District Elec. Sys.
Rev. Series D, 5.7% 1/1/04
Univ. of Arizona Univ. Rev. AA 1,000 1,026
Series B, 6.9% 6/1/16
(Pre-Refunded to 6/1/00 @
102) (e)
16,102
ARKANSAS - 1.3%
Arkansas Student Ln. Auth.
Rev. Sr. Series A1:
6.05% 6/1/02 (d) Aa 4,700 4,804
6.05% 12/1/02 (d) Aa 4,455 4,574
9,378
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
CALIFORNIA - 0.5%
Los Angeles Dept. Wtr. & Pwr.
Elec. Plant Rev. Second Issue:
9% 10/15/00 Aa3 $ 1,300 $ 1,342
9% 10/15/01 Aa3 2,000 2,145
3,487
COLORADO - 0.9%
Arapaho County Cap. Impt. Aaa 4,500 2,794
Trust Fund Hwy. Rev. (Cap.
Appreciation) Series E, 0%
8/31/08 (Pre-Refunded to
8/31/05 @ 82.9449) (e)
Denver City & County Arpt.
Rev.:
Rfdg. Series C, 5.1% 11/15/01 Baa1 2,320 2,311
(d)
Series C, 6.55% 11/15/02 (d) Baa1 1,420 1,458
6,563
DISTRICT OF COLUMBIA - 0.4%
District of Columbia Gen.
Oblig. Rfdg. Series A1:
4.65% 6/1/02 (MBIA Insured) Aaa 1,680 1,675
4.65% 6/1/02 (MBIA Insured) Aaa 1,570 1,566
(Escrowed to Maturity) (e)
3,241
FLORIDA - 3.6%
Dade County Aviation Rev. Aaa 3,500 3,528
Rfdg. (Miami Int'l. Arpt.
Proj.) Series A, 5.25%
10/1/01 (FSA Insured) (d)
Florida Dept. of Trans. Aa2 2,725 2,834
(Right of Way Aquisition &
Bridge Proj.) 6.5% 7/1/02
Florida Ports Fing. Aaa 4,575 4,750
Commission Rev. (State
Trans. Trust Fund Proj.) 6%
6/1/05 (MBIA Insured) (d)
Jacksonville Elec. Auth. Rev.:
Rfdg. (Saint John River Aa2 1,500 1,587
Proj.) Series 10 Issue 2,
6.5% 10/1/03
Third Installment, 5.2% Aaa 875 872
7/1/01 (Escrowed to
Maturity) (e)
Lakeland Elec. & Wtr. Rev. Aaa 9,255 9,507
Rfdg. (Energy Sys. Proj.)
First Lien Series B, 6.3%
10/1/01 (FSA Insured)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
FLORIDA - CONTINUED
Lee County Indl. Dev. Auth.
Health Care Facilities Rev.
(Shell Point Village Proj.)
Series A:
5.25% 11/15/04 BBB- $ 500 $ 476
5.25% 11/15/05 BBB- 685 644
5.25% 11/15/06 BBB- 1,145 1,061
Tampa Gen. Oblig. (Catholic Aaa 1,000 1,018
Health East Proj.) Series
A3, 5.5% 11/15/02 (MBIA
Insured)
26,277
GEORGIA - 4.2%
Atlanta Arpt. Facilities Rev. Aaa 1,500 1,510
Rfdg. 5% 1/1/01 (AMBAC
Insured)
Atlanta Wtr. & Swr. Rev. Aaa 4,475 4,520
4.75% 1/1/23 (FGIC Insured)
(Pre-Refunded to 1/1/04 @
102) (e)
Dalton Utils. Rev. 5.75% Aaa 6,000 6,172
1/1/09 (FSA Insured)
Georgia Gen. Oblig.:
Series B, 6.1% 3/1/05 Aaa 3,000 3,143
Series C:
6.5% 7/1/06 Aaa 4,010 4,307
7.25% 7/1/06 Aaa 2,000 2,226
Series D, 5.8% 11/1/05 Aaa 9,000 9,348
31,226
HAWAII - 1.7%
Hawaii Arpt. Sys. Rev. Second Aaa 1,000 1,028
Series, 7.4% 7/1/02 (FGIC
Insured) (d)
Hawaii Gen. Oblig.:
Rfdg. Series CO, 4.625% Aaa 5,000 5,001
9/1/01 (FGIC Insured)
Series CN, 6.25% 3/1/02 (FGIC Aaa 2,000 2,057
Insured)
Honolulu City & County Gen.
Oblig. Series B:
5.5% 11/1/04 (FGIC Insured) Aaa 465 475
5.5% 11/1/04 (FGIC Insured) Aaa 4,160 4,256
(Escrowed to Maturity) (e)
12,817
IOWA - 0.4%
Iowa Student Ln. Liquidity
Corp. Student Ln. Rev.:
Series A, 6.35% 3/1/01 Aa1 1,500 1,527
Series D, 7% 12/1/03 (AMBAC Aaa 1,535 1,581
Insured) (d)
3,108
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
KENTUCKY - 0.7%
Owensboro Elec. Lt. & Pwr. Aaa $ 5,450 $ 5,257
Rev. Rfdg. Series B, 0%
1/1/01 (AMBAC Insured)
LOUISIANA - 0.3%
Louisiana Pub. Facilities Aaa 1,900 1,931
Auth. Rev. Rfdg. (Student
Ln. Prog.) Sr. Series A1,
6.2% 3/1/01
MARYLAND - 1.9%
Maryland Gen. Oblig. (State & Aaa 4,000 4,027
Local Facilities Ln. Prog.)
Series 2, 5% 7/15/01
Montgomery County Gen. Oblig. Aaa 4,000 4,043
(Consolidated Pub. Impt.
Proj.) Series A, 5.2% 10/1/01
Univ. of Maryland Sys. Aa3 6,325 6,370
Auxiliary Facility & Tuition
Rev. Rfdg. Series B, 5%
10/1/01
14,440
MASSACHUSETTS - 5.0%
Massachusetts Gen. Oblig.:
(Consolidated Ln. Prog.)
Series C:
5% 9/1/04 Aa2 6,575 6,588
6.75% 8/1/06 (Pre-Refunded to Aaa 1,000 1,049
8/1/01 @ 102) (e)
Rfdg. Series A, 5% 8/1/01 Aa2 1,000 1,006
Rfdg. (Cap. Appreciation) Aaa 3,830 3,398
Series B, 0% 8/1/02 (AMBAC
Insured)
Massachusetts Health & Edl. Aaa 3,800 3,762
Facilities Auth. Rev. Rfdg.
(Fairview Extended Care
Proj.) Series B, 4.55%
1/1/21 (MBIA Insured)
Massachusetts Ind. Fin. Agcy. BBB 3,000 2,951
Resource Recovery Rev. Rfdg.
(Ogden Haverhill Proj.)
Series A, 4.5% 12/1/01
Massachusetts Ind. Fin. Agcy. A1 4,510 4,427
Rev. (Cap. Appreciation)
(Massachusetts Biomedical
Research Corp. Proj.) Series
A1, 0% 8/1/00
Massachusetts Wtr. Resources
Auth. Rev.:
Rfdg. Series C, 5.25% 12/1/01 A1 2,000 2,021
Series A, 7.125% 4/1/00 A1 1,500 1,503
New England Ed. Ln. Marketing
Corp. Massachusetts Student
Ln. Rev. Rfdg.:
Series B, 5.4% 6/1/00 Aa2 8,500 8,522
Sr. Issue D, 6.2% 9/1/00 Aaa 2,000 2,018
37,245
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
MICHIGAN - 1.9%
Detroit Convention Facilities
Rev. Rfdg. (Cobo Hall
Expansion Proj.):
4.75% 9/30/00 A $ 5,220 $ 5,235
4.8% 9/30/01 A 1,000 1,001
Michigan Hosp. Fin. Auth.
Rev. Rfdg.:
(Genesys Reg'l. Med. Hosp.
Proj.) Series A:
5.25% 10/1/02 (Escrowed to Baa2 2,040 2,059
Maturity) (e)
5.25% 10/1/03 (Escrowed to Baa2 1,000 1,010
Maturity) (e)
(Mercy Health Svcs. Proj.):
Series S, 5.75% 8/15/05 Aa3 1,275 1,295
Series T, 5.75% 8/15/05 Aa3 3,070 3,118
13,718
MINNESOTA - 2.6%
Minneapolis Gen. Oblig. (Cap.
Appreciation) Series B:
0% 12/1/02 Aaa 1,300 1,137
0% 12/1/03 Aaa 500 415
0% 12/1/04 Aaa 1,500 1,178
Minnesota Gen. Oblig.:
4.75% 8/1/01 Aaa 12,250 12,288
5.9% 8/1/05 (Pre-Refunded to Aaa 3,815 3,913
8/1/02 @ 100) (e)
18,931
MISSOURI - 0.6%
Kansas City Arpt. Rev. Rfdg. Aaa 4,085 4,125
(Gen. Impt. Proj.) Series A,
5.25% 9/1/03 (FSA Insured)
(d)
NEBRASKA - 3.5%
Nebraska Pub. Pwr. District
Rev.:
(Pwr. Supply Sys. Proj.) Aaa 4,400 4,473
Series A, 5.25% 1/1/28 (MBIA
Insured) (Pre-Refunded to
1/1/05 @ 101) (e)
Rfdg. Series A, 5% 1/1/01 A1 8,500 8,547
Series A, 5.25% 1/1/05 (MBIA Aaa 10,000 10,084
Insured)
5.4% 7/1/01 A1 3,085 3,118
26,222
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NEVADA - 0.4%
Clark County Hwy. Impt. Rev. Aaa $ 2,000 $ 2,012
(Motor Vehicle Fuel Tax
Proj.) 5% 7/1/01 (AMBAC
Insured)
Clark County Gen. Oblig. Aa2 1,000 1,022
(Flood Cont. Proj.) 6%
11/1/01
3,034
NEW JERSEY - 2.4%
New Jersey Gen. Oblig. 5.25% Aa1 3,000 3,017
3/1/07
New Jersey Health Care A3 3,500 3,581
Facilities Fing. Auth. Rev.
Rfdg. (Atlantic City Med.
Ctr. Proj.) Series C, 6.45%
7/1/02
New Jersey Trans. Corp.
Series A:
5.25% 9/1/01 (FSA Insured) Aaa 5,000 5,034
5.4% 9/1/02 (FSA Insured) Aaa 6,350 6,428
18,060
NEW MEXICO - 0.6%
Albuquerque Arpt. Rev. Rfdg.:
6.25% 7/1/00 (AMBAC Insured) Aaa 660 664
(d)
6.25% 7/1/01 (AMBAC Insured) Aaa 980 1,000
(d)
New Mexico Edl. Assistance Aaa 2,365 2,433
Foundation Student Ln. Rev.
Sr. Series IV A1, 6.5%
3/1/04 (d)
4,097
NEW YORK - 16.9%
Long Island Pwr. Auth. Elec.
Sys. Rev.:
Series A, 5.5% 12/1/06 (AMBAC Aaa 4,000 4,080
Insured)
4.25% 4/1/00 Baa1 14,235 14,235
Metro. Trans. Auth. New York
Commuter Facilities Rev.
Series A:
5% 7/1/06 Baa1 1,520 1,494
5.125% 7/1/07 Baa1 3,015 2,969
5.25% 7/1/08 Baa1 3,640 3,594
5.375% 7/1/09 Baa1 3,635 3,603
5.5% 7/1/10 Baa1 4,220 4,201
Muni. Assistance Corp. for
New York City:
Rfdg.:
Series E, 5.5% 7/1/01 Aa2 20,400 20,630
Series L:
6% 7/1/05 Aa2 3,500 3,656
6% 7/1/06 Aa2 1,000 1,047
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NEW YORK - CONTINUED
Muni. Assistance Corp. for
New York City: - continued
Series G:
5.5% 7/1/01 Aa2 $ 5,000 $ 5,058
6% 7/1/05 Aa2 3,000 3,133
New York City Gen. Oblig.:
Rfdg.:
Series A, 5.7% 8/1/02 A3 1,500 1,526
Series E, 5.4% 2/15/03 A3 10,285 10,388
Series D:
6.6% 2/1/03 A3 975 1,016
6.6% 2/1/03 (Escrowed to A3 25 26
Maturity) (e)
Series H:
5% 8/1/05 A3 8,050 7,961
6.9% 2/1/01 A3 265 271
6.9% 2/1/01 (Escrowed to Aaa 135 138
Maturity) (e)
Series J, 6% 2/15/04 A3 3,000 3,089
New York State Local Govt. Aaa 10,500 11,065
Assistance Corp. Series B,
7.5% 4/1/20 (Pre-Refunded to
4/1/01 @ 102) (e)
New York State Med. Care Aaa 1,785 1,889
Facilities Fin. Agcy. Rev.
(Mental Health Svcs.
Facilities Proj.) Series C,
7.3% 2/15/21 (Pre-Refunded
to 8/15/01 @ 102) (e)
New York State Thruway Auth. Aaa 4,000 4,069
Gen. Rev. Series C, 5.4%
1/1/05 (FGIC Insured)
New York State Thruway Auth.
Hwy. & Bridge Trust Fund
Series A:
5.8% 4/1/10 (AMBAC Insured) Aaa 2,415 2,538
(Pre-Refunded to 4/1/04 @
102) (e)
5.8% 4/1/11 (AMBAC Insured) Aaa 2,725 2,863
(Pre-Refunded to 4/1/04 @
102) (e)
New York State Thruway Auth.
Svc. Contract Rev. (Local
Hwy. & Bridge Proj.):
5.4% 4/1/03 Baa1 2,750 2,779
6% 4/1/01 Baa1 1,100 1,118
6% 4/1/03 Baa1 2,300 2,363
Triborough Bridge & Tunnel Aa3 3,885 4,003
Auth. Revs. Rfdg. Series B,
6% 1/1/03
124,802
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NORTH CAROLINA - 3.9%
North Carolina Eastern Muni.
Pwr. Agcy. Pwr. Sys. Rev.
Rfdg.:
Series A:
5.2% 1/1/01 Baa1 $ 3,000 $ 3,003
7.875% 1/1/02 Baa1 9,255 9,633
Series B, 5.5% 1/1/02 Baa3 1,000 1,000
North Carolina Gen. Oblig.
(Pub. School Bldg. Proj.):
4.5% 4/1/01 Aaa 10,000 10,026
4.6% 4/1/03 Aaa 4,000 3,983
North Carolina Muni. Pwr. Baa1 1,000 1,004
Agcy. #1 Catawba Elec. Rev.
Rfdg. 5.75% 1/1/02
28,649
OHIO - 4.4%
Akron Wtrwks. Rev. 6.55% Aaa 3,750 3,905
3/1/12 (AMBAC Insured)
(Pre-Refunded to 3/1/01 @
102) (e)
Butler County Trans. Impt. Aaa 2,605 2,615
District Series A, 5%
4/1/04 (FSA Insured)
Cleveland Arpt. Sys. Rev. Aaa 1,000 1,016
Series A, 5.5% 1/1/05 (FSA
Insured) (d)
Franklin County Gen. Oblig. - 3,800 3,972
(Courthouse Proj.) 6.375%
12/1/17 (Pre-Refunded to
12/1/01 @ 102) (e)
Ohio Bldg. Auth.:
(Administration Bldg. Fund Aa2 2,175 2,207
Prog.) Series A, 5.5% 10/1/01
Rfdg. (State Correctional Aa2 5,600 5,849
Facilities Proj.) Series A,
6% 10/1/05
Ohio Wtr. Dev. Auth. Poll.
Cont. Facilities Rev.:
(Wtr. Cont. Ln. Fund Prog.) Aaa 1,810 1,827
5.25% 6/1/06 (MBIA Insured)
Rfdg. Bonds (Ohio Edison Co. Baa3 10,000 9,838
Proj.) Series A, 4.25%,
tender 6/1/01
Ohio Wtr. Dev. Auth. Rev. Aaa 1,350 1,376
(Fresh Wtr. Svc. Proj.) 5.4%
6/1/05 (AMBAC Insured)
32,605
PENNSYLVANIA - 1.8%
Pennsylvania Higher Edl. A3 4,000 4,013
Facilities Auth. Health
Svcs. Rev. Rfdg. (Univ. of
Pennslyvania Proj.) Series
A, 5.125% 1/1/01
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
PENNSYLVANIA - CONTINUED
Philadelphia Gas Works Rev. Aaa $ 5,000 $ 5,049
First Series A, 5.25% 7/1/05
(FSA Insured)
Somerset County Gen. Auth. Aaa 4,000 4,098
Commonwealth Lease Rev.
6.25% 10/15/11 (FGIC
Insured) (Pre-Refunded to
10/15/01 @ 100) (e)
13,160
SOUTH CAROLINA - 2.3%
Charleston County School Aa1 5,000 4,989
District 4% 2/1/01
Richland County School Aaa 1,100 1,118
District #2 Series B, 5.6%
3/1/02 (MBIA Insured)
South Carolina Ed. Assistance - 1,400 1,425
Auth. Rev. (Insured Student
Ln. Prog.) 6.3% 9/1/01 (d)
South Carolina Gen. Oblig. Aaa 5,000 5,085
(Cap. Impt. Proj.) Series B,
5.75% 8/1/01
South Carolina Pub. Svc. Aaa 4,145 4,326
Auth. Rev. Rfdg. (Santee
Cooper Proj.) Series B, 6.5%
7/1/26 (Pre-Refunded to
7/1/01 @ 102) (e)
16,943
TENNESSEE - 4.4%
Memphis-Shelby County Arpt.
Auth. Arpt. Rev. Rfdg.
Series A:
5.25% 2/15/01 (MBIA Insured) Aaa 800 807
(d)
5.25% 2/15/02 (MBIA Insured) Aaa 1,000 1,006
(d)
Shelby County Gen. Oblig.:
Series 1996 B, 5.75% 11/1/21 Aaa 14,000 14,483
(FSA Insured) (Pre-Refunded
to 11/1/06 @ 100) (e)
Series A:
0% 5/1/10 (Pre-Refunded to AA+ 15,750 8,933
5/1/05 @ 74.444) (e)
0% 5/1/12 (Pre-Refunded to AA+ 15,130 7,511
5/1/05 @ 65.1568) (e)
32,740
TEXAS - 14.1%
Alief Independent School Aaa 1,000 908
District Rfdg. (Cap.
Appreciation) 0% 2/15/02
Austin Arpt. Sys. Rev. Prior Aaa 4,810 5,116
Lien Series A, 6.5%
11/15/05 (MBIA Insured) (d)
Austin Combined Util. Sys. A2 5,000 5,036
Rev. Rfdg. Series A, 5.5%
11/15/06
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
TEXAS - CONTINUED
Austin Independent School Aaa $ 3,470 $ 3,586
District Rfdg. 5.75% 8/1/14
(Pre-Refunded to 8/1/06 @
100) (e)
Brazos River Auth. Rev. Rfdg. Baa1 5,000 4,972
Bonds (Reliant Energy, Inc.
Proj.) Series B, 5.2%,
tender 12/1/02
Corpus Christi Independent Aaa 1,600 1,493
School District Rfdg. (Cap.
Appreciation) 0% 8/15/01
Cypress-Fairbanks Independent Aaa 10,000 6,677
School District Rfdg. (Cap.
Appreciation) Series B, 0%
8/1/07 (AMBAC Insured)
Dallas County Gen. Oblig. 7% Aaa 1,750 1,810
8/15/01
Deer Park Independent School Aaa 2,240 1,929
District Rfdg. 0% 2/15/03
Harris County Gen. Oblig. Aa1 3,490 3,264
Rfdg. (Cap. Appreciation)
(Toll Road Proj.) Sub Lien,
0% 8/1/01
Houston Wtr. & Swr. Sys. Rev. Aaa 3,170 3,356
Series A, 6.375% 12/1/22
(MBIA Insured) (Pre-Refunded
to 12/1/02 @ 102) (e)
Irving Independent School
District:
(Cap. Appreciation) 0% 2/15/04 Aaa 3,985 3,246
Rfdg. (Cap. Appreciation) 0% Aaa 3,100 2,669
2/15/03
Klein Independent School
District Rfdg.:
5.25% 8/1/05 Aaa 1,600 1,615
5.25% 8/1/06 Aaa 2,000 2,014
North Health Facilities Dev. Aaa 2,050 2,035
Corp. Hosp. Rev. Rfdg.
(United Reg'l. Health Care
Sys., Inc. Proj.) 4.5%
9/1/02 (MBIA Insured)
Port Houston Auth. Harris Aaa 2,000 2,080
County 6% 10/1/06 (FGIC
Insured) (d)
San Antonio Gen. Oblig.
Series 2000:
4.5% 2/1/05 Aa2 1,035 1,000
5% 2/1/06 Aa2 1,085 1,074
5% 2/1/07 Aa2 1,135 1,120
San Antonio Wtr. Rev. 6.2% Aaa 4,665 4,853
5/15/03 (FGIC Insured)
Texas A&M Univ. Rev. Rfdg. Aa2 2,300 2,320
(Fing. Sys. Prog.) 5.25%
5/15/01
Texas Gen. Oblig.:
Rfdg. (Cap. Appreciation):
(Superconducting Proj.) Aaa 2,750 2,480
Series C, 0% 4/1/02 (FGIC
Insured)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
TEXAS - CONTINUED
Texas Gen. Oblig.: - continued
Rfdg. (Cap. Appreciation):
(Texas Pub. Fin. Auth. Proj.) Aaa $ 9,000 $ 8,350
Series A, 0% 10/1/01 (AMBAC
Insured)
(Texas Pub. Fin. Auth. Proj.) Aa1 16,210 16,935
Series A, 6.25% 10/1/06
Texas Muni. Pwr. Agcy. Rev. Aaa 10,000 10,059
Rfdg. 5.25% 9/1/06 (MBIA
Insured)
Univ. of Texas Permanent Aaa 4,000 4,033
Univ. Fund 5.25% 7/1/06
104,030
UTAH - 4.4%
Intermountain Pwr. Agcy. Pwr.
Supply Rev.:
Rfdg. Series C, 6% 7/1/01 Aaa 2,000 2,037
(MBIA Insured)
Rfdg. (Cap. Appreciation)
Series B:
0% 7/1/00 A1 1,000 985
0% 7/1/00 (MBIA Insured) Aaa 3,500 3,451
0% 7/1/01 (AMBAC Insured) Aaa 5,000 4,695
Series 1, 0% 7/1/15 Aaa 7,500 7,470
(Pre-Refunded to 7/1/00 @
100) (e)
Series B, 5.5% 7/1/01 (MBIA Aaa 13,825 13,975
Insured)
32,613
VIRGINIA - 2.5%
Fairfax County Gen. Oblig.
Rfdg. (Pub. Impt. Proj.)
Series A:
4.75% 6/1/03 Aaa 3,595 3,595
5% 6/1/07 Aaa 10,990 10,916
Virginia Gen. Oblig. 6% 6/1/02 Aaa 1,810 1,864
Virginia Pub. School Auth. Aa1 2,000 2,059
Series A, 6% 8/1/02
18,434
WASHINGTON - 4.8%
Clark County Pub. Util. Aaa 2,000 2,045
District #1 Generating Sys.
Rev. 6% 1/1/02 (FGIC Insured)
Pierce County School District Aaa 11,295 11,355
#10 Tacoma 5% 12/1/02 (FSA
Insured)
Washington Gen. Oblig. Rfdg. Aa1 1,000 1,019
Series R 96B, 5.5% 7/1/03
Washington Pub. Pwr. Supply Aa1 3,000 3,095
Sys. Nuclear Proj. #1 Rev.
Rfdg. Series A, 6.5% 7/1/02
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
WASHINGTON - CONTINUED
Washington Pub. Pwr. Supply
Sys. Nuclear Proj. #2 Rev.
Rfdg.:
(Bonneville Pwr. Aaa $ 3,000 $ 3,111
Administration Proj.) Series
A, 6% 7/1/08 (AMBAC Insured)
Series A:
4.8% 7/1/04 Aa1 3,000 2,956
5.75% 7/1/08 Aa1 3,000 3,052
6.5% 7/1/02 Aa1 2,220 2,291
Series B, 5.5% 7/1/03 Aa1 2,000 2,022
Washington Pub. Pwr. Supply Aaa 5,000 4,922
Sys. Nuclear Proj. #3 Rev.
Rfdg. Series C, 5% 7/1/06
(FSA Insured)
35,868
WISCONSIN - 0.6%
Wisconsin Gen. Oblig. Series Aa2 1,370 1,380
C, 5.25% 5/1/01
Wisconsin Health & Edl. Aaa 3,000 3,162
Facilities Auth. Rev. (Saint
Lukes Med. Ctr. Proj.) 7.1%
8/15/11 (MBIA Insured)
(Pre-Refunded to 8/15/01 @
102) (e)
4,542
TOTAL MUNICIPAL BONDS 724,526
(Cost $730,880)
</TABLE>
CASH EQUIVALENTS - 1.7%
SHARES
Municipal Central Cash Fund, 12,331,145 12,331
3.87% (b)(c) (Cost $12,331)
TOTAL INVESTMENT PORTFOLIO - 736,857
99.7%
(Cost $743,211)
NET OTHER ASSETS - 0.3% 2,251
NET ASSETS - 100% $ 739,108
LEGEND
(a) S&P credit ratings are used in the absence of a rating by Moody's
Investors Service, Inc.
(b) Information in this report regarding holdings by state and
security types does not reflect the holdings of the Municipal Central
Cash Fund. A listing of the Municipal Central Cash Fund's holdings as
of its most recent fiscal period end is available upon request.
(c) The rate quoted is the annualized seven-day yield of the fund at
period end.
(d) Private activity obligations whose interest is subject to the
federal alternative minimum tax for individuals.
(e) Security collateralized by an amount sufficient to pay interest
and principal.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total
value of investments in securities, is as follows (ratings are
unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 83.8% AAA, AA, A 87.1%
Baa 9.8% BBB 4.3%
Ba 0.0% BB 1.3%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by Moody's or S&P amounted to 0.7%.
The distribution of municipal securities by revenue source, as a
percentage of net assets, is as follows:
General Obligations 32.2%
Electric Utilities 22.3
Escrowed/Pre-Refunded 15.8
Transportation 8.9
Special Tax 7.1
Education 6.1
Others* (individually less 7.6
than 5%)
100.0%
* Includes short-term investments and net other assets.
INCOME TAX INFORMATION
At February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $743,211,000. Net unrealized depreciation
aggregated $6,354,000, of which $1,271,000 related to appreciated
investment securities and $7,625,000 related to depreciated investment
securities.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AMOUNTS IN THOUSANDS (EXCEPT
PER-SHARE AMOUNT) FEBRUARY
29, 2000 (UNAUDITED)
ASSETS
Investment in securities, at $ 736,857
value (cost $743,211) - See
accompanying schedule
Receivable for fund shares 670
sold
Interest receivable 9,472
Other receivables 2
TOTAL ASSETS 747,001
LIABILITIES
Payable for fund shares $ 7,088
redeemed
Distributions payable 474
Accrued management fee 325
Other payables and accrued 6
expenses
TOTAL LIABILITIES 7,893
NET ASSETS $ 739,108
Net Assets consist of:
Paid in capital $ 746,489
Distributions in excess of (11)
net interest income
Accumulated undistributed net (1,016)
realized gain (loss) on
investments
Net unrealized appreciation (6,354)
(depreciation) on investments
NET ASSETS, for 74,663 shares $ 739,108
outstanding
NET ASSET VALUE, offering $9.90
price and redemption price
per share ($739,108 (divided
by) 74,663 shares)
STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS SIX
MONTHS ENDED FEBRUARY 29,
2000 (UNAUDITED)
INTEREST INCOME $ 16,157
EXPENSES
Management fee $ 1,984
Non-interested trustees' 1
compensation
Total expenses before 1,985
reductions
Expense reductions (2) 1,983
NET INTEREST INCOME 14,174
REALIZED AND UNREALIZED GAIN (681)
(LOSS)
Net realized gain (loss) on
investment securities
Change in net unrealized (6,355)
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) (7,036)
NET INCREASE (DECREASE) IN $ 7,138
NET ASSETS RESULTING FROM
OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED FEBRUARY 29, YEAR ENDED AUGUST 31, 1999
2000 (UNAUDITED)
INCREASE (DECREASE) IN NET
ASSETS
Operations Net interest income $ 14,174 $ 26,004
Net realized gain (loss) (681) 2,677
Change in net unrealized (6,355) (13,114)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 7,138 15,567
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (14,346) (26,004)
From net interest income
In excess of net realized (235) 0
gain
TOTAL DISTRIBUTIONS (14,581) (26,004)
Share transactions Net 300,757 337,840
proceeds from sales of shares
Reinvestment of distributions 11,594 20,370
Cost of shares redeemed (263,572) (299,020)
NET INCREASE (DECREASE) IN 48,779 59,190
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) 41,336 48,753
IN NET ASSETS
NET ASSETS
Beginning of period 697,772 649,019
End of period (including $ 739,108 $ 697,772
distributions in excess of
net interest income of $11
and $0, respectively)
OTHER INFORMATION
Shares
Sold 30,214 33,370
Issued in reinvestment of 1,166 2,011
distributions
Redeemed (26,509) (29,541)
Net increase (decrease) 4,871 5,840
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS ENDED FEBRUARY 29, YEARS ENDED AUGUST 31,
2000
(UNAUDITED) 1999 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.000 $ 10.150 $ 10.040 $ 9.930 $ 9.980 $ 9.840
period
Income from Investment .194 E .395 .419 .425 .418 .429
Operations Net interest
income
Net realized and unrealized (.095) (.150) .110 .110 (.050) .140
gain (loss)
Total from investment .099 .245 .529 .535 .368 .569
operations
Less Distributions
From net interest income (.196) (.395) (.419) (.425) (.418) (.429)
In excess of net realized gain (.003) - - - - -
Total distributions (.199) (.395) (.419) (.425) (.418) (.429)
Net asset value, end of $ 9.900 $ 10.000 $ 10.150 $ 10.040 $ 9.930 $ 9.980
period
TOTAL RETURN B, C 1.00% 2.44% 5.37% 5.49% 3.75% 5.95%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in $ 739 $ 698 $ 649 $ 726 $ 791 $ 909
millions)
Ratio of expenses to average .55% A .55% .55% .55% .54% D .55%
net assets
Ratio of net interest income 3.93% A 3.89% 4.15% 4.25% 4.17% 4.38%
to average net assets
Portfolio turnover rate 53% A 66% 33% 32% 78% 51%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
NOTES TO FINANCIAL STATEMENTS
For the period ended February 29, 2000 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Spartan Short-Intermediate Municipal Income Fund (the fund) is a fund
of Fidelity Union Street Trust (the trust) and is authorized to issue
an unlimited number of shares. The trust is registered under the
Investment Company Act of 1940, as amended, as an open-end management
investment company organized as a Massachusetts business trust. The
financial statements have been prepared in conformity with generally
accepted accounting principles which require management to make
certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. Securities are valued based upon a computerized
matrix system and/or appraisals by a pricing service, both of which
consider market transactions and dealer-supplied valuations.
Securities for which quotations are not readily available are valued
at their fair value as determined in good faith under consistently
applied procedures under the general supervision of the Board of
Trustees. Short-term securities with remaining maturities of sixty
days or less for which quotations are not readily available are valued
at amortized cost or original cost plus accrued interest, both of
which approximate current value.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
INTEREST INCOME. Interest income, which includes amortization of
premium and accretion of original issue discount, is accrued as
earned.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and
paid monthly from net interest income. Distributions from realized
gains, if any, are recorded on the ex-dividend date.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for futures transactions. The fund also utilized earnings
and profits distributed to shareholders on redemption of shares as a
part of the dividends paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Distributions in excess of net interest income and accumulated
undistributed net realized gain (loss) on investments may include
temporary book and tax basis differences that will reverse in a
subsequent period. Any taxable income or gain remaining at fiscal year
end is distributed in the following year.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
MUNICIPAL CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the Securities and Exchange Commission, the fund may invest in the
Municipal Central Cash Fund (the Cash Fund) managed by Fidelity
Investments Money Management, Inc. (FIMM), an affiliate of Fidelity
Management & Research Company (FMR). The Cash Fund is an open-end
money market fund available only to investment companies and other
accounts managed by FMR and its affiliates. The Cash Fund seeks
preservation of capital, liquidity, and current income by investing in
high-quality, short-term municipal securities of various states and
municipalities. Income distributions from the Cash Fund are declared
daily and paid monthly from net interest income. Income distributions
earned by the fund are recorded as interest income in the accompanying
financial statements.
DELAYED DELIVERY TRANSACTIONS AND WHEN ISSUED SECURITIES. The fund may
purchase or sell securities on a delayed delivery or when issued
basis. Payment and delivery may take place after the customary
settlement period for that security. The price of the underlying
securities and the date when the securities will be delivered and paid
for are fixed at the time the transaction is negotiated. The fund may
receive compensation for interest forgone in the purchase of a delayed
delivery security. With respect to purchase commitments, the fund
identifies securities as segregated in its records with a value at
least equal to the amount of the commitment. Losses may arise due to
changes in the market value of the underlying securities or if the
counterparty does not perform under the contract, or if the issuer
does not issue the securities due to political, economic, or other
factors.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $238,828,000 and $186,572,000, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a fee
that is computed daily at an annual rate of .55% of the fund's average
net assets. FMR pays all other expenses, except the compensation of
the non-interested Trustees and certain exceptions such as interest,
taxes, brokerage commissions and extraordinary expenses. The
management fee paid to FMR by the fund is reduced by an amount equal
to the fees and expenses paid by the fund to the non-interested
Trustees.
SUB-ADVISER FEE. FMR, on behalf of the fund, has entered into a
sub-advisory agreement with FIMM, a wholly owned subsidiary of FMR.
For its services, FIMM receives a fee from FMR of 50% of the
management fee payable to FMR. The fee is paid prior to any voluntary
expense reimbursements which may be in effect.
5. EXPENSE REDUCTIONS.
Through arrangements with the fund's custodian and transfer agent,
credits realized as a result of uninvested cash balances were used to
reduce a portion of the fund's expenses. During the period, the fund's
expenses were reduced by $2,000 under these arrangements.
MANAGING YOUR INVESTMENTS
Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a
day.
BY PHONE
Fidelity Automated Service Telephone provides a single toll-free
number to access account balances, positions, quotes and trading. It's
easy to navigate the service, and on your first call, the system will
help you create a personal identification number (PIN) for security.
(PHONE_GRAPHIC)FIDELITY AUTOMATED
SERVICE TELEPHONE (FAST)
1-800-544-5555 SM
PRESS
1 For mutual fund and brokerage trading.
2 For quotes.*
3 For account balances and holdings.
4 To review orders and mutual fund activity.
5 To change your PIN.
*0 To speak to a Fidelity representative.
BY PC
Fidelity's web site on the Internet provides a wide range of
information, including daily financial news, fund performance,
interactive planning tools and news about Fidelity products and
services.
(COMPUTER_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call EarthLink Sprint at
1-800-288-2967, and be sure to ask for registration number SMD004 to
receive a special Fidelity package that includes 30 days of free
Internet access. EarthLink is North America's #1 independent Internet
access provider.
(COMPUTER_GRAPHIC)
FIDELITY ON-LINE XPRESS+(registered trademark)
Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools . . . all on your desktop. Call Fidelity
at 1-800-544-0240 or visit our web site for more information on how to
manage your investments via your PC.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD
AND RETURN WILL VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE
WILL ALSO VARY. THIS MEANS THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU
SELL YOUR SHARES. THERE IS NO ASSURANCE THAT MONEY MARKET FUNDS WILL
BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY
MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT. TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE,
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF ANY
SALES CHARGES.
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISER
Fidelity Investments Money
Management, Inc.
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Fred L. Henning, Jr., Vice President
Dwight D. Churchill, Vice President
Norman U. Lind, Vice President
Eric D. Roiter, Secretary
Robert A. Dwight, Treasurer
Stanley N. Griffith, Assistant Vice President
Matthew N. Karstetter, Deputy Treasurer
Maria F. Dwyer, Deputy Treasurer
John H. Costello, Assistant Treasurer
Thomas J. Simpson, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
Donald J. Kirk *
Ned C. Lautenbach *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
* INDEPENDENT TRUSTEES
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
Citibank, N.A.
New York, NY and
Fidelity Service Company, Inc.
Boston, MA
CUSTODIAN
Citibank, N.A.
New York, NY
FIDELITY'S MUNICIPAL BOND FUNDS
Spartan Arizona Municipal Income
(registered trademark)
Spartan California Municipal Income
Spartan Connecticut Municipal Income
Spartan Florida Municipal Income
Spartan Intermediate Municipal Income
Spartan Maryland Municipal Income
Spartan Massachusetts Municipal Income
Spartan Michigan Municipal Income
Spartan Minnesota Municipal Income
Spartan Municipal Income
Spartan New Jersey Municipal Income
Spartan New York Municipal Income
Spartan Ohio Municipal Income
Spartan Pennsylvania Municipal Income
Spartan Short-Intermediate
Municipal Income
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-6666
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST) 1-800-544-5555 SM
AUTOMATED LINE FOR QUICKEST SERVICE
(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com