FIDELITY MUNICIPAL TRUST, 485BPOS, 1994-02-16

FIDELITY MUNICIPAL TRUST
485BPOS, 1994-02-16

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT (NO 2-55725)

UNDER THE SECURITIES ACT OF 1933 [ ]

Pre-Effective Amendment No. [ ]

Post-Effective Amendment No. 64 [x]

and
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 [x]
Amendment No.
Fidelity Municipal Trust
(Exact Name of Registrant as Specified in Charter)
82 Devonshire St., Boston, MA 02109
(Address of Principal Executive Offices)
Registrant's Telephone Number (617) 570-7000
Arthur S. Loring, Secretary
82 Devonshire Street,
Boston, Massachusetts 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
( ) Immediately upon filing pursuant to paragraph (b)
(x) On February 17, 1994 pursuant to paragraph (b) of Rule 485
( ) 60 days after filing pursuant to paragraph (a) of Rule 485
( ) On ( ) pursuant to paragraph (a) of Rule 485
Registrant intends to file a declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940 and intends to file the Notice required by
such Rule on or before February 28, 1994.

FIDELITY MUNICIPAL BOND PORTFOLIO
CROSS REFERENCE SHEET
FORM N-1A

ITEM NUMBER PROSPECTUS SECTION

<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 .............................. Cover Page

2 a .............................. Expenses

b, c .............................. Contents; The Fund at a Glance; Who May Want
to Invest

3 a .............................. Financial Highlights

b .............................. Financial Highlights

c, d .............................. Performance

4 a i............................. Charter

ii........................... The Fund at a Glance; Investment Principles;
Securities and Investment Practices

b .............................. Securities and Investment Practices

c .............................. Who May Want to Invest; Investment Principles;
Securities and Investment Practices

5 a .............................. Charter

b i............................. Doing Business with Fidelity; Charter

ii........................... Charter; Breakdown of Expenses

iii.......................... Expenses; Breakdown of Expenses

c, d .............................. Charter; Breakdown of Expenses; Cover Page;
FMR and Its Affiliates

e .............................. FMR and its Affiliates

f .............................. Expenses

g .............................. *

5A .............................. Annual Reports

6 a i............................. Charter

ii........................... How to Buy Shares; How to Sell Shares;
Transaction Details; Exchange Restrictions

iii.......................... *

b ............................. *

c .............................. Exchange Restrictions

d .............................. *

e .............................. Doing Business with Fidelity; How to Buy Shares;
How to Sell Shares; Investor Services

f, g .............................. Dividends, Capital Gains, and Taxes

7 a .............................. Charter; Cover Page

b .............................. How to Buy Shares; Transaction Details

c .............................. *

d .............................. How to Buy Shares

e .............................. *

f .............................. Breakdown of Expenses

8 .............................. How to Sell Shares; Investor Services; Transaction
Details; Exchange Restrictions

9 .............................. *

</TABLE>

* Not Applicable

CROSS REFERENCE SHEET
(CONTINUED)
FIDELITY MUNICIPAL BOND PORTFOLIO
FORM N-1A

ITEM NUMBER STATEMENT OF ADDITIONAL INFORMATION SECTION

<TABLE>
<CAPTION>
<S> <C> <C> <C>
10, 11 ............................ Cover Page

12 ............................ *

13 a - c ............................ Investment Policies and Limitations

d ............................ *

14 a - c ............................ Trustees and Officers

15 a, b ............................ *

c ............................ Trustees and Officers

16 a i........................... FMR

ii.......................... Trustees and Officers

iii......................... Management Contract

b ............................ Management Contract

c, d ............................ Interest of FMR Affiliates

e ............................ *

f ............................ Distribution and Service Plan

g ............................ *

h ............................ Description of the Trust

i ............................ Interest of FMR Affiliates

17 a ............................ Portfolio Transactions

b ............................ *

c ............................ Portfolio Transactions

d, e ............................ *

18 a ............................ Description of the Trust

b ............................ *

19 a ............................ Additional Purchase and Redemption Information

b ............................ Additional Purchase and Redemption Information;
Valuation of Portfolio Securities

c ............................ *

20 ............................ Distributions and Taxes

21 a, b ............................ Interest of FMR Affiliates

c ............................ *

22 ............................ Performance

23 ............................ Financial Statements

</TABLE>

* Not Applicable

Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how the fund
invests and the services available to shareholders.
A Statement of Additional Information dated February 17, 1994 has been
filed with the Securities and Exchange Commission, and is incorporated
herein by reference (is legally considered a part of this prospectus). The
Statement of Additional Information is available free upon request by
calling Fidelity at 1-800-544-8888.
Mutual fund shares are not deposits or obligations of, or endorsed or
guaranteed by, any bank, savings association, insured depository
institution or government agency, nor are they federally insured or
otherwise protected by the FDIC, the Federal Reserve Board, or any other
agency. Investments in the fund involve investment risk, including
possible loss of principal. The value of the investment and its return will
fluctuate and are not guaranteed. When sold, the value of the investment
may be higher or lower than the amount originally invested.
Municipal Bond seeks a high level of federally tax-free income with
preservation of capital by investing in investment-grade quality municipal
bonds.
FIDELITY
MUNICIPAL BOND
PORTFOLIO
PROSPECTUS
FEBRUARY 17, 1994(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON, MA
02109
LIKE ALL MUTUAL
FUNDS, THESE
SECURITIES HAVE NOT
BEEN APPROVED OR
DISAPPROVED BY THE
SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION, NOR HAS
THE SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION PASSED
UPON THE ACCURACY
OR ADEQUACY OF THIS
PROSPECTUS. ANY
REPRESENTATION TO
THE CONTRARY IS A
CRIMINAL OFFENSE.
MUN-pro-294

CONTENTS

KEY FACTS THE FUND AT A GLANCE

WHO MAY WANT TO INVEST

EXPENSES AND PERFORMANCE EXPENSES The fund's yearly
operating expenses.

FINANCIAL HIGHLIGHTS A summary
of the fund's financial data.

PERFORMANCE How the fund has
done over time.

YOUR ACCOUNT DOING BUSINESS WITH FIDELITY

TYPES OF ACCOUNTS Different
ways to set up your account.

HOW TO BUY SHARES Opening an
account and making additional
investments.

HOW TO SELL SHARES Taking money
out and closing your account.

INVESTOR SERVICES Services to
help you manage your account.

DIVIDENDS, CAPITAL GAINS, AND
TAXES

SHAREHOLDER AND TRANSACTION DETAILS Share price
ACCOUNT POLICIES calculations and the timing of
purchases and redemptions.

EXCHANGE RESTRICTIONS

THE FUND IN DETAIL CHARTER How the fund is
organized.

BREAKDOWN OF EXPENSES How
operating costs are calculated and
what they include.

INVESTMENT PRINCIPLES The fund's
overall approach to investing.

SECURITIES AND INVESTMENT
PRACTICES

<r>KEY FACTS</r>

THE FUND AT A GLANCE
GOAL: High federally tax-free income with preservation of capital. As with
any mutual fund, there is no assurance that the fund will achieve its goal.
STRATEGY: Invests in investment-grade quality, mainly long-term,
municipal bonds.
MANAGEMENT: Fidelity Management & Research Company (FMR) is the
management arm of Fidelity Investments, which was established in 1946 and
is now America's largest mutual fund manager.
SIZE: As of December 31, 1993, the fund had over $ 1.2 billion in
assets.
WHO MAY WANT TO INVEST
The fund may be appropriate for investors in higher tax brackets who seek
high current income that is free from federal income tax. The fund is
designed for those who are interested in investment-grade quality ratings,
but who are willing to forego the highest yields in pursuit of
greater share price stability.
By itself, the fund does not constitute a balanced investment plan. The
value of the fund's investments and the income they generate will vary from
day to day, generally reflecting changes in interest rates, market
conditions, and other political and economic news. When you sell your
shares, they may be worth more or less than what you paid for them.

THE SPECTRUM OF
FIDELITY FUNDS
Broad categories of Fidelity
funds are presented here in
order of ascending risk.
Generally, investors seeking
to maximize return must
assume greater risk.
Municipal Bond is in the
INCOME category.
(bullet) MONEY MARKET Seeks
income and stability by
investing in high-quality,
short-term investments.
(arrow) INCOME Seeks income by
investing in bonds.
(bullet) GROWTH AND INCOME
Seeks long-term growth and
income by investing in stocks
and bonds.
(bullet) GROWTH Seeks long-term
growth by investing mainly in
stocks.
(checkmark)
<r>EXPENSES AND PERFORMANCE</r>

EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell
shares of a fund.
Maximum sales charge on purchases and
reinvested dividends None
Deferred sales charge on redemptions None
Exchange fee None
ANNUAL FUND OPERATING EXPENSES are paid out of the fund's assets. The fund
pays a management fee to FMR. It also incurs other expenses for services
such as maintaining shareholder records and furnishing shareholder
statements and fund reports. The fund's expenses are factored into its
share price or dividends and are not charged directly to shareholder
accounts (see page ).
The following are projections based on historical expenses adjusted to
reflect the current contract , and are calculated as a percentage of
average net assets.
Management fee .42 %
12b-1 fee None
Other expenses .12 %
Total fund operating expenses .54 %
EXAMPLES: Let's say, hypothetically, that the fund's annual return is 5%
and that its operating expenses are exactly as just described. For every
$1,000 you invested, here's how much you would pay in total expenses if you
close your account after the number of years indicated:
After 1 year $ 6
After 3 years $ 17
After 5 years $ 30
After 10 years $ 68
These examples illustrate the effect of expenses, but are not meant to
suggest actual or expected costs or returns, all of which may vary.

UNDERSTANDING
EXPENSES
Operating a mutual fund
involves a variety of
expenses for portfolio
management, shareholder
statements, tax reporting, and
other services. These costs
are paid from the fund's
assets; their effect is already
factored into any quoted
share price or return.
(checkmark)

FINANCIAL HIGHLIGHTS
The table that follows has been audited by Coopers & Lybrand,
independent accountants. Their unqualified report is included in the fund's
Annual Report. The Annual Report is incorporated by reference into (is
legally a part of) the Statement of Additional Information.
SELECTED PER-SHARE DATA

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1.Years ended 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993
December 31

2.Net asset value, $ 6.72 $ 6.70 $ 7.42 $ 8.28 $ 7.60 $ 7.95 $ 8.13 $ 8.13 $ 8.47 $ 8.50
beginning 0 0 0 0 0 0 0 0 0

0
of period

3.Income from .590 .576 .553 .548 .558 .556 .541 .526 .519 .487
Investment
Operations
Net investment
income

4. Net realized and (.020) .720 .860 (.680) .350 .180 -- .410 .210 .600
unrealized
gain (loss) on
investments

5. Total from .570 1.296 1.413 (.132) .908 .736 .541 .936 .729 1.087
investment
operations

6.Less (.590) (.576) (.553) (.548) (.558) (.556) (.541) (.526) (.519)(.487)
Distrib

From net interest
income

7. From net -- -- -- -- -- -- -- (.070) (.180) (.410)
realized gain
on investments

8. Total (.590) (.576) (.553) (.548) (.558) (.556) (.541) (.596) (.699) (.897)
distributions

9.Net asset value, $ 6.70 $ 7.42 $ 8.28 $ 7.60 $ 7.95 $ 8.13 $ 8.13 $ 8.47 $ 8.50 $ 8.69
end 0 0 0 0 0 0 0 0 0 0
of period

10.Total return 9.02 20.09 19.54 (1.56) 12.30 9.56 6.91 11.91 8.93 13.17
% % % % % % % % % %
</TABLE>

RATIOS AND SUPPLEMENTAL DATA

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11.Net assets, end $ 741 $ 906 $ 1,14 $ 903 $ 984 $ 1,05 $ 1,07 $ 1,16 $ 1,19 $ 1,26
of period 1</r

4 0 3 2 2
(In millions)

12.Ratio of .53% .46% .51% .57% .51% .50% .50% .50% .49% .49%
expenses to
average net assets

13.Ratio of net 8.98 8.06 6.90 7.03 7.11% 6.90 6.71 6.35 6.11% 5.51
interest income to % % % % % % % %
average net assets

14.Portfolio 93% 145% 72% 72% 46% 64% 49% 33% 53% 74%
turnover rate

</TABLE>

PERFORMANCE
Bond fund performance can be measured as TOTAL RETURN or YIELD. The total
returns and yields that follow are based on historical fund results.
The fund's fiscal year runs from January 1 through December 31. The tables
below show the fund's performance over past fiscal years compared to a
measure of inflation. The chart on page 8 helps you compare the
yields of this fund to those of its competitors.
AVERAGE ANNUAL TOTAL RETURNS
Fiscal periods ended Past 1 Past 5 Past 10
December 31, 1993 year years years
Municipal Bond 13.17% 10.07% 10.83%
Consumer Price
Index 2.75% 3.89% 3.71%
CUMULATIVE TOTAL RETURNS
Fiscal periods ended Past 1 Past 5 Past 10
December 31, 1993 year years years
Municipal Bond 13.17% 61.60% 179.58%
Consumer Price
Index 2.75% 21.00% 43.93%

UNDERSTANDING
PERFORMANCE
YIELD illustrates the income
earned by a fund over a
recent period. 30-day yields
are usually used for bond
funds. Yields change daily,
reflecting changes in interest
rates.
TOTAL RETURN reflects both the
reinvestment of income and
capital gain distributions and
any change in a fund's share
price.
(checkmark)
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment in the fund over a
given period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return
if performance had been constant over the entire period. Average annual
total returns smooth out variations in performance; they are not the same
as actual year-by-year results.
YIELD refers to the income generated by an investment in the fund over a
given period of time, expressed as an annual percentage rate. A
TAX-EQUIVALENT YIELD shows what an investor would have to earn before taxes
to equal a tax-free yield. Yields are calculated according to a standard
that is required for all stock and bond funds. Because this differs from
other accounting methods, the quoted yield may not equal the income
actually paid to shareholders.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. government.
THE COMPETITIVE FUNDS AVERAGE is the Lipper General Municipal Debt Funds
Average , which currently reflects the performance of over 160
mutual funds with similar objectives. This average, which assumes
reinvestment of distributions, is published by Lipper Analytical Services,
Inc.
30-DAY YIELDS

Percentage (%)
Row: 1, Col: 1, Value: 6.430000000000001
Row: 1, Col: 2, Value: 6.319999999999999
Row: 2, Col: 1, Value: 6.44
Row: 2, Col: 2, Value: 6.27
Row: 3, Col: 1, Value: 6.26
Row: 3, Col: 2, Value: 6.18
Row: 4, Col: 1, Value: 6.149999999999999
Row: 4, Col: 2, Value: 6.119999999999999
Row: 5, Col: 1, Value: 6.21
Row: 5, Col: 2, Value: 6.2
Row: 6, Col: 1, Value: 6.18
Row: 6, Col: 2, Value: 6.149999999999999
Row: 7, Col: 1, Value: 6.119999999999999
Row: 7, Col: 2, Value: 6.04
Row: 8, Col: 1, Value: 6.05
Row: 8, Col: 2, Value: 6.01
Row: 9, Col: 1, Value: 5.8
Row: 9, Col: 2, Value: 5.49
Row: 10, Col: 1, Value: 5.76
Row: 10, Col: 2, Value: 5.91
Row: 11, Col: 1, Value: 5.75
Row: 11, Col: 2, Value: 5.83
Row: 12, Col: 1, Value: 5.55
Row: 12, Col: 2, Value: 5.7
Row: 13, Col: 1, Value: 5.69
Row: 13, Col: 2, Value: 5.74
Row: 14, Col: 1, Value: 5.85
Row: 14, Col: 2, Value: 5.8
Row: 15, Col: 1, Value: 5.69
Row: 15, Col: 2, Value: 5.78
Row: 16, Col: 1, Value: 5.6
Row: 16, Col: 2, Value: 5.7
Row: 17, Col: 1, Value: 5.29
Row: 17, Col: 2, Value: 5.51
Row: 18, Col: 1, Value: 4.84
Row: 18, Col: 2, Value: 5.22
Row: 19, Col: 1, Value: 5.02
Row: 19, Col: 2, Value: 5.22
Row: 20, Col: 1, Value: 5.17
Row: 20, Col: 2, Value: 5.26
Row: 21, Col: 1, Value: 5.5
Row: 21, Col: 2, Value: 5.42
Row: 22, Col: 1, Value: 5.39
Row: 22, Col: 2, Value: 5.4
Row: 23, Col: 1, Value: 5.470000000000001
Row: 23, Col: 2, Value: 5.34
Row: 24, Col: 1, Value: 5.23
Row: 24, Col: 2, Value: 5.23
Row: 25, Col: 1, Value: 4.8
Row: 25, Col: 2, Value: 5.0
Row: 26, Col: 1, Value: 4.819999999999999
Row: 26, Col: 2, Value: 4.88
Row: 27, Col: 1, Value: 4.859999999999999
Row: 27, Col: 2, Value: 4.92
Row: 28, Col: 1, Value: 4.98
Row: 28, Col: 2, Value: 4.88
Row: 29, Col: 1, Value: 4.75
Row: 29, Col: 2, Value: 4.8
Row: 30, Col: 1, Value: 4.85
Row: 30, Col: 2, Value: 4.79
Row: 31, Col: 1, Value: 4.76
Row: 31, Col: 2, Value: 4.69
Row: 32, Col: 1, Value: 4.64
Row: 32, Col: 2, Value: 4.53
Row: 33, Col: 1, Value: 4.63
Row: 33, Col: 2, Value: 4.48
Row: 34, Col: 1, Value: 4.94
Row: 34, Col: 2, Value: 4.58
Municipal
Bond
Competitive
funds average
1992
1991
1993
THE CHART SHOWS THE 30-DAY ANNUALIZED NET YIELDS FOR THE FUND AND ITS
COMPETITIVE FUNDS AVERAGE AS OF THE LAST DAY OF EACH MONTH FROM
JANUARY 1991 THROUGH NOVEMBER 1993.
The fund's recent strategies, performance, and holdings are detailed twice
a year in financial reports, which are sent to all shareholders. For
current performance or a free annual report, call 1-800-544-8888.
TOTAL RETURNS AND YIELDS ARE BASED ON PAST RESULTS AND ARE NOT AN
INDICATION OF FUTURE PERFORMANCE.
<r>YOUR ACCOUNT</r>

DOING BUSINESS WITH FIDELITY
Fidelity Investments was established in 1946 to manage one of America's
first mutual funds. Today, Fidelity is the largest mutual fund company in
the country, and is known as an innovative provider of high-quality
financial services to individuals and institutions.
In addition to its mutual fund business, the company operates one of
America's leading discount brokerage firms, Fidelity Brokerage Services,
Inc. (FBSI). Fidelity is also a leader in providing tax-sheltered
retirement plans for individuals investing on their own or through their
employer.
Fidelity is committed to providing investors with practical information to
make investment decisions. Based in Boston, Fidelity provides customers
with complete service 24 hours a day, 365 days a year, through a network of
telephone service centers around the country.
To reach Fidelity for general information, call these numbers:
(bullet) For mutual funds, 1-800-544-8888
(bullet) For brokerage, 1-800-544-7272
If you would prefer to speak with a representative in person, Fidelity has
over 75 walk-in Investor Centers across the country.
TYPES OF ACCOUNTS
You may set up an account directly in the fund or, if you own or intend to
purchase individual securities as part of your total investment portfolio,
you may consider investing in the fund through a brokerage account.
If you are investing through FBSI or another financial institution or
investment professional, refer to its program materials for any special
provisions regarding your investment in the fund.
The different ways to set up (register) your account with Fidelity are
listed below.
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have two or
more owners (tenants).
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and obtain
tax benefits. An individual can give up to $10,000 a year per child without
paying federal gift tax. Depending on state laws, you can set up a
custodial account under the Uniform Gifts to Minors Act (UGMA) or the
Uniform Transfers to Minors Act (UTMA).
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR OTHER
GROUPS
Requires a special application.
HOW TO BUY SHARES
THE FUND'S SHARE PRICE, called net asset value (NAV), is calculated every
business day. The fund's shares are sold without a sales charge.
Shares are purchased at the next share price calculated after your
investment is received and accepted. Share price is normally calculated at
4 p.m. Eastern time.
IF YOU ARE NEW TO FIDELITY, complete and sign an account application and
mail it along with your check. You may also open your account in person or
by wire as described on page . If there is no application accompanying this
prospectus, call 1-800-544-8888.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(bullet) Mail in an application with a check, or
(bullet) Open your account by exchanging from another Fidelity fund.
If you buy shares by check or Fidelity Money Line(Registered trademark),
and then sell those shares by any method other than by exchange to another
Fidelity fund, the payment may be delayed for up to seven business
days to ensure that your previous investment has cleared.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $2,500
TO ADD TO AN ACCOUNT $250
Through automatic investment plans $100
MINIMUM BALANCE $1,000

<TABLE>
<CAPTION>
<S> <C> <C>
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT

Phone 1-800-544-777 (phone_graphic) (bullet) Exchange from another (bullet) Exchange from another
Fidelity fund account Fidelity fund account
with the same with the same
registration, including registration, including
name, address, and name, address, and
taxpayer ID number. taxpayer ID number.
(bullet) Use Fidelity Money
Line to transfer from
your bank account. Call
before your first use to
verify that this service
is in place on your
account. Maximum
Money Line: $50,000.

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
Mail (mail_graphic) (bullet) Complete and sign the (bullet) Make your check
application. Make your payable to " Fidelity
check payable to Municipal Bond
" Fidelity Municipal Portfolio. " Indicate your
Bond Portfolio " . Mail to fund account number
the address indicated on your check and mail
on the application. to the address printed
on your account
statement.
(bullet) Exchange by mail: call
1-800-544-6666 for
instructions.

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
In Person (hand_graphic) (bullet) Bring your application (bullet) Bring your check to a
and check to a Fidelity Fidelity Investor Center.
Investor Center. Call Call 1-800-544-9797 for
1-800-544-9797 for the the center nearest you.
center nearest you.

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
Wire (wire_graphic) (bullet) Call 1-800-544-7777 to (bullet) Wire to:
set up your account Bankers Trust
and to arrange a wire Company,
transaction. Bank Routing
(bullet) Wire within 24 hours to: #021001033,
Bankers Trust Account #00163053.
Company, Specify " Fidelity
Bank Routing Municipal Bond
#021001033, Portfolio " and include
Account #00163053. your account number
Specify " Fidelity and your name.
Municipal Bond
Portfolio " and include
your new account
number and your
name.

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
Automatically (automatic_graphic) (bullet) Not available. (bullet) Use Fidelity Automatic
Account Builder. Sign
up for this service
when opening your
account, or call
1-800-544-6666 to add
it.

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118

</TABLE>

HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares. Your shares will be sold at
the next share price calculated after your order is received and accepted.
Share price is normally calculated at 4 p.m. Eastern time.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least $1,000
worth of shares in the account to keep it open.
TO SELL SHARES BY BANK WIRE OR FIDELITY MONEY LINE, you will need to sign
up for these services in advance.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to
protect you and Fidelity from fraud. Your request must be made in writing
and include a signature guarantee if any of the following situations apply:
(bullet) You wish to redeem more than $100,000 worth of shares,
(bullet) Your account registration has changed within the last 30 days,
(bullet) The check is being mailed to a different address than the one on
your account (record address),
(bullet) The check is being made payable to someone other than the account
owner, or
(bullet) The redemption proceeds are being transferred to a Fidelity
account with a different registration.
You should be able to obtain a signature guarantee from a bank, broker
(including Fidelity Investor Centers), dealer, credit union (if authorized
under state law), securities exchange or association, clearing agency, or
savings association. A notary public cannot provide a signature guarantee.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(bullet) Your name,
(bullet) The fund's name,
(bullet) Your fund account number,
(bullet) The dollar amount or number of shares to be redeemed, and
(bullet) Any other applicable requirements listed in the table at right.
Unless otherwise instructed, Fidelity will send a check to the record
address. Deliver your letter to a Fidelity Investor Center, or mail it to:
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
CHECKWRITING
If you have a checkbook for your account, you may write an unlimited number
of checks. Do not, however, try to close out your account by check.
ACCOUNT TYPE SPECIAL REQUIREMENTS

<TABLE>
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<S> <C> <C>
Phone 1-800-544-777 (phone_graphic) All account types (bullet) Maximum check request:
$100,000.
(bullet) For Money Line transfers to
your bank account; minimum:
$ 10 ; maximum: $100,000.
(bullet) You may exchange to other
Fidelity funds if both
accounts are registered with
the same name(s), address,
and taxpayer ID number.

Mail or in Person (mail_graphic)(hand_graphic) Individual, Joint (bullet) The letter of instruction must
Tenant, be signed by all persons
Sole Proprietorship required to sign for
, UGMA, UTMA transactions, exactly as their
Trust names appear on the
account.
(bullet) The trustee must sign the
letter indicating capacity as
Business or trustee. If the trustee's name
Organization is not in the account
registration, provide a copy of
the trust document certified
within the last 60 days.
(bullet) At least one person
Executor, authorized by corporate
Administrator, resolution to act on the
Conservator, account must sign the letter.
Guardian (bullet) Include a corporate
resolution with corporate seal
or a signature guarantee.
(bullet) Call 1-800-544-6666 for
instructions.

Wire (wire_graphic) All account types (bullet) You must sign up for the wire
feature before using it. To
verify that it is in place, call
1-800-544-6666. Minimum
wire: $5,000.
(bullet) Your wire redemption request
must be received by Fidelity
before 4 p.m. Eastern time
for money to be wired on the
next business day.

</TABLE>

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Check (check_graphic) All account types (bullet) Minimum check: $500.
(bullet) All account owners must sign
a signature card to receive a
checkbook.

</TABLE>

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(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118

</TABLE>

To reduce expenses, only one copy of most financial reports will be mailed
to your household, even if you have more than one account in the fund. Call
1-800-544-6666 if you need copies of financial reports or historical
account information.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your fund shares and buy shares of other
Fidelity funds by telephone or in writing.
Note that exchanges out of the fund are limited to four per calendar year,
and that they may have tax consequences for you. For complete policies and
restrictions governing exchanges, including circumstances under which a
shareholder's exchange privilege may be suspended or revoked, see page .
SYSTEMATIC WITHDRAWAL PLANS let you set up monthly or quarterly redemptions
from your account.
FIDELITY MONEY LINE(Registered trademark) enables you to transfer money by
phone between your bank account and your fund account. Most transfers are
complete within three business days of your call.
REGULAR INVESTMENT PLANS
One easy way to pursue your financial goals is to invest money regularly.
Fidelity offers convenient services that let you transfer money into your
fund account, or between fund accounts, automatically. While regular
investment plans do not guarantee a profit and will not protect you against
loss in a declining market, they can be an excellent way to invest for a
home, educational expenses, and other long-term financial goals.
REGULAR INVESTMENT PLANS

FIDELITY AUTOMATIC ACCOUNT BUILDERSM
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY FUND

MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Monthly or (bullet) For a new account, complete the
quarterly appropriate section on the fund
application.
(bullet) For existing accounts, call
1-800-544-6666 for an application.
(bullet) To change the amount or frequency of
your investment, call 1-800-544-6666 at
least three business days prior to your
next scheduled investment date.

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DIRECT DEPOSIT
TO SEND ALL OR A PORTION OF YOUR PAYCHECK OR GOVERNMENT CHECK TO A FIDELITY FUNDA

</TABLE>

MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Every pay (bullet) Check the appropriate box on the fund
period application, or call 1-800-544-6666 for an
authorization form.
(bullet) Changes require a new authorization
form.

<TABLE>
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FIDELITY AUTOMATIC EXCHANGE SERVICE
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND TO ANOTHER FIDELITY FUND

</TABLE>

<TABLE>
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MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Monthly, (bullet) To establish, call 1-800-544-6666 after
bimonthly, both accounts are opened.
quarterly, or (bullet) To change the amount or frequency of
annually your investment, call 1-800-544-6666.

</TABLE>

A BECAUSE ITS SHARE PRICE FLUCTUATES, THE FUND MAY NOT BE AN APPROPRIATE
CHOICE FOR DIRECT DEPOSIT OF YOUR ENTIRE CHECK.
DIVIDENDS, CAPITAL GAINS, AND TAXES
The fund distributes substantially all of its net investment income and
capital gains to shareholders each year. Income dividends are declared
daily and paid monthly. Capital gains are normally distributed in February
and December.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. If the option you prefer is not listed on the
application, call 1-800-544-6666 for instructions. The fund offers four
options:
1. REINVESTMENT OPTION. Your dividend and capital gain distributions will
be automatically reinvested in additional shares of the fund. If you do not
indicate a choice on your application, you will be assigned this option.
2. INCOME-EARNED OPTION. Your capital gain distributions will be
automatically reinvested, but you will be sent a check for each dividend
distribution.
3. CASH OPTION. You will be sent a check for your dividend and capital gain
distributions.
4. DIRECTED DIVIDENDS(Registered trademark) OPTION. Your dividend and
capital gain distributions will be automatically invested in another
identically registered Fidelity fund.
Dividends will be reinvested at the fund's NAV on the last day of the
month. Capital gain distributions will be reinvested at the NAV as of the
date the fund deducts the distribution from its NAV. The mailing of
distribution checks will begin within seven days, or longer for a December
ex-dividend date.

UNDERSTANDING
DISTRIBUTIONS
As a fund shareholder, you
are entitled to your share of
the fund's net income and
gains on its investments. The
fund passes its earnings
along to its investors as
DISTRIBUTIONS.
Each fund earns interest from
its investments. These are
passed along as DIVIDEND
DISTRIBUTIONS. The fund may
realize capital gains if it sells
securities for a higher price
than it paid for them. These
are passed along as CAPITAL
GAIN DISTRIBUTIONS.
(checkmark)
TAXES
As with any investment, you should consider how an investment in a tax-free
fund could affect you. Below are some of the fund's tax implications.
TAXES ON DISTRIBUTIONS. Interest income that the fund earns is distributed
to shareholders as income dividends. Interest that is federally tax-free
remains tax-free when it is distributed.
However, gain on the sale of tax-free bonds results in taxable
distributions. Short-term capital gains and a portion of the gain on bonds
purchased at a discount are taxed as dividends. Long-term capital gain
distributions are taxed as long-term capital gains. These distributions are
taxable when they are paid, whether you take them in cash or reinvest them.
However, distributions declared in December and paid in January are taxable
as if they were paid on December 31. Fidelity will send you and the IRS a
statement showing the tax status of the distributions paid to you in the
previous year.
The fund does not currently intend to purchase any municipal obligations
whose interest is subject to the federal alternative minimum tax.
A portion of the fund's dividends may be free from state or local taxes.
Income from investments in your state are often tax-free to you. Each year,
Fidelity will send you a breakdown of the fund's income from each state to
help you calculate your taxes.
During fiscal 1993, 100 % of the fund's income dividends w ere
free from federal income tax.
TAXES ON TRANSACTIONS. Your redemptions - including exchanges to other
Fidelity funds - are subject to capital gains tax. A capital gain or loss
is the difference between the cost of your shares and the price you receive
when you sell them.
Whenever you sell shares of the fund, Fidelity will send you a confirmation
statement showing how many shares you sold and at what price. You will also
receive a consolidated transaction statement every January. However, it is
up to you or your tax preparer to determine whether this sale resulted in a
capital gain and, if so, the amount of tax to be paid. Be sure to keep your
regular account statements; the information they contain will be essential
in calculating the amount of your capital gains.
"BUYING A DIVIDEND." If you buy shares just before the fund deducts a
capital gain distribution from its NAV, you will pay the full price for the
shares and then receive a portion of the price back in the form of a
taxable distribution.
<r>SHAREHOLDER AND ACCOUNT POLICIES</r>

TRANSACTION DETAILS
THE FUND IS OPEN FOR BUSINESS each day the New York Stock Exchange (NYSE)
is open. Fidelity normally calculates the fund's net asset value as of the
close of business of the NYSE, normally 4 p.m. Eastern time.
THE FUND'S NAV is the value of a single share. The NAV is computed by
adding the value of the fund's investments, cash, and other assets,
subtracting its liabilities, and then dividing the result by the number of
shares outstanding.
The fund's assets are valued primarily on the basis of market quotations,
if available. Since market quotations are often unavailable, assets are
usually valued by a method that the Board of Trustees believes accurately
reflects fair value.
THE FUND'S OFFERING PRICE (price to buy one share) and REDEMPTION PRICE
(price to sell one share) are its NAV.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that
your Social Security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require the fund to
withhold 31% of your taxable distributions and redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Note that Fidelity will
not be responsible for any losses resulting from unauthorized transactions
if it follows reasonable procedures designed to verify the identity of the
caller. Fidelity will request personalized security codes or other
information, and may also record calls. You should verify the accuracy of
your confirmation statements immediately after you receive them. If you do
not want the ability to redeem and exchange by telephone, call Fidelity for
instructions.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during periods
of unusual market activity), consider placing your order by mail or by
visiting a Fidelity Investor Center.
THE FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. The fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions"
on page . Purchase orders may be refused if, in FMR's opinion, they are of
a size that would disrupt management of the fund.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your order will be processed at the
next offering price calculated after your order is received and accepted.
Note the following:
(bullet) All of your purchases must be made in U.S. dollars and checks
must be drawn on U.S. banks.
(bullet) Fidelity does not accept cash.
(bullet) When making a purchase with more than one check, each check must
have a value of at least $50.
(bullet) The fund reserves the right to limit the number of checks
processed at one time.
(bullet) If your check does not clear, your purchase will be cancelled and
you could be liable for any losses or fees the fund or its transfer agent
has incurred.
(bullet) You begin to earn dividends as of the first business day
following the day of your purchase.
TO AVOID THE COLLECTION PERIOD associated with check and Money Line
purchases, consider buying shares by bank wire, U.S. Postal money order,
U.S. Treasury check, Federal Reserve check, or direct deposit instead.
YOU MAY BUY OR SELL SHARES OF THE FUND THROUGH A BROKER, who may charge you
a fee for this service. If you invest through a broker or other
institution, read its program materials for any additional service features
or fees that may apply.
CERTAIN FINANCIAL INSTITUTIONS that have entered into sales agreements with
Fidelity Distributors Corporation (FDC) may enter confirmed purchase orders
on behalf of customers by phone, with payment to follow no later than the
time when the fund is priced on the following business day. If payment is
not received by that time, the financial institution could be held liable
for resulting fees or losses.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the
next NAV calculated after your request is received and accepted. Note the
following:
(bullet) Normally, redemption proceeds will be mailed to you on the next
business day, but if making immediate payment could adversely affect the
fund, it may take up to seven days to pay you.
(bullet) Shares will earn dividends through the date of redemption;
however, shares redeemed on a Friday or prior to a holiday will continue to
earn dividends until the next business day.
(bullet) Fidelity Money Line redemptions generally will be credited to
your bank account on the second or third business day after your phone
call.
(bullet) The fund may hold payment on redemptions until it is reasonably
satisfied that investments made by check or Fidelity Money Line have been
collected, which can take up to seven business days.
(bullet) Redemptions may be suspended or payment dates postponed when the
NYSE is closed (other than weekends or holidays), when trading on the NYSE
is restricted, or as permitted by the SEC.
(bullet) If you sell shares by writing a check and the amount of the check
is greater than the value of your account, your check will be returned to
you and you may be subject to additional charges.
IF YOUR ACCOUNT BALANCE FALLS BELOW $1,000, you will be given 30 days'
notice to reestablish the minimum balance. If you do not increase your
balance, Fidelity reserves the right to close your account and send the
proceeds to you. Your shares will be redeemed at the NAV on the day your
account is closed.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
FDC may, at its own expense, provide promotional incentives to qualified
recipients who support the sale of shares of the fund without reimbursement
from the fund. Qualified recipients are securities dealers who have sold
fund shares or others, including banks and other financial institutions,
under special arrangements in connection with FDC's sales activities. In
some instances, these incentives may be offered only to certain
institutions whose representatives provide services in connection with the
sale or expected sale of significant amounts of shares.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging shares of the fund
for shares of other Fidelity funds. However, you should note the following:
(bullet) The fund you are exchanging into must be registered for sale in
your state.
(bullet) You may only exchange between accounts that are registered in the
same name, address, and taxpayer identification number.
(bullet) Before exchanging into a fund, read its prospectus.
(bullet) If you exchange into a fund with a sales charge, you pay the
percentage-point difference between that fund's sales charge and any sales
charge you have previously paid in connection with the shares you are
exchanging. For example, if you had already paid a sales charge of 2% on
your shares and you exchange them into a fund with a 3% sales charge, you
would pay an additional 1% sales charge.
(bullet) Exchanges may have tax consequences for you.
(bullet) Because excessive trading can hurt fund performance and
shareholders, the fund reserves the right to temporarily or permanently
terminate the exchange privilege of any investor who makes more than four
exchanges out of the fund per calendar year. Accounts under common
ownership or control, including accounts with the same taxpayer
identification number, will be counted together for purposes of the four
exchange limit.
(bullet) The fund reserves the right to refuse exchange purchases by any
person or group if, in FMR's judgment, the fund would be unable to invest
the money effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
(bullet) Your exchanges may be restricted or refused if the fund receives
or anticipates simultaneous orders affecting significant portions of the
fund's assets. In particular, a pattern of exchanges that coincide with a
"market timing" strategy may be disruptive to the fund.
Although the fund will attempt to give you prior notice whenever it is
reasonably able to do so, it may impose these restrictions at any time. The
fund reserves the right to terminate or modify the exchange privilege in
the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
administrative fees of up to $7.50 and redemption fees of up to 1.50% on
exchanges. Check each fund's prospectus for details.
<r>THE FUND IN DETAIL</r>

CHARTER
MUNICIPAL BOND IS A MUTUAL FUND: an investment that pools shareholders'
money and invests it toward a specified goal. In technical terms, the fund
is currently a diversified fund of Fidelity Municipal Trust, an open-end
management investment company organized as a Massachusetts business trust
on June 22, 1984.
THE FUND IS GOVERNED BY A BOARD OF TRUSTEES, which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet throughout the year to oversee the fund's activities,
review contractual arrangements with companies that provide services to the
fund, and review performance. The majority of trustees are not otherwise
affiliated with Fidelity.
THE FUND MAY HOLD SPECIAL MEETINGS AND MAIL PROXY MATERIALS. These meetings
may be called to elect or remove trustees, change fundamental policies,
approve a management contract, or for other purposes. Shareholders not
attending these meetings are encouraged to vote by proxy. Fidelity will
mail proxy materials in advance, including a voting card and information
about the proposals to be voted on. The number of votes you are entitled to
is based upon the dollar value of your investment.
FMR AND ITS AFFILIATES
FIDELITY FACTS
Fidelity offers the broadest
selection of mutual funds
in the world.
(bullet) Number of Fidelity mutual
funds: over 200
(bullet) Assets in Fidelity mutual
funds: over $ 225 billion
(bullet) Number of shareholder
accounts: over 15 million
(bullet) Number of investment
analysts and portfolio
managers: over 200
(checkmark)
The fund is managed by FMR, which chooses the fund's investments and
handles its business affairs.
Gary Swayze is vice president and manager of Municipal Bond, which he has
managed since August 1985. Previously, Mr. Swayze managed Insured Tax-Free
and Limited Term Municipals . He also managed New York Insured
Tax-Free, New York Short-Term, New York Tax-Free High Yield , and
Spartan New York Municipal High Yield. Mr. Swayze joined Fidelity in 1980.
FDC distributes and markets Fidelity's funds and services. Fidelity Service
Co. (FSC) performs transfer agent servicing functions for the fund.

FMR Corp. is the parent company of these organizations. Through ownership
of voting common stock, Edward C. Johnson 3d (President and a trustee of
the trust), Johnson family members, and various trusts for the benefit of
the Johnson family form a controlling group with respect to FMR Corp.
United Missouri Bank, N.A., is the fund's transfer agent, although it
employs FSC to perform these functions for the fund. It is located at 1010
Grand Avenue, Kansas City, Missouri.
To carry out the fund's transactions, FMR may use its broker-dealer
affiliates and other firms that sell fund shares, provided that the fund
receives services and commission rates comparable to those of other
broker-dealers.
BREAKDOWN OF EXPENSES
Like all mutual funds, the fund pays fees related to its daily operations.
Expenses paid out of the fund's assets are reflected in its share price or
dividends; they are neither billed directly to shareholders nor deducted
from shareholder accounts.
The fund pays a MANAGEMENT FEE to FMR for managing its investments and
business affairs. The fund also pays OTHER EXPENSES, which are explained at
right.
FMR may, from time to time, agree to reimburse the fund for management fees
and other expenses above a specified limit. FMR retains the ability to be
repaid by the fund if expenses fall below the specified limit prior to the
end of the fiscal year. Reimbursement arrangements, which may be terminated
at any time without notice, can decrease the fund's expenses and boost its
performance.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month. The fee is
calculated by adding a group fee rate to an individual fund fee rate, and
multiplying the result by the fund's average net assets.
The group fee rate is based on the average net assets of all the mutual
funds advised by FMR. This rate cannot rise above .37%, and it drops as
total assets under management increase.
UNDERSTANDING THE
MANAGEMENT FEE
The management fee FMR
receives is designed to be
responsive to changes in
FMR's total assets under
management. Building this
variable into the fee
calculation assures
shareholders that they will
pay a lower rate as FMR's
assets under management
increase.
(checkmark)
For December 1993, the group fee rate was .16 %. The individual fund
fee rate is .25%. The total management fee rate for fiscal 1993 was
.37%.
OTHER EXPENSES
While the management fee is a significant component of the fund's annual
operating costs, the fund has other expenses as well.
FSC performs many transaction and accounting functions. These services
include processing shareholder transactions, valuing the fund's
investments, and handling securities loans. In fiscal 1993, FSC received
fees equal to .03 % of the fund's average net assets.
The fund also pays other expenses, such as legal, audit, and custodian
fees; proxy solicitation costs; and the compensation of trustees who are
not affiliated with Fidelity.
The fund has adopted a Distribution and Service Plan. This plan recognizes
that FMR may use its resources, including management fees, to pay expenses
associated with the sale of fund shares. This may include payments to third
parties, such as banks or broker-dealers, that provide shareholder support
services or engage in the sale of the fund's shares. It is important to
note, however, that the fund does not pay FMR any separate fees for this
service.
The fund's portfolio turnover rate for fiscal 1993 was 74 %. This
rate varies from year to year.
INVESTMENT PRINCIPLES
THE FUND seeks as high a level of federally tax-free income as is
consistent with preservation of capital. FMR normally invests so that at
least 80% of the fund's assets are invested in municipal securities whose
interest is free from federal income tax.
The fund's level of risk and potential reward depend on the quality and
maturity of its investments. The fund invests primarily in municipal bonds
judged by FMR to be of high-grade or upper- medium-grade quality,
but it may also invest in medium-grade quality securities. The fund
normally invests in long-term bonds, generally maintaining a
dollar-weighted average maturity of 20 years or longer, but it may invest
in obligations of any maturity.
The fund's yield and share price will change based on changes in interest
rates. In general, bond prices rise when interest rates fall, and vice
versa. FMR may use various investment techniques to hedge the fund's risks,
but there is no guarantee that these strategies will work as intended. When
you sell your shares, they may be worth more or less than what you paid for
them.
FMR normally invests the fund's assets according to its investment strategy
and does not expect to invest in federally taxable obligations. When FMR
considers it appropriate for defensive purposes , however, it may
temporarily invest substantially in short-term instruments, may hold a
substantial amount of uninvested cash, or may invest more than normally
permitted in federally taxable obligations.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which the fund may invest, and strategies FMR may employ in
pursuit of the fund's investment objective. A summary of risks and
restrictions associated with these instrument types and investment
practices is included as well. Policies and limitations are considered at
the time of purchase; the sale of instruments is not required in the event
of a subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these techniques to
the full extent permitted unless it believes that doing so will help the
fund achieve its goal. As a shareholder, you will receive financial reports
every six months detailing fund holdings and describing recent investment
activities.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers to
borrow money from investors. The issuer pays the investor a fixed or
variable rate of interest, and must repay the amount borrowed at maturity.
Some debt securities, such as zero coupon bonds, do not pay current
interest, but are purchased at a discount from their face values. Debt
securities have varying degrees of quality and varying levels of
sensitivity to changes in interest rates. Longer-term bonds are generally
more sensitive to interest rate changes than short-term bonds.
Investment-grade debt securities are medium- and high-quality securities.
Some, however, may possess speculative characteristics and may be more
sensitive to economic changes and changes in the financial condition of
issuers.
RESTRICTIONS: The fund does not currently intend to invest more than
one-third of its total assets in bonds of equivalent quality to Baa by
Moody's Investors Service, Inc. and BBB by Standard & Poor's
Corporation, and does not currently intend to invest in lower-quality
bonds. The fund does not currently intend to invest more than 20% of its
total assets in securities that are not rated by Moody's or S&P.
MUNICIPAL SECURITIES are issued to raise money for a variety of public
purposes, including general financing for state and local governments, or
financing for specific projects or public facilities. Municipal securities
may be issued in anticipation of future revenues, and may be backed by the
full taxing power of a municipality, the revenues from a specific project,
or the credit of a private organization. A security's credit may be
enhanced by a bank, insurance company, or other financial institution. The
fund may own a municipal security directly or through a participation
interest.
MUNICIPAL LEASE OBLIGATIONS are used by municipalities to acquire land,
equipment, or facilities. If the municipality stops making payments or
transfers its obligations to a private entity, the obligation could lose
value or become taxable.
OTHER MUNICIPAL SECURITIES may include general obligations of U.S.
territories and possessions such as Guam, the Virgin Islands, and Puerto
Rico, and their political subdivisions and public corporations. The economy
of Puerto Rico is closely linked to the U.S. economy, and will depend on
the strength of the U.S. dollar, interest rates, the price stability of oil
imports, and the continued existence of favorable tax incentives. Recent
legislation reduced these incentives, but it is impossible to predict what
impact the changes will have.
PRIVATE ENTITIES may be involved in some municipal securities. For example,
industrial revenue bonds are backed by private entities, and resource
recovery bonds often involve private corporations. The viability of a
project or tax incentives could affect the value and credit quality of
these securities.
ASSET-BACKED SECURITIES may include pools of purchase contracts, financing
leases, or sales agreements entered into by municipalities. These
securities usually rely on continued payments by a municipality, and may
also be subject to prepayment risk.
VARIABLE- AND FLOATING-RATE INSTRUMENTS may have interest rates that move
in tandem with a benchmark, helping to stabilize their prices. Inverse
floaters have interest rates that move in the opposite direction from the
benchmark, making the instrument's market value more volatile.
PUT FEATURES entitle the holder to put (sell back) an instrument to the
issuer or a financial intermediary. In exchange for this benefit, the fund
may pay periodic fees or accept a lower interest rate. Demand features and
standby commitments are types of put features.
ADJUSTING INVESTMENT EXPOSURE. The fund can use various techniques to
increase or decrease its exposure to changing security prices, interest
rates, or other factors that affect security values. These techniques may
involve derivative transactions such as buying and selling options and
futures contracts and purchasing indexed securities.
FMR can use these practices to adjust the risk and return characteristics
of the fund's portfolio of investments. If FMR judges market conditions
incorrectly or employs a strategy that does not correlate well with the
fund's investments, these techniques could result in a loss, regardless of
whether the intent was to reduce risk or increase return. These techniques
may increase the volatility of the fund and may involve a small investment
of cash relative to the magnitude of the risk assumed. In addition, these
techniques could result in a loss if the counterparty to the transaction
does not perform as promised.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS are trading practices in
which payment and delivery for the securities take place at a future date.
The market value of a security could change during this period, which could
affect the fund's yield.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by
FMR, under the supervision of the Board of Trustees, to be illiquid, which
means that they may be difficult to sell promptly at an acceptable price.
The sale of other securities may be subject to legal restrictions.
Difficulty in selling securities may result in a loss or may be costly to
the fund.
RESTRICTIONS: The fund may not purchase a security if, as a result, more
than 10% of its assets would be invested in illiquid securities.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the
risks of investing. This may include limiting the amount of money invested
in any one issuer or, on a broader scale, in any one industry or type of
project. Economic, business, or political changes can affect all securities
of a similar type.
RESTRICTIONS: With respect to 75% of total assets, the fund may not invest
more than 5% of its total assets in any one issuer. This limitation does
not apply to U.S. government securities. The fund may invest more than 25%
of its total assets in tax-free securities that finance similar types of
projects.
BORROWING. The fund may borrow from banks or from other funds advised by
FMR, or through reverse repurchase agreements. If the fund borrows money,
its share price may be subject to greater fluctuation until the borrowing
is paid off. If the fund makes additional investments while borrowings are
outstanding, this may be considered a form of leverage.
RESTRICTIONS: The fund may borrow only for temporary or emergency purposes,
but not in an amount exceeding 33% of its total assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraph restates all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraph, can be changed without shareholder approval.
The fund seeks to provide as high a level of interest income exempt from
federal income tax as is consistent with preservation of capital. The fund
invests in a diversified portfolio of municipal bonds. The fund will invest
primarily in municipal bonds judged by FMR to be of high grade or upper
medium grade quality, although it may invest up to one-third of its total
assets in bonds judged to be of medium quality if they are suitable for
achieving its investment objective. The fund's standards for high-grade,
upper-medium- grade, and medium-grade obligations are essentially
the same as Moody's and S&P's four highest categories of Baa or BBB and
above. The fund will not invest in any bond rated lower than Baa by Moody's
or BBB by S&P, but may invest up to 20% of its total assets in bonds
not rated by either or these rating services if FMR judges them to meet the
fund's quality standards. The fund will normally invest at least 80% of its
assets in municipal securities whose interest is exempt from federal income
tax. With respect to 75% of its total assets, the fund will not invest more
than 5% of its total assets in any one issuer. The fund may borrow only for
temporary or emergency purposes, but not in an amount exceeding 33% of its
total assets.

This prospectus is printed on recycled paper using soy-based inks.

FIDELITY MUNICIPAL BOND PORTFOLIO
A FUND OF FIDELITY MUNICIPAL TRUST
STATEMENT OF ADDITIONAL INFORMATION
FEBRUARY 17, 1994
This Statement is not a prospectus but should be read in conjunction with
the fund's current Prospectus (dated February 17, 1994). Please retain this
document for future reference. The Annual Report for the fiscal year ended
December 31, 1993 is incorporated herein by reference. To obtain an
additional cop y of the Prospectus or Annual Report, please call
Fidelity Distributors Corporation at 1-800-544-8888.
TABLE OF CONTENTS PAG
E

Investment Policies and Limitations

Portfolio Transactions

Valuation of Portfolio Securities

Performance

Additional Purchase and Redemption Information

Distributions and Taxes

FMR

Trustees and Officers

Management Contract

Distribution and Service Plan

Interest of FMR Affiliates

Description of the Trust

Financial Statements

Appendix

INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENTS
United Missouri Bank, N.A. (United Missouri) and Fidelity Service Co. (FSC)
MUN-ptB-294
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or
limitation states a maximum percentage of th e fund's assets that may
be invested in any security or other asset, or sets forth a policy
regarding quality standards, such standard or percentage limitation will be
determined immediately after and as a result of the fund's acquisition of
such security or other asset. Accordingly, any subsequent change in values,
net assets, or other circumstances will not be considered when determining
whether the investment complies with the fund's investment policies and
limitations.
The fund's fundamental investment policies and limitations cannot be
changed without approval by a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940) of the fund.
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities) if, as a result,
(a) more than 5% of the fund's total assets would be invested in the
securities of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed
this amount will be reduced within three days (not including Sundays and
holidays) to the extent necessary to comply with the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities, or tax-exempt obligations issued or guaranteed by a U.S.
territory or possession or a state or local government, or a political
subdivision of any of the foregoing) if, as a result, more than 25% of the
fund's total assets would be invested in securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(8) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser, or (b) by engaging in reverse repurchase agreements
with any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (3)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The fund does not currently intend to invest more than 25% of its total
assets in industrial revenue bonds related to a single industry .
(vi) The fund does not currently intend to engage in repurchase
agreements or make loans, but this limitation does not apply to purchases
of debt securities.
(vii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(viii) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(ix) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(x) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
For purposes of limitations (1) and (5), FMR identifies the issuer of a
security depending on its terms and conditions. In identifying the issuer,
FMR will consider the entity or entities responsible for payment of
interest and repayment of principal and the source of such payments; the
way in which assets and revenues of an issuing political subdivision are
separated from those of other political entities; and whether a
governmental body is guaranteeing the security.
For the fund's limitations on futures and options transactions, see the
section entitled "Limitations on Futures and Options Transactions" on page
.
AFFILIATED BANK TRANSACTIONS. Pursuant to exemptive orders issued by the
Securities and Exchange Commission (SEC), the fund may engage in
transactions with banks that are, or may be considered to be, "affiliated
persons" of the fund under the Investment Company Act of 1940. Such
transactions may be entered into only pursuant to procedures established
and periodically reviewed by the Boards of Trustees. These transactions may
include repurchase agreements with custodian banks; purchases, as
principal, of short-term obligations of, and repurchase agreements with,
the 50 largest U.S. banks (measured by deposits); transactions in municipal
securities; and transactions in U.S. government securities with affiliated
banks that are primary dealers in these securities.
DELAYED-DELIVERY TRANSACTIONS. The fund may buy and sell securities on a
delayed-delivery or when-issued basis. These transactions involve a
commitment by the fund to purchase or sell specific securities at a
predetermined price or yield, with payment and delivery taking place after
the customary settlement period for that type of security (and more than
seven days in the future). Typically, no interest accrues to the purchaser
until the security is delivered. The fund may receive fees for entering
into delayed-delivery transactions.
When purchasing securities on a delayed-delivery basis, the fund assumes
the rights and risks of ownership, including the risk of price and yield
fluctuations. Because the fund is not required to pay for securities
until the delivery date, these risks are in addition to the risks
associated with the fund's other investments. If the fund remains
substantially fully invested at a time when delayed-delivery purchases are
outstanding, the delayed-delivery purchases may result in a form of
leverage. When delayed-delivery purchases are outstanding, the fund will
set aside appropriate liquid assets in a segregated custodial account to
cover its purchase obligations. When the fund has sold a security on
a delayed-delivery basis, the fund does not participate in further gains or
losses with respect to the security. If the other party to a
delayed-delivery transaction fails to deliver or pay for the securities,
the fund could miss a favorable price or yield opportunity, or could suffer
a loss.
The fund may renegotiate delayed-delivery transactions after they are
entered into, and may sell underlying securities before they are delivered,
which may result in capital gains or losses.
REFUNDING CONTRACTS. The fund may purchase securities on a when-issued
basis in connection with the refinancing of an issuer's outstanding
indebtedness. Refunding contracts require the issuer to sell and the fund
to buy refunded municipal obligations at a stated price and yield on a
settlement date that may be several months or several years in the future.
The fund generally will not be obligated to pay the full purchase price if
it fails to perform under a refunding contract. Instead, refunding
contracts generally provide for payment of liquidated damages to the issuer
(currently 15-20% of the purchase price). The fund may secure its
obligations under a refunding contract by depositing collateral or a letter
of credit equal to the liquidated damages provisions of the refunding
contract. When required by SEC guidelines, the fund will place
liquid assets in a segregated custodial account equal in amount to its
obligations under refunding contracts.
INVERSE FLOATERS are instruments whose interest rates bear an inverse
relationship to the interest rate on another security or the value of an
index. Changes in the interest rate on the other security or index
inversely affect the residual interest rate paid on the inverse floater,
with the result that the inverse floater's price will be considerably more
volatile than that of a fixed-rate bond. For example, a municipal issuer
may decide to issue two variable-rate instruments instead of a single
long-term, fixed-rate bond. The interest rate on one instrument reflects
short-term interest rates, while the interest rate on the other instrument
(the inverse floater) reflects the approximate rate the issuer would have
paid on a fixed-rate bond, multiplied by two, minus the interest rate paid
on the short-term instrument. Depending on market availability, the two
portions may be recombined to form a fixed-rate municipal bond. The market
for inverse floaters is relatively new.
VARIABLE OR FLOATING RATE OBLIGATIONS, including certain participation
interests in municipal instruments, have interest rate adjustment formulas
that help stabilize their market values. Many variable and floating rate
instruments also carry demand features that permit the fund to sell
them at par value plus accrued interest on short notice.
In many instances bonds and participation interests have tender options or
demand features that permit a fund to tender (or put) the bonds to an
institution at periodic intervals and to receive the principal amount
thereof. The fund considers variable rate instruments structured in
this way (Participating VRDOs) to be essentially equivalent to other VRDOs
it purchases. The IRS has not ruled whether the interest on Participating
VRDOs is Tax-exempt and, accordingly, the fund intends to purchase
these instruments based on opinions of bond counsel. The fund may invest in
fixed-rate bonds that are subject to third party puts and in participation
interests in such bonds held by a bank in trust or otherwise.
TENDER OPTION BONDS are created by coupling an intermediate- or long-term,
fixed-rate, tax-exempt bond (generally held pursuant to a custodial
arrangement) with a tender agreement that gives the holder the option to
tender the bond at its face value. As consideration for providing the
tender option, the sponsor (usually a bank, broker-dealer, or other
financial institution) receives periodic fees equal to the difference
between the bond's fixed coupon rate and the rate (determined by a
remarketing or similar agent) that would cause the bond, coupled with the
tender option, to trade at par on the date of such determination. After
payment of the tender option fee, the fund effectively holds a demand
obligation that bears interest at the prevailing short-term tax-exempt
rate. In selecting tender option bonds for the fund, FMR will consider the
creditworthiness of the issuer of the underlying bond, the custodian, and
the third party provider of the tender option. In certain instances, a
sponsor may terminate a tender option if, for example, the issuer of the
underlying bond defaults on interest payments.
ZERO COUPON BONDS do not make regular interest payments. Instead, they are
sold at a deep discount from their face value and are redeemed at face
value when they mature. Because zero coupon bonds do not pay current
income, their prices can be very volatile when interest rates change. In
calculating its daily dividend, the fund takes into account as
income a portion of the difference between a zero coupon bond's purchase
price and its face value.
STANDBY COMMITMENTS are puts that entitle holders to same-day settlement at
an exercise price equal to the amortized cost of the underlying security
plus accrued interest, if any, at the time of exercise. The fund may
acquire standby commitments to enhance the liquidity of portfolio
securities.
Ordinarily the fund will not transfer a standby commitment to a
third party, although it could sell the underlying municipal security to a
third party at any time. The fund may purchase standby commitments
separate from or in conjunction with the purchase of securities subject to
such commitments. In the latter case, the fund would pay a higher price for
the securities acquired, thus reducing their yield to maturity.
Issuers or financial intermediaries may obtain letters of credit or other
guarantees to support their ability to buy securities on demand. FMR may
rely upon its evaluation of a bank's credit in determining whether to
support an instrument supported by a letter of credit. In evaluating a
foreign bank's credit, FMR will consider whether adequate public
information about the bank is available and whether the bank may be subject
to unfavorable political or economic developments, currency controls, or
other governmental restrictions that might affect the bank's ability to
honor its credit commitment.
Standby commitments are subject to certain risks, including the ability of
issuers of standby commitments to pay for securities at the time the
commitments are exercised; the fact that standby commitments are not
marketable by the fund; and the possibility that the maturities of the
underlying securities may be different from those of the commitments.
MUNICIPAL LEASE OBLIGATIONS. The fund may invest a portion of its assets in
municipal leases and participation interests therein. These obligations,
which may take the form of a lease, an installment purchase, or a
conditional sale contract, are issued by state and local governments and
authorities to acquire land and a wide variety of equipment and facilities.
Generally, the fund will not hold such obligations directly as a lessor of
the property, but will purchase a participation interest in a municipal
obligation from a bank or other third party. A participation interest gives
the fund a specified, undivided interest in the obligation in
proportion to its purchased interest in the total amount of the obligation.
Municipal leases frequently have risks distinct from those associated with
general obligation or revenue bonds. State constitutions and statutes set
forth requirements that states or municipalities must meet to incur debt.
These may include voter referenda, interest rate limits, or public sale
requirements. Leases, installment purchases, or conditional sale contracts
(which normally provide for title to the leased asset to pass to the
governmental issuer) have evolved as a means for governmental issuers to
acquire property and equipment without meeting their constitutional and
statutory requirements for the issuance of debt. Many leases and contracts
include "non-appropriation clauses" providing that the governmental issuer
has no obligation to make future payments under the lease or contract
unless money is appropriated for such purposes by the appropriate
legislative body on a yearly or other periodic basis. Non-appropriation
clauses free the issuer from debt issuance limitations.
FEDERALLY TAXABLE OBLIGATIONS. The fund does not intend to invest in
securities whose interest is federally taxable; however, from time to time,
the fund may invest a portion of its assets on a temporary basis in
fixed-income obligations whose interest is subject to federal income tax.
For example, the fund may invest in obligations whose interest is federally
taxable pending the investment or reinvestment in municipal securities of
proceeds from the sale of its shares or sales of portfolio securities.
Should the fund invest in federally taxable obligations, it would
purchase securities that in FMR's judgment are of high quality. These would
include obligations issued or guaranteed by the U.S. government or its
agencies or instrumentalities; obligations of domestic banks; and
repurchase agreements. The fund's standards for high-quality taxable
obligations are essentially the same as those described by Moody's
Investors Service, Inc. (Moody's) in rating corporate obligations within
its two highest ratings of Prime-1 and Prime-2, and those described by
Standard & Poor's Corporation (S&P) in rating corporate obligations
within its two highest ratings of A-1 and A-2.
Proposals to restrict or eliminate the federal income tax exemption for
interest on municipal obligations are introduced before Congress from time
to time. Proposals also may be introduced before state legislatures that
would affect the state tax treatment of the fund's distributions. If such
proposals were enacted, the availability of municipal obligations and the
value of the fund's holdings would be affected and the Trustees would
reevaluate the fund's investment objective and policies.
The fund anticipates being as fully invested as practicable in municipal
securities; however, there may be occasions when, as a result of maturities
of portfolio securities, sales of fund shares, or in order to meet
redemption requests, the fund may hold cash that is not earning
income. In addition, there may be occasions when, in order to raise cash to
meet redemptions, the fund may be required to sell securities at a loss.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund purchases a
security and simultaneously commits to resell that security to the seller
at an agreed-upon price on an agreed-upon date within a number of days from
the date of purchase. The resale price reflects the purchase price plus an
agreed-upon incremental amount which is unrelated to the coupon rate or
maturity of the purchased security. A repurchase agreement is a taxable
obligation which involves the obligation of the seller to pay the
agreed-upon price, which obligation is in effect secured by the value (at
least equal to the amount of the agreed-upon resale price and marked to
market daily) of the underlying security. The fund may engage in repurchase
agreements with respect to any security in which it is authorized to
invest. While it does not presently appear possible to eliminate all risks
from these transactions (particularly the possibility of a decline in the
market value of the underlying securities, as well as delays and costs to a
fund in connection with bankruptcy proceedings), it is the fund's policy to
limit repurchase agreement transactions to parties whose creditworthiness
has been reviewed and found satisfactory by FMR.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund
sells a portfolio instrument to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase the instrument
at a particular price and time. While a reverse repurchase agreement is
outstanding, the fund will maintain appropriate liquid assets in a
segregated custodial account to cover its obligation under the agreement.
The fund will enter into reverse repurchase agreements only with parties
whose creditworthiness has been found satisfactory by FMR. Such
transactions may increase fluctuations in the market value of the fund's
assets and may be viewed as a form of leverage.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which they
are valued. Under the supervision of the Board of Trustees, FMR determines
the liquidity of a fund's investments and, through reports from FMR, the
Board monitors investments in illiquid instruments. In determining the
liquidity of the fund's investments, FMR may consider various factors,
including (1) the frequency of trades and quotations, (2) the number of
dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including
any demand or tender features), and (5) the nature of the marketplace for
trades (including the ability to assign or offset the fund's rights and
obligations relating to the investment). Investments currently considered
by the fund to be illiquid include over-the-counter options. Also, FMR may
determine some restricted securities and municipal lease obligations to be
illiquid. However, with respect to over-the-counter options the fund
writes, all or a portion of the value of the underlying instrument may be
illiquid depending on the assets held to cover the option and the nature
and terms of any agreement the fund may have to close out the option before
expiration. In the absence of market quotations, illiquid investments are
priced at fair value as determined in good faith by a committee appointed
by the Board of Trustees. If through a change in values, net assets, or
other circumstances, the fund were in a position where more than 10% its
net assets were invested in illiquid securities, it would seek to take
appropriate steps to protect liquidity.
RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, the fund may be obligated to pay all or part of
the registration expense and a considerable period may elapse between the
time it decides to seek registration and the time the fund may be permitted
to sell a security under an effective registration statement. If, during
such a period, adverse market conditions were to develop, the fund might
obtain a less favorable price than prevailed when it decided to seek
registration of the security.
INDEXED SECURITIES. The fund may purchase securities whose prices are
indexed to the prices of other securities, securities indices, or other
financial indicators. Indexed securities typically, but not always, are
debt securities or deposits whose value at maturity or coupon rate is
determined by reference to a specific instrument or statistic. Indexed
securities may have principal payments as well as coupon payments that
depend on the performance of one or more interest rates. Their coupon rates
or principal payments may change by several percentage points for every 1%
interest rate change. One example of indexed securities is inverse
floaters.
The performance of indexed securities depends to a great extent on the
performance of the security or other instrument to which they are indexed,
and may also be influenced by interest rate changes. At the same time,
indexed securities are subject to the credit risks associated with the
issuer of the security, and their values may decline substantially if the
issuer's creditworthiness deteriorates. Indexed securities may be more
volatile than the underlying instruments.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. The fund has filed
a notice of eligibility for exclusion from the definition of the term
"commodity pool operator" with the Commodity Futures Trading Commission
(CFTC) and the National Futures Association, which regulate trading in the
futures markets. The fund intends to comply with Section 4.5 of the
regulations under the Commodity Exchange Act which limits the extent to
which the fund can commit assets to initial margin deposits and
option premiums.
In addition, the fund will not: (a) sell futures contracts, purchase put
options, or write call options if, as a result, more than 25% of the fund's
total assets would be hedged with futures and options under normal
conditions; (b) purchase futures contracts or write put options if, as a
result, the fund's total obligations upon settlement or exercise of
purchased futures contracts and written put options would exceed 25% of its
total assets; or (c) purchase call options if, as a result, the current
value of option premiums for call options purchased by the fund would
exceed 5% of the fund's total assets. These limitations do not apply to
options attached to or acquired or traded together with their underlying
securities, and do not apply to securities that incorporate features
similar to options.
The above limitations on the fund's investments in futures contracts and
options, and the fund's policies regarding futures contracts and options
discussed elsewhere in this Statement of Additional Information, are not
fundamental policies and may be changed as regulatory agencies permit.
FUTURES CONTRACTS. When the fund purchases a futures contract, it
agrees to purchase a specified underlying instrument at a specified future
date. When the fund sells a futures contract, it agrees to sell the
underlying instrument at a specified future date. The price at which the
purchase and sale will take place is fixed when the fund enters into the
contract. Some currently available futures contracts are based on specific
securities, such as U.S. Treasury bonds or notes, and some are based on
indices of securities prices, such as the Bond Buyer Municipal Bond Index.
Futures can be held until their delivery dates, or can be closed out before
then if a liquid secondary market is available.
The value of a futures contract tends to increase and decrease in tandem
with the value of its underlying instrument. Therefore, purchasing futures
contracts will tend to increase the fund's exposure to positive and
negative price fluctuations in the underlying instrument, much as if it had
purchased the underlying instrument directly. When the fund sells a
futures contract, by contrast, the value of its futures position will tend
to move in a direction contrary to the market. Selling futures contracts,
therefore, will tend to offset both positive and negative market price
changes, much as if the underlying instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract is
not required to deliver or pay for the underlying instrument unless the
contract is held until the delivery date. However, both the purchaser and
seller are required to deposit "initial margin" with a futures broker,
known as a futures commission merchant (FCM), when the contract is entered
into. Initial margin deposits are typically equal to a percentage of the
contract's value. If the value of either party's position declines, that
party will be required to make additional "variation margin" payments to
settle the change in value on a daily basis. The party that has a gain may
be entitled to receive all or a portion of this amount. Initial and
variation margin payments do not constitute purchasing securities on margin
for purposes of the fund's investment limitations. In the event of
the bankruptcy of an FCM that holds margin on behalf of the fund,
the fund may be entitled to return of margin owed to it only in proportion
to the amount received by the FCM's other customers, potentially resulting
in losses to the fund.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, the
fund obtains the right (but not the obligation) to sell the option's
underlying instrument at a fixed strike price. In return for this right,
the fund pays the current market price for the option (known as the option
premium). Options have various types of underlying instruments, including
specific securities, indices of securities prices, and futures contracts.
The fund may terminate its position in a put option it has purchased by
allowing it to expire or by exercising the option. If the option is allowed
to expire, the fund will lose the entire premium it paid. If the fund
exercises the option, it completes the sale of the underlying instrument at
the strike price. The fund may also terminate a put option position
by closing it out in the secondary market at its current price, if a liquid
secondary market exists.
The buyer of a typical put option can expect to realize a gain if security
prices fall substantially. However, if the underlying instrument's price
does not fall enough to offset the cost of purchasing the option, a put
buyer can expect to suffer a loss (limited to the amount of the premium
paid, plus related transaction costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's
strike price. A call buyer typically attempts to participate in potential
price increases of the underlying instrument with risk limited to the cost
of the option if security prices fall. At the same time, the buyer can
expect to suffer a loss if security prices do not rise sufficiently to
offset the cost of the option.
WRITING PUT AND CALL OPTIONS. When the fund writes a put option, it
takes the opposite side of the transaction from the option's purchaser. In
return for receipt of the premium, the fund assumes the obligation to pay
the strike price for the option's underlying instrument if the other party
to the option chooses to exercise it. When writing an option on a futures
contract the fund will be required to make margin payments to an FCM
as described above for futures contracts. The fund may seek to
terminate its position in a put option it writes before exercise by closing
out the option in the secondary market at its current price. If the
secondary market is not liquid for a put option the fund has
written, however, the fund must continue to be prepared to pay the strike
price while the option is outstanding, regardless of price changes, and
must continue to set aside assets to cover its position.
If security prices rise, a put writer would generally expect to profit,
although its gain would be limited to the amount of the premium it
received. If security prices remain the same over time, it is likely that
the writer will also profit, because it should be able to close out the
option at a lower price. If security prices fall, the put writer would
expect to suffer a loss. This loss should be less than the loss from
purchasing the underlying instrument directly, however, because the premium
received for writing the option should mitigate the effects of the decline.
Writing a call option obligates the fund to sell or deliver the
option's underlying instrument, in return for the strike price, upon
exercise of the option. The characteristics of writing call options are
similar to those of writing put options, except that writing calls
generally is a profitable strategy if prices remain the same or fall.
Through receipt of the option premium, a call writer mitigates the effects
of a price decline. At the same time, because a call writer must be
prepared to deliver the underlying instrument in return for the strike
price, even if its current value is greater, a call writer gives up some
ability to participate in security price increases.
COMBINED POSITIONS. The fund may purchase and write options in
combination with each other, or in combination with futures or forward
contracts, to adjust the risk and return characteristics of the overall
position. For example, the fund may purchase a put option and write
a call option on the same underlying instrument, in order to construct a
combined position whose risk and return characteristics are similar to
selling a futures contract. Another possible combined position would
involve writing a call option at one strike price and buying a call option
at a lower price, in order to reduce the risk of the written call option in
the event of a substantial price increase. Because combined options
positions involve multiple trades, they result in higher transaction costs
and may be more difficult to open and close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of types
of exchange-traded options and futures contracts, it is likely that the
standardized contracts available will not match the fund's current
or anticipated investments exactly. The fund may invest in options
and futures contracts based on securities with different issuers,
maturities, or other characteristics from the securities in which it
typically invests, which involves a risk that the options or futures
position will not track the performance of the fund's other investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match a fund's
investments well. Options and futures prices are affected by such factors
as current and anticipated short-term interest rates, changes in volatility
of the underlying instrument, and the time remaining until expiration of
the contract, which may not affect security prices the same way. Imperfect
correlation may also result from differing levels of demand in the options
and futures markets and the securities markets, from structural differences
in how options and futures and securities are traded, or from imposition of
daily price fluctuation limits or trading halts. The fund may
purchase or sell options and futures contracts with a greater or lesser
value than the securities it wishes to hedge or intends to purchase in
order to attempt to compensate for differences in volatility between the
contract and the securities, although this may not be successful in all
cases. If price changes in the fund's options or futures positions
are poorly correlated with its other investments, the positions may fail to
produce anticipated gains or result in losses that are not offset by gains
in other investments.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a liquid
secondary market will exist for any particular option or futures contract
at any particular time. Options may have relatively low trading volume and
liquidity if their strike prices are not close to the underlying
instrument's current price. In addition, exchanges may establish daily
price fluctuation limits for options and futures contracts, and may halt
trading if a contract's price moves upward or downward more than the limit
in a given day. On volatile trading days when the price fluctuation limit
is reached or a trading halt is imposed, it may be impossible for
the fund to enter into new positions or close out existing
positions. If the secondary market for a contract is not liquid because of
price fluctuation limits or otherwise, it could prevent prompt liquidation
of unfavorable positions, and potentially could require the fund to
continue to hold a position until delivery or expiration regardless of
changes in its value. As a result, the fund's access to other assets held
to cover its options or futures positions could also be impaired.
OTC OPTIONS. Unlike exchange-traded options, which are standardized with
respect to the underlying instrument, expiration date, contract size, and
strike price, the terms of over-the-counter options (options not traded on
exchanges) generally are established through negotiation with the other
party to the option contract. While this type of arrangement allows
the fund greater flexibility to tailor an option to its needs, OTC
options generally involve greater credit risk than exchange-traded options,
which are guaranteed by the clearing organization of the exchanges where
they are traded.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. The fund will comply with
guidelines established by the SEC with respect to coverage of options and
futures strategies by mutual funds, and if the guidelines so require will
set aside appropriate liquid assets in a segregated custodial account in
the amount prescribed. Securities held in a segregated account cannot be
sold while the futures or option strategy is outstanding, unless they are
replaced with other suitable assets. As a result, there is a possibility
that segregation of a large percentage of the fund's assets could
impede portfolio management or the fund's ability to meet redemption
requests or other current obligations.
ELECTRIC UTILITIES INDUSTRY. The electric utilities industry has been
experiencing, or may experience in the future, problems, including (a) the
effects of inflation upon construction and operating costs, (b) the
availability and cost of fuel, (c) the availability and cost of capital,
(d) the effects of conservation on energy demand, (e) the effects of
rapidly changing environmental, safety, and licensing requirements, and
other federal, state, and local regulations, (f) timely and sufficient rate
increases, (g) opposition to nuclear power, and (h) increased competition.
HEALTH CARE INDUSTRY. The health care industry is subject to regulatory
action by a number of private and governmental agencies, including federal,
state, and local governmental agencies. A major source of revenues for the
health care industry is payments from the Medicare and Medicaid programs.
As a result, the industry is sensitive to legislative changes and
reductions in governmental spending for such programs. Numerous other
factors may affect the industry, such as general and local economic
conditions; demand for services; expenses (including malpractice insurance
premiums); and competition among health care providers. In the future, the
following elements may adversely affect health care facility operations:
adoption of legislation proposing a national health insurance program;
medical and technological advances which dramatically alter the need for
health services or the way in which such services are delivered; and
efforts by employers, insurers, and governmental agencies to reduce the
costs of health insurance and healthcare services.
HOUSING. Housing revenue bonds are generally issued by a state, county,
city, local housing authority, or other public agency. They are secured by
the revenues derived from mortgages purchased with the proceeds of the bond
issue. It is extremely difficult to predict the supply of available
mortgages to be purchased with the proceeds of an issue or the future cash
flow from the underlying mortgages. Consequently, there are risks that
proceeds will exceed supply, resulting in early retirement of bonds, or
that homeowner repayments will create an irregular cash flow.
Many factors may affect the financing of multi-family housing projects,
including acceptable completion of construction, proper management,
occupancy and rent levels, economic conditions, and changes to current laws
and regulations.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of the fund by FMR pursuant to authority contained in the fund's
management contract. FMR is also responsible for the placement of
transaction orders for other investment companies and accounts for which it
or its affiliates act as investment adviser. In selecting broker-dealers,
subject to applicable limitations of the federal securities laws, FMR will
consider various relevant factors, including, but not limited to, the size
and type of the transaction; the nature and character of the markets for
the security to be purchased or sold; the execution efficiency, settlement
capability and financial condition of the broker-dealer firm; the
broker-dealer's execution services rendered on a continuing basis; and the
reasonableness of any commissions.
The fund may execute portfolio transactions with broker-dealers who provide
research and execution services to the fund or other accounts over which
FMR or its affiliates exercise investment discretion. Such services may
include advice concerning the value of securities; the advisability of
investing in, purchasing, or selling securities; the availability of
securities or the purchasers or sellers of securities; furnishing analyses
and reports concerning issuers, industries, securities, economic factors
and trends, portfolio strategy, and performance of accounts; and effecting
securities transactions and performing functions incidental thereto (such
as clearance and settlement). The selection of such broker-dealers
generally is made by FMR (to the extent possible consistent with execution
considerations), based upon the quality of research and execution services
provided.
The receipt of research from broker-dealers that execute transactions on
behalf of the fund may be useful to FMR in rendering investment management
services to the fund or its other clients, and conversely, such information
provided by broker-dealers who have executed transaction orders on behalf
of other FMR clients may be useful to FMR in carrying out its obligations
to the fund. The receipt of such research has not reduced FMR's normal
independent research activities; however, it enables FMR to avoid the
additional expenses that could be incurred if FMR tried to develop
comparable information through its own efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause the
fund to pay such higher commissions, FMR must determine in good faith that
such commissions are reasonable in relation to the value of the brokerage
and research services provided by such executing broker-dealers, viewed in
terms of a particular transaction or FMR's overall responsibilities to the
fund and its other clients. In reaching this determination, FMR will not
attempt to place a specific dollar value on the brokerage and research
services provided, or to determine what portion of the compensation should
be related to those services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of the fund or shares of other Fidelity
funds, to the extent permitted by law. FMR may use research services
provided by and place agency transactions with Fidelity Brokerage Services,
Inc. (FBSI), a subsidiary of FMR Corp., if the commissions are fair and
reasonable and comparable to commissions charged by non-affiliated,
qualified broker-dealer firms for similar services.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members of
national securities exchanges from executing exchange transactions for
accounts which they or their affiliates manage, except if certain
requirements are satisfied . Pursuant to such re quirements , the
Board of Trustees has authorized FBSI to e xecute fund
portfolio transactions on national securities exchanges in accordance
with approved procedures and applicable SEC rules .
The Trustees periodically review FMR's performance of its responsibilities
in connection with the placement of portfolio transactions on behalf of the
fund and review the commissions paid by the fund over representative
periods of time to determine whether they are reasonable in relation to the
benefits to the fund.
For the 1993 and 1992 fiscal years ended December 31, the fund's
annual portfolio turnover rates amounted to 74 % and 53%,
respectively.
From time to time the Trustees will review whether the recapture for the
benefit of the fund of some portion of the brokerage commissions or similar
fees paid by the fund on portfolio transactions is legally permissible and
advisable. The fund seek s to recapture soliciting broker-dealer fees
on the tender of portfolio securities, but at present no other recapture
arrangements are in effect. The Trustees intend to continue to review
whether recapture opportunities are available and are legally permissible
and, if so, to determine in the exercise of their business judgment whether
it would be advisable for the fund to seek such recapture.
Although the Trustees and officers of the fund are substantially the same
as those of other funds managed by FMR, investment decisions for each of
the fund are made independently from those of other funds managed by FMR or
accounts managed by FMR affiliates. It sometimes happens that the same
security is held in the portfolio of more than one of these funds or
accounts. Simultaneous transactions are inevitable when several funds are
managed by the same investment adviser, particularly when the same security
is suitable for the investment objective of more than one fund.
When two or more funds are simultaneously engaged in the purchase or sale
of the same security, the prices and amounts are allocated in accordance
with a formula considered by the officers of the funds involved to be
equitable to the fund. In some cases this system could have a detrimental
effect on the price or value of the security as far as each of the funds is
concerned. In other cases, however, the ability of the fund to participate
in volume transactions will produce better executions and prices for the
fund. It is the current opinion of the Trustees that the desirability of
retaining FMR as investment adviser to the fund outweighs any disadvantages
that may be said to exist from exposure to simultaneous transactions.
VALUATION OF PORTFOLIO SECURITIES
Valuations of portfolio securities furnished by the pricing service
employed by the fund are based upon a computerized matrix system or
appraisals by the pricing service, in each case in reliance upon
information concerning market transactions and quotations from recognized
municipal securities dealers. The methods used by the pricing service and
the quality of valuations so established are reviewed by officers of the
fund and FSC under the general supervision of the Trustees. There are a
number of pricing services available and the Trustees, on the basis of
on-going evaluation of these services, may use other pricing services or
discontinue the use of any pricing service in whole or in part.
PERFORMANCE
The fund may quote performance in various ways. All performance information
supplied by the fund in advertising is historical and is not intended to
indicate future returns. T he fund's share price, yield, and total
returns fluctuate in response to market conditions and other factors, and
the value of the fund's shares when redeemed may be more or less than their
original cost.
YIELD CALCULATIONS. The fund's yield used in advertising is computed by
dividing the fund's interest income for a given 30-day or one-month period,
net of expenses, by the average number of shares entitled to receive
dividends during the period, dividing this figure by the fund's net asset
value per share at the end of the period, and annualizing the result
(assuming compounding of income) in order to arrive at an annual percentage
rate. Income is calculated for purposes of yield quotations in accordance
with standardized methods applicable to all stock and bond fund s . In
general, interest income is reduced with respect to bonds trading at a
premium over their par value by subtracting a portion of the premium from
income on a daily basis, and is increased with respect to bonds trading at
a discount by adding a portion of the discount to daily income. Capital
gains and losses generally are excluded from the calculation.
Income calculated for the purposes of determining the fund's yield differs
from income as determined for other accounting purposes. Because of the
different accounting methods used, and because of the compounding of income
assumed in yield calculations, the fund's yield may not equal its
distribution rate, the income paid to your account, or the income reported
in the fund's financial statements.
The fund's tax-equivalent yield is the rate an investor would have
to earn from a fully taxable investment after taxes to equal the fund's
tax-free yield. Tax-equivalent yields are calculated by dividing the
fund's yield by the result of one minus a stated federal or combined
federal and state tax rate. (If only a portion of the fund's yield
is tax-exempt, only that portion is adjusted in the calculation.)
The following table shows the effect of a shareholder's tax status on
effective yield under federal income tax laws for 199 4 . It shows the
approximate yield a taxable security must provide at various income
brackets to produce after-tax yields equivalent to those of hypothetical
tax-exempt obligations yielding from 4 % to 7 %. Of course, no
assurance can be given that the fund will achieve any specific tax-exempt
yield. While the fund invest principally in obligations whose interest is
exempt from federal income tax, other income received by the fund may be
taxable.
199 4 TAX RATES AND TAX-EQUIVALENT YIELDS

Federal If individual tax-exempt yield is:
Single Return Joint Return Tax .4% .5% .6% .7%
Taxable Income:* Taxable Income:* Bracket** Then taxable-equivalent
yield is:
$ 22,751 - $ 55,100 $ 38,001 - $ 91,850 28. % 5.56% 6.94% 8.33%
9.72%
$ 55,101 - $115,000 $ 91,851 - $140,000 31. % 5.80 7.25 8.70 10.14
$115,001 - $250,000 $140,001 - $250,000 36. % 6.25 7.81 9.38 10.94
$250,001 - above $250,001 - above 39.6% 6.62 8.28 9.93 11.59

* Net amount subject to federal income tax after deductions and exemptions.
Assumes ordinary income only; does not
include impact of preferential rate on long-term capital gain income.
** Excludes the impact of the phaseout of personal exemptions, limitation
on itemized deductions, and other credits,
exclusions, and adjustments which may raise a taxpayer's marginal tax
rate. An increase in a shareholder's marginal tax
rate would increase that shareholder's tax-equivalent yield.
The fund may invest a portion of its assets in obligations that are subject
to federal income tax. When the fund invests in these obligations,
its tax-equivalent yield will be lower. In the table above, tax-equivalent
yields are calculated assuming investments are 100% federally tax-free.
Yield information may be useful in reviewing the fund's performance and in
providing a basis for comparison with other investment alternatives.
However, the fund's yield fluctuates, unlike investments that pay a fixed
interest rate over a stated period of time. When comparing investment
alternatives, investors should also note the quality and maturity of the
portfolio securities of the respective investment companies they have
chosen to consider.
Investors should recognize that in periods of declining interest rates the
fund's yield will tend to be somewhat higher than prevailing market rates,
and in periods of rising interest rates the fund's yield will tend to be
somewhat lower. Also, when interest rates are falling, the inflow of net
new money to the fund from the continuous sale of its shares will likely be
invested in instruments producing lower yields than the balance of the
fund's holdings, thereby reducing the current yield of the fund. In periods
of rising interest rates, the opposite can be expected to occur.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect all
aspects of the fund's returns, including the effect of reinvesting
dividends and capital gain distributions (if any), and any change in the
fund's net asset value per share (NAV) over the period. Average annual
total returns are calculated by determining the growth or decline in value
of a hypothetical historical investment in the fund over a stated
period, and then calculating the annually compounded percentage rate that
would have produced the same result if the rate of growth or decline in
value had been constant over the period. For example, a cumulative total
return of 100% over ten years would produce an average annual total return
of 7.18%, which is the steady annual rate of return that would equal 100%
growth on a compounded basis in ten years. While average annual returns are
a convenient means of comparing investment alternatives, investors should
realize that the fund's performance is not constant over time, but changes
from year to year, and that average annual returns represent averaged
figures as opposed to the actual year-to-year performance of the fund.
In addition to average annual returns, the fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, or a series of
redemptions, over any time period. Total returns may be broken down into
their components of income and capital (including capital gains and changes
in share price) in order to illustrate the relationship of these factors
and their contributions to total return. An example of this type of
illustration is given below.
Total returns, yields, and other performance information may be quoted
numerically or in a table, graph, or similar illustration.
NET ASSET VALUES. Charts and graphs using the fund's net asset
value, adjusted net asset value, and benchmark indices may be used to
exhibit performance. An adjusted NAV includes any distributions paid by the
fund and reflects all elements of its return. Unless otherwise indicated,
the fund's adjusted NAVs are not adjusted for sales charges, if any.
HISTORICAL FUND RESULTS. The following table shows the fund's 30-day yield
and tax-equivalent yield (assuming a 31% federal income tax rate) as of
December 31, 1993. The table also shows the fund's average annual and
cumulative total returns for the fiscal year December 31, 1993.
Average Annual Total Returns Cumulative Total Returns

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
30-Day Tax-Equivalen One Five Ten One Five Ten
t

Yield Yield Year Years Years Year Years Years

4.96% 7.75% 13.17% 10.07% 10.83% 13.17% 61.60% 179.58%

</TABLE>

The following table shows the income and capital elements of the fund's
total returns and compares them to the cost of living (as measured by the
Consumer Price Index, or CPI) over the same period. During the periods
quoted, interest rates and bond prices fluctuated widely; thus the table
should not be considered representative of the dividend income or capital
gain or loss that could be realized from an investment in the fund today.
During the period from December 31, 1983 through December 31, 1993, a
hypothetical $10,000 investment in Municipal Bond would have grown to
$ 27,958 , assuming all distributions were reinvested.
MUNICIPAL BOND INDEX

Value of Value of Value of

Initial Reinvested Reinvested Cost

Period Ended $10,000 Income Capital Gain Total of

December 31 Investment Dividends Distributions Value Living

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1993 $ 12,932 $ 13,050 $ 1,977 $ 27,958 $ 14,393

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1992 12,649 11,356 700 24,704 14,008

1991 12,604 9,889 186 22,679 13,613

1990 12,098 8,167 0 20,265 13,208

1989 12,098 6,857 0 18,955 12,448

1988 11,830 5,470 0 17,301 11,895

1987 11,310 4,096 0 15,405 11,392

1986 12,321 3,328 0 15,650 10,908

1985 11, 042 2,050 0 13,092 10,790

1984 9,970 932 0 10,902 10,395

</TABLE>

Explanatory Notes: With an initial investment of $10,000 made on December
31, 1983, the net amount invested in fund shares was $10,000. The cost of
the initial investment ($10,000), together with the aggregate cost of
reinvested dividends and capital gain distributions for the period covered
(their cash value at the time they were reinvested), amounted to
$ 23,867 . If distributions had not been reinvested, the amount of
distributions earned from the fund over time would have been smaller, and
cash payments for the period would have amounted to $ 8,115 for
income dividends and $ 982 for capital gain distributions. Tax
consequences of different investments have not been factored into the above
figures.
The fund's performance may be compared to the performance of other mutual
fund in general, or to the performance of particular types of mutual fund.
These comparisons may be expressed as mutual fund rankings prepared by
Lipper Analytical Services, Inc. (Lipper), an independent service located
in Summit, New Jersey that monitors the performance of mutual fund s .
Lipper generally ranks fund s on the basis of total return, assuming
reinvestment of distributions, but does not take sales charges or
redemption fees into consideration, and is prepared without regard to tax
consequences. Lipper may also rank fund s based on yield. In addition
to the mutual fund rankings, the fund's performance may be compared
to mutual fund performance indices prepared by Lipper.
From time to time, the fund's performance may also be compared to other
mutual funds tracked by financial or business publications and periodicals.
For example, the fund may quote Morningstar, Inc. in its advertising
materials. Morningstar, Inc. is a mutual fund rating service that rates
mutual funds on the basis of risk-adjusted performance. Rankings that
compare the performance of Fidelity funds to one another in appropriate
categories over specific periods of time may also be quoted in advertising.
The fund may also quote the Lehman Brothers Muni Bond Index, an index of
municipal bonds that have been issued within the last five years as part of
a deal of at least $50 million. The index includes issues with maturities
of at least two years and those rated at least Baa by Moody's or BBB by
S&P. The index excludes bonds subject to the federal alternative
minimum tax.
Fidelity may provide information designed to help individuals understand
their investment goals and explore various financial strategies. For
example, Fidelity's FundMatchsm Program includes a workbook describing
general principles of investing, such as asset allocation, diversification,
risk tolerance, and goal setting; a questionnaire designed to help create a
personal financial profile; and an action plan offering investment
alternatives. Materials may also include discussions of Fidelity's three
asset allocation funds and other Fidelity funds, products, and services.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical
returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury
bills, the U.S. rate of inflation (based on the CPI), and combinations of
various capital markets. The performance of these capital markets is based
on the returns of different indices.
Fidelity funds may use the performance of these capital markets in order to
demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any
of these capital markets. The risks associated with the security types in
any capital market may or may not correspond directly to those of the fund.
Ibbotson calculates total returns in the same method as the fund. The fund
may also compare performance to that of other compilations or indices that
may be developed and made available in the future.
The fund may compare its performance or the performance of securities in
which it may invest to averages published by IBC USA (Publications), Inc.
of Ashland, Massachusetts. These averages assume reinvestment of
distributions. The Bond Fund Report AverageS(registered
trademark)/ Municipal , which is reported in the BOND FUND
REPORT(registered trademark), covers over 361 Tax-Free bond funds.
When evaluating comparisons to money market funds, investors should
consider the relevant differences in investment objectives and policies.
Specifically, money market funds invest in short-term, high-quality
instruments and seek to maintain a stable $1.00 share price. The fund,
however, invests in longer-term instruments and its share price changes
daily in response to a variety of factors.
The fund may compare and contrast in advertising the relative advantages of
investing in a mutual fund versus an individual municipal bond. Unlike
tax-free mutual funds, individual municipal bonds offer a stated rate of
interest and, if held to maturity, repayment of principal. Although some
individual municipal bonds might offer a higher return, they do not offer
the reduced risk of a mutual fund that invests in many different
securities. The initial investment requirements and sales charges of many
tax-free mutual funds are lower than the purchase cost of individual
municipal bonds, which are generally issued in $5,000 denominations and are
subject to direct brokerage costs.
In advertising materials, Fidelity may reference or discuss its products
and services, which may include: other Fidelity funds; retirement
investing; brokerage products and services; the effects of periodic
investment plans and dollar cost averaging; saving for college; charitable
giving; and the Fidelity credit card. In addition, Fidelity may quote
financial or business publications and periodicals, including model
portfolios or allocations, as they relate to fund management, investment
philosophy, and investment techniques. Fidelity may also reprint, and use
as advertising and sales literature, articles from Fidelity Focus, a
quarterly magazine provided free of charge to Fidelity fund shareholders.
The fund may present its fund number, Quotron(registered trademark) number,
and CUSIP number, and discuss or quote its current portfolio manager.
The fund may advertise examples of the effects of periodic investment
plans, including the principle of dollar cost averaging. In such a program,
an investor invests a fixed dollar amount in a fund at periodic intervals,
thereby purchasing fewer shares when prices are high and more shares when
prices are low. While such a strategy does not assure a profit or guard
against loss in a declining market, the investor's average cost per share
can be lower than if fixed numbers of shares are purchased at the same
intervals. In evaluating such a plan, investors should consider their
ability to continue purchasing shares during periods of low price levels.
According to the Investment Company Institute, over the past ten years,
assets in tax-exempt funds increased from $45 billion in 1984 to
approximately $291 billion at the end of 1992. As of December 31, 1993, FMR
advised 42 tax-free funds with a total value of over $ 25 billion in
assets.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The fund is open for business and its net asset value per share (NAV) is
calculated each day the New York Stock Exchange (NYSE) is open for trading.
The NYSE has designated the following holiday closings for 1994:
Washington's Birthday (observed), Good Friday, Memorial Day (observed),
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day
(observed). Although FMR expects the same holiday schedule, with the
addition of New Year's Day, to be observed in the future, the NYSE may
modify its holiday schedule at any time.
FSC normally determines the fund's NAV as of the close of the NYSE
(normally 4:00 p.m. Eastern time). However, NAV may be calculated earlier
if trading on the NYSE is restricted or as permitted by the SEC. To the
extent that portfolio securities are traded in other markets on days when
the NYSE is closed, the fund's NAV may be affected on days when
investors do not have access to the fund to purchase or redeem shares.
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing the fund's NAV. Shareholders receiving securities or other
property on redemption may realize a gain or loss for tax purposes, and
will incur any costs of sale, as well as the associated inconveniences.
Pursuant to Rule 11a-3 under the Investment Company Act of 1940 (the 1940
Act), the fund is required to give shareholders at least 60 days' notice
prior to terminating or modifying its exchange privilege. Under the Rule,
the 60-day notification requirement may be waived if (i) the only effect of
a modification would be to reduce or eliminate an administrative fee,
redemption fee, or deferred sales charge ordinarily payable at the time of
an exchange, or (ii) the fund suspends the redemption of the shares to be
exchanged as permitted under the 1940 Act or the rules and regulations
thereunder, or the fund to be acquired suspends the sale of its shares
because it is unable to invest amounts effectively in accordance with its
investment objective and policies.
In the Prospectus, the fund has notified shareholders that it reserves the
right at any time, without prior notice, to refuse exchange purchases by
any person or group if, in FMR's judgment, the fund would be unable to
invest effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and the
U.S. Postal Service cannot deliver your checks, or if your checks remain
uncashed for six months, Fidelity may reinvest your distributions at the
then-current NAV. All subsequent distributions will then be reinvested
until you provide Fidelity with alternate instructions.
DIVIDENDS. To the extent that the fund's income is derived from federally
tax-exempt interest, the daily dividends declared by the fund are also
federally tax-exempt. The fund will send each shareholder a notice in
January describing the tax status of dividends and capital gain
distributions (if any) for the prior year.
Shareholders are required to report tax-exempt income on their federal tax
returns. Shareholders who earn other income, such as Social Security
benefits, may be subject to federal income tax on up to one half of such
benefits to the extent that their income, including tax-exempt income,
exceeds certain base amounts.
The fund purchases municipal obligations based on opinions of bond counsel
regarding the federal income tax status of the obligations. These opinions
generally will be based upon covenants by the issuers regarding continuing
compliance with federal tax requirements. If the issuer of an obligation
fails to comply with its covenants at any time, interest on the obligation
could become federally taxable retroactive to the date the obligation was
issued.
As a result of the Tax Reform Act of 1986, interest on certain "private
activity" securities (referred to as "qualified bonds" in the Internal
Revenue Code) is subject to the federal alternative minimum tax (AMT),
although the interest continues to be excludable from gross income for
other tax purposes. Interest from private activity securities will be
considered tax-exempt for purposes of the fund's policies of investing so
that at least 80% of assets are invested in federally tax-exempt municipal
securities. Interest from private activity securities is a
tax-preference item for the purposes of determining whether a taxpayer is
subject to the AMT and the amount of AMT to be paid, if any. Private
activity securities issued after August 7, 1986 to benefit a private or
industrial user or to finance a private facility are affected by this rule.
The fund does not currently intend to purchase private activity securities
whose interest is a tax preference item for purposes of the AMT.
Nevertheless, the fund reserve the right to purchase such obligations in
the future, subject to notice to shareholders, if their respective Board of
Trustees determines that it is in the best interest of the shareholders to
do so.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by the fund on
the sale of securities and distributed to shareholders are federally
taxable as long-term capital gains, regardless of the length of time that
shareholders have held their shares. If a shareholder receives a long-term
capital gain distribution on shares of the fund and such shares are
held six months or less and are sold at a loss, the portion of the loss
equal to the amount of the long-term capital gain distribution will be
considered a long-term loss for tax purposes.
A portion of the gain on bonds purchase at a discount after April 30, 1993
and short-term capital gains distributed by the fund are federally taxable
to shareholders as dividends, not as capital gains. Distributions from
short-term capital gains do not qualify for the dividends-received
deduction. Dividend distributions resulting from a recharacterization of
gain from the sale of bonds purchased at a discount after April 30, 1993
are not considered income for purposes of the fund's policy of investing
so that at least 80% of its assets are invested in federally tax-free
municipal securities.
TAX STATUS OF THE FUND. The fund has qualified and intends to continue to
qualify each year as a "regulated investment company" for tax purposes, so
that it will not be liable for federal tax at the fund level on income and
capital gains distributed to shareholders. In order to qualify as a
regulated investment company and avoid being subject to federal income or
excise taxes, the fund intends to distribute substantially all of its net
investment income and net realized capital gains (if any) within each
calendar year as well as on a fiscal year basis. The fund also intends to
comply with other tax rules applicable to regulated investment companies,
including a requirement that capital gains from the sale of securities held
less than three months constitute less than 30% of the fund's gross income
for each fiscal year. Gains from some futures contracts and options are
included in this 30% calculation, which may limit the fund's
investment in such instruments. Fidelity Municipal Trust treats each fund
as a separate entity for tax purposes.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax considerations generally affecting the fund and its shareholders;
no attempt has been made to discuss individual tax consequences.
Distributions from the fund may be subject to state and local taxes.
Investors should consult their tax advisers to determine whether the fund
is suitable to their particular tax situation.
FMR
FMR is a wholly owned subsidiary of FMR Corp., a parent company organized
in 1972. At present, the principal operating activities of FMR Corp. are
those conducted by three of its divisions as follows: FSC, which is the
transfer and shareholder servicing agent for certain of the funds advised
by FMR; Fidelity Investments Institutional Operations Company, which
performs shareholder servicing functions for certain institutional
customers; and Fidelity Investments Retail Marketing Company, which
provides marketing services to various companies within the Fidelity
organization.
Several affiliates of FMR are also engaged in the investment advisory
business. Fidelity Management Trust Company provides trustee, investment
advisory, and administrative services to retirement plans and corporate
employee benefit accounts. Fidelity Management & Research (U.K.) Inc.
(FMR U.K.) and Fidelity Management & Research (Far East) Inc. (FMR Far
East), both wholly owned subsidiaries of FMR formed in 1986, supply
investment research, and may supply portfolio management services, to FMR
in connection with certain funds advised by FMR. Analysts employed by FMR,
FMR U.K., and FMR Far East research and visit thousands of domestic and
foreign companies each year. FMR Texas, a wholly owned subsidiary of FMR
formed in 1989, supplies portfolio management and research services in
connection with certain money market funds advised by FMR.
TRUSTEES AND OFFICERS
The Trustees and executive officers of the trust are listed below. Except
as indicated, each individual has held the office shown or other offices in
the same company for the last five years. All persons named as Trustees
and officers also serve in similar capacities for other funds advised by
FMR. Unless otherwise noted, the business address of each Trustee and
officer is 82 Devonshire Street, Boston, Massachusetts 02109, which is also
the address of FMR. Those Trustees who are "interested persons" (as
defined by the 1940 Act) by virtue of their affiliation with either a trust
or FMR, are indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d, Trustee and President, is Chairman, Chief
Executive Officer and a Director of FMR Corp.; a Director and Chairman of
the Board and of the Executive Committee of FMR; Chairman and a Director of
FMR Texas Inc. (1989), Fidelity Management & Research (U.K.) Inc., and
Fidelity Management & Research (Far East) Inc.
*J. GARY BURKHEAD, Trustee and Senior Vice President, is President of
FMR; and President and a Director of FMR Texas Inc. (1989), Fidelity
Management & Research (U.K.) Inc., and Fidelity Management &
Research (Far East) Inc.
RALPH F. COX, 200 Rivercrest Drive, Fort Worth, TX, Trustee (1991), is
President of Greenhill Petroleum Corporation (petroleum exploration and
production, 1990). Prior to his retirement in March 1990, Mr. Cox was
President and Chief Operating Officer of Union Pacific Resources Company
(exploration and production). He is a Director of Bonneville Pacific
Corporation (independent power, 1989) and CH2M Hill Companies
(engineering). In addition, he served on the Board of Directors of the
Norton Company (manufacturer of industrial devices, 1983-1990) and
continues to serve on the Board of Directors of the Texas State Chamber of
Commerce, and is a member of advisory boards of Texas A&M University
and the University of Texas at Austin.
PHYLLIS BURKE DAVIS, P.O. Box 264, Bridgehampton, NY, Trustee (1992).
Prior to her retirement in September 1991, Mrs. Davis was the Senior Vice
President of Corporate Affairs of Avon Products, Inc. She is currently a
Director of BellSouth Corporation (telecommunications), Eaton Corporation
(manufacturing, 1991), and the TJX Companies, Inc. (retail stores, 1990),
and previously served as a Director of Hallmark Cards, Inc. (1985-1991) and
Nabisco Brands, Inc. In addition, she serves as a Director of the New York
City Chapter of the National Multiple Sclerosis Society, and is a member of
the Advisory Council of the International Executive Service Corps. and the
President's Advisory Council of The University of Vermont School of
Business Administration.
RICHARD J. FLYNN, 77 Fiske Hill, Sturbridge, MA, Trustee, is a financial
consultant. Prior to September 1986, Mr. Flynn was Vice Chairman and a
Director of the Norton Company (manufacturer of industrial devices). He is
currently a Director of Mechanics Bank and a Trustee of College of the Holy
Cross and Old Sturbridge Village, Inc.
E. BRADLEY JONES, 3881-2 Lander Road, Chagrin Falls, OH, Trustee (1990).
Prior to his retirement in 1984, Mr. Jones was Chairman and Chief Executive
Officer of LTV Steel Company. Prior to May 1990, he was Director of
National City Corporation (a bank holding company) and National City Bank
of Cleveland. He is a Director of TRW Inc. (original equipment and
replacement products), Cleveland-Cliffs Inc (mining), NACCO Industries,
Inc. (mining and marketing), Consolidated Rail Corporation, Birmingham
Steel Corporation (1988), Hyster-Yale Materials Handling, Inc. (1989), and
RPM, Inc. (manufacturer of chemical products, 1990). In addition, he
serves as a Trustee of First Union Real Estate Investments, Chairman of the
Board of Trustees and a member of the Executive Committee of the Cleveland
Clinic Foundation, a Trustee and a member of the Executive Committee of
University School (Cleveland), and a Trustee of Cleveland Clinic
Florida.
DONALD J. KIRK, 680 Steamboat Road, Apartment #1-North, Greenwich, CT,
Trustee, is a Professor at Columbia University Graduate School of Business
and a financial consultant. Prior to 1987, he was Chairman of the
Financial Accounting Standards Board. Mr. Kirk is a Director of General Re
Corporation (reinsurance) and Valuation Research Corp. (appraisals and
valuations, 1993). In addition, he serves as Vice Chairman of the Board of
Directors of the National Arts Stabilization Fund and Vice Chairman of the
Board of Trustees of the Greenwich Hospital Association.
*PETER S. LYNCH, Trustee (1990) is Vice Chairman of FMR (1992). Prior
to his retirement on May 31, 1990, he was a Director of FMR (1989) and
Executive Vice President of FMR (a position he held until March 31, 1991);
Vice President of Fidelity Magellan Fund and FMR Growth Group Leader; and
Managing Director of FMR Corp. Mr. Lynch was also Vice President of
Fidelity Investments Corporate Services (1991-1992). He is a Director of
W.R. Grace & Co. (chemicals, 1989) and Morrison Knudsen Corporation
(engineering and construction). In addition, he serves as a Trustee of
Boston College, Massachusetts Eye & Ear Infirmary, Historic Deerfield
(1989) and Society for the Preservation of New England Antiquities, and as
an Overseer of the Museum of Fine Arts of Boston (1990).
GERALD C. McDONOUGH, 135 Aspenwood Drive, Cleveland, OH, Trustee (1989),
is Chairman of G.M. Management Group (strategic advisory services). Prior
to his retirement in July 1988, he was Chairman and Chief Executive Officer
of Leaseway Transportation Corp. (physical distribution services). Mr.
McDonough is a Director of ACME-Cleveland Corp. (metal working,
telecommunications and electronic products), Brush-Wellman Inc. (metal
refining), York International Corp. (air conditioning and refrigeration,
1989), Commercial Intertech Corp. (water treatment equipment, 1992), and
Associated Estates Realty Corporation (a real estate investment trust,
1993).
EDWARD H. MALONE, 5601 Turtle Bay Drive #2104, Naples, FL, Trustee.
Prior to his retirement in 1985, Mr. Malone was Chairman, General Electric
Investment Corporation and a Vice President of General Electric Company.
He is a Director of Allegheny Power Systems, Inc. (electric utility),
General Re Corporation (reinsurance) and Mattel Inc. (toy manufacturer).
He is also a Trustee of Rensselaer Polytechnic Institute and of Corporate
Property Investors and a member of the Advisory Boards of Butler Capital
Corporation Funds and Warburg, Pincus Partnership Funds.
MARVIN L. MANN, 55 Railroad Avenue, Greenwich, CT, Trustee (1993) is
Chairman of the Board, President, and Chief Executive Officer of Lexmark
International, Inc. (office machines, 1991). Prior to 1991, he held the
positions of Vice President of International Business Machines Corporation
("IBM") and President and General Manager of various IBM divisions and
subsidiaries. Mr. Mann is a Director of M.A. Hanna Company (chemicals,
1993) and Infomart (marketing services, 1991), a Trammell Crow Co. In
addition, he serves as the Campaign Vice Chairman of the Tri-State United
Way (1993) and is a member of the University of Alabama President's Cabinet
(1990).
THOMAS R. WILLIAMS, 21st Floor, 191 Peachtree Street, N.E., Atlanta, GA,
Trustee, is President of The Wales Group, Inc. (management and financial
advisory services). Prior to retiring in 1987, Mr. Williams served as
Chairman of the Board of First Wachovia Corporation (bank holding company),
and Chairman and Chief Executive Officer of The First National Bank of
Atlanta and First Atlanta Corporation (bank holding company). He is
currently a Director of BellSouth Corporation (telecommunications),
ConAgra, Inc. (agricultural products), Fisher Business Systems, Inc.
(computer software), Georgia Power Company (electric utility), Gerber Alley
& Associates, Inc. (computer software), National Life Insurance Company
of Vermont, American Software, Inc. (1989), and AppleSouth, Inc.
(restaurants, 1992).
GARY L. FRENCH, Treasurer (1991). Prior to becoming Treasurer of the
Fidelity funds, Mr. French was Senior Vice President, Fund Accounting -
Fidelity Accounting & Custody Services Co. (1991); Vice President, Fund
Accounting - Fidelity Accounting & Custody Services Co. (1990); and
Senior Vice President, Chief Financial and Operations Officer - Huntington
Advisers, Inc. (1985-1990).
ARTHUR S. LORING, Secretary, is Senior Vice President and General
Counsel of FMR, Vice President - Legal of FMR Corp., and Vice President and
Clerk of FDC.
GARY LEE SWAYZE, Vice President of FMR (1987), Fidelity Municipal Bond
Portfolio (1987), and other funds advised by FMR, is an employee of
FMR.
Under a retirement program that became effective on November 1, 1989,
Trustees, upon reaching age 72, become eligible to participate in a defined
benefit retirement program under which they receive payments during their
lifetime from the fund based on their basic trustee fees and length of
service. Currently, Messrs. Robert L. Johnson, William R. Spaulding,
Bertram H. Witham, and David L. Yunich participate in the program.
As of December 31, 1993, the Trustees and officers of the fund owned, in
the aggregate, less than 1% of the fund's total outstanding shares.
MANAGEMENT CONTRACT
The fund employs FMR to furnish investment advisory and other services.
Under FMR's management contract with the fund, FMR acts as investment
adviser and, subject to the supervision of the Boards of Trustees, directs
the investments of the fund in accordance with its investment objective,
policies, and limitations. FMR also provides the fund with all necessary
office facilities and personnel for servicing the fund's investments, and
compensates all officers of the trusts, all Trustees who are "interested
persons" of the trust or of FMR, and all personnel of the trusts or FMR
performing services relating to research, statistical, and investment
activities.
In addition, FMR or its affiliates, subject to the supervision of the
Boards of Trustees, provide the management and administrative services
necessary for the operation of the fund. These services include providing
facilities for maintaining the fund's organization; supervising relations
with custodians, transfer and pricing agents, accountants, underwriters,
and other persons dealing with the fund; preparing all general shareholder
communications and conducting shareholder relations; maintaining the fund's
records and the registration of the fund's shares under federal and state
law; developing management and shareholder services for the fund; and
furnishing reports, evaluations, and analyses on a variety of subjects to
the Boards of Trustees.
In addition to the management fee payable to FMR and the fees payable to
United Missouri, the fund pays all of its expenses, without limitation,
that are not assumed by those parties. The fund pays for typesetting,
printing, and mailing proxy material to shareholders, legal expenses, and
the fees of the custodian, auditor, and non-interested Trustees. Although
the fund's management contract provides that the fund will pay for
typesetting, printing, and mailing prospectuses, statements of additional
information, notices, and reports to existing shareholders, United Missouri
has entered into a revised sub-transfer agent agreement with FSC, pursuant
to which FSC bears the cost of providing these services to existing
shareholders. Other expenses paid by the fund include interest, taxes,
brokerage commissions, the fund's proportionate share of insurance premiums
and Investment Company Institute dues, and the costs of registering shares
under federal and state securities laws. The fund is also liable for such
nonrecurring expenses as may arise, including costs of any litigation to
which the fund may be a party and any obligation it may have to
indemnify the trust's officers and Trustees with respect to litigation.
FMR is the fund's manager pursuant to a management contract dated January
1, 1994, which was approved by shareholders on December 15, 1993 .
For the services of FMR under the contract, the fund pays FMR a monthly
management fee composed of the sum of two elements: a group fee rate and an
individual fund fee rate.
The group fee rate is based on the monthly average net assets of all of the
registered investment companies with which FMR has management contracts and
is calculated on a cumulative basis pursuant to the graduated fee rate
schedule shown on the left. On the right, the effective fee rate schedule
shows the results of cummulatively applying the annualized rates at varying
asset levels. For example, the effective annual fee rate at $ 233
billion of group net assets - their approximate level for December 1993 -
was .1621% , which is the weighted average of the respective fee
rates for each level of group net assets up to $ 233 billion.
GROUP FEE RATE SCHEDULE* EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual
Assets Rate Assets Fee Rate

0 - $ 3 billion .3700% $ 0.5 billion .3700%

3 - 6 .3400 25 .2664

6 - 9 .3100 50 .2188

9 - 12 .2800 75 .1986

12 - 15 .2500 100 .1869

15 - 18 .2200 125 .1793

18 - 21 .2000 150 .1736

21 - 24 .1900 175 .1695

24 - 30 .1800 200 .1658

30 - 36 .1750 225 .1629

36 - 42 .1700 250 .1604

42 - 48 .1650 275 .1583

48 - 66 .1600 300 .1565

66 - 84 .1550 325 .1548

84 - 120 .1500 350 .1533

120 - 174 .1450

174 - 228 .1400

228 - 282 .1375

282 - 336 .1350

Over 336 .1325

* Prior to January 1, 1992, the group fee rate was based on a schedule with
breakpoints ending at .150 0 % for average group assets in excess of
$84 billion. The group fee breakpoints shown for average group assets
between $84 billion and $228 billion were voluntarily adopted by FMR on
January 1, 1992. Additional breakpoints for average group assets in excess
of $228 billion were voluntarily adopted by FMR on November 1, 1993. The
fund's management contract dated January 1, 1994 reflects these extensions
of the group fee rate schedule.
The individual fund fee rate for the fund under the current contract
is .25%. Based on the average net assets of funds advised by FMR for
December 1993, and the individual fund fee rate in effect during fiscal
1993, the annual management fee rate would be calculated as follows:
Group Fee Rate Individual Fund Fee Rate Management Fee Rate
.1621 % + . 20 % = .3621 %

One twelfth of this annual management fee rate is then applied to the
fund's average net assets for the current month, giving a dollar amount
which is the fee for that month.
Management fees paid to FMR for the fiscal years ended December 31, 1993,
1992, and 1991 for FMR's services as investment adviser were $ 4,677,000,
$4,381,000 and $4,224,000 , respectively.
To comply with the California Code of Regulations, FMR will reimburse the
fund if and to the extent that a fund's aggregate operating expenses exceed
specified percentages of its average net assets. The applicable
percentages are 2 1/2% of the first $30 million, 2% of the next $70
million, and 1 1/2% of average net assets in excess of $100 million. When
calculating the fund's expenses for purposes of this regulation, the
fund may exclude interest, taxes, brokerage commissions, and extraordinary
expenses, as well as a portion of its distribution plan expenses.
DISTRIBUTION AND SERVICE PLAN
The fund has adopted a distribution and service plan (the plan) under Rule
12b-1 under the Investment Company Act of 1940 (the Rule). The Rule
provides in substance that a mutual fund may not engage directly or
indirectly in financing any activity that is primarily intended to result
in the sale of shares of the fund except pursuant to a plan adopted by the
fund under the Rule. The Board of Trustees has adopted the plan to allow
the fund and FMR to incur certain expenses that might be considered to
constitute indirect payment by the fund of distribution expenses. Under
the plan, if payment by the fund to FMR of management fees should be
deemed to be indirect financing by the fund of the distribution of its
shares, such payment is authorized by the fund's plan.
The plan specifically recognizes that FMR, either directly or through FDC,
may use its management fee revenue, past profits, or other resources,
without limitation, to pay promotional and administrative expenses in
connection with the offer and sale of shares of the fund. In addition, the
plan provides that FMR may use its resources, including its management fee
revenue, to make payments to third parties that provide assistance in
selling the fund's shares, or to third parties, including banks, that
render shareholder support services. During the fiscal year ended December
31, 1993 FMR made payments to third parties amounting to $ 2,000 .
As required by the Rule, the Trustees carefully considered all pertinent
factors relating to the implementation of the plan prior to its approval,
and have determined that there is a reasonable likelihood that the plan
will benefit the fund and its shareholders. In particular, the Trustees
noted that the plan does not authorize payments by the fund other than
those made to FMR under its management contract with the fund. To the
extent that the plan gives FMR and FDC greater flexibility in connection
with the distribution of shares of the fund, additional sales of the fund's
shares may result. Additionally, certain shareholder support services may
be provided more effectively under the plan by local entities with whom
shareholders have other relationships. The plan was approved by
shareholders of the fund at a shareholder meeting held December 31, 1986.
The Glass-Steagall Act generally prohibits federally and state chartered or
supervised banks from engaging in the business of underwriting, selling, or
distributing securities. Although the scope of this prohibition under the
Glass-Steagall Act has not been clearly defined by the courts or
appropriate regulatory agencies, FDC believes that the Glass-Steagall Act
should not preclude a bank from performing shareholder support services or
servicing and recordkeeping functions. FDC intends to engage banks only to
perform such functions. However, changes in federal or state statutes and
regulations pertaining to the permissible activities of banks and their
affiliates or subsidiaries, as well as further judicial or administrative
decisions or interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a bank were
prohibited from so acting, the Trustees would consider what actions, if
any, would be necessary to continue to provide efficient and effective
shareholder services. In such event, changes in the operation of the fund
might occur, including possible termination of any automatic investment or
redemption or other services then provided by the bank. It is not expected
that shareholders would suffer any adverse financial consequences as a
result of any of these occurrences. The fund may execute portfolio
transactions with and purchase securities issued by depository institutions
that receive payments under the plan. No preference will be shown in the
selection of investments for the instruments of such depository
institutions. In addition, state securities laws on this issue may differ
from the interpretations of federal law expressed herein, and banks and
other financial institutions may be required to register as dealers
pursuant to state law.
INTEREST OF FMR AFFILIATES
United Missouri is the fund's custodian and transfer agent. United
Missouri has entered into sub-contracts with FSC, an affiliate of FMR,
under the terms of which FSC performs the processing activities associated
with the transfer agent and shareholder servicing functions for the fund.
Under the sub-contracts, FSC bears the expense of typesetting, printing,
and mailing prospectuses, statements of additional information, and all
other reports, notices, and statements to shareholders, except proxy
statements. FSC also pays out-of-pocket expenses associated with transfer
agent services.
United Missouri pays FSC an annual fee of $25.50 per regular account with a
balance of $5,000 or more, $15 per regular account with a balance of less
than $5,000, and a supplemental activity charge of $5.61 for monetary
transactions. These fees and charges are subject to annual cost escalation
based on postal rate changes and changes in wage and price levels as
measured by the National Consumer Price Index for Urban Areas. With
respect to institutional client master accounts, the fund pays FSC a
per-account fee of $95 and monetary transaction charges of $20 or $17.50,
depending on the nature of services provided. With respect to certain
institutional broker-dealer accounts, the fund pays FSC a per-account fee
of $30 and a charge of $6 for monetary transactions. Fees for certain
institutional retirement plan accounts are based on the net assets of all
such accounts in the fund.
Prior to March 26, 1992, State Street Bank and Trust Company (State Street)
served as the fund's custodian and transfer agent and also sub-contracted
with FSC to perform the processing activities associated with providing
transfer agent and shareholder servicing functions for the fund. Beginning
on June 1, 1989, FSC was compensated by State Street on the same basis as
it is currently compensated by United Missouri (although fee rates and
charges were adjusted periodically to reflect postal rate changes and
changes in wage and price levels as measured by the National Consumer Price
Index for Urban Areas).
Transfer agent fees, including reimbursement for out-of-pocket expenses,
paid to FSC for the fiscal years ended December 31, 1993, 1992, and 1991
were $915,000 , $831, 000 and $711, respectively.
United Missouri has an additional sub-contract with FSC, pursuant to which
FSC performs the calculations necessary to determine the fund's net asset
value per share and dividends and maintains the fund's accounting records.
The annual fee rates for these pricing and bookkeeping services are based
on the fund's average net assets, specifically, .04% for the first $500
million of average net assets and .02% for average net assets in excess of
$500 million. The fee is limited to a minimum of $45,000 and a maximum of
$750,000 per year.
Prior to March 26, 1992, State Street subcontracted with FSC for pricing
and bookkeeping services. Beginning July 1, 1991, FSC was compensated for
these services by State Street on the same basis as it is currently
compensated by United Missouri. Prior to July 1, 1991, the annual fee paid
to FSC for pricing and bookkeeping services was based on two schedules, one
pertaining to the fund's average net assets and one pertaining to the type
and number of transactions the fund made.
Pricing and bookkeeping fees, including reimbursement for out-of-pocket
expenses, paid to FSC for fiscal 1993, 1992, and 1991 were $ 358,000 ,
$430,842 and $345,006, respectively.
The transfer agent fees and pricing and bookkeeping fees described above
are paid to FSC by United Missouri, which is entitled to reimbursement from
the fund for these expenses.
The fund has a distribution agreement with FDC, a Massachusetts corporation
organized on July 18, 1960. FDC is a broker-dealer registered under the
Securities Exchange Act of 1934 and is a member of the National Association
of Securities Dealers, Inc. The distribution agreements call for FDC to
use all reasonable efforts, consistent with its other business, to secure
purchasers for shares of the fund, which are continuously offered at net
asset value. Promotional and administrative expenses in connection with
the offer and sale of shares are paid by FMR.
DESCRIPTION OF THE TRUST
TRUST ORGANIZATION. Fidelity Municipal Bond Portfolio is a fund of
Fidelity Municipal Trust, an open-end management investment company
originally organized as a Maryland corporation on November 22, 1976 and
reorganized as a Massachusetts business trust on June 22, 1984, at which
time its name changed from Fidelity Municipal Bond Fund, Inc. to Fidelity
Municipal Bond Fund. On March 1, 1986, the trust's name was changed to
Fidelity Municipal Trust. Currently, there are eight fund s of the
trust : Fidelity Municipal Bond Portfolio; Fidelity Aggressive Tax-Free
Portfolio; Spartan Short-Intermediate Municipal Fund; Fidelity Insured
Tax-Free Portfolio; Fidelity Ohio Tax-Free High Yield Fund; Fidelity
Michigan Tax-Free High Yield Fund; Fidelity Minnesota Tax-Free Portfolio;
and Spartan Pennsylvania Municipal High Yield Portfolio. The
Declaration of Trust permits the Trustees to create additional funds.
In the event that FMR ceases to be the investment adviser to the trust or a
fund, the right of the trust or a fund to use the identifying names
"Fidelity" and "Spartan" may be withdrawn.
The assets of the trust received for the issue or sale of shares of each
fund and all income, earnings, profits, and proceeds thereof, subject
only to the rights of creditors, are especially allocated to such fund, and
constitute the underlying assets of such fund. The underlying assets of
each fund are segregated on the books of account, and are to be
charged with the liabilities with respect to such fund and with a share of
the general expenses of the trust. Expenses with respect to the trust are
to be allocated in proportion to the asset value of the respective
funds , except where allocations of direct expense can otherwise be
fairly made. The officers of the trust, subject to the general supervision
of the Board of Trustees, have the power to determine which expenses are
allocable to a given fund, or which are general or allocable to all of the
funds . In the event of the dissolution or liquidation of the trust,
shareholders of each fund are entitled to receive as a class the
underlying assets of such fund available for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. The trust is an entity of the type
commonly known as a "Massachusetts business trust." Under Massachusetts
law, shareholders of such a trust may, under certain circumstances, be held
personally liable for the obligations of the trust. The Declaration of
Trust provides that the trust shall not have any claim against shareholders
except for the payment of the purchase price of shares and requires that
each agreement, obligation, or instrument entered into or executed
by the trust or the Trustees include a provision limiting the
obligations created thereby to the trust and its assets. The Declaration
of Trust provides for indemnification out of each fund's property of
any shareholders held personally liable for the obligations of the fund.
The Declaration of Trust also provides that each fund shall, upon
request, assume the defense of any claim made against any shareholder for
any act or obligation of the fund and satisfy any judgment thereon. Thus,
the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which a fund
itself would be unable to meet its obligations. FMR believes that, in view
of the above, the risk of personal liability to shareholders is remote.
The Declaration of Trust further provides that the Trustees, if they have
exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declaration of Trust protect s
Trustees against any liability to which they would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of their
office.
VOTING RIGHTS. Each fund's capital consists of shares of beneficial
interest. As a shareholder , you receive one vote for each dollar
value of net asset value per share you own. The shares have no
preemptive or conversion rights; the voting and dividend rights, the
right of redemption, and the privilege of exchange are described in the
Prospectus. Shares are fully paid and nonassessable, except as set forth
under the heading "Shareholder and Trustee Liability" above.
Shareholders representing 10% or more of the trust or the
fund may, as set forth in the Declaration of Trust, call meetings of
the trust or a fund for any purpose related to the trust or fund, as
the case may be, including, in the case of a meeting of the entire
trust, the purpose of voting on removal of one or more Trustees. The
trust or any fund may be terminated upon the sale of its assets to another
open-end management investment company or upon liquidation and distribution
of its assets , if approved by vote of the holders of a majority of the
trust or the fund, as determined by the current value of each shareholder's
investment in the fund or trust . If not so terminated, the trust and
its funds will continue indefinitely.
CUSTODIAN. United Missouri, 1010 Grand Avenue, Kansas City, Missouri is
custodian of the assets of the fund. The custodian is responsible for the
safekeeping of the fund's assets and the appointment of subcustodian banks
and clearing agencies. The custodian takes no part in determining the
investment policies of the fund or in deciding which securities are
purchased or sold by a fund. The fund may, however, invest in
obligations of the custodian and may purchase securities from or sell
securities to the custodian.
FMR, its officers and directors, its affiliated companies, and the trust's
Trustees may from time to time have transactions with various banks,
including banks serving as custodian for certain of the funds advised by
FMR. Transactions that have occurred to date include mortgages and
personal and general business loans. In the judgment of FMR, the terms and
conditions of those transactions were not influenced by existing or
potential custodial or other fund relationships.
AUDITOR. Coopers & Lybrand, One Post Office Square, Boston,
Massachusetts, serves as the trust's independent accountant. The auditor
examines financial statements for the fund and provides other audit, tax,
and related services.
FINANCIAL STATEMENTS
The Annual Report for the fiscal year ended December 31, 1993 is a separate
report supplied with this Statement of Additional Information and is
incorporated herein by reference.
APPENDIX
DOLLAR-WEIGHTED AVERAGE MATURITY is derived by multiplying the value of
each investment by the number of days remaining to its maturity, adding
these calculations, and then dividing the total by the value of the fund's
portfolio. An obligation's maturity is typically determined on a stated
final maturity basis, although there are some exceptions to this rule.
For example, if it is probable that the issuer of an instrument will take
advantage of a maturity-shortening device, such as a call, refunding, or
redemption provision, the date on which the instrument will probably be
called, refunded, or redeemed may be considered to be its maturity date.
When a municipal bond issuer has committed to call an issue of bonds and
has established an independent escrow account that is sufficient to, and is
pledged to, refund that issue, the number of days to maturity for the
prerefunded bond is considered to be the number of days to the announced
call date of the bonds.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S MUNICIPAL BOND RATINGS:
AAA - Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such issues.
AA - Bonds rated Aa are judged to be of high quality by all standards.
Together with Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long - term risks appear somewhat
larger than in Aaa securities.
A - Bonds rated A possess many favorable investment attributes and are to
be considered as upper-medium-grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the
future.
BAA - Bonds rated Baa are considered as medium - grade obligations,
i.e, they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Those bonds in the Aa , A and Baa groups which Moody's believes
possess the strongest investment attributes are designated by the symbols
Aa1, A1 and Baa1.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S MUNICIPAL BOND RATINGS:
AAA - Debt rated AAA has the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay principal
is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest-rated debt issues only in small
degree.
A - Debt rated A has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher-rated
categories.
The ratings from AA to BBB may be modified by the addition of a plus or
minus to show relative standing within the major rating categories.
FIDELITY LIMITED TERM MUNICIPALS
FIDELITY HIGH YIELD TAX-FREE PORTFOLIO
FIDELITY AGGRESSIVE TAX-FREE PORTFOLIO
CROSS REFERENCE SHEET
FORM N-1A

ITEM NUMBER PROSPECTUS SECTION

<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 .............................. Cover Page

2 a .............................. Expenses

b, c .............................. Contents; The Funds at a Glance; Who May Want
to Invest

3 a .............................. *

b .............................. *

c, d .............................. Performance

4 a i............................. Charter

ii........................... The Funds at a Glance; Investment Principles;
Securities and Investment Practices

b .............................. Securities and Investment Practices

c .............................. Who May Want to Invest; Investment Principles;
Securities and Investment Practices

5 a .............................. Charter

b i............................. Doing Business with Fidelity; Charter

ii........................... Charter; Breakdown of Expenses

iii.......................... Expenses; Breakdown of Expenses

c, d .............................. Charter; Breakdown of Expenses; Cover Page;
FMR and Its Affiliates

e .............................. FMR and its Affiliates

f .............................. Expenses

g .............................. *

5A .............................. Annual Reports

6 a i............................. Charter

ii........................... How to Buy Shares; How to Sell Shares;
Transaction Details; Exchange Restrictions

iii.......................... *

b ............................. *

c .............................. Exchange Restrictions

d .............................. *

e .............................. Doing Business with Fidelity; How to Buy Shares;
How to Sell Shares; Investor Services

f, g .............................. Dividends, Capital Gains, and Taxes

7 a .............................. Charter; Cover Page

b .............................. How to Buy Shares; Transaction Details

c .............................. *

d .............................. How to Buy Shares

e .............................. *

f .............................. Breakdown of Expenses

8 .............................. How to Sell Shares; Investor Services; Transaction
Details; Exchange Restrictions

9 .............................. *

</TABLE>

* Not Applicable

CROSS REFERENCE SHEET
(CONTINUED)
FIDELITY LIMITED TERM MUNICIPALS
FIDELITY HIGH YIELD TAX-FREE PORTFOLIO
FIDELITY AGGRESSIVE TAX-FREE PORTFOLIO
FORM N-1A

ITEM NUMBER STATEMENT OF ADDITIONAL INFORMATION SECTION

<TABLE>
<CAPTION>
<S> <C> <C> <C>
10, 11 ............................ Cover Page

12 ............................ *

13 a - c ............................ Investment Policies and Limitations

d ............................ *

14 a - c ............................ Trustees and Officers

15 a, b ............................ *

c ............................ Trustees and Officers

16 a i........................... FMR

ii.......................... Trustees and Officers

iii......................... Management Contracts

b ............................ Management Contracts

c, d ............................ Interest of FMR Affiliates

e ............................ *

f ............................ Distribution and Service Plans

g ............................ *

h ............................ Description of the Trusts

i ............................ Interest of FMR Affiliates

17 a ............................ Portfolio Transactions

b ............................ *

c ............................ Portfolio Transactions

d, e ............................ *

18 a ............................ Description of the Trusts

b ............................ *

19 a ............................ Additional Purchase and Redemption Information

b ............................ Additional Purchase and Redemption Information;
Valuation of Portfolio Securities

c ............................ *

20 ............................ Distributions and Taxes

21 a, b ............................ Interest of FMR Affiliates

c ............................ *

22 ............................ Performance

23 ............................ Financial Statements

</TABLE>

* Not Applicable

Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how each
fund invests and the services available to shareholders.
A Statement of Additional Information dated February 17, 1994 has been
filed with the Securities and Exchange Commission, and is incorporated
herein by reference (is legally considered a part of this prospectus). The
Statement of Additional Information is available free upon request by
calling Fidelity at 1-800-544-8888.
Mutual fund shares are not deposits or obligations of, or endorsed or
guaranteed by, any bank, savings association, insured depository
institution or government agency, nor are they federally insured or
otherwise protected by the FDIC, the Federal Reserve Board, or any other
agency. Investments in the funds involve investment risk, including
possible loss of principal. The value of the investment and its return will
fluctuate and are not guaranteed. When sold, the value of the investment
may be higher or lower than the amount originally invested.
Each of these funds seeks a high level of current income exempt from
federal income tax.
FIDELITY'S
TAX-FREE BOND
FUNDS
FIDELITY LIMITED TERM
MUNICIPALS stresses preservation of capital by investing mainly in high-
and upper-medium-quality municipal obligations.
FIDELITY HIGH YIELD TAX-FREE PORTFOLIO focuses on long-term, medium-quality
bonds.
FIDELITY AGGRESSIVE TAX-FREE PORTFOLIO invests mainly in medium- and
lower-quality municipal bonds.
PROSPECTUS
FEBRUARY 17, 1994(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON, MA
02109
LIKE ALL MUTUAL
FUNDS, THESE
SECURITIES HAVE NOT
BEEN APPROVED OR
DISAPPROVED BY THE
SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION, NOR HAS
THE SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION PASSED
UPON THE ACCURACY
OR ADEQUACY OF THIS
PROSPECTUS. ANY
REPRESENTATION TO
THE CONTRARY IS A
CRIMINAL OFFENSE.
MUN-pro-294
CONTENTS

KEY FACTS THE FUNDS AT A GLANCE

WHO MAY WANT TO INVEST

EXPENSES AND PERFORMANCE EXPENSES Each fund's yearly
operating expenses.

FINANCIAL HIGHLIGHTS A summary
of each fund's financial data.

PERFORMANCE How each fund has
done over time.

YOUR ACCOUNT DOING BUSINESS WITH FIDELITY

TYPES OF ACCOUNTS Different
ways to set up your account.

HOW TO BUY SHARES Opening an
account and making additional
investments.

HOW TO SELL SHARES Taking money
out and closing your account.

INVESTOR SERVICES Services to
help you manage your account.

DIVIDENDS, CAPITAL GAINS, AND
TAXES

SHAREHOLDER AND TRANSACTION DETAILS Share price
ACCOUNT POLICIES calculations and the timing of
purchases and redemptions.

EXCHANGE RESTRICTIONS

THE FUNDS IN DETAIL CHARTER How each fund is
organized.

BREAKDOWN OF EXPENSES How
operating costs are calculated and
what they include.

INVESTMENT PRINCIPLES Each
fund's overall approach to
investing.

SECURITIES AND INVESTMENT
PRACTICES

<r>KEY FACTS</r>

THE FUNDS AT A GLANCE
MANAGEMENT: Fidelity Management & Research Company (FMR) is the
management arm of Fidelity Investments, which was established in 1946 and
is now America's largest mutual fund manager.
As with any mutual fund, there is no assurance that a fund will achieve its
goal.
MUNICIPAL BOND
GOAL: High current income free from federal income tax with preservation of
capital.
STRATEGY: Invests only in investment-grade quality municipal bonds while
maintaining an average maturity of 12 years or less.
HIGH YIELD TAX-FREE
GOAL: High current income free from federal income tax.
STRATEGY: Invests mainly in long-term, medium-quality municipal bonds.
AGGRESSIVE TAX-FREE
GOAL: High current income free from federal income tax.
STRATEGY: Invests mainly in medium- and lower-quality municipal bonds,
normally with maturities over 20 years.
WHO MAY WANT TO INVEST
Any of the funds may be appropriate for investors in higher tax brackets
who seek high current income that is free from federal income tax. Each
fund's level of risk, and potential reward, depend on the quality and
maturity of its investments; lower-quality, longer-term investments
typically carry the most risk and the highest yield potential. You should
consider your tolerance for risk when making an investment decision.
THE SPECTRUM OF
FIDELITY FUNDS
Broad categories of Fidelity
funds are presented here in
order of ascending risk.
Generally, investors seeking
to maximize return must
assume greater risk. The
funds in this prospectus are
in the INCOME category.
(bullet) MONEY MARKET Seeks
income and stability by
investing in high-quality,
short-term investments.
(arrow) INCOME Seeks income by
investing in bonds.
(bullet) GROWTH AND INCOME
Seeks long-term growth and
income by investing in stocks
and bonds.
(bullet) GROWTH Seeks long-term
growth by investing mainly in
stocks.
(checkmark)
By themselves, t hese funds do not constitute a balanced investment
plan. The value of the funds' investments and the income they generate will
vary from day to day, generally reflecting changes in interest rates,
market conditions, and other political and economic news. When you sell
your shares, they may be worth more or less than what you paid for them.
<r>EXPENSES AND PERFORMANCE</r>

EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell
shares of a fund.
Maximum sales charge on purchases and
reinvested dividends None
Deferred sales charge on
redemptions None
Redemption fee
for Limited Term Municipal s and High
Yield Tax-Free None
for Aggressive Tax-Free (on shares held less
than 180 days) 1%
Exchange fee None
ANNUAL FUND OPERATING EXPENSES are paid out of each fund's assets. Each
fund pays a management fee to FMR. It also incurs other expenses for
services such as maintaining shareholder records and furnishing shareholder
statements and fund reports. A fund's expenses are factored into its share
price or dividends and are not charged directly to shareholder accounts
(see page 25 ).
The following are projections based on historical expenses, and are
calculated as a percentage of average net assets. The projected
management fee for Limited Term Municipals is adjusted to reflect the
fund's current lower management fee.
MUNICIPAL BOND
Management fee .41%
12b-1 fee None
Other expenses .16%
Total fund operating expenses .57%
HIGH YIELD TAX-FREE
Management fee .42%
12b-1 fee None
Other expenses .14%
Total fund operating expenses .56%
AGGRESSIVE TAX-FREE
Management fee .47%
12b-1 fee None
Other expenses .17%
Total fund operating expenses .64%
EXAMPLES: Let's say, hypothetically, that each fund's annual return is 5%
and that its operating expenses are exactly as just described. For every
$1,000 you invested, here's how much you would pay in total expenses if you
close your account after the number of years indicated:
After 1 After 3 After 5 After 10
year years years years
Limited Term Muni $6 $18 $32 $71
High Yield Tax-Free $6 $18 $3 2 $7 1
Aggressive Tax-Free $7 $20 $36 $80
These examples illustrate the effect of expenses, but are not meant to
suggest actual or expected costs or returns, all of which may vary.
FMR voluntarily agreed to temporarily limit Limited Term Municipals '
management fee to .10% of the fund's average net assets plus 5% of
the fund's gross income throughout the month during the reporting period.
If this agreement were not in effect, the management fee, other expenses,
and total operating expenses would have been .46%, .16%, and .62%,
respectively.
FINANCIAL HIGHLIGHTS
The tables that follow have been audited by Coopers & Lybrand,
independent accountants. Their unqualified reports are included in each
fund's Annual Report. Each fund's Annual Report is incorporated by
reference into (is legally a part of) the Statement of Additional
Information.
LIMITED TERM MUNICIPAL S

<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
15.Selected Per-Share
Data and Ratios

16.Years Ended
1984 1985 1986 1987 1988 1989 1990 1991 1992 1993
December 31

17.Net asset
$ 8.03 $ 8.15 $ 8.88 $ 9.58 $ 9.10 $ 9.23 $ 9.31 $ 9.27 $ 9.52 $ 9.60
value,
0 0 0 0 0 0 0 0 0 0
beginning of period

18.Income from
.641 .634 .615 .582 .600 .617 .615 .603 .573 .516
Investment
Operations
Net in teres t
income

19. Net realized
.120 .730 .700 (.480) .130 .080 .010 .400 .180 .630
and unrealized
gain (loss) on
investments

20. Total from
.761 1.364 1.315 .102 .730 .697 .625 1.003 .753 1.146
investment
operations

21.Less
(.641) (.634) (.615) (.582) (.600) (.617) (.615) (.603) (.573) (.516)
Distributions
From net interest
income

22. From net
- -- -- -- -- -- -- (.050) (.150) (.100) (. 220 )
realized gain on
investments

23. In excess of
-- -- -- -- -- -- -- -- -- (.020)
net realized
gain on
investments

24. Total
(.641) (.634) (.615) (.582) (.600) (.617) (.665) (.753) (.673) (.756)
distributions

25.Net asset
$ 8.15 $ 8.88 $ 9.58 $ 9.10 $ 9.23 $ 9.31 $ 9.27 $ 9.52 $ 9.60 $ 9.99
value, end of
0 0 0 0 0 0 0 0 0 0
period

26.Total Return
9.87 17.31 15.19 1.14 8.22 7.83 6.97 11.19 8.17 12.24
% % % % % % % % % %

27.Net assets, end
$ 214 $ 316 $ 580 $ 459 $ 441 $ 442 $ 468 $ 696 $ 976 $ 1,19
of period (In 9
millions)

28.Ratio of
.79% .71% .68% .74% .67% .66% .67% .68% .64% .57%
expenses to
average net assets

29.Ratio of
.79% .71% .68% .74% .67% .68% .67% .68% .64% .57%
expenses to
average net assets
before expense
reductions

30.Ratio of net
7.93 7.41 6.55 6.29 6.51 6.70 6.63 6.41 5.94 5.19
interest income
%<>

% % % % % % % % %
to average net
assets

31.Portfolio
152% 73% 30% 59% 30% 55% 72% 42% 50% 111%
turnover rate

</TABLE>

HIGH YIELD TAX-FREE

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
32.Selected Per-Share
Data and Ratios

33.Y e ars 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993
Ended

November 30

34.Net asset $ 11.1 $ 11.0 $ 12.2 $ 13.7 $ 11.7 $ 12.2 $ 12.8 $ 12.6 $ 12.6 $ 12.7
value, 70 00 90 70 50 10 00 10 90 20
beginning of
period

35.Income 1.074 1.038 .999 .936 .901 .893 .857 .845 .811 .764
from
Investment
Operations
Net interest
income

36. Net (.170) 1.290 1.520 (1.500 .460 .600 .200 .310 .190 .700
realized and )
unrealized
gain (loss)
on
investments

37. Total from .904 2.328 2.519 (.564) 1.361 1.493 1.057 1.155 1.001 1.464
investment
operations

38.Less (1.074 (1.038 (.999) (.936) (.901) (.893) (.857) (.845) (.811) (.764)
Distributions ) )
From net
interest
income

39. From net - - (.040) (.520) - (.010) (.390) (.230) (.160) (.190)
realized gain
on
investments

40. Total (1.074 (1.038 (1.039 (1.456 (.901) (.903) (1.247 (1.075 (.971) (.954)
distributions ) ) ) ) ) )

41.Net asset $ 11.0 $ 12.2 $ 13.7 $ 11.7 $ 12.2 $ 12.8 $ 12.6 $ 12.6 $ 12.7 $ 13.2
value, 00 90 70 50 10 00 10 90 20 30
end of period

42.Total Return 8.57% 22.01 21.21 (4.45) 11.93 12.60 8.91% 9.62% 8.21% 11.92
% % % % % %

43.Net assets, $ 1,04 $ 1,66 $ 2,44 $ 1,61 $ 1,57 $ 1,73 $ 1,78 $ 1,99 $ 2,07 $ 2,12
end of 0 1 9 0 4 8 4 7 5 8
period (In
millions)

44.Ratio of .59% .56% .57% .71% .60% .58% .57% .56% .57% .56%
expenses to
average net
assets

45.Ratio of net 9.75% 8.83% 7.63% 7.38% 7.48% 7.10% 6.96% 6.72% 6.40% 5.85%
interest income
to average net
assets

46.Portfolio 73% 57% 49% 80% 47% 71% 58% 44% 47% 53%
turnover rate

</TABLE>

AGGRESSIVE TAX-FREE

<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C>
47.Selected Per-Share
Data and Ratios

48.Years Ended
1985 C 1986 1987 1988 1989 1990 1991 1992 1993
December 31

49.Net asset
$ 10.00 $ 10.66 $ 11.56 $ 10.82 $ 11.33 $ 11.49 $ 11.43 $ 11.80 $ 11.88
value, beginning
0 0 0 0 0 0 0 0 0
of period

50.Income from
.310 .933 .902 .894 .881 .886 .863 .834 .783
Investment
Operations
Net interest
income

51. Net realized
.660 .900 (.740) .510 .160 (.060) .429 .208 .788
and unrealized
gain (loss) on
investments

52. Total from
.970 1.833 .162 1.404 1.041 .826 1.292 1.042 1.571
investment
operations

53.Less
(.310) (.933) (.902) (.894) (.881) (.886) (.863) (.834) (.783)
Distributions
From net interest
income

54. From net
- - - - - - - (.060) (.130) (.340)
realized gain on
investments

55. Total
(.310) (.933) (.902) (.894) (.881) (.886) (.923) (.964) (1.123
distributions )

56. Redemption
- - - - - - .001 .002 .002
fees added
to paid in capital

57.Net asset
$ 10.66 $ 11.56 $ 10.82 $ 11.33 $ 11.49 $ 11.43 $ 11.80 $ 11.88 $ 12.33
value, end of
0 0 0 0 0 0 0 0 0
period

58.Total ReturnB
9.84% 17.74 1.42% 13.40 9.50% 7.48% 11.77 9.17% 13.63
% % % %

59.Net assets, end
$ 101 $ 394 $ 353 $ 456 $ 546 $ 551 $ 654 $ 762 $ 952
of period
(In millions)

60.Ratio of
.60%A .65% .74% .73% .69% .66% .69% .64% .64%
expenses to
average net assets

61.Ratio of
1.21% .84% .78% .73% .69% .66% .69% .64% .64%
expenses to
A
average net assets
before expense
reductions

62.Ratio of net
10.17 8.17% 8.06% 7.98% 7.68% 7.79% 7.46% 7.01% 6.37%
interest income
%A
to average net
assets

63.Portfolio
4%A 17% 68% 46% 46% 46% 30% 43% 54%
turnover rate

</TABLE>

A ANNUALIZED.
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
C FROM SEPTEMBER 13, 1985 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31,
1985.
PERFORMANCE
Bond fund performance can be measured as TOTAL RETURN or YIELD. The total
returns and yields that follow are based on historical fund results.
High Yield Tax-Free's fiscal year runs from December 1 through November 30.
The fiscal year for Limited Term Municipals and Aggressive Tax-Free
runs from January 1 through December 31. The tables below show each fund's
performance over past fiscal years compared to a measure of inflation. The
charts on page 9 help you compare the yields of these funds to those
of their competitors.
MUNICIPAL BOND
Fiscal periods ended Past 1 Past 5 Past 10
December 31, 1993 year years years
Average annual
total return 12.24% 9.26% 9.73%
Cumulative
total return 12.24% 55.69% 153.02%
Consumer Price
Index 2.75% 21.00% 43.93%
HIGH YIELD TAX-FREE
Fiscal periods ended Past 1 Past 5 Past 10
November 30, 1993 year years years
Average annual
total return 11.92% 10.24% 10.83%
Cumulative
total return 11.92% 62.80% 179.57%
Consumer Price
Index 2.68% 21.20% 44.07%
AGGRESSIVE TAX-FREE
Fiscal periods ended Past 1 Past 5 Life of
December 31, 1993 year years fund A
Average annual
total return 13. 63 % 10. 29 % 11.2 7 %
Cumulative
total return 13. 63 % 63. 20 % 142. 75 %
Consumer Price
Index 2.75% 21.00% 35.00%
A From September 13, 1985.
EXPLANATION OF TERMS
UNDERSTANDING
PERFORMANCE
YIELD illustrates the income
earned by a fund over a
recent period. 30-day yields
are usually used for bond
funds. Yields change daily,
reflecting changes in interest
rates.
TOTAL RETURN reflects both the
reinvestment of income and
capital gain distributions and
any change in a fund's share
price.
(checkmark)
TOTAL RETURN is the change in value of an investment in a fund over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return
if performance had been constant over the entire period. Average annual
total returns smooth out variations in performance; they are not the same
as actual year-by-year results.
YIELD refers to the income generated by an investment in a fund over a
given period of time, expressed as an annual percentage rate. A
TAX-EQUIVALENT YIELD shows what an investor would have to earn before taxes
to equal a tax-free yield. Yields are calculated according to a standard
that is required for all stock and bond funds. Because this differs from
other accounting methods, the quoted yield may not equal the income
actually paid to shareholders.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. government.
MUNICIPAL BOND
30-day yields
Percent
age %
Row: 1, Col: 1, Value: 6.1
Row: 1, Col: 2, Value: 6.0
Row: 2, Col: 1, Value: 5.8
Row: 2, Col: 2, Value: 5.7
Row: 3, Col: 1, Value: 6.4
Row: 3, Col: 2, Value: 6.0
Row: 4, Col: 1, Value: 6.3
Row: 4, Col: 2, Value: 5.9
Row: 5, Col: 1, Value: 6.2
Row: 5, Col: 2, Value: 5.7
Row: 6, Col: 1, Value: 6.4
Row: 6, Col: 2, Value: 5.8
Row: 7, Col: 1, Value: 6.4
Row: 7, Col: 2, Value: 5.7
Row: 8, Col: 1, Value: 6.4
Row: 8, Col: 2, Value: 5.6
Row: 9, Col: 1, Value: 6.3
Row: 9, Col: 2, Value: 5.6
Row: 10, Col: 1, Value: 6.1
Row: 10, Col: 2, Value: 5.5
Row: 11, Col: 1, Value: 6.1
Row: 11, Col: 2, Value: 5.5
Row: 12, Col: 1, Value: 6.0
Row: 12, Col: 2, Value: 5.4
Row: 13, Col: 1, Value: 5.4
Row: 13, Col: 2, Value: 5.0
Row: 14, Col: 1, Value: 5.6
Row: 14, Col: 2, Value: 5.0
Row: 15, Col: 1, Value: 5.9
Row: 15, Col: 2, Value: 5.2
Row: 16, Col: 1, Value: 5.9
Row: 16, Col: 2, Value: 5.2
Row: 17, Col: 1, Value: 5.8
Row: 17, Col: 2, Value: 5.2
Row: 18, Col: 1, Value: 5.7
Row: 18, Col: 2, Value: 5.0
Row: 19, Col: 1, Value: 5.3
Row: 19, Col: 2, Value: 4.6
Row: 20, Col: 1, Value: 5.4
Row: 20, Col: 2, Value: 4.6
Row: 21, Col: 1, Value: 5.5
Row: 21, Col: 2, Value: 4.7
Row: 22, Col: 1, Value: 5.6
Row: 22, Col: 2, Value: 4.7
Row: 23, Col: 1, Value: 5.4
Row: 23, Col: 2, Value: 4.7
Row: 24, Col: 1, Value: 5.4
Row: 24, Col: 2, Value: 4.7
Row: 25, Col: 1, Value: 5.3
Row: 25, Col: 2, Value: 4.6
Row: 26, Col: 1, Value: 4.7
Row: 26, Col: 2, Value: 4.3
Row: 27, Col: 1, Value: 4.9
Row: 27, Col: 2, Value: 4.2
Row: 28, Col: 1, Value: 4.9
Row: 28, Col: 2, Value: 4.3
Row: 29, Col: 1, Value: 4.9
Row: 29, Col: 2, Value: 4.3
Row: 30, Col: 1, Value: 4.8
Row: 30, Col: 2, Value: 4.3
Row: 31, Col: 1, Value: 4.8
Row: 31, Col: 2, Value: 4.2
Row: 32, Col: 1, Value: 4.8
Row: 32, Col: 2, Value: 4.1
Row: 33, Col: 1, Value: 4.6
Row: 33, Col: 2, Value: 4.0
Row: 34, Col: 1, Value: 4.6
Row: 34, Col: 2, Value: 3.9
Row: 35, Col: 1, Value: nil
Row: 35, Col: 2, Value: nil
Municipal
Bond
Competitive
funds average
1992
1991
1993

HIGH YIELD TAX-FREE
30-day yields
Percent
age %
Row: 1, Col: 1, Value: 6.8
Row: 1, Col: 2, Value: 7.1
Row: 2, Col: 1, Value: 6.4
Row: 2, Col: 2, Value: 6.9
Row: 3, Col: 1, Value: 6.7
Row: 3, Col: 2, Value: 7.0
Row: 4, Col: 1, Value: 6.6
Row: 4, Col: 2, Value: 6.9
Row: 5, Col: 1, Value: 6.6
Row: 5, Col: 2, Value: 6.8
Row: 6, Col: 1, Value: 6.7
Row: 6, Col: 2, Value: 6.9
Row: 7, Col: 1, Value: 6.7
Row: 7, Col: 2, Value: 6.8
Row: 8, Col: 1, Value: 6.7
Row: 8, Col: 2, Value: 6.7
Row: 9, Col: 1, Value: 6.6
Row: 9, Col: 2, Value: 6.7
Row: 10, Col: 1, Value: 6.3
Row: 10, Col: 2, Value: 6.7
Row: 11, Col: 1, Value: 6.2
Row: 11, Col: 2, Value: 6.7
Row: 12, Col: 1, Value: 6.3
Row: 12, Col: 2, Value: 6.6
Row: 13, Col: 1, Value: 6.1
Row: 13, Col: 2, Value: 6.5
Row: 14, Col: 1, Value: 6.2
Row: 14, Col: 2, Value: 6.5
Row: 15, Col: 1, Value: 6.5
Row: 15, Col: 2, Value: 6.5
Row: 16, Col: 1, Value: 6.5
Row: 16, Col: 2, Value: 6.5
Row: 17, Col: 1, Value: 6.3
Row: 17, Col: 2, Value: 6.4
Row: 18, Col: 1, Value: 6.6
Row: 18, Col: 2, Value: 6.2
Row: 19, Col: 1, Value: 5.6
Row: 19, Col: 2, Value: 6.0
Row: 20, Col: 1, Value: 5.7
Row: 20, Col: 2, Value: 6.0
Row: 21, Col: 1, Value: 5.7
Row: 21, Col: 2, Value: 6.1
Row: 22, Col: 1, Value: 6.1
Row: 22, Col: 2, Value: 6.2
Row: 23, Col: 1, Value: 5.9
Row: 23, Col: 2, Value: 6.1
Row: 24, Col: 1, Value: 6.0
Row: 24, Col: 2, Value: 6.0
Row: 25, Col: 1, Value: 5.8
Row: 25, Col: 2, Value: 5.9
Row: 26, Col: 1, Value: 5.3
Row: 26, Col: 2, Value: 5.6
Row: 27, Col: 1, Value: 5.4
Row: 27, Col: 2, Value: 5.5
Row: 28, Col: 1, Value: 5.4
Row: 28, Col: 2, Value: 5.5
Row: 29, Col: 1, Value: 5.5
Row: 29, Col: 2, Value: 5.2
Row: 30, Col: 1, Value: 5.3
Row: 30, Col: 2, Value: 5.0
Row: 31, Col: 1, Value: 5.4
Row: 31, Col: 2, Value: 5.4
Row: 32, Col: 1, Value: 5.3
Row: 32, Col: 2, Value: 5.3
Row: 33, Col: 1, Value: 5.1
Row: 33, Col: 2, Value: 5.2
Row: 34, Col: 1, Value: 5.1
Row: 34, Col: 2, Value: 5.1
Row: 35, Col: 1, Value: nil
Row: 35, Col: 2, Value: nil
High Yield
Tax-Free
Competitive

funds
average
1992
1991
1993

AGGRESSIVE TAX-FREE
30-day yields
Percent
age %
Row: 1, Col: 1, Value: 7.6
Row: 1, Col: 2, Value: 7.1
Row: 2, Col: 1, Value: 7.4
Row: 2, Col: 2, Value: 6.9
Row: 3, Col: 1, Value: 7.7
Row: 3, Col: 2, Value: 7.0
Row: 4, Col: 1, Value: 7.6
Row: 4, Col: 2, Value: 6.9
Row: 5, Col: 1, Value: 7.3
Row: 5, Col: 2, Value: 6.8
Row: 6, Col: 1, Value: 7.5
Row: 6, Col: 2, Value: 6.9
Row: 7, Col: 1, Value: 7.3
Row: 7, Col: 2, Value: 6.8
Row: 8, Col: 1, Value: 7.3
Row: 8, Col: 2, Value: 6.7
Row: 9, Col: 1, Value: 7.3
Row: 9, Col: 2, Value: 6.7
Row: 10, Col: 1, Value: 7.1
Row: 10, Col: 2, Value: 6.7
Row: 11, Col: 1, Value: 7.1
Row: 11, Col: 2, Value: 6.7
Row: 12, Col: 1, Value: 7.1
Row: 12, Col: 2, Value: 6.6
Row: 13, Col: 1, Value: 6.9
Row: 13, Col: 2, Value: 6.5
Row: 14, Col: 1, Value: 6.9
Row: 14, Col: 2, Value: 6.5
Row: 15, Col: 1, Value: 7.1
Row: 15, Col: 2, Value: 6.5
Row: 16, Col: 1, Value: 7.0
Row: 16, Col: 2, Value: 6.5
Row: 17, Col: 1, Value: 6.8
Row: 17, Col: 2, Value: 6.4
Row: 18, Col: 1, Value: 6.5
Row: 18, Col: 2, Value: 6.2
Row: 19, Col: 1, Value: 6.3
Row: 19, Col: 2, Value: 6.0
Row: 20, Col: 1, Value: 6.3
Row: 20, Col: 2, Value: 6.0
Row: 21, Col: 1, Value: 6.4
Row: 21, Col: 2, Value: 6.1
Row: 22, Col: 1, Value: 6.7
Row: 22, Col: 2, Value: 6.2
Row: 23, Col: 1, Value: 6.5
Row: 23, Col: 2, Value: 6.1
Row: 24, Col: 1, Value: 6.5
Row: 24, Col: 2, Value: 6.0
Row: 25, Col: 1, Value: 6.4
Row: 25, Col: 2, Value: 5.9
Row: 26, Col: 1, Value: 5.9
Row: 26, Col: 2, Value: 5.6
Row: 27, Col: 1, Value: 5.9
Row: 27, Col: 2, Value: 5.5
Row: 28, Col: 1, Value: 6.1
Row: 28, Col: 2, Value: 5.5
Row: 29, Col: 1, Value: 6.0
Row: 29, Col: 2, Value: 5.5
Row: 30, Col: 1, Value: 5.8
Row: 30, Col: 2, Value: 5.3
Row: 31, Col: 1, Value: 5.9
Row: 31, Col: 2, Value: 5.4
Row: 32, Col: 1, Value: 5.7
Row: 32, Col: 2, Value: 5.3
Row: 33, Col: 1, Value: 5.6
Row: 33, Col: 2, Value: 5.2
Row: 34, Col: 1, Value: 5.5
Row: 34, Col: 2, Value: 5.1
Row: 35, Col: 1, Value: nil
Row: 35, Col: 2, Value: nil
Aggressive
Tax-Free
Competitive

funds
average
1992
1991
1993
THE CHARTS SHOW THE 30-DAY ANNUALIZED NET YIELDS FOR THE FUNDS AND THEIR

COMPETITIVE FUNDS AVERAGES AS OF THE LAST DAY OF EACH MONTH FROM JANUARY

1991 THROUGH NOVEMBER 1993.
THE COMPETITIVE FUNDS AVERAGES, which assume reinvestment of distributions,
are published by Lipper Analytical Services, Inc. Municipal Bond compares
its performance to the Lipper General Municipal Debt Funds Average ,
and High Yield Tax-Free and Aggressive Tax-Free compare their performance
to the Lipper High Yield Municipal Bond Funds Average. These averages
currently reflect the performance of over 60 and 25 mutual funds with
similar objectives, respectively.
The funds' recent strategies, performance, and holdings are detailed twice
a year in financial reports, which are sent to all shareholders. For
current performance or a free annual report, call 1-800-544-8888.
TOTAL RETURNS AND YIELDS ARE BASED ON PAST RESULTS AND ARE NOT AN
INDICATION OF FUTURE PERFORMANCE.
<r>YOUR ACCOUNT</r>

DOING BUSINESS WITH FIDELITY
Fidelity Investments was established in 1946 to manage one of America's
first mutual funds. Today, Fidelity is the largest mutual fund company in
the country, and is known as an innovative provider of high-quality
financial services to individuals and institutions.
In addition to its mutual fund business, the company operates one of
America's leading discount brokerage firms, Fidelity Brokerage Services,
Inc. (FBSI). Fidelity is also a leader in providing tax-sheltered
retirement plans for individuals investing on their own or through their
employer.
Fidelity is committed to providing investors with practical information to
make investment decisions. Based in Boston, Fidelity provides customers
with complete service 24 hours a day, 365 days a year, through a network of
telephone service centers around the country.
To reach Fidelity for general information, call these numbers:
(bullet) For mutual funds, 1-800-544-8888
(bullet) For brokerage, 1-800-544-7272
If you would prefer to speak with a representative in person, Fidelity has
over 75 walk-in Investor Centers across the country .
TYPES OF ACCOUNTS
You may set up an account directly in a fund or, if you own or intend to
purchase individual securities as part of your total investment portfolio,
you may consider investing in a fund through a brokerage account.
If you are investing through FBSI or another financial institution or
investment professional, refer to its program materials for any special
provisions regarding your investment in the fund.
The different ways to set up (register) your account with Fidelity are
listed below.
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENAN T
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have two or
more owners (tenants).
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and obtain
tax benefits. An individual can give up to $10,000 a year per child without
paying federal gift tax. Depending on state laws, you can set up a
custodial account under the Uniform Gifts to Minors Act (UGMA) or the
Uniform Transfers to Minors Act (UTMA).
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR OTHER
GROUPS
Requires a special application.
HOW TO BUY SHARES
EACH FUND'S SHARE PRICE, called net asset value (NAV), is calculated every
business day. Each fund's shares are sold without a sales charge.
Shares are purchased at the next share price calculated after your
investment is received and accepted. Share price is normally calculated at
4 p.m. Eastern time.
IF YOU ARE NEW TO FIDELITY, complete and sign an account application and
mail it along with your check. You may also open your account in person or
by wire as described on page . If there is no application accompanying this
prospectus, call 1-800-544-8888.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(bullet) Mail in an application with a check, or
(bullet) Open your account by exchanging from another Fidelity fund.
If you buy shares by check or Fidelity Money Line(Registered trademark),
and then sell those shares by any method other than by exchange to another
Fidelity fund, the payment may be delayed for up to seven business
days to ensure that your previous investment has cleared.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $2,500
TO ADD TO AN ACCOUNT $250
Through automatic investment plans $100
MINIMUM BALANCE $1,000

<TABLE>
<CAPTION>
<S> <C> <C>
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
Mail (mail_graphic) (bullet) Complete and sign the (bullet) Make your check
application. Make your payable to the complete
check payable to the name of the fund.
complete name of the Indicate your fund
fund. Mail to the account number on
address indicated on your check and mail to
the application. the address printed on
your account statement.
(bullet) Exchange by mail: call
1-800-544-6666 for
instructions.

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
Wire (wire_graphic) (bullet) Call 1-800-544-7777 to (bullet) Wire to:
set up your account Bankers Trust
and to arrange a wire Company,
transaction. Bank Routing
(bullet) Wire within 24 hours to: #021001033,
Bankers Trust Account #00163053.
Company, Specify the complete
Bank Routing name of the fund and
#021001033, include your account
Account #00163053. number and your
Specify the complete name.
name of the fund and
include your new
account number and
your name.

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118

</TABLE>

HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares. Your shares will be sold at
the next share price calculated after your order is received and accepted.
Share price is normally calculated at 4 p.m. Eastern time.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least $1,000
worth of shares in the account to keep it open.
TO SELL SHARES BY BANK WIRE OR FIDELITY MONEY LINE, you will need to sign
up for these services in advance.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to
protect you and Fidelity from fraud. Your request must be made in writing
and include a signature guarantee if any of the following situations apply:
(bullet) You wish to redeem more than $100,000 worth of shares,
(bullet) Your account registration has changed within the last 30 days,
(bullet) The check is being mailed to a different address than the one on
your account (record address),
(bullet) The check is being made payable to someone other than the account
owner, or
(bullet) The redemption proceeds are being transferred to a Fidelity
account with a different registration.
You should be able to obtain a signature guarantee from a bank, broker
(including Fidelity Investor Centers), dealer, credit union (if authorized
under state law), securities exchange or association, clearing agency, or
savings association. A notary public cannot provide a signature guarantee.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(bullet) Your name,
(bullet) The fund's name,
(bullet) Your fund account number,
(bullet) The dollar amount or number of shares to be redeemed, and
(bullet) Any other applicable requirements listed in the table at right.
Unless otherwise instructed, Fidelity will send a check to the record
address. Deliver your letter to a Fidelity Investor Center, or mail it to:
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
CHECKWRITING
If you have a checkbook for your account in Municipal Bond or High Yield
Tax-Free, you may write an unlimited number of checks. Do not, however, try
to close out your account by check.
ACCOUNT TYPE SPECIAL REQUIREMENTS

<TABLE>
<CAPTION>
<S> <C> <C>
IF YOU SELL SHARES OF AGGRESSIVE TAX-FREE AFTER HOLDING THEM LESS THAN 180 DAYS, THE
FUND WILL DEDUCT A REDEMPTION FEE EQUAL TO 1% OF THE VALUE OF THOSE SHARES.

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
Check (check_graphic) All account types (bullet) Minimum check: $500.
(bullet) All account owners must sign
a signature card to receive a
checkbook.

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118

</TABLE>

24-HOUR SERVICE
ACCOUNT ASSISTANCE
1-800-544-6666
ACCOUNT BALANCES
1-800-544-7544
ACCOUNT TRANSACTIONS
1-800-544-7777
PRODUCT INFORMATION
1-800-544-8888
QUOTES
1-800-544-8544
RETIREMENT ACCOUNT
ASSISTANCE
1-800-544-4774
AUTOMATED SERVICE
(checkmark)
To reduce expenses, only one copy of most financial reports will be mailed
to your household, even if you have more than one account in a fund.
Call 1-800-544-6666 if you need copies of financial reports or historical
account information.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your fund shares and buy shares of other
Fidelity funds by telephone or in writing.
Note that exchanges out of a fund are limited to four per calendar year,
and that they may have tax consequences for you. For complete policies and
restrictions governing exchanges, including circumstances under which a
shareholder's exchange privilege may be suspended or revoked, see page .
SYSTEMATIC WITHDRAWAL PLANS let you set up monthly or quarterly redemptions
from your account.
FIDELITY MONEY LINE(Registered trademark) enables you to transfer money by
phone between your bank account and your fund account. Most transfers are
complete within three business days of your call.
REGULAR INVESTMENT PLANS
One easy way to pursue your financial goals is to invest money regularly.
Fidelity offers convenient services that let you transfer money into your
fund account, or between fund accounts, automatically. While regular
investment plans do not guarantee a profit and will not protect you against
loss in a declining market, they can be an excellent way to invest for a
home, educational expenses, and other long-term financial goals.
REGULAR INVESTMENT PLANS

FIDELITY AUTOMATIC ACCOUNT BUILDERSM
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY FUND

<TABLE>
<CAPTION>
<S> <C> <C>
DIRECT DEPOSIT
TO SEND ALL OR A PORTION OF YOUR PAYCHECK OR GOVERNMENT CHECK TO A FIDELITY FUNDA

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
FIDELITY AUTOMATIC EXCHANGE SERVICE
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND TO ANOTHER FIDELITY FUND

</TABLE>

A BECAUSE THEIR SHARE PRICES FLUCTUATE, THE SE FUNDS MAY NOT BE
APPROPRIATE CHOICE S FOR DIRECT DEPOSIT OF YOUR ENTIRE CHECK.
DIVIDENDS, CAPITAL GAINS, AND TAXES
Each fund distributes substantially all of its net investment income and
capital gains to shareholders each year. Income dividends are declared
daily and paid monthly. Capital gains are normally distributed in February
and December for Limited Term Municipals and Aggressive Tax-Free and
in January and December for High Yield Tax-Free.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. If the option you prefer is not listed on the
application, call 1-800-544-6666 for instructions. Each fund offers four
options:
5. REINVESTMENT OPTION. Your dividend and capital gain distributions will
be automatically reinvested in additional shares of the fund. If you do not
indicate a choice on your application, you will be assigned this option.
6. INCOME-EARNED OPTION. Your capital gain distributions will be
automatically reinvested, but you will be sent a check for each dividend
distribution.
7. CASH OPTION. You will be sent a check for your dividend and capital gain
distributions.
8. DIRECTED DIVIDENDS(Registered trademark) OPTION. Your dividend and
capital gain distributions will be automatically invested in another
identically registered Fidelity fund.
Dividends will be reinvested at the fund's NAV on the last day of the
month. Capital gain distributions will be reinvested at the NAV as of the
date the fund deducts the distribution from its NAV . The mailing of
distribution checks will begin within seven days, or longer for a December
ex-dividend date.
UNDERSTANDING
DISTRIBUTIONS
As a fund shareholder, you
are entitled to your share of
the fund's net income and
gains on its investments. The
fund passes its earnings
along to its investors as
DISTRIBUTIONS.
Each fund earns interest from
its investments. These are
passed along as DIVIDEND
DISTRIBUTIONS. Each fund
may realize capital gains if it
sells securities for a higher
price than it paid for them.
These are passed along as
CAPITAL GAIN DISTRIBUTIONS.
(checkmark)
TAXES
As with any investment, you should consider how an investment in a tax-free
fund could affect you. Below are some of the funds' tax implications.
TAXES ON DISTRIBUTIONS. Interest income that a fund earns is distributed to
shareholders as income dividends. Interest that is federally tax-free
remains tax-free when it is distributed.
However, gain on the sale of tax-free bonds results in taxable
distributions. Short-term capital gains and a portion of the gain on bonds
purchased at a discount are taxed as dividends. Long-term capital gain
distributions are taxed as long-term capital gains. These distributions are
taxable when they are paid, whether you take them in cash or reinvest them.
However, distributions declared in December and paid in January are taxable
as if they were paid on December 31. Fidelity will send you and the IRS a
statement showing the tax status of the distributions paid to you in the
previous year.
The interest from some municipal securities is subject to the federal
alternative minimum tax. Limited Term Municipals and High Yield
Tax-Free do not currently intend to purchase these securities. Aggressive
Tax-Free may invest up to 20% of its assets in these securities.
Individuals who are subject to the tax must report this interest on their
tax returns.
A portion of a fund's dividends may be free from state or local taxes.
Income from investments in your state is often tax-free to you. Each year,
Fidelity will send you a breakdown of your fund's income from each state to
help you calculate your taxes.
During fiscal 1993, 100 % of each fund's income dividends w ere
free from federal income tax and 13.11 % of Aggressive Tax-Free's
income dividends were subject to the federal alternative minimum tax.
TAXES ON TRANSACTIONS. Your redemptions - including exchanges to other
Fidelity funds - are subject to capital gains tax. A capital gain or loss
is the difference between the cost of your shares and the price you receive
when you sell them.
Whenever you sell shares of a fund, Fidelity will send you a confirmation
statement showing how many shares you sold and at what price. You will also
receive a consolidated transaction statement every January. However, it is
up to you or your tax preparer to determine whether this sale resulted in a
capital gain and, if so, the amount of tax to be paid. Be sure to keep your
regular account statements; the information they contain will be essential
in calculating the amount of your capital gains.
"BUYING A DIVIDEND." If you buy shares just before a fund deducts a capital
gain distribution from its NAV, you will pay the full price for the shares
and then receive a portion of the price back in the form of a taxable
distribution.
<r>SHAREHOLDER AND ACCOUNT POLICIES</r>

TRANSACTION DETAILS
THE FUNDS ARE OPEN FOR BUSINESS each day the New York Stock Exchange (NYSE)
is open. Fidelity normally calculates each fund's NAV as of the close of
business of the NYSE, normally 4 p.m. Eastern time.
EACH FUND'S NAV is the value of a single share. The NAV is computed by
adding the value of the fund's investments, cash, and other assets,
subtracting its liabilities, and then dividing the result by the number of
shares outstanding.
Each fund's assets are valued primarily on the basis of market quotations,
if available. Since market quotations are often unavailable, assets are
usually valued by a method that the Board of Trustees believes accurately
reflects fair value.
EACH FUND'S OFFERING PRICE (price to buy one share) and REDEMPTION PRICE
(price to sell one share) are its NAV.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that
your Social Security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require a fund to
withhold 31% of your taxable distributions and redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Note that Fidelity will
not be responsible for any losses resulting from unauthorized transactions
if it follows reasonable procedures designed to verify the identity of the
caller. Fidelity will request personalized security codes or other
information, and may also record calls. You should verify the accuracy of
your confirmation statements immediately after you receive them. If you do
not want the ability to redeem and exchange by telephone, call Fidelity for
instructions.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during periods
of unusual market activity), consider placing your order by mail or by
visiting a Fidelity Investor Center.
EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. Each fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions"
on page . Purchase orders may be refused if, in FMR's opinion, they are of
a size that would disrupt management of a fund.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your order will be processed at the
next offering price calculated after your order is received and accepted.
Note the following:
(bullet) All of your purchases must be made in U.S. dollars and checks
must be drawn on U.S. banks.
(bullet) Fidelity does not accept cash.
(bullet) When making a purchase with more than one check, each check must
have a value of at least $50.
(bullet) Each fund reserves the right to limit the number of checks
processed at one time.
(bullet) If your check does not clear, your purchase will be cancelled and
you could be liable for any losses or fees a fund or its transfer agent has
incurred.
(bullet) You begin to earn dividends as of the first business day
following the day of your purchase.
TO AVOID THE COLLECTION PERIOD associated with check and Money Line
purchases, consider buying shares by bank wire, U.S. Postal money order,
U.S. Treasury check, Federal Reserve check, or direct deposit instead.
YOU MAY BUY OR SELL SHARES OF THE FUNDS THROUGH A BROKER, who may charge
you a fee for this service. If you invest through a broker or other
institution, read its program materials for any additional service features
or fees that may apply.
CERTAIN FINANCIAL INSTITUTIONS that have entered into sales agreements with
Fidelity Distributors Corporation (FDC) may enter confirmed purchase orders
on behalf of customers by phone, with payment to follow no later than the
time when a fund is priced on the following business day. If payment is not
received by that time, the financial institution could be held liable for
resulting fees or losses.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the
next NAV calculated after your request is received and accepted. Note the
following:
(bullet) Normally, redemption proceeds will be mailed to you on the next
business day, but if making immediate payment could adversely affect a
fund, it may take up to seven days to pay you.
(bullet) Shares will earn dividends through the date of redemption;
however, shares redeemed on a Friday or prior to a holiday will continue to
earn dividends until the next business day.
(bullet) Fidelity Money Line redemptions generally will be credited to
your bank account on the second or third business day after your phone
call.
(bullet) Each fund may hold payment on redemptions until it is reasonably
satisfied that investments made by check or Fidelity Money Line have been
collected, which can take up to seven business days.
(bullet) Redemptions may be suspended or payment dates postponed when the
NYSE is closed (other than weekends or holidays), when trading on the NYSE
is restricted, or as permitted by the SEC.
(bullet) If you sell shares by writing a check and the amount of the check
is greater than the value of your account, your check will be returned to
you and you may be subject to additional charges.
THE REDEMPTION FEE for Aggressive Tax-Free, if applicable, will be deducted
from the amount of your redemption. This fee is paid to the fund rather
than FMR, and it does not apply to shares that were acquired through
reinvestment of distributions. If shares you are redeeming were not all
held for the same length of time, those shares you held longest will be
redeemed first for purposes of determining whether the fee applies.
IF YOUR ACCOUNT BALANCE FALLS BELOW $1,000, you will be given 30 days'
notice to reestablish the minimum balance. If you do not increase your
balance, Fidelity reserves the right to close your account and send the
proceeds to you. Your shares will be redeemed at the NAV on the day your
account is closed.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
FDC may, at its own expense, provide promotional incentives to qualified
recipients who support the sale of shares of the funds without
reimbursement from the funds. Qualified recipients are securities dealers
who have sold fund shares or others, including banks and other financial
institutions, under special arrangements in connection with FDC's sales
activities. In some instances, these incentives may be offered only to
certain institutions whose representatives provide services in connection
with the sale or expected sale of significant amounts of shares.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging shares of a fund for
shares of other Fidelity funds. However, you should note the following:
(bullet) The fund you are exchanging into must be registered for sale in
your state.
(bullet) You may only exchange between accounts that are registered in the
same name, address, and taxpayer identification number.
(bullet) Before exchanging into a fund, read its prospectus.
(bullet) If you exchange into a fund with a sales charge, you pay the
percentage-point difference between that fund's sales charge and any sales
charge you have previously paid in connection with the shares you are
exchanging. For example, if you had already paid a sales charge of 2% on
your shares and you exchange them into a fund with a 3% sales charge, you
would pay an additional 1% sales charge.
(bullet) Exchanges may have tax consequences for you.
(bullet) Because excessive trading can hurt fund performance and
shareholders, each fund reserves the right to temporarily or permanently
terminate the exchange privilege of any investor who makes more than four
exchanges out of the fund per calendar year. Accounts under common
ownership or control, including accounts with the same taxpayer
identification number, will be counted together for purposes of the four
exchange limit.
(bullet) Each fund reserves the right to refuse exchange purchases by any
person or group if, in FMR's judgment, the fund would be unable to invest
the money effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
(bullet) Your exchanges may be restricted or refused if a fund receives or
anticipates simultaneous orders affecting significant portions of the
fund's assets. In particular, a pattern of exchanges that coincides with a
"market timing" strategy may be disruptive to a fund.
Although the funds will attempt to give you prior notice whenever they are
reasonably able to do so, they may impose these restrictions at any time.
The funds reserve the right to terminate or modify the exchange privilege
in the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
administrative fees of up to $7.50 and redemption fees of up to 1.50% on
exchanges. Check each fund's prospectus for details.
<r>THE FUNDS IN DETAIL</r>

CHARTER
EACH FUND IS A MUTUAL FUND: an investment that pools shareholders' money
and invests it toward a specified goal. In technical terms, Municipal Bond
is currently a diversified fund of Fidelity Municipal Trust, High Yield
Tax-Free is currently a diversified fund of Fidelity Court Street Trust,
and Aggressive Tax-Free is currently a diversified fund of Fidelity
Municipal Trust. Each trust is an open-end management investment company.
Fidelity Municipal Trust was organized as a Massachusetts business trust on
June 22, 1984. Fidelity Court Street Trust was organized as a Massachusetts
business trust on April 21, 1977. Fidelity Municipal Trust was organized as
a Massachusetts business trust on June 22, 1984. There is a remote
possibility that one fund might become liable for a misstatement in the
prospectus about another fund.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES, which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet throughout the year to oversee the funds' activities,
review contractual arrangements with companies that provide services to the
funds, and review performance. The majority of trustees are not otherwise
affiliated with Fidelity.
THE FUNDS MAY HOLD SPECIAL MEETINGS AND MAIL PROXY MATERIALS. These
meetings may be called to elect or remove trustees, change fundamental
policies, approve a management contract, or for other purposes.
Shareholders not attending these meetings are encouraged to vote by proxy.
Fidelity will mail proxy materials in advance, including a voting card and
information about the proposals to be voted on. Municipal Bond and High
Yield Tax-Free shareholders are entitled to one vote for each share they
own. The number of votes Aggressive Tax-Free shareholders are entitled to
is based upon the dollar value of their investment.
FMR AND ITS AFFILIATES
FIDELITY FACTS
Fidelity offers the broadest
selection of mutual funds
in the world.
(bullet) Number of Fidelity mutual
funds: over 200
(bullet) Assets in Fidelity mutual
funds: over $ 225 billion
(bullet) Number of shareholder
accounts: over 15 million
(bullet) Number of investment
analysts and portfolio
managers: over 200
(checkmark)
The funds are managed by FMR, which chooses their investments and handles
their business affairs.
David Murphy is manager and vice president of Municipal Bond, which he has
managed since November 1989. Mr. Murphy also manages Spartan
Short-Intermediate Municipal, New York Tax-Free Insured, Spartan
Intermediate Municipal and Spartan New Jersey Municipal High Yield. Before
joining Fidelity in 1989, he managed municipal bond funds at Scudder,
Stevens & Clark.
Anne Punzak is manager and vice president of High Yield Tax-Free and
Aggressive Tax-Free which she has managed , since October 1993 and
January 1986 , respectively. She also manages Spartan Aggressive
Municipal Income and Spartan Florida Municipal Income. She joined Fidelity
in 1984.
FDC distributes and markets Fidelity's funds and services. Fidelity Service
Co. (FSC) performs transfer agent servicing functions for the funds.
FMR Corp. is the parent company of these organizations. Through ownership
of voting common stock, Edward C. Johnson 3d (President and a trustee of
the trusts), Johnson family members, and various trusts for the benefit of
the Johnson family form a controlling group with respect to FMR Corp.
United Missouri Bank, N.A., is each fund's transfer agent, although it
employs FSC to perform these functions for the funds. It is located at 1010
Grand Avenue, Kansas City, Missouri.
To carry out the funds' transactions, FMR may use its broker-dealer
affiliates and other firms that sell fund shares, provided that a fund
receives services and commission rates comparable to those of other
broker-dealers.
BREAKDOWN OF EXPENSES
Like all mutual funds, the funds pay fees related to their daily
operations. Expenses paid out of a fund's assets are reflected in its share
price or dividends; they are neither billed directly to shareholders nor
deducted from shareholder accounts.
Each fund pays a MANAGEMENT FEE to FMR for managing its investments and
business affairs. Each fund also pays OTHER EXPENSES, which are explained
on page 26 .
FMR may, from time to time, agree to reimburse the funds for management
fees and other expenses above a specified limit. FMR retains the ability to
be repaid by a fund if expenses fall below the specified limit prior to the
end of the fiscal year. Reimbursement arrangements, which may be terminated
at any time without notice, can decrease a fund's expenses and boost its
performance.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month.
LIMITED TERM MUNICIPALS' management fee consists of .15% of average net
assets plus 5% of gross income. The total management fee for fiscal 1993
was .41% .
On July 1, 1993, FMR voluntarily agreed to temporarily limit the fund's
management fee to .10% of the fund's average net assets plus 5% of the
fund's gross income throughout the month.
HIGH YIELD TAX-FREE'S and AGGRESSIVE TAX-FREE'S management fee is
calculated by adding a group fee rate to an individual fund fee rate, and
multiplying the result by the fund's average net assets.
The group fee rate is based on the average net assets of all the mutual
funds advised by FMR. This rate cannot rise above .37%, and it drops as
total assets under management increase.
For December 1993, the group fee rate was .1621 %. The individual
fund fee rate is .25% for High Yield Tax-Free, and .30% for Aggressive
Tax-Free. The total management fee rates for fiscal 1993 for High Yield
Tax-Free and Aggressive Tax-Free were .42% and .47%, respectively.
OTHER EXPENSES
While the management fee is a significant component of the funds' annual
operating costs, the funds have other expenses as well.
FSC performs many transaction and accounting functions. These services
include processing shareholder transactions, valuing each fund's
investments, and handling securities loans. In fiscal 1993, FSC received
fees equal to .14 % , .12 % and .13 %, respectively, of
Municipal Bond', High Yield Tax-Free's and Aggressive Tax-Free's average
net assets.
The funds also pay other expenses, such as legal, audit, and custodian
fees; proxy solicitation costs; and the compensation of trustees who are
not affiliated with Fidelity.
Each fund has adopted a Distribution and Service Plan. These plans
recognize that FMR may use its resources, including management fees, to pay
expenses associated with the sale of fund shares. This may include payments
to third parties, such as banks or broker-dealers, that provide shareholder
support services or engage in the sale of the fund's shares. It is
important to note, however, that the funds do not pay FMR any separate fees
for this service.
For fiscal 1993, the portfolio turnover rates for Municipal Bond, High
Yield Tax-Free and Aggressive Tax-Free were 111 %, 53 % and
54 %, respectively. These rates vary from year to year. High
turnover rates increase transaction costs and may increase taxable capital
gains. FMR considers these effects when evaluating the anticipated benefits
of short-term investing.
INVESTMENT PRINCIPLES
LIMITED TERM MUNICIPALS seeks high current income that is free from federal
income tax , and preservation of capital , by focusing on
municipal securities rated at least A by Moody's or S&P ,
or judged by FMR to be of equivalent quality. The fund's dollar-weighted
average maturity is limited to 12 years or less . FMR normally
invests at least 80% of the fund's assets in tax-free obligations with
maturities of 15 years or less.
HIGH YIELD TAX-FREE seeks high current income that is free from federal
income tax by investing at least 65% of its total assets in high yielding
municipal securities, focusing on municipal bonds rated A or Baa by
Moody's, A or BBB by S&P, or, if unrated, judged by FMR to be of
equivalent quality. The fund often invests in long-term bonds, but may
shorten the average maturity and improve quality as economic or
market conditions change. FMR normally invests so that at least 80% of the
fund's income is free from federal income tax.
AGGRESSIVE TAX-FREE seeks high current income that is free from federal
income tax by normally investing at least 65% of its total assets in
securities rated A or lower by Moody's or S&P or, if unrated, judged by
FMR to be of equivalent quality. Since the fund can emphasize lower-quality
securities, FMR's research and analysis are an integral part of choosing
the fund's investments. The fund typically purchases securities with
remaining maturities of 20 years or longer. FMR normally invests at least
80% of the fund's assets in federally tax-free municipal securities.
If you are subject to the federal alternative minimum tax, you should note
that the fund may invest up to 20% of its assets in municipal securities
issued to finance private activities. The interest from these investments
is a tax-preference item for purposes of the tax.
EACH FUND'S yield and share price change daily based on interest rate
changes and on the quality and maturity of its investments. In general,
bond prices rise when interest rates fall, and vice versa. This effect is
usually more pronounced for longer-term securities. Lower-quality
securities typically offer higher yields and carry more risk than
higher quality, lower yielding securities . When you sell your shares,
they may be worth more or less that what you paid for them.
FMR normally invests each fund's assets according to its investment
strategy and does not expect to invest in federally taxable
obligations . When FMR considers it appropriate for defensive
purposes , however, it may temporarily invest substantially in
short-term instruments, may hold a sustantial amount of uninvested cash,
or may invest more than normally permitted in federally taxable
obligations.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which the funds may invest, and strategies FMR may employ in
pursuit of the funds' investment objectives. A summary of risks and
restrictions associated with these instrument types and investment
practices is included as well. Policies and limitations are considered at
the time of purchase; the sale of instruments is not required in the event
of a subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these techniques to
the full extent permitted unless it believes that doing so will help the
funds achieve their goals. As a shareholder, you will receive financial
reports every six months detailing fund holdings and describing recent
investment activities.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers to
borrow money from investors. The issuer pays the investor a fixed or
variable rate of interest, and must repay the amount borrowed at maturity.
Some debt securities, such as zero coupon bonds, do not pay current
interest, but are purchased at a discount from their face values. Debt
securities have varying degrees of quality and varying levels of
sensitivity to changes in interest rates. Longer-term bonds are generally
more sensitive to interest rate changes than short-term bonds.
Lower-quality debt securities may have speculative characteristics, and
involve greater risk of default or price changes due to changes in the
issuer's creditworthiness. The market prices of these securities may
fluctuate more than higher-quality securities and may decline significantly
in periods of general or regional economic difficulty.
The tables on page 29 provide a summary of ratings assigned to debt
holdings (not including money market instruments) in High Yield Tax-Free's
and Aggressive Tax-Free's portfolios. These figures are dollar-weighted
averages of month-end portfolio holdings during fiscal 1993, and are
presented as a percentage of total investments. These percentages are
historical and do not necessarily indicate the funds' current or future
debt holdings.
RESTRICTIONS: Municipal Bond does not currently intend to invest in bonds
rated below Baa by Moody's or BBB by S&P. The fund does not currently
intend to invest more than 25% of its total assets in bonds whose quality
is judged by FMR to be equivalent to bonds rated Baa or BBB, and does not
currently intend to invest more than 20% of its total assets in bonds that
are not rated by Moody's or S&P. High Yield Tax-Free does not currently
intend to invest more than 25% of its total assets in bonds rated below Baa
or BBB, or unrated bonds judged by FMR to be of equivalent quality. The
fund does not currently intend to invest more than 10% of its total
assets in bonds rated B or below or, if unrated, judged by FMR to be of
equivalent quality. Aggressive Tax-Free does not currently intend to invest
more than 10% of its total assets in bonds that are in default.
MUNICIPAL SECURITIES are issued to raise money for a variety of public
purposes, including general financing for state and local governments, or
financing for specific projects or public facilities. Municipal securities
may be issued in anticipation of future revenues, and may be backed by the
full taxing power of a municipality, the revenues from a specific project,
or the credit of a private organization. A security's credit may be
enhanced by a bank, insurance company, or other financial institution. A
fund may own a municipal security directly or through a participation
interest.
MUNICIPAL LEASE OBLIGATIONS are used by municipalities to acquire land,
equipment, or facilities. If the municipality stops making payments or
transfers its obligations to a private entity, the obligation could lose
value or become taxable.
OTHER MUNICIPAL SECURITIES may include general obligations of U.S.
territories and possessions such as Guam, the Virgin Islands, and Puerto
Rico, and their political subdivisions and public corporations. The economy
of Puerto Rico is closely linked to the U.S. economy, and will depend on
the strength of the U.S. dollar, interest rates, the price stability of oil
imports, and the continued existence of favorable tax incentives. Recent
legislation reduced these incentives, but it is impossible to predict what
impact the changes will have.
PRIVATE ENTITIES may be involved in some municipal securities. For example,
industrial revenue bonds are backed by private entities, and resource
recovery bonds often involve private corporations. The viability of a
project or tax incentives could affect the value and credit quality of
these securities.
HIGH YIELD TAX-FREE
Fiscal 1993 Debt Holdings, by Rating MOODY'S STANDARD &
POOR'S
INVESTORS SERVICE, INC. CORPORATION
Rating Average A Rating Averag
eA
INVESTMENT GRADE
Highest quality Aaa AAA
High quality Aa 53.51 % AA 61.39%
Upper-medium grade A A
Medium grade Baa 13.06 % BBB 12.10 %
LOWER QUALITY
Moderately speculative Ba 3.98 % BB 2.24 %
Speculative B 1.47 % B 1.61 %
Highly speculative Caa 0.00 % CCC 0.00 %
Poor quality Ca 0.00 % CC 0.00 %
Lowest quality, no interest C C
In default, in arrears -- D 0.00 %

72.02% 77.34%

AGGRESSIVE TAX-FREE
Fiscal 1993 Debt Holdings, by Rating MOODY'S STANDARD &
POOR'S
INVESTORS SERVICE, INC. CORPORATION
Rating Average A Rating Averag
eA
INVESTMENT GRADE
Highest quality Aaa AAA
High quality Aa 29.45 % AA 31.72 %
Upper-medium grade A A
Medium grade Baa 21.48 % BBB 15.76 %
LOWER QUALITY
Moderately speculative Ba 6.41 % BB 4.18 %
Speculative B 2.72 % B 2.34 %
Highly speculative Caa 0.44 % CCC 0.31 %
Poor quality Ca 0.00 % CC 0.00 %
Lowest quality, no interest C C
In default, in arrears -- D 0.00 %
60.50 % 54.31 %
A THE DOLLAR-WEIGHTED AVERAGE OF DEBT SECURITIES NOT RATED BY MOODY'S OR
S&P AMOUNTED TO 12.2 % AND 29.3% FOR HIGH YIELD TAX-FREE AND

AGGRESSIVE TAX-FREE, RESPECTIVELY . THIS MAY INCLUDE SECURITIES RATED
BY
OTHER NATIONALLY RECOGNIZED RATING SERVICES, AS WELL AS UNRATED SECURITIES.
UNRATED SECURITIES CONSIDERED TO BE INVESTMENT-GRADE QUALITY BY FMR ARE

4.19% OF AGGRESSIVE TAX-FREE'S ASSETS. REFER TO THE FUNDS '
STATEMENT OF
ADDITIONAL INFORMATION FOR A MORE COMPLETE DISCUSSION OF THESE RATINGS.

ASSET-BACKED SECURITIES may include pools of purchase contracts, financing
leases, or sales agreements entered into by municipalities. These
securities usually rely on continued payments by a municipality, and may
also be subject to prepayment risk.
VARIABLE- AND FLOATING-RATE INSTRUMENTS may have interest rates that move
in tandem with a benchmark, helping to stabilize their prices. Inverse
floaters have interest rates that move in the opposite direction from the
benchmark, making the instrument's market value more volatile.
PUT FEATURES entitle the holder to put (sell back) an instrument to the
issuer or a financial intermediary. In exchange for this benefit, a fund
may pay periodic fees or accept a lower interest rate. Demand features and
standby commitments are types of put features.
ADJUSTING INVESTMENT EXPOSURE. A fund can use various techniques to
increase or decrease its exposure to changing security prices, interest
rates, or other factors that affect security values. These techniques may
involve derivative transactions such as buying and selling options and
futures contracts and purchasing indexed securities.
FMR can use these practices to adjust the risk and return characteristics
of a fund's portfolio of investments. If FMR judges market conditions
incorrectly or employs a strategy that does not correlate well with a
fund's investments, these techniques could result in a loss, regardless of
whether the intent was to reduce risk or increase return. These techniques
may increase the volatility of the fund and may involve a small investment
of cash relative to the magnitude of the risk assumed. In addition, these
techniques could result in a loss if the counterparty to the transaction
does not perform as promised.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS are trading practices in
which payment and delivery for the securities take place at a future date.
The market value of a security could change during this period, which could
affect a fund's yield.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by
FMR, under the supervision of the Board of Trustees, to be illiquid, which
means that they may be difficult to sell promptly at an acceptable price.
The sale of other securities may be subject to legal restrictions.
Difficulty in selling securities may result in a loss or may be costly to a
fund.
RESTRICTIONS: A fund may not purchase a security if, as a result, more than
10% of its assets would be invested in illiquid securities.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the
risks of investing. This may include limiting the amount of money invested
in any one issuer or, on a broader scale, in any one industry or type of
project. Economic, business, or political changes can affect all securities
of a similar type.
RESTRICTIONS: A fund may not invest more than 5% of its total assets in any
one issuer. For High Yield Tax-Free and Aggressive Tax-Free, this
restriction only applies to 75% of their total assets. These limitations do
not apply to U.S. government securities. A fund may invest more than 25% of
its total assets in tax-free securities that finance similar types of
projects.
BORROWING. A fund may borrow from banks or from other funds advised by FMR,
or through reverse repurchase agreements. If a fund borrows money, its
share price may be subject to greater fluctuation until the borrowing is
paid off. If the fund makes additional investments while borrowings are
outstanding, this may be considered a form of leverage.
RESTRICTIONS: A fund may borrow only for temporary or emergency purposes,
but not in an amount exceeding 33% of its total assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraphs restate all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraphs, can be changed without shareholder approval.
LIMITED TERM MUNICIPALS seeks to provide the highest level of income exempt
from federal income tax that can be obtained, consistent with the
preservation of capital, from a diversified portfolio of high-quality,
limited-term obligations. The fund will normally invest at least 80% of its
assets in tax-exempt obligations with maturities of 15 years or less, and
the fund's dollar-weighted average maturity will be at all times limited to
12 years or less. The maturity of the fund's portfolio will be adjusted
from time to time based on FMR's assessment of interest rate trends. The
municipal bonds in the fund's portfolio are primarily of high or upper
medium quality, although the fund may invest up to 25% of its total assets
in medium grade bonds. The fund's standards for high grade, upper medium
grade, and medium grade obligations are essentially the same as Moody's and
S&P's four highest categories of Baa or BBB and above. The fund will
not invest in municipals bonds rated lower than Baa by Moody's or BBB by
S&P. The fund may invest up to 20% of its total assets in bonds not
rated by either of these rating services if FMR determines that they are
comparable to securities rated Baa or above by Moody's or BBB or above by
S&P. Unrated bonds deemed to be comparable to bonds rated Baa by
Moody's or BBB by S&P will be included in the 25% limitation on medium
grade bonds set forth in this paragraph. The fund may not invest more than
5% of its total assets in any one issuer.
HIGH YIELD TAX-FREE seeks to provide a high current yield exempt from
federal income tax. The fund will normally invest so that at least 80% of
its income is exempt from federal income tax. With respect to 75% of its
total assets, the fund may not invest more than 5% of its total assets in
any one issuer.
AGGRESSIVE TAX-FREE seeks to provide a high current yield, exempt from
federal income tax, by investing primarily in medium and lower quality
municipal bonds. The fund will normally invest at least 80% of its assets
in municipal securities whose interest is exempt from federal tax. With
respect to 75% of its total assets, the fund may not invest more than 5% of
its total assets in any one issuer.
EACH FUND may borrow only for temporary or emergency purposes, but not in
an amount exceeding 33% of its total assets.
This prospectus is printed on recycled paper using soy-based inks.

FIDELITY'S TAX-FREE BOND FUNDS
FIDELITY AGGRESSIVE TAX-FREE PORTFOLIO
A FUND OF FIDELITY MUNICIPAL TRUST
FIDELITY HIGH YIELD TAX-FREE PORTFOLIO
A FUND OF FIDELITY COURT STREET TRUST
FIDELITY LIMITED TERM MUNICIPALS
A FUND OF FIDELITY SCHOOL STREET TRUST
STATEMENT OF ADDITIONAL INFORMATION
FEBRUARY 17, 1994
This Statement is not a prospectus but should be read in conjunction with
the funds' current Prospectus (dated February 17, 1994). Please retain this
document for future reference. The Annual Report of Fidelity High Yield
Tax-Free Portfolio for the fiscal year ended November 30, 1993 and the
Annual Reports of Fidelity Aggressive Tax-Free Portfolio and Fidelity
Limited Term Municipals for the fiscal year ended December 31, 1993 are
incorporated herein by reference. To obtain additional copies of the
Prospectus or an Annual Report, please call Fidelity Distributors
Corporation at 1-800-544-8888.
TABLE OF CONTENTS PAGE

Investment Policies and Limitations

Portfolio Transactions

Valuation of Portfolio Securities

Performance

Additional Purchase and Redemption Information

Distributions and Taxes

FMR

Trustees and Officers

Management Contracts

Distribution and Service Plans

Interest of FMR Affiliates

Description of the Trusts

Financial Statements

Appendix

INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or
limitation states a maximum percentage of a fund's assets that may be
invested in any security or other asset, or sets forth a policy regarding
quality standards, such standard or percentage limitation will be
determined immediately after and as a result of the fund's acquisition of
such security or other asset. Accordingly, any subsequent change in values,
net assets, or other circumstances will not be considered when determining
whether the investment complies with a fund's investment policies
and limitations.
Each fund's fundamental investment policies and limitations cannot be
changed without approval by a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940) of the fund.
However, with respect to Aggressive Tax-Free and High Yield, except for the
fundamental investment limitations set forth below, the investment policies
and limitations described in this Statement of Additional Information are
not fundamental and may be changed without shareholder approval.
INVESTMENT LIMITATIONS OF FIDELITY AGGRESSIVE TAX-FREE PORTFOLIO
(AGGRESSIVE TAX-FREE)
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
1(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed by the
U.S. government or any of its agencies or instrumentalities) if, as a
result, (a) more than 5% of the fund's total assets would be invested in
the securities of that issuer, or (b) the fund would hold more than 10% of
the outstanding voting securities of that issuer;
2(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
3(3) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed
this amount will be reduced within three days (not including Sundays and
holidays) to the extent necessary to comply with the 33 1/3% limitation;
4(4) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
5(5) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities, or tax-exempt obligations issued or guaranteed by a U.S.
territory or possession or a state or local government, or a political
subdivision of any of the foregoing) if, as a result, more than 25% of the
fund's total assets would be invested the securities of companies whose
principal business activities are in the same industry;
6(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
7(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
8(8) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
9THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
10(i) The fund does not currently intend to sell securities short, unless
it owns or has the right to obtain securities equivalent in kind and amount
to the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
11(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
12(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (3)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
13(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
14(v) The fund does not currently intend to invest more than 25% of its
total assets in industrial revenue bonds related to a single industry.
15(vi) The fund does not currently intend to invest in securities of real
estate investment trusts that are not readily marketable, or to invest in
securities of real estate limited partnerships that are not listed on the
New York Stock Exchange or the American Stock Exchange or traded on the
NASDAQ National Market System.
16(vii) The fund does not currently intend to engage in repurchase
agreements or make loans, but this limitation does not apply to purchases
of debt securities.
17(viii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
18(ix) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
19(x) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
20(xi) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
21For purposes of limitations (1) and (5), FMR identifies the issuer of a
security depending on its terms and conditions. In identifying the issuer,
FMR will consider the entity or entities responsible for payment of
interest and repayment of principal and the source of such payments; the
way in which assets and revenues of an issuing political subdivision are
separated from those of other political entities; and whether a
governmental body is guaranteeing the security.
22For the fund's limitations on futures and options transactions, see the
section entitled "Limitations on Futures and Options Transactions" on page
.
INVESTMENT LIMITATIONS OF FIDELITY HIGH YIELD TAX-FREE PORTFOLIO
(HIGH YIELD)
23THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
24(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed by the
U.S. government or any of its agencies or instrumentalities) if, as a
result, (a) more than 5% of the fund's total assets would be invested in
the securities of that issuer, or (b) the fund would hold more than 10% of
the outstanding voting securities of that issuer;
25(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
26(3) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed
this amount will be reduced within three days (not including Sundays and
holidays) to the extent necessary to comply with the 33 1/3% limitation;
27(4) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
28(5) purchase the securities of any issuer (other than securities issued
or guaranteed by the U.S. government or any of its agencies or
instrumentalities, or tax-exempt obligations issued or guaranteed by a U.S.
territory or possession or a state or local government, or a political
subdivision of any of the foregoing) if, as a result, more than 25% of the
fund's total assets would be invested the securities of companies whose
principal business activities are in the same industry;
29(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
30(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
31(8) lend any security or make any other loan if, as a result, more than
33 1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
32THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
33(i) The fund does not currently intend to sell securities short, unless
it owns or has the right to obtain securities equivalent in kind and amount
to the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
34(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
35(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (3)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
36(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
37(v) The fund does not currently intend to invest more than 25% of its
total assets in industrial revenue bonds related to a single industry.
38(vi) The fund does not currently intend to invest in securities of real
estate investment trusts that are not readily marketable, or to invest in
securities of real estate limited partnerships that are not listed on the
New York Stock Exchange or the American Stock Exchange or traded on the
NASDAQ National Market System.
39(vii) The fund does not currently intend to engage in repurchase
agreements or make loans, but this limitation does not apply to purchases
of debt securities.
40(viii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
41(ix) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
42(x) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
43(xi) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
44For purposes of limitations (1) and (5), FMR identifies the issuer of a
security depending on its terms and conditions. In identifying the issuer,
FMR will consider the entity or entities responsible for payment of
interest and repayment of principal and the source of such payments; the
way in which assets and revenues of an issuing political subdivision are
separated from those of other political entities; and whether a
governmental body is guaranteeing the security.
45For the fund's limitations on futures and options transactions, see the
section entitled "Limitations on Futures and Options Transactions" on page
.
INVESTMENT LIMITATIONS OF FIDELITY LIMITED TERM MUNICIPALS
(LIMITED TERM)
46THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
47(1) purchase the securities of any issuer (except the U.S. government,
its agencies or its instrumentalities) if, as a result, more than 5% of its
total assets would be invested in the securities of such issuer. For
purposes of this restriction, the fund will regard the entity which has the
ultimate responsibility for the payment of interest and principal as the
issuer;
48(2) issue senior securities;
49(3) make short sales of securities provided, however, that the fund may
purchase or sell futures contracts;
50(4) purchase any securities on margin, except for such short-term credits
as are necessary for the clearance of transactions; provided, however, that
the fund may make initial and variation margin payments in connection with
purchase or sales of futures contracts or of options on futures contracts;
51(5) borrow money, except that the fund may borrow money or engage in
reverse repurchase agreements for temporary or emergency purposes (not for
leveraging or investment) in an amount not exceeding 33 1/3% of the value
of the fund's total assets (including borrowings) less liabilities (other
than borrowings). Any borrowings that come to exceed 33 1/3% of its total
assets by reason of a decline in net assets will be reduced within three
days to the extent necessary to comply with the 33 1/3% limitation;
52(6) underwrite any issue of securities, except to the extent that the
purchase of municipal bonds directly from an issuer in accordance with the
fund's investment objective, policies, and restrictions may be deemed to be
underwriting;
53(7) purchase securities (other than municipal bonds and obligations
issued or guaranteed by the U.S. government, its agencies or
instrumentalities) if, as a result, more than 10% of its total assets would
be invested in any one industry;
54(8) purchase or sell real estate, but this shall not prevent the fund
from investing in municipal bonds or other permitted investments secured by
real estate or interests therein;
55(9) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities);
56(10) make loans, except through the purchase of a portion of an issue of
debt securities in accordance with its investment objective, policies, and
restrictions;
57(11) invest in oil, gas, or other mineral exploration or development
programs; or
58(12) purchase or retain the securities of any issuer other than the
securities of the fund, if, to the fund's knowledge, those Trustees and
officers of the fund or those officers and directors of FMR, who
individually own beneficially more than 1/2 of 1% of the outstanding
securities of such issuer, together own beneficially more than 5% of such
outstanding securities.
59Investment limitation (5) is construed in conformity with the 1940 Act,
and, accordingly, "three days" means three days exclusive of Sundays and
holidays.
60THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
61(i) With respect to 75% of its total assets, the fund does not currently
intend to purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, the fund would own more than 10% of the
outstanding voting securities of such issuer.
62(ii) The fund does not currently intend to sell securities short.
63(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser, or (b) by engaging in reverse repurchase agreements
with any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (5)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
64(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
65(v) The fund does not currently intend to invest more than 25% of its
total assets in industrial revenue bonds related to a single industry.
66(vi) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
67(vii) The fund does not currently intend to purchase the securities of
any issuer (other than securities issued or guaranteed by domestic or
foreign governments or political subdivisions thereof) if, as a result,
more than 5% of its total assets would be invested in the securities of
business enterprises that, including predecessors, have a record of less
than three years of continuous operation.
68For purposes of limitations (1), (7), and (i) FMR identifies the issuer
of a security depending on its terms and conditions. In identifying the
issuer, FMR will consider the entity or entities responsible for payment of
interest and repayment of principal and the source of such payments; the
way in which assets and revenues of an issuing political subdivision are
separated from those of other political entities; and whether a
governmental body is guaranteeing the security.
69For the fund's limitations on futures and options transactions, see the
section entitled "Limitations on Futures and Options Transactions" on page
.
70Limited Term will treat municipal obligations which have the option to
require the issuer to redeem within its portfolio maturity limitation of 15
years as having remaining maturities within said limitation, even if the
periods to the stated maturity dates of such obligations are greater than
the maturity limitation of the fund.
INVESTMENT POLICIES SHARED BY THE FUNDS
71AFFILIATED BANK TRANSACTIONS. Pursuant to exemptive orders issued by the
Securities and Exchange Commission (SEC), a fund may engage in transactions
with banks that are, or may be considered to be, "affiliated persons" of
the fund under the Investment Company Act of 1940. Such transactions may be
entered into only pursuant to procedures established and periodically
reviewed by the Boards of Trustees. These transactions may include
repurchase agreements with custodian banks; purchases, as principal, of
short-term obligations of, and repurchase agreements with, the 50 largest
U.S. banks (measured by deposits); transactions in municipal securities;
and transactions in U.S. government securities with affiliated banks that
are primary dealers in these securities.
DELAYED-DELIVERY TRANSACTIONS. Each fund may buy and sell securities on a
delayed-delivery or when-issued basis. These transactions involve a
commitment by a fund to purchase or sell specific securities at a
predetermined price or yield, with payment and delivery taking place after
the customary settlement period for that type of security (and more than
seven days in the future). Typically, no interest accrues to the purchaser
until the security is delivered. The funds may receive fees for entering
into delayed-delivery transactions.
When purchasing securities on a delayed-delivery basis, each fund assumes
the rights and risks of ownership, including the risk of price and yield
fluctuations. Because a fund is not required to pay for securities until
the delivery date, these risks are in addition to the risks associated with
the fund's other investments. If a fund remains substantially fully
invested at a time when delayed-delivery purchases are outstanding, the
delayed-delivery purchases may result in a form of leverage. When
delayed-delivery purchases are outstanding, a fund will set aside
appropriate liquid assets in a segregated custodial account to cover its
purchase obligations. When a fund has sold a security on a delayed-delivery
basis, the fund does not participate in further gains or losses with
respect to the security. If the other party to a delayed-delivery
transaction fails to deliver or pay for the securities, the fund could miss
a favorable price or yield opportunity, or could suffer a loss.
Each fund may renegotiate delayed-delivery transactions after they are
entered into, and may sell underlying securities before they are delivered,
which may result in capital gains or losses.
REFUNDING CONTRACTS. The funds may purchase securities on a when-issued
basis in connection with the refinancing of an issuer's outstanding
indebtedness. Refunding contracts require the issuer to sell and the fund
to buy refunded municipal obligations at a stated price and yield on a
settlement date that may be several months or several years in the future.
The funds generally will not be obligated to pay the full purchase price if
they fail to perform under a refunding contract. Instead, refunding
contracts generally provide for payment of liquidated damages to the issuer
(currently 15-20% of the purchase price). The funds may secure their
obligations under a refunding contract by depositing collateral or a letter
of credit equal to the liquidated damages provisions of the refunding
contract. When required by SEC guidelines, a fund will place liquid assets
in a segregated custodial account equal in amount to its obligations under
refunding contracts.
INVERSE FLOATERS are instruments whose interest rates bear an inverse
relationship to the interest rate on another security or the value of an
index. Changes in the interest rate on the other security or index
inversely affect the residual interest rate paid on the inverse floater,
with the result that the inverse floater's price will be considerably more
volatile than that of a fixed-rate bond. For example, a municipal issuer
may decide to issue two variable-rate instruments instead of a single
long-term, fixed-rate bond. The interest rate on one instrument reflects
short-term interest rates, while the interest rate on the other instrument
(the inverse floater) reflects the approximate rate the issuer would have
paid on a fixed-rate bond, multiplied by two, minus the interest rate paid
on the short-term instrument. Depending on market availability, the two
portions may be recombined to form a fixed-rate municipal bond. The market
for inverse floaters is relatively new.
VARIABLE OR FLOATING RATE OBLIGATIONS, including certain participation
interests in municipal instruments, have interest rate adjustment formulas
that help stabilize their market values. Many variable and floating rate
instruments also carry demand features that permit a fund to sell them at
par value plus accrued interest on short notice.
In many instances bonds and participation interests have tender options or
demand features that permit a fund to tender (or put) the bonds to an
institution at periodic intervals and to receive the principal amount
thereof. A fund considers variable rate instruments structured in this way
(Participating VRDOs) to be essentially equivalent to other VRDOs it
purchases. The IRS has not ruled whether the interest on Participating
VRDOs is Tax-exempt and, accordingly, a fund intends to purchase these
instruments based on opinions of bond counsel. Each fund may invest in
fixed-rate bonds that are subject to third party puts and in participation
interests in such bonds held by a bank in trust or otherwise.
TENDER OPTION BONDS are created by coupling an intermediate- or long-term,
fixed-rate, tax-exempt bond (generally held pursuant to a custodial
arrangement) with a tender agreement that gives the holder the option to
tender the bond at its face value. As consideration for providing the
tender option, the sponsor (usually a bank, broker-dealer, or other
financial institution) receives periodic fees equal to the difference
between the bond's fixed coupon rate and the rate (determined by a
remarketing or similar agent) that would cause the bond, coupled with the
tender option, to trade at par on the date of such determination. After
payment of the tender option fee, the fund effectively holds a demand
obligation that bears interest at the prevailing short-term tax-exempt
rate. In selecting tender option bonds for the funds, FMR will consider the
creditworthiness of the issuer of the underlying bond, the custodian, and
the third party provider of the tender option. In certain instances, a
sponsor may terminate a tender option if, for example, the issuer of the
underlying bond defaults on interest payments.
ZERO COUPON BONDS do not make regular interest payments. Instead, they are
sold at a deep discount from their face value and are redeemed at face
value when they mature. Because zero coupon bonds do not pay current
income, their prices can be very volatile when interest rates change. In
calculating its daily dividend, a fund takes into account as income a
portion of the difference between a zero coupon bond's purchase price and
its face value.
STANDBY COMMITMENTS are puts that entitle holders to same-day settlement at
an exercise price equal to the amortized cost of the underlying security
plus accrued interest, if any, at the time of exercise. Each fund may
acquire standby commitments to enhance the liquidity of portfolio
securities.
Ordinarily a fund will not transfer a standby commitment to a third party,
although it could sell the underlying municipal security to a third party
at any time. A fund may purchase standby commitments separate from or in
conjunction with the purchase of securities subject to such commitments. In
the latter case, the fund would pay a higher price for the securities
acquired, thus reducing their yield to maturity.
Issuers or financial intermediaries may obtain letters of credit or other
guarantees to support their ability to buy securities on demand. FMR may
rely upon its evaluation of a bank's credit in determining whether to
support an instrument supported by a letter of credit. In evaluating a
foreign bank's credit, FMR will consider whether adequate public
information about the bank is available and whether the bank may be subject
to unfavorable political or economic developments, currency controls, or
other governmental restrictions that might affect the bank's ability to
honor its credit commitment.
Standby commitments are subject to certain risks, including the ability of
issuers of standby commitments to pay for securities at the time the
commitments are exercised; the fact that standby commitments are not
marketable by the funds; and the possibility that the maturities of the
underlying securities may be different from those of the commitments.
MUNICIPAL LEASE OBLIGATIONS. Each fund may invest a portion of its assets
in municipal leases and participation interests therein. These obligations,
which may take the form of a lease, an installment purchase, or a
conditional sale contract, are issued by state and local governments and
authorities to acquire land and a wide variety of equipment and facilities.
Generally, the funds will not hold such obligations directly as a lessor of
the property, but will purchase a participation interest in a municipal
obligation from a bank or other third party. A participation interest gives
a fund a specified, undivided interest in the obligation in proportion to
its purchased interest in the total amount of the obligation.
Municipal leases frequently have risks distinct from those associated with
general obligation or revenue bonds. State constitutions and statutes set
forth requirements that states or municipalities must meet to incur debt.
These may include voter referenda, interest rate limits, or public sale
requirements. Leases, installment purchases, or conditional sale contracts
(which normally provide for title to the leased asset to pass to the
governmental issuer) have evolved as a means for governmental issuers to
acquire property and equipment without meeting their constitutional and
statutory requirements for the issuance of debt. Many leases and contracts
include "non-appropriation clauses" providing that the governmental issuer
has no obligation to make future payments under the lease or contract
unless money is appropriated for such purposes by the appropriate
legislative body on a yearly or other periodic basis. Non-appropriation
clauses free the issuer from debt issuance limitations.
FEDERALLY TAXABLE OBLIGATIONS. The funds do not intend to invest in
securities whose interest is federally taxable; however, from time to time,
each fund may invest a portion of its assets on a temporary basis in
fixed-income obligations whose interest is subject to federal income tax.
For example, each fund may invest in obligations whose interest is
federally taxable pending the investment or reinvestment in municipal
securities of proceeds from the sale of its shares or sales of portfolio
securities.
Should a fund invest in federally taxable obligations, it would purchase
securities that in FMR's judgment are of high quality. These would include
obligations issued or guaranteed by the U.S. government or its agencies or
instrumentalities; obligations of domestic banks; and repurchase
agreements. The funds' standards for high-quality taxable obligations are
essentially the same as those described by Moody's Investors Service, Inc.
(Moody's) in rating corporate obligations within its two highest ratings of
Prime-1 and Prime-2, and those described by Standard & Poor's
Corporation (S&P) in rating corporate obligations within its two
highest ratings of A-1 and A-2.
Proposals to restrict or eliminate the federal income tax exemption for
interest on municipal obligations are introduced before Congress from time
to time. Proposals also may be introduced before state legislatures that
would affect the state tax treatment of the funds' distributions. If such
proposals were enacted, the availability of municipal obligations and the
value of the funds' holdings would be affected and the Trustees would
reevaluate the funds' investment objectives and policies.
Each fund anticipates being as fully invested as practicable in municipal
securities; however, there may be occasions when, as a result of maturities
of portfolio securities, sales of fund shares, or in order to meet
redemption requests, a fund may hold cash that is not earning income. In
addition, there may be occasions when, in order to raise cash to meet
redemptions, a fund may be required to sell securities at a loss.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund purchases a
security and simultaneously commits to resell that security to the seller
at an agreed-upon price on an agreed-upon date within a number of days from
the date of purchase. The resale price reflects the purchase price plus an
agreed-upon incremental amount which is unrelated to the coupon rate or
maturity of the purchased security. A repurchase agreement is a taxable
obligation which involves the obligation of the seller to pay the
agreed-upon price, which obligation is in effect secured by the value (at
least equal to the amount of the agreed-upon resale price and marked to
market daily) of the underlying security. Each fund may engage in
repurchase agreements with respect to any security in which it is
authorized to invest. While it does not presently appear possible to
eliminate all risks from these transactions (particularly the possibility
of a decline in the market value of the underlying securities, as well as
delays and costs to a fund in connection with bankruptcy proceedings), it
is each fund's policy to limit repurchase agreement transactions to parties
whose creditworthiness has been reviewed and found satisfactory by FMR.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund
sells a portfolio instrument to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase the instrument
at a particular price and time. While a reverse repurchase agreement is
outstanding, a fund will maintain appropriate liquid assets in a segregated
custodial account to cover its obligation under the agreement. Each fund
will enter into reverse repurchase agreements only with parties whose
creditworthiness has been found satisfactory by FMR. Such transactions may
increase fluctuations in the market value of a fund's assets and may be
viewed as a form of leverage.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which they
are valued. Under the supervision of the Board of Trustees, FMR determines
the liquidity of a fund's investments and, through reports from FMR, the
Board monitors investments in illiquid instruments. In determining the
liquidity of a fund's investments, FMR may consider various factors,
including (1) the frequency of trades and quotations, (2) the number of
dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including
any demand or tender features), and (5) the nature of the marketplace for
trades (including the ability to assign or offset the fund's rights and
obligations relating to the investment). Investments currently considered
by each fund to be illiquid include over-the-counter options. Also, FMR may
determine some restricted securities and municipal lease obligations to be
illiquid. However, with respect to over-the-counter options a fund writes,
all or a portion of the value of the underlying instrument may be illiquid
depending on the assets held to cover the option and the nature and terms
of any agreement the fund may have to close out the option before
expiration. In the absence of market quotations, illiquid investments are
priced at fair value as determined in good faith by a committee appointed
by the Board of Trustees. If through a change in values, net assets, or
other circumstances, a fund were in a position where more than 10% its net
assets were invested in illiquid securities it would seek to take
appropriate steps to protect liquidity.
RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, a fund may be obligated to pay all or part of the
registration expense and a considerable period may elapse between the time
it decides to seek registration and the time the fund may be permitted to
sell a security under an effective registration statement. If, during such
a period, adverse market conditions were to develop, a fund might obtain a
less favorable price than prevailed when it decided to seek registration of
the security.
LOWER-RATED MUNICIPAL SECURITIES. Aggressive Tax-Free and High Yield may
each invest a portion of their assets in lower-rated municipal securities
as described in the Prospectus.
While the market for municipal securities is considered to be adequate,
adverse publicity and changing investor perceptions may affect the ability
of outside pricing services used by the funds to value portfolio
securities, and the funds' ability to dispose of lower-rated bonds. The
outside pricing services are consistently monitored to assure that
securities are valued by a method that the Boards of Trustees believe
accurately reflects fair value. The impact of changing investor perceptions
may be especially pronounced in markets where municipal securities are
thinly traded.
The funds may choose, at their expense, or in conjunction with others, to
pursue litigation or otherwise exercise their rights as a security holder
to protect the interests of security holders if they determine this to be
in the best interest of fund shareholders.
INDEXED SECURITIES. Each fund may purchase securities whose prices are
indexed to the prices of other securities, securities indices, or other
financial indicators. Indexed securities typically, but not always, are
debt securities or deposits whose value at maturity or coupon rate is
determined by reference to a specific instrument or statistic. Indexed
securities may have principal payments as well as coupon payments that
depend on the performance of one or more interest rates. Their coupon rates
or principal payments may change by several percentage points for every 1%
interest rate change. One example of indexed securities is inverse
floaters.
The performance of indexed securities depends to a great extent on the
performance of the security or other instrument to which they are indexed,
and may also be influenced by interest rate changes. At the same time,
indexed securities are subject to the credit risks associated with the
issuer of the security, and their values may decline substantially if the
issuer's creditworthiness deteriorates. Indexed securities may be more
volatile than the underlying instruments.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. Each fund has filed a
notice of eligibility for exclusion from the definition of the term
"commodity pool operator" with the Commodity Futures Trading Commission
(CFTC) and the National Futures Association, which regulate trading in the
futures markets. The funds intend to comply with Section 4.5 of the
regulations under the Commodity Exchange Act which limits the extent to
which a fund can commit assets to initial margin deposits and option
premiums.
In addition, a fund will not: (a) sell futures contracts, purchase put
options, or write call options if, as a result, more than 25% of the fund's
total assets would be hedged with futures and options under normal
conditions; (b) purchase futures contracts or write put options if, as a
result, the fund's total obligations upon settlement or exercise of
purchased futures contracts and written put options would exceed 25% of its
total assets; or (c) purchase call options if, as a result, the current
value of option premiums for call options purchased by the fund would
exceed 5% of the fund's total assets. These limitations do not apply to
options attached to or acquired or traded together with their underlying
securities, and do not apply to securities that incorporate features
similar to options.
The above limitations on the funds' investments in futures contracts and
options, and the funds' policies regarding futures contracts and options
discussed elsewhere in this Statement of Additional Information, are not
fundamental policies and may be changed as regulatory agencies permit.
FUTURES CONTRACTS. When a fund purchases a futures contract, it agrees to
purchase a specified underlying instrument at a specified future date. When
a fund sells a futures contract, it agrees to sell the underlying
instrument at a specified future date. The price at which the purchase and
sale will take place is fixed when the fund enters into the contract. Some
currently available futures contracts are based on specific securities,
such as U.S. Treasury bonds or notes, and some are based on indices of
securities prices, such as the Bond Buyer Municipal Bond Index. Futures can
be held until their delivery dates, or can be closed out before then if a
liquid secondary market is available.
The value of a futures contract tends to increase and decrease in tandem
with the value of its underlying instrument. Therefore, purchasing futures
contracts will tend to increase a fund's exposure to positive and negative
price fluctuations in the underlying instrument, much as if it had
purchased the underlying instrument directly. When a fund sells a futures
contract, by contrast, the value of its futures position will tend to move
in a direction contrary to the market. Selling futures contracts,
therefore, will tend to offset both positive and negative market price
changes, much as if the underlying instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract is
not required to deliver or pay for the underlying instrument unless the
contract is held until the delivery date. However, both the purchaser and
seller are required to deposit "initial margin" with a futures broker,
known as a futures commission merchant (FCM), when the contract is entered
into. Initial margin deposits are typically equal to a percentage of the
contract's value. If the value of either party's position declines, that
party will be required to make additional "variation margin" payments to
settle the change in value on a daily basis. The party that has a gain may
be entitled to receive all or a portion of this amount. Initial and
variation margin payments do not constitute purchasing securities on margin
for purposes of a fund's investment limitations. In the event of the
bankruptcy of an FCM that holds margin on behalf of a fund, the fund may be
entitled to return of margin owed to it only in proportion to the amount
received by the FCM's other customers, potentially resulting in losses to
the fund.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, a fund obtains
the right (but not the obligation) to sell the option's underlying
instrument at a fixed strike price. In return for this right, the fund pays
the current market price for the option (known as the option premium).
Options have various types of underlying instruments, including specific
securities, indices of securities prices, and futures contracts. The fund
may terminate its position in a put option it has purchased by allowing it
to expire or by exercising the option. If the option is allowed to expire,
the fund will lose the entire premium it paid. If the fund exercises the
option, it completes the sale of the underlying instrument at the strike
price. A fund may also terminate a put option position by closing it out in
the secondary market at its current price, if a liquid secondary market
exists.
The buyer of a typical put option can expect to realize a gain if security
prices fall substantially. However, if the underlying instrument's price
does not fall enough to offset the cost of purchasing the option, a put
buyer can expect to suffer a loss (limited to the amount of the premium
paid, plus related transaction costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's
strike price. A call buyer typically attempts to participate in potential
price increases of the underlying instrument with risk limited to the cost
of the option if security prices fall. At the same time, the buyer can
expect to suffer a loss if security prices do not rise sufficiently to
offset the cost of the option.
WRITING PUT AND CALL OPTIONS. When a fund writes a put option, it takes the
opposite side of the transaction from the option's purchaser. In return for
receipt of the premium, the fund assumes the obligation to pay the strike
price for the option's underlying instrument if the other party to the
option chooses to exercise it. When writing an option on a futures contract
a fund will be required to make margin payments to an FCM as described
above for futures contracts. A fund may seek to terminate its position in a
put option it writes before exercise by closing out the option in the
secondary market at its current price. If the secondary market is not
liquid for a put option a fund has written, however, the fund must continue
to be prepared to pay the strike price while the option is outstanding,
regardless of price changes, and must continue to set aside assets to cover
its position.
If security prices rise, a put writer would generally expect to profit,
although its gain would be limited to the amount of the premium it
received. If security prices remain the same over time, it is likely that
the writer will also profit, because it should be able to close out the
option at a lower price. If security prices fall, the put writer would
expect to suffer a loss. This loss should be less than the loss from
purchasing the underlying instrument directly, however, because the premium
received for writing the option should mitigate the effects of the decline.
Writing a call option obligates a fund to sell or deliver the option's
underlying instrument, in return for the strike price, upon exercise of the
option. The characteristics of writing call options are similar to those of
writing put options, except that writing calls generally is a profitable
strategy if prices remain the same or fall. Through receipt of the option
premium, a call writer mitigates the effects of a price decline. At the
same time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price, even if its current value is
greater, a call writer gives up some ability to participate in security
price increases.
COMBINED POSITIONS. A fund may purchase and write options in combination
with each other, or in combination with futures or forward contracts, to
adjust the risk and return characteristics of the overall position. For
example, a fund may purchase a put option and write a call option on the
same underlying instrument, in order to construct a combined position whose
risk and return characteristics are similar to selling a futures contract.
Another possible combined position would involve writing a call option at
one strike price and buying a call option at a lower price, in order to
reduce the risk of the written call option in the event of a substantial
price increase. Because combined options positions involve multiple trades,
they result in higher transaction costs and may be more difficult to open
and close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of types
of exchange-traded options and futures contracts, it is likely that the
standardized contracts available will not match a fund's current or
anticipated investments exactly. A fund may invest in options and futures
contracts based on securities with different issuers, maturities, or other
characteristics from the securities in which it typically invests, which
involves a risk that the options or futures position will not track the
performance of the fund's other investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match a fund's
investments well. Options and futures prices are affected by such factors
as current and anticipated short-term interest rates, changes in volatility
of the underlying instrument, and the time remaining until expiration of
the contract, which may not affect security prices the same way. Imperfect
correlation may also result from differing levels of demand in the options
and futures markets and the securities markets, from structural differences
in how options and futures and securities are traded, or from imposition of
daily price fluctuation limits or trading halts. A fund may purchase or
sell options and futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to attempt to
compensate for differences in volatility between the contract and the
securities, although this may not be successful in all cases. If price
changes in a fund's options or futures positions are poorly correlated with
its other investments, the positions may fail to produce anticipated gains
or result in losses that are not offset by gains in other investments.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a liquid
secondary market will exist for any particular option or futures contract
at any particular time. Options may have relatively low trading volume and
liquidity if their strike prices are not close to the underlying
instrument's current price. In addition, exchanges may establish daily
price fluctuation limits for options and futures contracts, and may halt
trading if a contract's price moves upward or downward more than the limit
in a given day. On volatile trading days when the price fluctuation limit
is reached or a trading halt is imposed, it may be impossible for a fund to
enter into new positions or close out existing positions. If the secondary
market for a contract is not liquid because of price fluctuation limits or
otherwise, it could prevent prompt liquidation of unfavorable positions,
and potentially could require a fund to continue to hold a position until
delivery or expiration regardless of changes in its value. As a result, the
fund's access to other assets held to cover its options or futures
positions could also be impaired.
OTC OPTIONS. Unlike exchange-traded options, which are standardized with
respect to the underlying instrument, expiration date, contract size, and
strike price, the terms of over-the-counter options (options not traded on
exchanges) generally are established through negotiation with the other
party to the option contract. While this type of arrangement allows a fund
greater flexibility to tailor an option to its needs, OTC options generally
involve greater credit risk than exchange-traded options, which are
guaranteed by the clearing organization of the exchanges where they are
traded.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. Each fund will comply
with guidelines established by the SEC with respect to coverage of options
and futures strategies by mutual funds, and if the guidelines so require
will set aside appropriate liquid assets in a segregated custodial account
in the amount prescribed. Securities held in a segregated account cannot be
sold while the futures or option strategy is outstanding, unless they are
replaced with other suitable assets. As a result, there is a possibility
that segregation of a large percentage of a fund's assets could impede
portfolio management or the fund's ability to meet redemption requests or
other current obligations.
EDUCATION. In general, there are two types of education-related bonds;
those issued to finance projects for public colleges and universities, and
those representing pooled interests in student loans. Bonds issued to
supply public educational institutions with funds are subject to the risk
of unanticipated revenue decline, primarily the result of decreasing
student enrollment. Among the factors that may affect enrollment are
restrictions on students' ability to pay tuition, availability of state and
federal funding, and general economic conditions.
Student loan revenue bonds are backed by pools of student loans and are
generally offered by state (or substate) authorities or commissions.
Student loans are guaranteed by state guarantee agencies and reinsured by
the Department of Education. The risks associated with these issues is that
default on the student loans may result in prepayment to bondholders and an
earlier-than-anticipated retirement of the bond.
ELECTRIC UTILITIES INDUSTRY. The electric utilities industry has been
experiencing, or may experience in the future, problems, including (a) the
effects of inflation upon construction and operating costs, (b) the
availability and cost of fuel, (c) the availability and cost of capital,
(d) the effects of conservation on energy demand, (e) the effects of
rapidly changing environmental, safety, and licensing requirements, and
other federal, state, and local regulations, (f) timely and sufficient rate
increases, (g) opposition to nuclear power, and (h) increased competition.
HEALTH CARE INDUSTRY. The health care industry is subject to regulatory
action by a number of private and governmental agencies, including federal,
state, and local governmental agencies. A major source of revenues for the
health care industry is payments from the Medicare and Medicaid programs.
As a result, the industry is sensitive to legislative changes and
reductions in governmental spending for such programs. Numerous other
factors may affect the industry, such as general and local economic
conditions; demand for services; expenses (including malpractice insurance
premiums); and competition among health care providers. In the future, the
following elements may adversely affect health care facility operations:
adoption of legislation proposing a national health insurance program;
medical and technological advances which dramatically alter the need for
health services or the way in which such services are delivered; and
efforts by employers, insurers, and governmental agencies to reduce the
costs of health insurance and healthcare services.
HOUSING. Housing revenue bonds are generally issued by a state, county,
city, local housing authority, or other public agency. They are secured by
the revenues derived from mortgages purchased with the proceeds of the bond
issue. It is extremely difficult to predict the supply of available
mortgages to be purchased with the proceeds of an issue or the future cash
flow from the underlying mortgages. Consequently, there are risks that
proceeds will exceed supply, resulting in early retirement of bonds, or
that homeowner repayments will create an irregular cash flow.
Many factors may affect the financing of multi-family housing projects,
including acceptable completion of construction, proper management,
occupancy and rent levels, economic conditions, and changes to current laws
and regulations.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of the funds by FMR pursuant to authority contained in each fund's
management contract. FMR is also responsible for the placement of
transaction orders for other investment companies and accounts for which it
or its affiliates act as investment adviser. In selecting broker-dealers,
subject to applicable limitations of the federal securities laws, FMR will
consider various relevant factors, including, but not limited to, the size
and type of the transaction; the nature and character of the markets for
the security to be purchased or sold; the execution efficiency, settlement
capability and financial condition of the broker-dealer firm; the
broker-dealer's execution services rendered on a continuing basis; and the
reasonableness of any commissions.
The funds may execute portfolio transactions with broker-dealers who
provide research and execution services to the funds or other accounts over
which FMR or its affiliates exercise investment discretion. Such services
may include advice concerning the value of securities; the advisability of
investing in, purchasing, or selling securities; the availability of
securities or the purchasers or sellers of securities; furnishing analyses
and reports concerning issuers, industries, securities, economic factors
and trends, portfolio strategy, and performance of accounts; and effecting
securities transactions and performing functions incidental thereto (such
as clearance and settlement). The selection of such broker-dealers
generally is made by FMR (to the extent possible consistent with execution
considerations), based upon the quality of research and execution services
provided.
The receipt of research from broker-dealers that execute transactions on
behalf of the funds may be useful to FMR in rendering investment management
services to the funds or its other clients, and conversely, such
information provided by broker-dealers who have executed transaction orders
on behalf of other FMR clients may be useful to FMR in carrying out its
obligations to the funds. The receipt of such research has not reduced
FMR's normal independent research activities; however, it enables FMR to
avoid the additional expenses that could be incurred if FMR tried to
develop comparable information through its own efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause the
funds to pay such higher commissions, FMR must determine in good faith that
such commissions are reasonable in relation to the value of the brokerage
and research services provided by such executing broker-dealers, viewed in
terms of a particular transaction or FMR's overall responsibilities to the
funds and its other clients. In reaching this determination, FMR will not
attempt to place a specific dollar value on the brokerage and research
services provided, or to determine what portion of the compensation should
be related to those services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of the funds or shares of other Fidelity
funds, to the extent permitted by law. FMR may use research services
provided by and place agency transactions with Fidelity Brokerage Services,
Inc. (FBSI), a subsidiary of FMR Corp., if the commissions are fair and
reasonable and comparable to commissions charged by non-affiliated,
qualified broker-dealer firms for similar services.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members of
national securities exchanges from executing exchange transactions for
accounts which they or their affiliates manage, except if certain
requirements are satisfied . Pursuant to such re quirements , the
Board of Trustees has authorized FBSI to e xecute fund
portfolio transactions on national securities exchanges in
accordance with approved procedures and applicable SEC rules.
The Trustees periodically review FMR's performance of its responsibilities
in connection with the placement of portfolio transactions on behalf of the
funds and review the commissions paid by the funds over representative
periods of time to determine whether they are reasonable in relation to the
benefits to the funds.
For the 1993 and 1992 fiscal years (ended November 30 for High Yield and
December 31 for Aggressive Tax-Free and Limited Term ), the funds'
annual portfolio turnover rates were as follows:
1993 1992

Aggressive Tax-Free 54% 43%

High Yield 53% 47%

Limited Term 111% 50%

From time to time the Trustees will review whether the recapture for the
benefit of the funds of some portion of the brokerage commissions or
similar fees paid by the funds on portfolio transactions is legally
permissible and advisable. The funds seek to recapture soliciting
broker-dealer fees on the tender of portfolio securities, but at present no
other recapture arrangements are in effect. The Trustees intend to continue
to review whether recapture opportunities are available and are legally
permissible and, if so, to determine in the exercise of their business
judgment whether it would be advisable for the funds to seek such
recapture.
Although the Trustees and officers of the funds are substantially the same
as those of other funds managed by FMR, investment decisions for each of
the funds are made independently from those of other funds managed by FMR
or accounts managed by FMR affiliates. It sometimes happens that the same
security is held in the portfolio of more than one of these funds or
accounts. Simultaneous transactions are inevitable when several funds are
managed by the same investment adviser, particularly when the same security
is suitable for the investment objective of more than one fund.
When two or more funds are simultaneously engaged in the purchase or sale
of the same security, the prices and amounts are allocated in accordance
with a formula considered by the officers of the funds involved to be
equitable to each fund. In some cases this system could have a detrimental
effect on the price or value of the security as far as each of the funds is
concerned. In other cases, however, the ability of the funds to participate
in volume transactions will produce better executions and prices for the
funds. It is the current opinion of the Trustees that the desirability of
retaining FMR as investment adviser to the funds outweighs any
disadvantages that may be said to exist from exposure to simultaneous
transactions.
VALUATION OF PORTFOLIO SECURITIES
Valuations of portfolio securities furnished by the pricing service
employed by the funds are based upon a computerized matrix system or
appraisals by the pricing service, in each case in reliance upon
information concerning market transactions and quotations from recognized
municipal securities dealers. The methods used by the pricing service and
the quality of valuations so established are reviewed by officers of the
funds and FSC under the general supervision of the Trustees. There are a
number of pricing services available and the Trustees, on the basis of
on-going evaluation of these services, may use other pricing services or
discontinue the use of any pricing service in whole or in part.
PERFORMANCE
The funds may quote performance in various ways. All performance
information supplied by the funds in advertising is historical and is not
intended to indicate future returns. Each fund's share price, yield, and
total returns fluctuate in response to market conditions and other factors,
and the value of each fund's shares when redeemed may be more or less than
their original cost.
YIELD CALCULATIONS. The funds' yields used in advertising are computed by
dividing a fund's interest income for a given 30-day or one-month period,
net of expenses, by the average number of shares entitled to receive
dividends during the period, dividing this figure by the fund's net asset
value per share at the end of the period, and annualizing the result
(assuming compounding of income) in order to arrive at an annual percentage
rate. Yields for Aggressive Tax-Free do not reflect the fund's 1%
redemption fee. Income is calculated for purposes of yield quotations in
accordance with standardized methods applicable to all stock and bond
funds. In general, interest income is reduced with respect to bonds trading
at a premium over their par value by subtracting a portion of the premium
from income on a daily basis, and is increased with respect to bonds
trading at a discount by adding a portion of the discount to daily income.
Capital gains and losses generally are excluded from the calculation.
Income calculated for the purposes of determining the funds' yields differs
from income as determined for other accounting purposes. Because of the
different accounting methods used, and because of the compounding of income
assumed in yield calculations, a fund's yield may not equal its
distribution rate, the income paid to your account, or the income reported
in the fund's financial statements.
A fund's tax-equivalent yield is the rate an investor would have to earn
from a fully taxable investment after taxes to equal the fund's tax-free
yield. Tax-equivalent yields are calculated by dividing a fund's yield by
the result of one minus a stated federal or combined federal and state tax
rate. (If only a portion of a fund's yield is tax-exempt, only that portion
is adjusted in the calculation.)
The following table shows the effect of a shareholder's tax status on
effective yield under federal income tax laws for 199 4 . It shows the
approximate yield a taxable security must provide at various income
brackets to produce after-tax yields equivalent to those of hypothetical
tax-exempt obligations yielding from 4% to 7%. Of course, no assurance can
be given that the funds will achieve any specific tax-exempt yield. While
the funds invest principally in obligations whose interest is exempt from
federal income tax, other income received by the funds may be taxable.
199 4 TAX RATES AND TAX-EQUIVALENT YIELDS

72 Federal If individual tax-exempt yield is:
73 Single Return Joint Return Tax 4% 5% 6% 7%
74 Taxable Income:* Taxable Income:* Bracket** Then taxable-equivalent
yield is:
75 $ 22, 751 - $ 5 5,100 $ 38,001 - $
91,850 28 % 5.56% 6.94% 8.33% 9.72%
76 $ 55,101 - $115,000 $ 91,851 - $140,000 31 % 5.80
7.25 8.70 10.14
77 $115,001 - $250,000 $140,001 - $250,000 36 % 6.25 7.81 9.38 10.94
78 $250,001 - above $250,001 - above 39.6% 6.62 8.28 9.93 11.59
* Net amount subject to federal income tax after deductions and
exemptions. Assumes ordinary income only; does not include impact of
preferential rate on long-term capital gain income.
** Excludes the impact of the phaseout of personal exemptions, limitation
on itemized deductions, and other credits, exclusions, and adjustments
which may raise a taxpayer's marginal tax rate. An increase in a
shareholder's marginal tax rate would increase that shareholder's
tax-equivalent yield.
Each fund may invest a portion of its assets in obligations that are
subject to federal income tax. When a fund invests in these obligations,
its tax-equivalent yield will be lower. In the table above, tax-equivalent
yields are calculated assuming investments are 100% federally tax-free.
Yield information may be useful in reviewing the funds' performance and in
providing a basis for comparison with other investment alternatives.
However, the funds' yields fluctuate, unlike investments that pay a fixed
interest rate over a stated period of time. When comparing investment
alternatives, investors should also note the quality and maturity of the
portfolio securities of the respective investment companies they have
chosen to consider.
Investors should recognize that in periods of declining interest rates the
funds' yields will tend to be somewhat higher than prevailing market rates,
and in periods of rising interest rates the funds' yields will tend to be
somewhat lower. Also, when interest rates are falling, the inflow of net
new money to the funds from the continuous sale of its shares will likely
be invested in instruments producing lower yields than the balance of the
funds' holdings, thereby reducing the current yields of the funds. In
periods of rising interest rates, the opposite can be expected to occur.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect all
aspects of a fund's returns, including the effect of reinvesting dividends
and capital gain distributions (if any), and any change in the fund's net
asset value per share (NAV) over the period. Average annual total returns
are calculated by determining the growth or decline in value of a
hypothetical historical investment in a fund over a stated period, and then
calculating the annually compounded percentage rate that would have
produced the same result if the rate of growth or decline in value had been
constant over the period. For example, a cumulative total return of 100%
over ten years would produce an average annual total return of 7.18%, which
is the steady annual rate of return that would equal 100% growth on a
compounded basis in ten years. While average annual returns are a
convenient means of comparing investment alternatives, investors should
realize that the funds' performance is not constant over time, but changes
from year to year, and that average annual returns represent averaged
figures as opposed to the actual year-to-year performance of the funds.
In addition to average annual returns, the funds may quote unaveraged or
cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, or a series of
redemptions, over any time period. Total returns may be broken down into
their components of income and capital (including capital gains and changes
in share price) in order to illustrate the relationship of these factors
and their contributions to total return. An example of this type of
illustration is given below.
Total returns, yields, and other performance information may be quoted
numerically or in a table, graph, or similar illustration. Total returns
for Aggressive Tax-Free will generally not include the fund's 1% redemption
fee since this only affects shares held for less than 180 days. Excluding
the fund's redemption fee from a total return calculation produces a higher
total return figure.
NET ASSET VALUES. Charts and graphs using a fund's net asset value,
adjusted net asset value, and benchmark indices may be used to exhibit
performance. An adjusted NAV includes any distributions paid by the fund
and reflects all elements of its return. Unless otherwise indicated, the
fund's adjusted NAVs are not adjusted for sales charges, if any.
HISTORICAL FUND RESULTS. The following table shows the funds' 30-day yields
and tax-equivalent yields (assuming a 31% federal income tax rate) as of
November 30, 1993 (High Yield) and December 31, 1993 (Aggressive Tax-Free
and Limited Term). The table also shows each fund's average annual and
cumulative total returns for the fiscal years ended November 30, 1993 (High
Yield) and December 31, 1993 (Aggressive Tax-Free and Limited Term).
Average Annual Total Returns Cumulative Total Returns

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
30-Day Tax-Equivalent One Five Ten One Five Ten

Yield Yield Year Years Years Year Years Years

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
<C> <C>
Aggressive Tax-Free*
5.63% 8.80% 13.63% 10.29% 11.27% 13.63% 63.20% 142.75%

High Yield
5.34 8.34 11.92 10.24 10.83 11.92 62.80 179.57

Limited Term
4.70 7.34 12.24 9.26 9.73 12.24 55.69 153.02

</TABLE>

* Ten-year figures are life of fund, September 13, 1985 (commencement of
operations) through December 31, 1993.
Note: The yields and total return figures for Aggressive Tax-Free do not
include the effect of paying the fund's 1% redemption fee applied to shares
held for less than 180 days.
The following tables show the income and capital elements of each fund's
total returns and compares them to the cost of living (as measured by the
Consumer Price Index, or CPI) over the same period. During the periods
quoted, interest rates and bond prices fluctuated widely; thus the tables
should not be considered representative of the dividend income or capital
gain or loss that could be realized from an investment in the funds today.
AGGRESSIVE TAX-FREE. During the period from September 13, 1985
(commencement of operations) through December 31, 1993, a hypothetical
$10,000 investment in Aggressive Tax-Free would have grown to
$ 24,294 , assuming all distributions were reinvested.
AGGRESSIVE TAX-FREE INDEX

Value of Value of Value of

Initial Reinvested Reinvested Cost

Period Ended $10,000 Income Capital Gain Total of

December 31 Investment Dividends Distributions Value Living**

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1993 $12,340 $10,960 $994 $24,294 $ 13,500

1992 11,880 9,152 330 21,362 13,139

1991 11,800 7,669 99 19,568 12,769

1990 11,430 6,077 0 17,507 12,389

1989 11,490 4,798 0 16,288 11,676

1988 11,330 3,544 0 14,874 11,157

1987 10,820 2,296 0 13,116 10,685

1986 11,560 1,373 0 12,933 10,231

1985* 10,660 324 0 10,984 10,120

</TABLE>

* From commencement of operations, September 13, 1985.
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 made on September
13, 1985, the net amount invested in fund shares was $10,000. The cost of
the initial investment ($10,000), together with the aggregate cost of
reinvested dividends and capital gain distributions for the period covered
(their cash value at the time they were reinvested), amounted to
$ 21,209 . If distributions had not been reinvested, the amount of
distributions earned from the fund over time would have been smaller, and
cash payments for the period would have amounted to $ 7,288 for
income dividends and $530 for capital gain distributions. If FMR had
not reimbursed certain fund expenses during the periods shown above, the
fund's total returns would have been lower. Tax consequences of different
investments have not been factored into the above figures. The total return
figures do not include the effect of paying the fund's 1% redemption fee
applied to shares held for less than 180 days.
HIGH YIELD. During the period from November 30, 1983 through November 30,
1993, a hypothetical $10,000 investment in High Yield would have grown to
$27,957 , assuming all distributions were reinvested.
HIGH YIELD INDEX

Value of Value of Value of

Initial Reinvested Reinvested Cost

Year Ended $10,000 Income Capital Gain Total of

November 30 Investment Dividends Distributions Value Living

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1993 $11,844 $13,711 $2,402 $27,957 $14,407

1992 11,388 11,662 1,931 24,980 14,032

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1991 11,361 10,092 1,632 23,085 13,617

1990 11,289 8,539 1,231 21,060 13,221

1989 11,459 7,234 644 19,337 12,441

1988 10,931 5,642 600 17,173 11,887

1987 10,519 4,245 578 15,342 11,403

1986 12,328 3,682 47 16,056 10,909

1985 11,003 2,244 0 13,247 10,771

1984 9,848 1,009 0 10,857 10,405

</TABLE>

Explanatory Notes: With an initial investment of $10,000 made on November
30, 1983, the net amount invested in fund shares was $10,000. The cost of
the initial investment ($10,000), together with the aggregate cost of
reinvested dividends and capital gain distributions for the period covered
(their cash value at the time they were reinvested), amounted to
$ 25,138 . If distributions had not been reinvested, the amount of
distributions earned from the fund over time would have been smaller, and
cash payments for the period would have amounted to $ 8,163 for
income dividends and $1,379 for capital gain distributions. Tax
consequences of different investments have not been factored into the above
figures.
LIMITED TERM. During the period from December 31, 1983 through December 31,
1993, a hypothetical $10,000 investment in Limited Term would have grown to
$25,302 , assuming all distributions were reinvested.
LIMITED TERM INDEX

Value of Value of Value of

Initial Reinvested Reinvested Cost

Year Ended $10,000 Income Capital Gain Total of

December 31 Investment Dividends Distributions Value Living

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1993 $12,441 $11,579 $1,282 $25,302 $14,393

1992 11,955 9,926 661 22,543 14,008

1991 11,856 8,560 426 20,841 13,613

1990 11,544 7,100 100 18,744 13,208

1989 11,594 5,929 0 17,523 12,448

1988 11,494 4,757 0 16,252 11,895

1987 11,333 3,685 0 15,018 11,392

1986 11,930 2,918 0 14,848 10,908

1985 11,059 1,831 0 12,890 10,790

1984 10,149 838 0 10,987 10,395

</TABLE>

Explanatory Notes: With an initial investment of $10,000 made on December
31, 1983, the net amount invested in fund shares was $10,000. The cost of
the initial investment ($10,000), together with the aggregate cost of
reinvested dividends and capital gain distributions for the period covered
(their cash value at the time they were reinvested), amounted to
$ 21,927 . If distributions had not been reinvested, the amount of
distributions earned from the fund over time would have been smaller, and
cash payments for the period would have amounted to $7,468 for
income dividends and $ 672 for capital gain distributions. If FMR had
not reimbursed certain fund expenses during the periods shown above, the
fund's total returns would have been lower. Tax consequences of different
investments have not been factored into the above figures.
A fund's performance may be compared to the performance of other mutual
funds in general, or to the performance of particular types of mutual
funds. These comparisons may be expressed as mutual fund rankings prepared
by Lipper Analytical Services, Inc. (Lipper), an independent service
located in Summit, New Jersey that monitors the performance of mutual
funds. Lipper generally ranks funds on the basis of total return, assuming
reinvestment of distributions, but does not take sales charges or
redemption fees into consideration, and is prepared without regard to tax
consequences. Lipper may also rank funds based on yield. In addition to the
mutual fund rankings, a fund's performance may be compared to mutual fund
performance indices prepared by Lipper.
From time to time, a fund's performance may also be compared to other
mutual funds tracked by financial or business publications and periodicals.
For example, the fund may quote Morningstar, Inc. in its advertising
materials. Morningstar, Inc. is a mutual fund rating service that rates
mutual funds on the basis of risk-adjusted performance. Rankings that
compare the performance of Fidelity funds to one another in appropriate
categories over specific periods of time may also be quoted in advertising.
The funds may also quote the Lehman Brothers Muni bond Index , an
index of municipal bonds that have been issued within the last five years
as part of a deal of at least $50 million. The index includes issues with
maturities of at least two years and those rated at least Baa by Moody's or
BBB by S&P. The index excludes bonds subject to the federal alternative
minimum tax.
Fidelity may provide information designed to help individuals understand
their investment goals and explore various financial strategies. For
example, Fidelity's FundMatchsm Program includes a workbook describing
general principles of investing, such as asset allocation, diversification,
risk tolerance, and goal setting; a questionnaire designed to help create a
personal financial profile; and an action plan offering investment
alternatives. Materials may also include discussions of Fidelity's three
asset allocation funds and other Fidelity funds, products, and services.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical
returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury
bills, the U.S. rate of inflation (based on the CPI), and combinations of
various capital markets. The performance of these capital markets is based
on the returns of different indices.
Fidelity funds may use the performance of these capital markets in order to
demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any
of these capital markets. The risks associated with the security types in
any capital market may or may not correspond directly to those of the
funds. Ibbotson calculates total returns in the same method as the funds.
The funds may also compare performance to that of other compilations or
indices that may be developed and made available in the future.
The funds may compare their performance or the performance of securities in
which they may invest to averages published by IBC USA (Publications), Inc.
of Ashland, Massachusetts. These averages assume reinvestment of
distributions. The Bond Fund Report AverageS(registered
trademark)/ Municipal , which is reported in the BOND FUND
REPORT(registered trademark), covers over 361 Tax-Free bond funds.
When evaluating comparisons to money market funds, investors should
consider the relevant differences in investment objectives and policies.
Specifically, money market funds invest in short-term, high-quality
instruments and seek to maintain a stable $1.00 share price. The
fund s , however, invest in longer-term instruments and
their share prices change daily in response to a variety of factors.
A fund may compare and contrast in advertising the relative advantages of
investing in a mutual fund versus an individual municipal bond. Unlike
tax-free mutual funds, individual municipal bonds offer a stated rate of
interest and, if held to maturity, repayment of principal. Although some
individual municipal bonds might offer a higher return, they do not offer
the reduced risk of a mutual fund that invests in many different
securities. The initial investment requirements and sales charges of many
tax-free mutual funds are lower than the purchase cost of individual
municipal bonds, which are generally issued in $5,000 denominations and are
subject to direct brokerage costs.
In advertising materials, Fidelity may reference or discuss its products
and services, which may include: other Fidelity funds; retirement
investing; brokerage products and services; the effects of periodic
investment plans and dollar cost averaging; saving for college; charitable
giving; and the Fidelity credit card. In addition, Fidelity may quote
financial or business publications and periodicals, including model
portfolios or allocations, as they relate to fund management, investment
philosophy, and investment techniques. Fidelity may also reprint, and use
as advertising and sales literature, articles from Fidelity Focus, a
quarterly magazine provided free of charge to Fidelity fund shareholders.
A fund may present its fund number, Quotron(registered trademark) number,
and CUSIP number, and discuss or quote its current portfolio manager.
A fund may advertise examples of the effects of periodic investment plans,
including the principle of dollar cost averaging. In such a program, an
investor invests a fixed dollar amount in a fund at periodic intervals,
thereby purchasing fewer shares when prices are high and more shares when
prices are low. While such a strategy does not assure a profit or guard
against loss in a declining market, the investor's average cost per share
can be lower than if fixed numbers of shares are purchased at the same
intervals. In evaluating such a plan, investors should consider their
ability to continue purchasing shares during periods of low price levels.
According to the Investment Company Institute, over the past ten years,
assets in tax-exempt funds increased from $45 billion in 1984 to
approximately $291 billion at the end of 1992. As of December 31, 1993, FMR
advised 42 tax-free funds with a total value of over $ 25 billion in
assets.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Each fund is open for business and its net asset value per share (NAV) is
calculated each day the New York Stock Exchange (NYSE) is open for trading.
The NYSE has designated the following holiday closings for 1994:
Washington's Birthday (observed), Good Friday, Memorial Day (observed),
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day
(observed). Although FMR expects the same holiday schedule, with the
addition of New Year's Day, to be observed in the future, the NYSE may
modify its holiday schedule at any time.
FSC normally determines each fund's NAV as of the close of the NYSE
(normally 4:00 p.m. Eastern time). However, NAV may be calculated earlier
if trading on the NYSE is restricted or as permitted by the SEC. To the
extent that portfolio securities are traded in other markets on days when
the NYSE is closed, a fund's NAV may be affected on days when investors do
not have access to the fund to purchase or redeem shares.
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing a fund's NAV. Shareholders receiving securities or other property
on redemption may realize a gain or loss for tax purposes, and will incur
any costs of sale, as well as the associated inconveniences.
Pursuant to Rule 11a-3 under the Investment Company Act of 1940 (the 1940
Act), each fund is required to give shareholders at least 60 days' notice
prior to terminating or modifying its exchange privilege. Under the Rule,
the 60-day notification requirement may be waived if (i) the only effect of
a modification would be to reduce or eliminate an administrative fee,
redemption fee, or deferred sales charge ordinarily payable at the time of
an exchange, or (ii) the fund suspends the redemption of the shares to be
exchanged as permitted under the 1940 Act or the rules and regulations
thereunder, or the fund to be acquired suspends the sale of its shares
because it is unable to invest amounts effectively in accordance with its
investment objective and policies.
In the Prospectus, each fund has notified shareholders that it reserves the
right at any time, without prior notice, to refuse exchange purchases by
any person or group if, in FMR's judgment, the fund would be unable to
invest effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and the
U.S. Postal Service cannot deliver your checks, or if your checks remain
uncashed for six months, Fidelity may reinvest your distributions at the
then-current NAV. All subsequent distributions will then be reinvested
until you provide Fidelity with alternate instructions.
DIVIDENDS. To the extent that the funds' income is derived from federally
tax-exempt interest, the daily dividends declared by each fund are also
federally tax-exempt. The funds will send each shareholder a notice in
January describing the tax status of dividends and capital gain
distributions (if any) for the prior year.
Shareholders are required to report tax-exempt income on their federal tax
returns. Shareholders who earn other income, such as Social Security
benefits, may be subject to federal income tax on up to one half of such
benefits to the extent that their income, including tax-exempt income,
exceeds certain base amounts.
The funds purchase municipal obligations based on opinions of bond counsel
regarding the federal income tax status of the obligations. These opinions
generally will be based upon covenants by the issuers regarding continuing
compliance with federal tax requirements. If the issuer of an obligation
fails to comply with its covenants at any time, interest on the obligation
could become federally taxable retroactive to the date the obligation was
issued.
As a result of the Tax Reform Act of 1986, interest on certain "private
activity" securities (referred to as "qualified bonds" in the Internal
Revenue Code) is subject to the federal alternative minimum tax (AMT),
although the interest continues to be excludable from gross income for
other tax purposes. Interest from private activity securities will be
considered tax-exempt for purposes of the funds' policies of investing so
that at least 80% of assets are invested in federally tax-exempt municipal
securities, or at least 80% of their income is free from federal income
tax, as the case may be. Interest from private activity securities is a
tax-preference item for the purposes of determining whether a taxpayer is
subject to the AMT and the amount of AMT to be paid, if any. Private
activity securities issued after August 7, 1986 to benefit a private or
industrial user or to finance a private facility are affected by this rule.
It is the current position of the Staff of the SEC that a fund which uses
the word "tax-free" in its name may not derive more than 20% of its income
from municipal obligations whose interest is a preference item for purposes
of the AMT. Under this position, at least 80% of each fund's income
distributions would have to be exempt from the AMT as well as federal
taxes. Corporate investors should note that a tax preference item for
purposes of the corporate AMT is 75% of the amount by which adjusted
current earnings (which includes tax-exempt interest) exceed the
alternative minimum taxable income of the corporation. If a shareholder
receives an exempt-interest dividend and sells shares at a loss after
holding them for a period of six months or less, the loss will be
disallowed to the extent of the amount of exempt-interest dividend.
The funds, except for Aggressive Tax-Free, do not currently intend to
purchase private activity securities whose interest is a tax preference
item for purposes of the AMT. Nevertheless, the funds reserve the right to
purchase such obligations in the future, subject to notice to shareholders,
if their respective Board of Trustees determines that it is in the best
interest of the shareholders to do so.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by the funds on
the sale of securities and distributed to shareholders are federally
taxable as long-term capital gains, regardless of the length of time that
shareholders have held their shares. If a shareholder receives a long-term
capital gain distribution on shares of a fund and such shares are held six
months or less and are sold at a loss, the portion of the loss equal to the
amount of the long-term capital gain distribution will be considered a
long-term loss for tax purposes.
A portion of the gain on bonds purchase d at a discount after April
30, 1993 and short-term capital gains distributed by the funds are
federally taxable to shareholders as dividends, not as capital gains.
Distributions from short-term capital gains do not qualify for the
dividends-received deduction. Dividend distributions resulting from a
recharacterization of gain from the sale of bonds purchased at a discount
after April 30, 1993 are not considered income for purposes of the funds'
80% policies discussed above .
TAX STATUS OF THE FUNDS. Each fund has qualified and intends to continue to
qualify each year as a "regulated investment company" for tax purposes, so
that it will not be liable for federal tax at the fund level on income and
capital gains distributed to shareholders. In order to qualify as a
regulated investment company and avoid being subject to federal income or
excise taxes, each fund intends to distribute substantially all of its net
investment income and net realized capital gains (if any) within each
calendar year as well as on a fiscal year basis. Each fund also intends to
comply with other tax rules applicable to regulated investment companies,
including a requirement that capital gains from the sale of securities held
less than three months constitute less than 30% of each fund's gross income
for each fiscal year. Gains from some futures contracts and options are
included in this 30% calculation, which may limit a fund's investment in
such instruments. Fidelity Municipal Trust treats each of its funds
(including Aggressive Tax-Free) as a separate entity for tax purposes.
Fidelity Court Street Trust (including High Yield) treats each of its funds
as a separate entity for tax purposes. Fidelity School Street Trust
(including Limited Term Municipals) treats each of its funds as a separate
entity for tax purposes.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax considerations generally affecting the funds and their
shareholders; no attempt has been made to discuss individual tax
consequences. Distributions from the funds may be subject to state and
local taxes. Investors should consult their tax advisers to determine
whether the funds are suitable to their particular tax situation.
FMR
FMR is a wholly owned subsidiary of FMR Corp., a parent company organized
in 1972. At present, the principal operating activities of FMR Corp. are
those conducted by three of its divisions as follows: FSC, which is the
transfer and shareholder servicing agent for certain of the funds advised
by FMR; Fidelity Investments Institutional Operations Company, which
performs shareholder servicing functions for certain institutional
customers; and Fidelity Investments Retail Marketing Company, which
provides marketing services to various companies within the Fidelity
organization.
Several affiliates of FMR are also engaged in the investment advisory
business. Fidelity Management Trust Company provides trustee, investment
advisory, and administrative services to retirement plans and corporate
employee benefit accounts. Fidelity Management & Research (U.K.) Inc.
(FMR U.K.) and Fidelity Management & Research (Far East) Inc. (FMR Far
East), both wholly owned subsidiaries of FMR formed in 1986, supply
investment research, and may supply portfolio management services, to FMR
in connection with certain funds advised by FMR. Analysts employed by FMR,
FMR U.K., and FMR Far East research and visit thousands of domestic and
foreign companies each year. FMR Texas, a wholly owned subsidiary of FMR
formed in 1989, supplies portfolio management and research services in
connection with certain money market funds advised by FMR.
TRUSTEES AND OFFICERS
The Trustees and executive officers of the trusts are listed below. Except
as indicated, each individual has held the office shown or other offices in
the same company for the last five years. All persons named as Trustees and
officers also serve in similar capacity for other funds advised by FMR.
Unless otherwise noted, the business address of each Trustee and officer is
82 Devonshire Street, Boston, Massachusetts 02109, which is also the
address of FMR. Those Trustees who are "interested persons" (as defined by
the 1940 Act) by virtue of their affiliation with either a trust of FMR,
are indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d, Trustee and President, is Chairman, Chief Executive
Officer and a Director of FMR Corp.; a Director and Chairman of the Board
and of the Executive Committee of FMR; Chairman and a Director of FMR Texas
Inc. (1989), Fidelity Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.
*J. GARY BURKHEAD, Trustee and Senior Vice President, is President of FMR;
and President and a Director of FMR Texas Inc. (1989), Fidelity Management
& Research (U.K.) Inc., and Fidelity Management & Research (Far
East) Inc.
RALPH F. COX, 200 Rivercrest Drive, Fort Worth, TX, Trustee (1991)
(Fidelity Municipal Trust and Fidelity School Street Trust only), is
President of Greenhill Petroleum Corporation (petroleum exploration and
production, 1990). Prior to his retirement in March 1990, Mr. Cox was
President and Chief Operating Officer of Union Pacific Resources Company
(exploration and production). He is a Director of Bonneville Pacific
Corporation (independent power, 1989) and CH2M Hill Companies
(engineering). In addition, he served on the Board of Directors of the
Norton Company (manufacturer of industrial devices, 1983-1990) and
continues to serve on the Board of Directors of the Texas State Chamber of
Commerce, and is a member of advisory boards of Texas A&M University
and the University of Texas at Austin.
PHYLLIS BURKE DAVIS, P.O. Box 264, Bridgehampton , NY, Trustee (1992)
(Fidelity Municipal Trust and Fidelity School Street Trust only) .
Prior to her retirement in September 1991, Mrs. Davis was the Senior Vice
President of Corporate Affairs of Avon Products, Inc. She is currently a
Director of BellSouth Corporation (telecommunications), Eaton Corporation
(manufacturing, 1991), and the TJX Companies, Inc. (retail stores, 1990),
and previously served as a Director of Hallmark Cards, Inc. (1985-1991) and
Nabisco Brands, Inc. In addition, she serves as a Director of the New York
City Chapter of the National Multiple Sclerosis Society, and is a member of
the Advisory Council of the International Executive Service Corps. and the
President's Advisory Council of The University of Vermont School of
Business Administration.
RICHARD J. FLYNN, 77 Fiske Hill, Sturbridge, MA, Trustee, is a financial
consultant. Prior to September 1986, Mr. Flynn was Vice Chairman and a
Director of the Norton Company (manufacturer of industrial devices). He is
currently a Director of Mechanics Bank and a Trustee of College of the Holy
Cross and Old Sturbridge Village, Inc.
E. BRADLEY JONES, 3881-2 Lander Road, Chagrin Falls, OH, Trustee (1990).
Prior to his retirement in 1984, Mr. Jones was Chairman and Chief Executive
Officer of LTV Steel Company. Prior to May 1990, he was Director of
National City Corporation (a bank holding company) and National City Bank
of Cleveland. He is a Director of TRW Inc. (original equipment and
replacement products), Cleveland-Cliffs Inc (mining), NACCO Industries,
Inc. (mining and marketing), Consolidated Rail Corporation, Birmingham
Steel Corporation (1988), Hyster-Yale Materials Handling, Inc. (1989), and
RPM, Inc. (manufacturer of chemical products, 1990). In addition, he
serves as a Trustee of First Union Real Estate Investments, Chairman of the
Board of Trustees and a member of the Executive Committee of the Cleveland
Clinic Foundation, a Trustee and a member of the Executive Committee of
University School (Cleveland), and a Trustee of Cleveland Clinic Florida.
DONALD J. KIRK, 680 Steamboat Road, Apartment #1-North, Greenwich, CT,
Trustee, is a Professor at Columbia University Graduate School of Business
and a financial consultant. Prior to 1987, he was Chairman of the
Financial Accounting Standards Board. Mr. Kirk is a Director of General Re
Corporation (reinsurance) and Valuation Research Corp. (appraisals and
valuations, 1993). In addition, he serves as Vice Chairman of the Board of
Directors of the National Arts Stabilization Fund and Vice Chairman of the
Board of Trustees of the Greenwich Hospital Association.
*PETER S. LYNCH, Trustee (1990) is Vice Chairman of FMR (1992). Prior to
his retirement on May 31, 1990, he was a Director of FMR (1989) and
Executive Vice President of FMR (a position he held until March 31, 1991);
Vice President of Fidelity Magellan Fund and FMR Growth Group Leader; and
Managing Director of FMR Corp. Mr. Lynch was also Vice President of
Fidelity Investments Corporate Services (1991-1992). He is a Director of
W.R. Grace & Co. (chemicals, 1989) and Morrison Knudsen Corporation
(engineering and construction). In addition, he serves as a Trustee of
Boston College, Massachusetts Eye & Ear Infirmary, Historic Deerfield
(1989) and Society for the Preservation of New England Antiquities, and as
an Overseer of the Museum of Fine Arts of Boston (1990).
GERALD C. McDONOUGH, 135 Aspenwood Drive, Cleveland, OH, Trustee (1989), is
Chairman of G.M. Management Group (strategic advisory services). Prior to
his retirement in July 1988, he was Chairman and Chief Executive Officer of
Leaseway Transportation Corp. (physical distribution services). Mr.
McDonough is a Director of ACME-Cleveland Corp. (metal working,
telecommunications and electronic products), Brush-Wellman Inc. (metal
refining), York International Corp. (air conditioning and refrigeration,
1989), Commercial Intertech Corp. (water treatment equipment, 1992), and
Associated Estates Realty Corporation (a real estate investment trust,
1993).
EDWARD H. MALONE, 5601 Turtle Bay Drive #2104, Naples, FL, Trustee. Prior
to his retirement in 1985, Mr. Malone was Chairman, General Electric
Investment Corporation and a Vice President of General Electric Company.
He is a Director of Allegheny Power Systems, Inc. (electric utility),
General Re Corporation (reinsurance) and Mattel Inc. (toy manufacturer).
He is also a Trustee of Rensselaer Polytechnic Institute and of Corporate
Property Investors and a member of the Advisory Boards of Butler Capital
Corporation Funds and Warburg, Pincus Partnership Funds.
MARVIN L. MANN, 55 Railroad Avenue, Greenwich, CT, Trustee (1993)
(Fidelity Municipal Trust only) is Chairman of the Board, President,
and Chief Executive Officer of Lexmark International, Inc. (office
machines, 1991). Prior to 1991, he held the positions of Vice President of
International Business Machines Corporation ("IBM") and President and
General Manager of various IBM divisions and subsidiaries. Mr. Mann is a
Director of M.A. Hanna Company (chemicals, 1993) and Infomart (marketing
services, 1991), a Trammell Crow Co. In addition, he serves as the
Campaign Vice Chairman of the Tri-State United Way (1993) and is a member
of the University of Alabama President's Cabinet (1990).
THOMAS R. WILLIAMS, 21st Floor, 191 Peachtree Street, N.E., Atlanta, GA,
Trustee, is President of The Wales Group, Inc. (management and financial
advisory services). Prior to retiring in 1987, Mr. Williams served as
Chairman of the Board of First Wachovia Corporation (bank holding company),
and Chairman and Chief Executive Officer of The First National Bank of
Atlanta and First Atlanta Corporation (bank holding company). He is
currently a Director of BellSouth Corporation (telecommunications),
ConAgra, Inc. (agricultural products), Fisher Business Systems, Inc.
(computer software), Georgia Power Company (electric utility), Gerber Alley
& Associates, Inc. (computer software), National Life Insurance Company
of Vermont, American Software, Inc. (1989), and AppleSouth, Inc.
(restaurants, 1992).
GARY L. FRENCH, Treasurer (1991). Prior to becoming Treasurer of the
Fidelity funds, Mr. French was Senior Vice President, Fund Accounting -
Fidelity Accounting & Custody Services Co. (1991); Vice President, Fund
Accounting - Fidelity Accounting & Custody Services Co. (1990); and
Senior Vice President, Chief Financial and Operations Officer - Huntington
Advisers, Inc. (1985-1990).
ARTHUR S. LORING, Secretary, is Senior Vice President and General Counsel
of FMR, Vice President - Legal of FMR Corp., and Vice President and Clerk
of FDC.
ANNE PUNZAK, Vice President of Fidelity Aggressive Tax-Free Portfolio
(1988), and other funds advised by FMR (1990), is an employee of FMR.
DAVID MURPHY, Vice President of Fidelity Limited Term Municipals and other
funds advised by FMR (1990), is an employee of FMR.
Under a retirement program that became effective on November 1, 1989,
Trustees, upon reaching age 72, become eligible to participate in a defined
benefit retirement program under which they receive payments during their
lifetime from the fund based on their basic trustee fees and length of
service. Currently, Messrs. Robert L. Johnson, William R. Spaulding,
Bertram H. Witham, and David L. Yunich participate in the program.
As of December 31, 1993, the Trustees and officers of the funds owned, in
the aggregate, less than 1% of each fund's total outstanding shares.
MANAGEMENT CONTRACTS
Each fund employs FMR to furnish investment advisory and other services.
Under FMR's management contract with each fund, FMR acts as investment
adviser and, subject to the supervision of the Boards of Trustees, directs
the investments of each fund in accordance with its investment objective,
policies, and limitations. FMR also provides the funds with all necessary
office facilities and personnel for servicing the funds' investments, and
compensates all officers of the trusts, all Trustees who are "interested
persons" of the trusts or of FMR, and all personnel of the trusts or FMR
performing services relating to research, statistical, and investment
activities.
In addition, FMR or its affiliates, subject to the supervision of the
Boards of Trustees, provide the management and administrative services
necessary for the operation of the funds. These services include providing
facilities for maintaining the funds' organizations; supervising relations
with custodians, transfer and pricing agents, accountants, underwriters,
and other persons dealing with the funds; preparing all general shareholder
communications and conducting shareholder relations; maintaining the funds'
records and the registration of the funds' shares under federal and state
law; developing management and shareholder services for the funds; and
furnishing reports, evaluations, and analyses on a variety of subjects to
the Boards of Trustees.
In addition to the management fee payable to FMR and the fees payable to
United Missouri, each fund pays all of its expenses, without limitation,
that are not assumed by those parties. Each fund pays for typesetting,
printing, and mailing proxy material to shareholders, legal expenses, and
the fees of the custodian, auditor, and non-interested Trustees. Although
each fund's management contract provides that the fund will pay for
typesetting, printing, and mailing prospectuses, statements of additional
information, notices, and reports to existing shareholders, United Missouri
has entered into a revised sub-transfer agent agreement with FSC, pursuant
to which FSC bears the cost of providing these services to existing
shareholders. Other expenses paid by the funds include interest, taxes,
brokerage commissions, each fund's proportionate share of insurance
premiums and Investment Company Institute dues, and the costs of
registering shares under federal and state securities laws. Each fund is
also liable for such nonrecurring expenses as may arise, including costs of
any litigation to which a fund may be a party and any obligation it may
have to indemnify the trusts ' officers and Trustees with respect to
litigation.
FMR is each fund's manager pursuant to a management contract
dated March 1, 1989 for Limited Term, which was approved by
shareholders on November 16, 1988, and contracts dated March 1, 1993 for
High Yield and Aggressive Tax-Free , which were approved by
shareholders on February 17, 1993 . For the services of FMR under its
management contract, Limited Term pays a monthly management fee to FMR at
the annual rate of .15% of the fund's average net assets throughout the
month plus 5% of the fund's gross income throughout the month. For this
purpose, gross income includes interest accrued on portfolio obligations,
adjusted for amortization of purchase premium, but excludes adjustments for
purchase discount on portfolio obligations. Effective July 1, 1993, FMR
voluntarily agreed to temporarily limit the management fee of Limited Term
to .10% of the fund's average net assets plus 5% of the fund's gross income
throughout the month.
For the services of FMR under the contracts, Aggressive Tax-Free and High
Yield each pay FMR a monthly management fee composed of the sum of two
elements: a group fee rate and an individual fund fee rate.
The group fee rate is based on the monthly average net assets of all of the
registered investment companies with which FMR has management contracts and
is calculated on a cumulative basis pursuant to the graduated fee rate
schedule shown on the left. On the right, the effective fee rate schedule
shows the results of cummulatively applying the annualized rates at varying
asset levels. For example, the effective annual fee rate at $ 233
billion of group net assets - their approximate level for December 1993 -
was .1621% , which is the weighted average of the respective fee
rates for each level of group net assets up to $ 233 billion.
GROUP FEE RATE SCHEDULE* EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual Fee
Assets Rate Assets Rate

0 - $ 3 billion .3700% $ 0.5 billion .3700%

3 - 6 .3400 25 .2664

6 - 9 .3100 50 .2188

9 - 12 .2800 75 .1986

12 - 15 .2500 100 .1869

15 - 18 .2200 125 .1793

18 - 21 .2000 150 .1736

21 - 24 .1900 175 .1695

24 - 30 .1800 200 .1658

30 - 36 .1750 225 .1629

36 - 42 .1700 250 .1604

42 - 48 .1650 275 .1583

48 - 66 .1600 300 .1565

66 - 84 .1550 325 .1548

84 - 120 .1500 350 .1533

120 - 174 .1450

174 - 228 .1400

228 - 282 .1375

282 - 336 .1350

Over 336 .1325

* Prior to January 1, 1992, the group fee rate was based on a schedule
with breakpoints ending at .1500% for average group assets in excess of $84
billion. The group fee breakpoints shown for average group assets between
$84 billion and $228 billion were voluntarily adopted by FMR on January 1,
1992. Each fund's management contract dated March 1, 1993 includes these
group fee rate breakpoints. Additional breakpoints for average group assets
in excess of $228 billion were voluntarily added to the group fee rate
schedule by FMR on November 1, 1993, pending shareholder approval of a new
management contract reflecting the extended schedule. The extended schedule
provides for lower management fees as FMR's total assets under management
increase.
The individual fund fee rates for the funds are as follows: .30%
(Aggressive Tax-Free) and .25% ( High Yield ). Based on the average
net assets of funds advised by FMR for December 1993, the annual management
fee rates would be calculated as follows:
Group Fee Rate Individual Fund Fee Rate Management Fee Rate
Aggressive Tax-Free . 1621 % + .30% = . 4621 %

High Yield . 1621 % + .25% = . 4121 %

One twelfth of this annual management fee rate is then applied to each
fund's average net assets for the current month, giving a dollar amount
which is the fee for that month.
Management fees paid to FMR for the fiscal years ended November 30 (High
Yield) and December 31 (Aggressive Tax-Free and Limited Term), 1993, 1992,
and 1991 for FMR's services as investment adviser are indicated in the
table below.
MANAGEMENT FEES
1993 1992 1991

Aggressive Tax-Free $4,149,000 $3,354,000 $2,841,000

High Yield 8,997,000 8,600,000 8,059,000

Limited Term 4,805,000 3,921,000 2,780,000

To comply with the California Code of Regulations, FMR will reimburse each
fund if and to the extent that a fund's aggregate operating expenses exceed
specified percentages of its average net assets. The applicable percentages
are 2 1/2% of the first $30 million, 2% of the next $70 million, and 1 1/2
% of average net assets in excess of $100 million. When calculating a
fund's expenses for purposes of this regulation, the fund may exclude
interest, taxes, brokerage commissions, and extraordinary expenses, as well
as a portion of its distribution plan expenses.
DISTRIBUTION AND SERVICE PLANS
Each fund have adopted a distribution and service plan (the plans) under
Rule 12b-1 under the Investment Company Act of 1940 (the Rule). The Rule
provides in substance that a mutual fund may not engage directly or
indirectly in financing any activity that is primarily intended to result
in the sale of shares of the fund except pursuant to a plan adopted by the
fund under the Rule. The Boards of Trustees ha ve adopted the plans
to allow the funds and FMR to incur certain expenses that might be
considered to constitute indirect payment by the funds of distribution
expenses. Under the plans, if payment by a fund to FMR of management fees
should be deemed to be indirect financing by the fund of the distribution
of its shares, such payment is authorized by the fund's plan.
The plans specifically recognize that FMR, either directly or through FDC,
may use its management fee revenue, past profits, or other resources,
without limitation, to pay promotional and administrative expenses in
connection with the offer and sale of shares of the funds. In addition, the
plans provide that FMR may use its resources, including its management fee
revenue, to make payments to third parties that provide assistance in
selling the funds' shares, or to third parties, including banks, that
render shareholder support services. During the fiscal years ended November
30, 1993 for High Yield and December 31, 1993 for Aggressive Tax-Free and
Limited Term, FMR made payments to third parties amounting to $13,000,
$3,000, and $49,000 , respectively.
As required by the Rule, the Trustees carefully considered all pertinent
factors relating to the implementation of the plans prior to their
approval, and have determined that there is a reasonable likelihood that
the plans will benefit the funds and their shareholders. In particular, the
Trustees noted that the plans do not authorize payments by the funds other
than those made to FMR under its management contracts with the funds. To
the extent that the plans give FMR and FDC greater flexibility in
connection with the distribution of shares of the funds, additional sales
of the funds' shares may result. Additionally, certain shareholder support
services may be provided more effectively under the plans by local entities
with whom shareholders have other relationships. The plans were approved by
shareholders of each fund at shareholder meetings held December 31, 1986
for Aggressive Tax-Free, January 20, 1987 for High Yield, and February 24,
1987 for Limited Term.
The Glass-Steagall Act generally prohibits federally and state chartered or
supervised banks from engaging in the business of underwriting, selling, or
distributing securities. Although the scope of this prohibition under the
Glass-Steagall Act has not been clearly defined by the courts or
appropriate regulatory agencies, FDC believes that the Glass-Steagall Act
should not preclude a bank from performing shareholder support services or
servicing and recordkeeping functions. FDC intends to engage banks only to
perform such functions. However, changes in federal or state statutes and
regulations pertaining to the permissible activities of banks and their
affiliates or subsidiaries, as well as further judicial or administrative
decisions or interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a bank were
prohibited from so acting, the Trustees would consider what actions, if
any, would be necessary to continue to provide efficient and effective
shareholder services. In such event, changes in the operation of the funds
might occur, including possible termination of any automatic investment or
redemption or other services then provided by the bank. It is not expected
that shareholders would suffer any adverse financial consequences as a
result of any of these occurrences. The funds may execute portfolio
transactions with and purchase securities issued by depository institutions
that receive payments under the plans. No preference will be shown in the
selection of investments for the instruments of such depository
institutions. In addition, state securities laws on this issue may differ
from the interpretations of federal law expressed herein, and banks and
other financial institutions may be required to register as dealers
pursuant to state law.
INTEREST OF FMR AFFILIATES
United Missouri is each fund's custodian and transfer agent. United
Missouri has entered into sub-contracts with FSC, an affiliate of FMR,
under the terms of which FSC performs the processing activities associated
with the transfer agent and shareholder servicing functions for each fund.
Under the sub-contracts, FSC bears the expense of typesetting, printing,
and mailing prospectuses, statements of additional information, and all
other reports, notices, and statements to shareholders, except proxy
statements. FSC also pays out-of-pocket expenses associated with transfer
agent services.
United Missouri pays FSC an annual fee of $25.50 per regular account with a
balance of $5,000 or more, $15 per regular account with a balance of less
than $5,000, and a supplemental activity charge of $5.61 for monetary
transactions. These fees and charges are subject to annual cost escalation
based on postal rate changes and changes in wage and price levels as
measured by the National Consumer Price Index for Urban Areas. With respect
to institutional client master accounts, the funds pay FSC a per-account
fee of $95 and monetary transaction charges of $20 or $17.50, depending on
the nature of services provided. With respect to certain institutional
broker-dealer accounts, the funds pay FSC a per-account fee of $30 and a
charge of $6 for monetary transactions. Fees for certain institutional
retirement plan accounts are based on the net assets of all such accounts
in the funds.
Prior to March 26, 1992, State Street Bank and Trust Company (State Street)
served as each fund's custodian and transfer agent and also sub-contracted
with FSC to perform the processing activities associated with providing
transfer agent and shareholder servicing functions for the funds. Beginning
on June 1, 1989, FSC was compensated by State Street on the same basis as
it is currently compensated by United Missouri (although fee rates and
charges were adjusted periodically to reflect postal rate changes and
changes in wage and price levels as measured by the National Consumer Price
Index for Urban Areas).
Transfer agent fees, including reimbursement for out-of-pocket expenses,
paid to FSC for the fiscal years ended November 30 (High Yield) and
December 31 (Aggressive Tax-Free and Limited Term), 1993, 1992, and 1991
are indicated in the table below .
TRANSFER AGENT FEES
1993 1992 1991

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Aggressive Tax-Free $ 892,000 $ 696,000 $ 567,000

High Yield 1,960,000 1,846,000 1,531,000

Limited Term 1,289,000 831,000 490,000

</TABLE>

United Missouri has an additional sub-contract with FSC, pursuant to which
FSC performs the calculations necessary to determine each fund's net asset
value per share and dividends and maintains each fund's accounting records.
The annual fee rates for these pricing and bookkeeping services are based
on each fund's average net assets. Specifically, .04% for the first $500
million of average net assets and .02% for average net assets in excess of
$500 million. The fee is limited to a minimum of $45,000 and a maximum of
$750,000 per year.
Prior to March 26, 1992, State Street subcontracted with FSC for pricing
and bookkeeping services. Beginning July 1, 1991, FSC was compensated for
these services by State Street on the same basis as it is currently
compensated by United Missouri. Prior to July 1, 1991, the annual fee paid
to FSC for pricing and bookkeeping services was based on two schedules, one
pertaining to e ach fund's average net assets and one pertaining to
the type and number of transactions each fund made.
Pricing and bookkeeping fees, including reimbursement for out-of-pocket
expenses, paid to FSC for fiscal 1993, 1992, and 1991 are indicated in the
table below.
PRICING AND BOOKKEEPING FEES
1993 1992 1991

Aggressive Tax-Free $ 282,000 $303,000 $223,000

High Yield 537,000 656,000 467,000

Limited Term 337,000 304,000 209,000

The transfer agent fees and pricing and bookkeeping fees described above
are paid to FSC by United Missouri, which is entitled to reimbursement from
the funds for these expenses.
Each fund has a distribution agreement with FDC, a Massachusetts
corporation organized on July 18, 1960. FDC is a broker-dealer registered
under the Securities Exchange Act of 1934 and is a member of the National
Association of Securities Dealers, Inc. The distribution agreements call
for FDC to use all reasonable efforts, consistent with its other business,
to secure purchasers for shares of the funds, which are continuously
offered at net asset value. Promotional and administrative expenses in
connection with the offer and sale of shares are paid by FMR.
Effective October 12, 1990, Aggressive Tax-Free removed its
1% deferred sales charge and effective March 1, 1991, replaced it with
a 1% redemption fee for shares held less than 180 days. For Aggressive
Tax-Free, FDC collected redemption fees in the amounts of $ 161,000 ,
and $118,000 and $63,480 for 1993 , 1992 and 1991 ,
respectively. When redeemed, shares acquired through the reinvestment of
dividends and capital gains are exempt from the redemption fee.
DESCRIPTION OF THE TRUSTS
TRUSTS' ORGANIZATION. Aggressive Tax-Free is a fund of Fidelity
Municipal Trust , an open-end management investment company
originally organized as a Maryland corporation on November 22, 1976 and
reorganized as a Massachusetts business trust on June 22, 1984, at which
time its name changed from Fidelity Municipal Bond Fund, Inc. to Fidelity
Municipal Bond Fund. On March 1, 1986, the trust's name was changed to
Fidelity Municipal Trust. Currently, there are eight funds of Fidelity
Municipal Trust: Fidelity Municipal Bond Portfolio; Fidelity Aggressive
Tax-Free Portfolio; Spartan Short-Intermediate Municipal Fund; Fidelity
Insured Tax-Free Portfolio; Fidelity Ohio Tax-Free High Yield Fund;
Fidelity Michigan Tax-Free High Yield Fund; Fidelity Minnesota Tax-Free
Portfolio; and Spartan Pennsylvania Municipal High Yield Portfolio.
High Yield is a fund of Fidelity Court Street Trust, an open-end
management investment company organized as a Massachusetts business trust
on April 21, 1977. On August 1, 1987, the trust's name was changed from
Fidelity High Yield Municipals to Fidelity Court Street Trust. Currently,
there are four funds of the trust: Fidelity High Yield Tax-Free Portfolio,
Spartan Connecticut Municipal High Yield Portfolio, Spartan New Jersey
Municipal High Yield Portfolio, and Spartan Florida Municipal Income
Portfolio.
Limited Term is a fund of Fidelity School Street Trust, an open-end
management investment company organized as a Massachusetts business trust
on September 10, 1976 under the name Fidelity Municipal Bond Fund. On June
17, 1993 , the trust's name was changed from Fidelity Limited Term
Municipals to Fidelity School Street Trust. Currently, there are two funds
of the trust: Fidelity Limited Term Municipals and Spartan Bond Strategist.
Each trust's Declaration of Trust permits the Trustees to create additional
funds.
In the event that FMR ceases to be the investment adviser to a trust or a
fund, the right of the trust or fund to use the identifying names
"Fidelity" or "Spartan" may be withdrawn. There is a remote possibility
that one fund might become liable for any misstatement in its prospectus or
statement of additional information about another fund.
The assets of each trust received for the issue or sale of shares of each
of its funds and all income, earnings, profits, and proceeds thereof,
subject only to the rights of creditors, are especially allocated to such
fund, and constitute the underlying assets of such fund. The underlying
assets of each fund are segregated on the books of account, and are to be
charged with the liabilities with respect to such fund and with a share of
the general expenses of their respective trusts. Expenses with respect to
each trust are to be allocated in proportion to the asset value of
their respective funds, except where allocations of direct expense can
otherwise be fairly made. The officers of the trusts, subject to the
general supervision of the Boards of Trustees, have the power to determine
which expenses are allocable to a given fund, or which are general or
allocable to all of the funds of a certain trust. In the event of the
dissolution or liquidation of a trust, shareholders of each fund of that
trust are entitled to receive as a class the underlying assets of such fund
available for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. Each trust is an entity of the type
commonly known as a "Massachusetts business trust." Under Massachusetts
law, shareholders of such a trust may, under certain circumstances, be held
personally liable for the obligations of the trust. Each Declaration of
Trust provides that the trust shall not have any claim against shareholders
except for the payment of the purchase price of shares and requires that
each agreement, obligation, or instrument entered into or executed by the
trust or its Trustees shall include a provision limiting the obligations
created thereby to the trust and its assets. Each Declaration of Trust
provides for indemnification out of each fund's property of any
shareholder held personally liable for the obligations of the fund.
Each Declaration of Trust also provides that each fund shall, upon request,
assume the defense of any claim made against any shareholder for any act or
obligation of the fund and satisfy any judgment thereon. Thus, the risk of
a shareholder incurring financial loss on account of shareholder liability
is limited to circumstances in which the fund itself would be unable to
meet its obligations. FMR believes that, in view of the above, the risk of
personal liability to shareholders is remote.
Each Declaration of Trust further provides that the Trustees, if they have
exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declarations of Trust protects Trustees
against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office.
VOTING RIGHTS. Each fund's capital consists of shares of beneficial
interest. As a shareholder of Aggressive Tax-Free, you receive one vote for
each dollar value of net asset value per share you own. As a
shareholder of High Yield and Limited Term, you receive one vote for each
share of beneficial interest you own. The shares have no preemptive or
conversion rights; the voting and dividend rights, the right of
redemption, and the privilege of exchange are described in the Prospectus.
Shares are fully paid and nonassessable, except as set forth under the
heading "Shareholder and Trustee Liability" above. Shareholders
representing 10% or more of a trust or fund may, as set forth in the
Declarations of Trust, call meetings of a trust or fund for any purpose
related to the trust or fund, as the case may be, including, in the case of
a meeting of an entire trust, the purpose of voting on removal of one or
more Trustees. Each trust or fund may be terminated upon the sale of
its assets to another open-end management investment company, or upon
liquidation and distribution of its assets , if approved by vote of
the holders of a majority of the outstanding shares of the trust or the
fund or, for Aggressive Tax-Free, as determined by the current value of
each shareholder's investment in the fund or trust. If not so
terminated, each trust or fund will continue indefinitely.
CUSTODIAN. United Missouri, 1010 Grand Avenue, Kansas City, Missouri is
custodian of the assets of the funds. The custodian is responsible for the
safekeeping of the funds' assets and the appointment of subcustodian banks
and clearing agencies. The custodian takes no part in determining the
investment policies of the funds or in deciding which securities are
purchased or sold by a fund. A fund may, however, invest in obligations of
the custodian and may purchase securities from or sell securities to the
custodian.
FMR, its officers and directors, its affiliated companies, and the trusts'
Trustees may from time to time have transactions with various banks,
including banks serving as custodian for certain of the funds advised by
FMR. Transactions that have occurred to date include mortgages and personal
and general business loans. In the judgment of FMR, the terms and
conditions of those transactions were not influenced by existing or
potential custodial or other fund relationships.
AUDITOR. Coopers & Lybrand, One Post Office Square, Boston,
Massachusetts, serves as the trusts' independent accountant. The auditor
examines financial statements for the funds and provides other audit, tax,
and related services.
FINANCIAL STATEMENTS
The Annual Reports for the fiscal years ended November 30, 1993 (High
Yield) and December 31, 1993 (Aggressive Tax-Free, and Limited Term) are
separate reports supplied with this Statement of Additional Information and
are incorporated herein by reference.
APPENDIX
DOLLAR-WEIGHTED AVERAGE MATURITY is derived by multiplying the value of
each investment by the number of days remaining to its maturity, adding
these calculations, and then dividing the total by the value of the fund's
portfolio. An obligation's maturity is typically determined on a stated
final maturity basis, although there are some exceptions to this rule.
For example, if it is probable that the issuer of an instrument will take
advantage of a maturity-shortening device, such as a call, refunding, or
redemption provision, the date on which the instrument will probably be
called, refunded, or redeemed may be considered to be its maturity date.
When a municipal bond issuer has committed to call an issue of bonds and
has established an independent escrow account that is sufficient to, and is
pledged to, refund that issue, the number of days to maturity for the
prerefunded bond is considered to be the number of days to the announced
call date of the bonds.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S MUNICIPAL BOND RATINGS:
AAA - Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such issues.
AA - Bonds rated Aa are judged to be of high quality by all standards.
Together with Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long - term risks appear somewhat
larger than in Aaa securities.
A - Bonds rated A possess many favorable investment attributes and are to
be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
BAA - Bonds rated Baa are considered as medium - grade obligations,
i.e, they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
BA - Bonds rated Ba are judged to have speculative elements. Their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded
during both good and bad times in the future. Uncertainty of position
characterizes bonds in this class.
B - Bonds rated B generally lack characteristics of a desirable investment.
Assurance of interest and principal payments of or maintenance of other
terms of the contract over any long period of time may be small.
CAA - Bonds rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.
CA - Bonds rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
C - Bonds rated C are the lowest - rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
Those bonds in the Aa, A, Baa, Ba, and B groups which Moody's believes
possess the strongest investment attributes are designated by the symbols
Aa1, A1, Baa1, Ba1, and B1.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S MUNICIPAL BOND RATINGS:
AAA - Debt rated AAA has the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay principal
is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest-rated debt issues only in small
degree.
A - Debt rated A has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher-rated
categories.
BB - Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
B - Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category
is also used for debt subordinated to senior debt that is assigned an
actual or implied BB or BB- rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal.
In the event of adverse business, financial, or economic conditions, it is
not likely to have the capacity to pay interest and repay principal.
CC - Debt rated CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC debt rating.
C - The rating C is typically applied to debt subordinated to senior debt
which is assigned on actual or implied CCC- debt rating. The C rating
may be used to cover a situation where a bankruptcy petition has been filed
but debt service payments are continued.
CI - The rating CI is reserved for income bonds on which no interest is
being paid.
D - Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even
if the applicable grace period has not expired, unless S&P believes
that such payments will be made during such grace period. The D rating will
also be used upon the filing of a bankruptcy petition if debt service
payments are jeopardized.
The ratings from AA to CCC may be modified by the addition of a plus or
minus to show relative standing within the major rating categories.

MICHIGAN, MINNESOTA, OHIO
CROSS REFERENCE SHEET

<TABLE>
<CAPTION>
<S> <C>
Part A - Prospectus

Form N-1A Item Number: Prospectus Caption:

1 a,b........................................................ Cover Page

2 a........................................................... Expenses

b,c........................................................ *

3 a.......................................................... Financial Highlights

b.......................................................... *

c, Performance
d.............................................................

4 a(i)....................................................... Charter

a(ii)...................................................... Securities and Investment Practices; Investment Principles;
The Funds at a Glance

b......................................................... Securities and Investment Policies

c............................................................ Investment Policies; Securities and Investment Limitiations

5 a.............................................................. Charter

b........................................................... Charter; Cover Page; Breakdown of Expenses

c............................................................. *

d,e.......................................................... Charter; Breakdown of Expenses

f............................................................. Charter

Performance
5A............................................................

6 a(i)......................................................... Charter

a(ii)......................................................... Transaction Details; Dividends, Capital Gains, and Taxes;
Investor Services; How to Sell Shares; How to Buy Shares;
Exchange Restrictions

a(iii)........................................................ *
b.................................................... Charter
c,d........................................................... *

e.............................................................. Cover Page; How to Buy Shares; How to Sell Shares;
Transaction Services

f............................................................. Dividends, Capital Gains, and Taxes

g............................................................ Dividends, Capital Gains, and Taxes; The Funds at a
Glance

7 a.............................................................. Charter

b(i-iv)..................................................... Transaction Details

b(v)......................................................... Types of Accounts; Doing Business with Fidelity

c.............................................................. *

d............................................................ How to Buy Shares

e......................................................... *

f.......................................................... Breakdown of Expenses

8 a.............................................................. How to Sell Shares; Breakdown of Expenses; Exchange
Restrictions

b............................................................. Types of Accounts

c.............................................................. Transaction Details

d............................................................. How to Sell Shares; Transaction Details; Exchange
Restrictions

9................................................................ *

_______________

* Not Applicable

</TABLE>

MICHIGAN MINNESOTA OHIO HIGH YIELD FUNDS
CROSS REFERENCE SHEET (CONTINUED)

Part B Statement of Additional Information Caption

10, 11.................................................................... Cover Page

12......................................................................... *

13 a,b,c................................................................. Investment Policies and Limitations

d...................................................................... Portfolio Transactions

14 a,b.................................................................... Trustees and Officers

c....................................................................... *

15 a,b.................................................................... *

c....................................................................... Trustees and Officers

16 a(i)................................................................... Portfolio Transactions; FMR

a(ii).................................................................. Trustees and Officers

a(iii),b.............................................................. Management Contract

c,d................................................................... Interest of FMR Affiliates

e, f, g............................................................... *

h...................................................................... Description of the Trust

i....................................................................... Interest of FMR Affiliates

17 a,b,c,d............................................................. Portfolio Transactions

e....................................................................... *

18 a....................................................................... Description of the Trust

b...................................................................... *

19 a....................................................................... Additional Purchase and Redemption Information

b...................................................................... Valuation of Portfolio Securities; Additional
Purchase and Redemption Information

c....................................................................... *

20......................................................................... Distributions and Taxes

21 a....................................................................... Interest of FMR Affiliates

b, c................................................................... *

22.......................................................................... Performance

23......................................................................... Financial Statements

_______________

* Not Applicable

</TABLE>

MINNESOTA,

AND OHIO
FUNDS
FIDELITY MICHIGAN MUNICIPAL MONEY MARKET FUND
FIDELITY OHIO MUNICIPAL MONEY MARKET FUND
FIDELITY MICHIGAN TAX-FREE HIGH YIELD FUND
FIDELITY MINNESOTA
TAX-FREE FUND
FIDELITY OHIO TAX-FREE
HIGH YIELD FUND
PROSPECTUS
FEBRUARY 17, 1994(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON, MA
02109
LIKE ALL MUTUAL
FUNDS, THESE
SECURITIES HAVE NOT
BEEN APPROVED OR
DISAPPROVED BY THE
SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION, NOR
HAS THE SECURITIES
AND EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION PASSED
UPON THE ACCURACY
OR ADEQUACY OF THIS
PROSPECTUS. ANY
REPRESENTATION TO
THE CONTRARY IS A
CRIMINAL OFFENSE.
OMM-pro-294

CONTENTS

KEY FACTS 4 THE FUNDS AT A GLANCE

4 WHO MAY WANT TO INVEST

EXPENSES AND PERFORMANCE 5 EXPENSES Each fund's yearly
operating expenses.

7 FINANCIAL HIGHLIGHTS A summary
of each fund's financial data.

12 PERFORMANCE How each fund has
done over time.

YOUR ACCOUNT 15 DOING BUSINESS WITH FIDELITY

15 TYPES OF ACCOUNTS Different
ways to set up your account.

16 HOW TO BUY SHARES Opening an
account and making additional
investments.

18 HOW TO SELL SHARES Taking money
out and closing your account.

20 INVESTOR SERVICES Services to
help you manage your account.

22 DIVIDENDS, CAPITAL GAINS, AND
TAXES

SHAREHOLDER AND 24 TRANSACTION DETAILS Share price
ACCOUNT POLICIES calculations and the timing of
purchases and redemptions.

26 EXCHANGE RESTRICTIONS

THE FUNDS IN DETAIL 27 CHARTER How each fund is
organized.

28 BREAKDOWN OF EXPENSES How
operating costs are calculated and
what they include.

29 INVESTMENT PRINCIPLES Each
fund's overall approach to
investing.

31 SECURITIES AND INVESTMENT
PRACTICES

<r>KEY FACTS</r>

THE FUNDS AT A GLANCE
MANAGEMENT: Fidelity Management & Research Company (FMR) is the
management arm of Fidelity Investments, which was established in 1946 and
is now America's largest mutual fund manager. FMR Texas Inc. (FTX), a
subsidiary of FMR, chooses investments for the money market funds.
As with any mutual fund, there is no assurance that a fund will achieve its
goal.
MICHIGAN MONEY MARKET
GOAL: High current tax-free income for Michigan residents while maintaining
a stable share price.
STRATEGY: Invests in high-quality, short-term municipal obligations whose
interest is free from federal income tax and Michigan income tax.
OHIO MONEY MARKET
GOAL: High current tax-free income for Ohio residents while maintaining a
stable share price.
STRATEGY: Invests in high-quality, short-term municipal obligations
whose interest is free from federal income tax and Ohio individual income
tax.
MICHIGAN HIGH YIELD
GOAL: High current tax-free income for Michigan residents.
STRATEGY: Invests mainly in investment-grade, long-term securities whose
interest is free from federal income tax and Michigan income tax.
MINNESOTA TAX-FREE
GOAL: High current tax-free income for Minnesota residents.
STRATEGY: Invests mainly in investment-grade, long-term securities whose
interest is free from federal income tax and Minnesota personal income tax.
OHIO HIGH YIELD
GOAL: High current tax-free income for Ohio residents.
STRATEGY: Invests mainly in investment-grade, long-term securities whose
interest is free from federal income tax and Ohio individual income tax.
WHO MAY WANT TO INVEST
These non-diversified funds may be appropriate for investors in higher tax
brackets who seek high current income that is free from federal income tax
and the state income tax of Ohio, Michigan, or Minnesota. Each fund's level
of risk and potential reward depend on the quality and maturity of its
investments. Each money market fund is managed to maintain its share price
stable at $1.00. The bond funds, with their broader range of
investments, have the potential for higher yields, but also carry a higher
degree of risk.
By themselves, these funds do not constitute a balanced investment
plan. The value of the funds' investments and the income they generate will
vary from day to day, generally reflecting changes in interest rates,
market conditions, and other federal and state political and economic news.
When you sell your bond fund shares they may be worth more or less than
what you paid for them.

EXPENSES AND PERFORMANCE</r>

EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell
shares of a fund.
Maximum sales charge on purchases and
reinvested dividends None
Deferred sales charge on redemptions None
Exchange fee None
ANNUAL FUND OPERATING EXPENSES are paid out of each fund's assets. Each
fund pays a management fee to FMR. It also incurs other expenses for
services such as maintaining shareholder records and furnishing shareholder
statements and fund reports. A fund's expenses are factored into its share
price or dividends and are not charged directly to shareholder accounts
(see page ).
The operating expenses on

page six are projections based on
historical expenses, and are calculated as a percentage of average net
assets.
EXAMPLES: Let's say, hypothetically, that each fund's annual return is 5%
and that its operating expenses are exactly as just described. For every
$1,000 you invested, the charts show how much you would pay in total
expenses if you close your account after the number of years
indicated .
These examples illustrate the effect of expenses, but are not meant to
suggest actual or expected costs or returns, all of which may vary.
UNDERSTANDING
EXPENSES
Operating a mutual fund
involves a variety of
expenses for portfolio
management, shareholder
statements, tax reporting, and
other services. These costs
are paid from the fund's
assets; their effect is already
factored into any quoted
share price or return.
(checkmark)
MICHIGAN MONEY MARKET
Operating expenses Example

Management fee .42% After 1 year $ 6

12b-1 fee None After 3 $ 20
years

Other expenses .20% After 5 $ 35
years

Total fund operating expenses .62% After 10 $ 77
years

OHIO MONEY MARKET
Operating expenses Example

Management fee .42% After 1 year $ 6

12b-1 fee None After 3 $ 19
years

Other expenses .17% After 5 $ 33
years

Total fund operating expenses .59% After 10 $ 74
years

MICHIGAN HIGH YIELD
Operating expenses Example
s

Management fee .42% After 1 year $ 6

12b-1 fee None After 3 $ 19
years

Other expenses .17% After 5 $ 33
years

Total fund operating expenses .59% After 10 $ 74
years

MINNESOTA TAX-FREE
Operating expenses Example

Management fee .42% After 1 year $ 6

12b-1 fee None After 3 $ 20
years

Other expenses .19% After 5 $ 34
years

Total fund operating expenses .61% After 10 $ 76
years

OHIO HIGH YIELD
Operating expenses Example

Management fee 41% After 1 year $6

12b-1 fee None After 3 $18
years

Other expenses .16% After 5 $32
years

Total fund operating expenses .57% After 10 $7 1
years

FINANCIAL HIGHLIGHTS
The tables that follow have been audited by Coopers & Lybrand,
independent accountants. Their unqualified reports are included in each
fund's Annual Report. Each fund's Annual Report is incorporated by
reference into (is legally a part of) its Statement of Additional
Information.
OHIO MONEY MARKET

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1.Selected Per-Share Data and
Ratios

2.Year e nded December 31 1989C 1990 1991 1992 1993

3.Net asset value, beginning of $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
period

4.Income from Investment .021 .058 .044 .028 .021
Operations
Net interest income

5. Dividends from net interest (.021) (.058) (.044) (.028) (.021)
income

6.Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00

7.Total r eturnB 2.15 5.90 4.50 2.81 2.09
% % % % %

8.Net assets, end of period (000 $ 57,748 $ 213,65 $ 247,88 $ 270,24 $ 262,37
omitted) 8 5 8 1

9.Ratio of expenses to average net - - .23 .47 .58 .59
assets % % % % %

10.Ratio of expenses to average net 1.14 .69 .64 .59 .59
assets %A % % % %
before expense reductions

11.Ratio of net interest income to 6.37 5.77 4.41 2.78 2.07
average net assets %A % % % %

</TABLE>

A ANNUALIZED
B TOTAL RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C FROM AUGUST 29, 1989 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1989
MICHIGAN MONEY MARKET

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
12.Selected Per-Share Data and Ratios

13.Years e nded December 31 1990C 1991 1992 1993

14.Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00

15.Income from Investment Operations .055 .044 .026 .020
Net interest income

16. Dividends from net interest income (.055) (.044) (.026) (.020)

17.Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00

18.Total r eturnB 5.66 4.46 2.66 1.98
% % % %

19.Net assets, end of period (000 omitted) $ 169,397 $ 175,15 $ 160,81 $ 175,19
0 7 0

20.Ratio of expenses to average net assetsD .22 .21 .49 .62
%A % % %

21.Ratio of expenses to average net assets .77 .65 .61 .62
before expense reductionsD %A % % %

22.Ratio of net interest income to average net 5.78 4.38 2.64 1.96
assets %A % % %

</TABLE>

A ANNUALIZED
B TOTAL RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C FROM JANUARY 12, 1990 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1990
D DURING THE PERIODS SHOWN, FMR VOLUNTARILY REIMBURSED THE FUND FOR CERTAIN
EXPENSES.
MICHIGAN HIGH YIELD

<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C>
23.Selected Per-Share Data and
Ratios

24.Year ended
1985C 1986 1987 1988 1989 1990 1991 1992 1993
December 31

25.Net asset
$ 10.00 $ 10.27 $ 11.38 $ 10.25 $ 10.79 $ 11.10 $ 10.89 $ 11.41 $ 11.71
value,
beginning of
period

26.Income from
.095 .792 .774 .754 .759 .758 .745 .733 .709
Investment
Operations
Net interest
income

27. Net
.270 1.110 (1.090) .540 .310 (.210) .520 .320 .870
realized and
unrealized gain
(loss)
on investments

28. Total from
.365 1.902 (.316) 1.294 1.069 .548 1.265 1.053 1.579
investment
operations

29.Less
(.095) (.792) (.774) (.754) (.759) (.758) (.745) (.733) (.709)
Distributions
From net
interest
income

30. From net
- - - - - (.040) - - - - - - - - (.020) (.240)
realized gain
on
investments

31. Total
(.095) (.792) (.814) (.754) (.759) (.758) (.745) (.753) (.949)
distributions

32.Net asset
$ 10.2 $ 11.38 $ 10.2 $ 10.7 $ 11.10 $ 10.8 $ 11.41 $ 11.71 $ 12.3
value,
70 0 50 90 0 90 0 0 40
end of period

33.Total r eturnB
3.65% 19.03 (2.81) 13.01 10.21 5.15% 12.04 9.54% 13.83
% % % % % %

34.Net assets,
$ 6,558 $ 127,5 $ 128,3 $ 170,7 $ 234,3 $ 279,4 $ 379,1 $ 463,8 $ 563,4
end of period
85 16 32 50 29 75 16 92
(000 omitted)

35.Ratio of
.60%A .60% .72% .75% .69% .64% .62% .61% .59%
expenses to
average net
assets

36.Ratio of
5.59% .89% .80% .75% .69% .64% .62% .61% .59%
expenses to
A
average net
assets before
expense
reductions

37.Ratio of net
8.43% 7.03% 7.25% 7.12% 6.92% 6.98% 6.73% 6.36% 5.79%
interest income
A
to average net
assets

38.Portfolio
9%A 24% 44% 24% 19% 18% 12% 15% 33%
turnover rate

</TABLE>

A ANNUALIZED
B TOTAL RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C FROM NOVEMBER 12, 1985 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1985
MINNESOTA TAX-FREE

<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C>
39.Selected Per-Share
Data and Ratios

40.Years e nded
1985C 1986 1987 1988 1989 1990 1991 1992 1993
December 31

41.Net asset
$ 10.00 $ 10.09 $ 10.99 $ 9.82 $ 10.31 $ 10.52 $ 10.55 $ 10.73 $ 10.85
value,
beginning of
period

42.Income
.075 .773 .722 .711 .711 .699 .690 .674 .647
from
Investment Op
erations
Net in terest
income

43. Net
.090 .900 (1.140) .490 .210 .030 .180 .120 .670
realized and
unrealized
gain (loss)
on
investments

44. Total from
.165 1.673 (.418) 1.201 .921 .729 .870 .794 1.317
investment
operations

45.Less
(.075) (.773) (.722) (.711) (.711) (.699) (.690) (.674) (.647)
Distributions
From net
interest
income

46. From net
- - - - - (.030) - - - - - - - - - - - -
realized
gain on
investments

47. Total
(.075) (.773) (.752) (.711) (.711) (.699) (.690) (.674) (.647)
distributions

48.Net asset
$ 10.0 $ 10.9 $ 9.82 $ 10.31 $ 10.5 $ 10.5 $ 10.7 $ 10.8$ 11.5 2
value, 9 9 2 5 3 5
end of period

49.Total
1.65% 17.04 (3.83) 12.61 9.24% 7.22% 8.50% 7.63% 12.42
r eturnB % % % %

50.Net assets,
$ 5,128 $ 93,69 $ 79,10 $ 99,58 $ 131,1 $ 167,1 $ 221,7 $ 280,7 $ 342,1
end of period
7 8 3 72 27 88 81 96
(000 omitted)

51.Ratio of
.60%A .60% .79% .82% .80% .76% .72% .67% .61%
expenses to
average net
assets

52.Ratio of
7.70% 1.01% .93% .82% .80% .76% .72% .67% .61%
expenses to
A
average net
assets before
expense
reductions

53.Ratio of net
8.06% 7.05% 7.04% 7.06% 6.84% 6.72% 6.47% 6.25% 5.73%
interest
A
income to
average
net assets

54.Portfolio
- -% 23% 63% 31% 25% 29% 14% 12% 37%
turnover rate

</TABLE>

A ANNUALIZED
B TOTAL RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C FROM NOVEMBER 2 1 , 1985 (COMMENCEMENT OF OPERATIONS) TO DECEMBER
31, 1985
OHIO HIGH YIELD

<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C>
55.Selected Per-Share Data
and Ratios

56.Years ended
1985C 1986 1987 1988 1989 1990 1991 1992 1993
December 31

57.Net asset
$ 10.00 $ 10.12 $ 10.97 $ 9.97 $ 10.50 $ 10.79 $ 10.84 $ 11.32 $ 11.55
value,
beginning of
period

58.Income
.094 .773 .740 .722 .725 .726 .719 .718 .693
from
Investment Op
erations
Net interest
income

59. Net
.120 .850 (1.000) .530 .290 .050 .480 .230 .720
realized and
unrealized
gain (loss)
on
investments

60. Total from
.214 1.623 (.260) 1.252 1.015 .776 1.199 .948 1.413
investment
operations

61.Less
(.094) (.773) (.740) (.722) (.725) (.726) (.719) (.718) (.693)
Distributions
From net
interest
income

62. From net
- - - - - - - - - - - - - - - - - (.250)
realized
gain on
investments

63. Total
(.094) (.773) (.740) (.722) (.725) (.726) (.719) (.718) (.943)
distributions

64.Net asset
$ 10.1 $ 10.9 $ 9.97 $ 10.5 $ 10.7 $ 10.8 $ 11.32 $ 11.55 $ 12.0
value,
20 70 0 00 90 40 0 0 20
end of period

65.Total
2.15% 16.46 (2.38) 12.93 9.99% 7.50% 11.45 8.66% 12.56
r eturnB
% % % % %

66.Net assets,
$ 4,424 $ 107,1 $ 116,6 $ 152,9 $ 200,9 $ 241,6 $ 327,7 $ 384,8 $ 457,8
end of period
89 40 73 41 16 67 61 72
(000 omitted)

67.Ratio of
.60% A .60% .79% .73% .71% .66% .64% .61% .57%
expenses to
average net
assets

68.Ratio of
6.94% .97% .87% .73% .71% .66% .64% .61% .57%
expenses to
A
average net
assets before
expense
reductions

69.Ratio of net
8.74% 7.01% 7.09% 7.08% 6.79% 6.82% 6.53% 6.31% 5.67%
interest income
A
to average
net assets

70.Portfolio
54% A 32% 36% 23% 22% 12% 11% 20% 41%
turnover rate

</TABLE>

A ANNUALIZED
B TOTAL RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C FROM NOVEMBER 15 , 1985 (COMMENCEMENT OF OPERATIONS) TO DECEMBER
31, 1985
PERFORMANCE
Mutual fund performance can be measured as TOTAL RETURN or YIELD. The total
returns and yields that follow are based on historical fund results.
Each fund's fiscal year runs from January 1 through December 31. The tables
below show each fund's performance over past fiscal years compared to a
measure of inflation. The chart s beginning on page 13 help
you compare the yields of these funds to those of their competitors.
UNDERSTANDING
PERFORMANCE
YIELD illustrates the income
earned by a fund over a
recent period. Seven-day
yields are the most common
illustration of money market
performance. 30-day yields
are usually used for bond
funds. Yields change daily,
reflecting changes in interest
rates.
TOTAL RETURN reflects both the
reinvestment of income and
capital gain distributions, and
any change in a fund's share
price.
(checkmark)
TOTAL RETURNS
Average Annual Total Return Cumulative Total Return

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Fiscal periods Past 1
Past 5
Life of
Past 1
Past 5
Life of

ended
year years fund year years fund
December 31,
1993

Michigan 1.98% n/a 3.71 1.98% n/a 15.57
Municipal %A %A
Money Market

Ohio Municipal 2.09% n/a 4.01 2.09% n/a 18.65

%B %B
Money Market

Michigan 13.83 10.11 10.13 13.83 61.89 119.40
Tax-Free
% % %C % % %C
High Yield

Minnesota
12.42 8.99% 8.79 12.42 53.76 98.10
Tax-Free % %D % % %D

Ohio Tax-Free
12.56 10.02 9.64 12.56 61.16 111.35
High Yield % % %E % % %E

Consumer 2.75% 3.89% n/a 2.75% 21.00 n/a
Price
%
Index

</TABLE>

A FROM COMMENCEMENT OF OPERATIONS (JANUARY 12, 1990)
B FROM COMMENCEMENT OF OPERATIONS (AUGUST 29, 1989)
C FROM COMMENCEMENT OF OPERATIONS (NOVEMBER 12, 1985)
D FROM COMMENCEMENT OF OPERATIONS (NOVEMBER 21, 1985)
E FROM COMMENCEMENT OF OPERATIONS (NOVEMBER 15, 1985)
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment in a fund over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return
if performance had been constant over the entire period. Average annual
total returns smooth out variations in performance; they are not the same
as actual year-by-year results.
YIELD refers to the income generated by an investment in a fund over a
given period of time, expressed as an annual percentage rate. When a money
market fund yield assumes that income earned is reinvested, it is called an
EFFECTIVE YIELD. A TAX-EQUIVALENT YIELD shows what an investor would have
to earn before taxes to equal a tax-free yield. Yields for the bond funds
are calculated according to a standard that is required for all stock and
bond funds. Because this differs from other accounting methods, the quoted
yield may not equal the income actually paid to shareholders.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. government.
THE COMPETITIVE FUNDS AVERAGES for the money market funds are the
IBC/Donoghue's MONEY FUND AVERAGES(registered trademark)/ state tax-free
category, which currently reflects the performance of over 140
mutual funds with similar objectives. These averages are published in the
MONEY FUND REPORT(Registered trademark) by IBC USA (Publications), Inc. The
competitive funds averages for the bond funds are published by Lipper
Analytical Services, Inc. The bond funds compare their performance
to the single state municipal debt funds, which currently reflect
the performance of over 23,25, and 35 mutual funds for Michigan,
Minnesota, and Ohio, with similar objectives, respectively. All of
these averages assume reinvestment of distributions.
The funds' recent strategies, performance, and holdings are detailed twice
a year in financial reports, which are sent to all shareholders. For
current performance or a free annual report, call 1-800-544-8888.
TOTAL RETURNS AND YIELDS ARE BASED ON PAST RESULTS AND ARE NOT AN
INDICATION OF FUTURE PERFORMANCE.
MICHIGAN MUNICIPAL MONEY MARKET
7-day yields
Percentage (%)
Row: 1, Col: 1, Value: 2.92
Row: 1, Col: 2, Value: 2.69
Row: 2, Col: 1, Value: 1.93
Row: 2, Col: 2, Value: 1.81
Row: 3, Col: 1, Value: 1.97
Row: 3, Col: 2, Value: 1.87
Row: 4, Col: 1, Value: 2.04
Row: 4, Col: 2, Value: 1.96
Row: 5, Col: 1, Value: 2.03
Row: 5, Col: 2, Value: 1.98
Row: 6, Col: 1, Value: 2.16
Row: 6, Col: 2, Value: 2.13
Row: 7, Col: 1, Value: 1.72
Row: 7, Col: 2, Value: 1.79
Row: 8, Col: 1, Value: 1.88
Row: 8, Col: 2, Value: 1.86
Row: 9, Col: 1, Value: 1.96
Row: 9, Col: 2, Value: 1.97
Row: 10, Col: 1, Value: 2.2
Row: 10, Col: 2, Value: 2.16
Row: 11, Col: 1, Value: 2.08
Row: 11, Col: 2, Value: 1.95
Row: 12, Col: 1, Value: 1.95
Row: 12, Col: 2, Value: 1.91
Row: 13, Col: 1, Value: 2.24
Row: 13, Col: 2, Value: 2.13
Michigan
Municipal
Money Market
Competitive
funds average
1992
1993

OHIO MUNICIPAL MONEY MARKET
7-day yields
Percentage (%)
Row: 1, Col: 1, Value: 2.97
Row: 1, Col: 2, Value: 2.69
Row: 2, Col: 1, Value: 2.05
Row: 2, Col: 2, Value: 1.81
Row: 3, Col: 1, Value: 2.06
Row: 3, Col: 2, Value: 1.87
Row: 4, Col: 1, Value: 2.21
Row: 4, Col: 2, Value: 1.96
Row: 5, Col: 1, Value: 2.16
Row: 5, Col: 2, Value: 1.98
Row: 6, Col: 1, Value: 2.28
Row: 6, Col: 2, Value: 2.13
Row: 7, Col: 1, Value: 1.89
Row: 7, Col: 2, Value: 1.79
Row: 8, Col: 1, Value: 2.02
Row: 8, Col: 2, Value: 1.86
Row: 9, Col: 1, Value: 2.11
Row: 9, Col: 2, Value: 1.97
Row: 10, Col: 1, Value: 2.24
Row: 10, Col: 2, Value: 2.16
Row: 11, Col: 1, Value: 2.08
Row: 11, Col: 2, Value: 1.95
Row: 12, Col: 1, Value: 2.05
Row: 12, Col: 2, Value: 1.91
Row: 13, Col: 1, Value: 2.37
Row: 13, Col: 2, Value: 2.13
Ohio
Municipal
Money Market
Competitive
funds average
1992
1993
MICHIGAN MUNICIPAL TAX-FREE HIGH YIELD
30-day yields
Percentage (%)
Row: 1, Col: 1, Value: 6.92
Row: 1, Col: 2, Value: 6.45
Row: 2, Col: 1, Value: 6.78
Row: 2, Col: 2, Value: 6.33
Row: 3, Col: 1, Value: 7.01
Row: 3, Col: 2, Value: 6.25
Row: 4, Col: 1, Value: 6.85
Row: 4, Col: 2, Value: 6.19
Row: 5, Col: 1, Value: 6.8
Row: 5, Col: 2, Value: 6.159999999999999
Row: 6, Col: 1, Value: 6.87
Row: 6, Col: 2, Value: 6.109999999999999
Row: 7, Col: 1, Value: 6.74
Row: 7, Col: 2, Value: 6.1
Row: 8, Col: 1, Value: 6.71
Row: 8, Col: 2, Value: 5.98
Row: 9, Col: 1, Value: 6.64
Row: 9, Col: 2, Value: 5.930000000000001
Row: 10, Col: 1, Value: 6.55
Row: 10, Col: 2, Value: 5.85
Row: 11, Col: 1, Value: 6.57
Row: 11, Col: 2, Value: 5.819999999999999
Row: 12, Col: 1, Value: 6.48
Row: 12, Col: 2, Value: 5.71
Row: 13, Col: 1, Value: 6.28
Row: 13, Col: 2, Value: 5.53
Row: 14, Col: 1, Value: 6.31
Row: 14, Col: 2, Value: 5.45
Row: 15, Col: 1, Value: 6.45
Row: 15, Col: 2, Value: 5.49
Row: 16, Col: 1, Value: 6.359999999999999
Row: 16, Col: 2, Value: 5.44
Row: 17, Col: 1, Value: 6.35
Row: 17, Col: 2, Value: 5.41
Row: 18, Col: 1, Value: 6.21
Row: 18, Col: 2, Value: 5.29
Row: 19, Col: 1, Value: 5.67
Row: 19, Col: 2, Value: 5.0
Row: 20, Col: 1, Value: 5.87
Row: 20, Col: 2, Value: 4.859999999999999
Row: 21, Col: 1, Value: 5.88
Row: 21, Col: 2, Value: 5.07
Row: 22, Col: 1, Value: 6.17
Row: 22, Col: 2, Value: 5.17
Row: 23, Col: 1, Value: 5.99
Row: 23, Col: 2, Value: 5.09
Row: 24, Col: 1, Value: 5.930000000000001
Row: 24, Col: 2, Value: 4.98
Row: 25, Col: 1, Value: 5.77
Row: 25, Col: 2, Value: 4.930000000000001
Row: 26, Col: 1, Value: 5.39
Row: 26, Col: 2, Value: 4.68
Row: 27, Col: 1, Value: 5.35
Row: 27, Col: 2, Value: 4.63
Row: 28, Col: 1, Value: 5.359999999999999
Row: 28, Col: 2, Value: 4.68
Row: 29, Col: 1, Value: 5.35
Row: 29, Col: 2, Value: 4.67
Row: 30, Col: 1, Value: 5.18
Row: 30, Col: 2, Value: 4.58
Row: 31, Col: 1, Value: 5.28
Row: 31, Col: 2, Value: 4.53
Row: 32, Col: 1, Value: 5.05
Row: 32, Col: 2, Value: 4.46
Row: 33, Col: 1, Value: 4.96
Row: 33, Col: 2, Value: 4.27
Row: 34, Col: 1, Value: 4.96
Row: 34, Col: 2, Value: 4.23
Michigan
Municipal
Tax-Free
High Yield
Competitive
funds
average
1992
1991
1993
MINNESOTA TAX-FREE
30-day yields
Percentage (%)
Row: 1, Col: 1, Value: 6.77
Row: 1, Col: 2, Value: 6.33
Row: 2, Col: 1, Value: 6.67
Row: 2, Col: 2, Value: 6.27
Row: 3, Col: 1, Value: 6.649999999999999
Row: 3, Col: 2, Value: 6.159999999999999
Row: 4, Col: 1, Value: 6.59
Row: 4, Col: 2, Value: 6.18
Row: 5, Col: 1, Value: 6.45
Row: 5, Col: 2, Value: 6.109999999999999
Row: 6, Col: 1, Value: 6.619999999999999
Row: 6, Col: 2, Value: 6.6
Row: 7, Col: 1, Value: 6.51
Row: 7, Col: 2, Value: 5.94
Row: 8, Col: 1, Value: 6.41
Row: 8, Col: 2, Value: 5.930000000000001
Row: 9, Col: 1, Value: 6.37
Row: 9, Col: 2, Value: 5.91
Row: 10, Col: 1, Value: 6.319999999999999
Row: 10, Col: 2, Value: 5.8
Row: 11, Col: 1, Value: 6.41
Row: 11, Col: 2, Value: 5.79
Row: 12, Col: 1, Value: 6.38
Row: 12, Col: 2, Value: 5.64
Row: 13, Col: 1, Value: 6.21
Row: 13, Col: 2, Value: 5.59
Row: 14, Col: 1, Value: 6.77
Row: 14, Col: 2, Value: 5.68
Row: 15, Col: 1, Value: 6.119999999999999
Row: 15, Col: 2, Value: 5.69
Row: 16, Col: 1, Value: 6.119999999999999
Row: 16, Col: 2, Value: 5.59
Row: 17, Col: 1, Value: 6.1
Row: 17, Col: 2, Value: 5.46
Row: 18, Col: 1, Value: 5.930000000000001
Row: 18, Col: 2, Value: 5.5
Row: 19, Col: 1, Value: 5.59
Row: 19, Col: 2, Value: 5.22
Row: 20, Col: 1, Value: 5.72
Row: 20, Col: 2, Value: 5.149999999999999
Row: 21, Col: 1, Value: 5.84
Row: 21, Col: 2, Value: 5.22
Row: 22, Col: 1, Value: 6.18
Row: 22, Col: 2, Value: 5.359999999999999
Row: 23, Col: 1, Value: 6.05
Row: 23, Col: 2, Value: 5.3
Row: 24, Col: 1, Value: 5.859999999999999
Row: 24, Col: 2, Value: 5.2
Row: 25, Col: 1, Value: 5.64
Row: 25, Col: 2, Value: 5.02
Row: 26, Col: 1, Value: 5.19
Row: 26, Col: 2, Value: 4.71
Row: 27, Col: 1, Value: 5.24
Row: 27, Col: 2, Value: 4.619999999999999
Row: 28, Col: 1, Value: 5.38
Row: 28, Col: 2, Value: 4.659999999999999
Row: 29, Col: 1, Value: 5.37
Row: 29, Col: 2, Value: 4.64
Row: 30, Col: 1, Value: 5.17
Row: 30, Col: 2, Value: 4.54
Row: 31, Col: 1, Value: 5.17
Row: 31, Col: 2, Value: 4.51
Row: 32, Col: 1, Value: 5.21
Row: 32, Col: 2, Value: 4.56
Row: 33, Col: 1, Value: 4.98
Row: 33, Col: 2, Value: 4.42
Row: 34, Col: 1, Value: 4.96
Row: 34, Col: 2, Value: 4.31
Minnesota
Tax-Free
Competitive
funds average
1992
1991
1993
OHIO TAX-FREE HIGH YIELD
30-day yields
Percentage (%)
Row: 1, Col: 1, Value: 6.58
Row: 1, Col: 2, Value: 6.3
Row: 2, Col: 1, Value: 6.470000000000001
Row: 2, Col: 2, Value: 6.159999999999999
Row: 3, Col: 1, Value: 6.649999999999999
Row: 3, Col: 2, Value: 6.01
Row: 4, Col: 1, Value: 6.59
Row: 4, Col: 2, Value: 5.98
Row: 5, Col: 1, Value: 6.55
Row: 5, Col: 2, Value: 6.0
Row: 6, Col: 1, Value: 6.659999999999999
Row: 6, Col: 2, Value: 5.96
Row: 7, Col: 1, Value: 6.6
Row: 7, Col: 2, Value: 5.87
Row: 8, Col: 1, Value: 6.470000000000001
Row: 8, Col: 2, Value: 5.87
Row: 9, Col: 1, Value: 6.5
Row: 9, Col: 2, Value: 5.83
Row: 10, Col: 1, Value: 6.38
Row: 10, Col: 2, Value: 5.67
Row: 11, Col: 1, Value: 6.319999999999999
Row: 11, Col: 2, Value: 5.64
Row: 12, Col: 1, Value: 6.25
Row: 12, Col: 2, Value: 5.59
Row: 13, Col: 1, Value: 6.149999999999999
Row: 13, Col: 2, Value: 5.44
Row: 14, Col: 1, Value: 6.109999999999999
Row: 14, Col: 2, Value: 5.45
Row: 15, Col: 1, Value: 6.319999999999999
Row: 15, Col: 2, Value: 5.51
Row: 16, Col: 1, Value: 6.25
Row: 16, Col: 2, Value: 5.609999999999999
Row: 17, Col: 1, Value: 6.119999999999999
Row: 17, Col: 2, Value: 5.51
Row: 18, Col: 1, Value: 5.95
Row: 18, Col: 2, Value: 5.31
Row: 19, Col: 1, Value: 5.45
Row: 19, Col: 2, Value: 4.98
Row: 20, Col: 1, Value: 5.51
Row: 20, Col: 2, Value: 4.92
Row: 21, Col: 1, Value: 5.63
Row: 21, Col: 2, Value: 5.03
Row: 22, Col: 1, Value: 5.9
Row: 22, Col: 2, Value: 5.21
Row: 23, Col: 1, Value: 5.87
Row: 23, Col: 2, Value: 5.17
Row: 24, Col: 1, Value: 5.72
Row: 24, Col: 2, Value: 5.05
Row: 25, Col: 1, Value: 5.67
Row: 25, Col: 2, Value: 4.930000000000001
Row: 26, Col: 1, Value: 5.319999999999999
Row: 26, Col: 2, Value: 4.72
Row: 27, Col: 1, Value: 5.33
Row: 27, Col: 2, Value: 4.54
Row: 28, Col: 1, Value: 5.359999999999999
Row: 28, Col: 2, Value: 4.609999999999999
Row: 29, Col: 1, Value: 5.37
Row: 29, Col: 2, Value: 4.57
Row: 30, Col: 1, Value: 5.17
Row: 30, Col: 2, Value: 4.49
Row: 31, Col: 1, Value: 5.159999999999999
Row: 31, Col: 2, Value: 4.430000000000001
Row: 32, Col: 1, Value: 5.02
Row: 32, Col: 2, Value: 4.48
Row: 33, Col: 1, Value: 4.9
Row: 33, Col: 2, Value: 4.34
Row: 34, Col: 1, Value: 4.819999999999999
Row: 34, Col: 2, Value: 4.28
Ohio Tax-Free
High Yield
Competitive
funds average
1992
1991
1993
THE CHART FOR EACH MONEY MARKET FUND SHOWS THE 7-DAY EFFECTIVE
YIELDS FOR
THE FUND AND ITS COMPETITIVE FUNDS AVERAGE AS OF THE LAST TUESDAY OF EACH
MONTH FROM DECEMBER 1992 THROUGH DECMEBER 199 3 . THE
CHART FOR EACH
BOND FUND SHOWS THE 30-DAY ANNUALIZED NET YIELDS FOR THE FUNDS AND
THEIR
COMPETITIVE FUNDS AVERAGES AS OF THE LAST DAY OF EACH MONTH FROM JANUARY

1991 THROUGH OCTOBER 1993.
YOUR ACCOUNT</r>

over 75 walk-in Investor Centers across the country.
TYPES OF ACCOUNTS
You may set up an account directly in a fund or, if you own or intend to
purchase individual securities as part of your total investment portfolio,
you may consider investing in a fund through a brokerage account You can
choose a money market fund as your core account for your Fidelity Ultra
Service Account or FidelityPlus brokerage account.
If you are investing through FBSI or another financial institution or
investment professional, refer to its program materials for any special
provisions regarding your investment in the fund.
The different ways to set up (register) your account with Fidelity are
listed below.
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have two or
more owners (tenants).
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and obtain
tax benefits. An individual can give up to $10,000 a year per child without
paying federal gift tax. Depending on state laws, you can set up a
custodial account under the Uniform Gifts to Minors Act (UGMA) or the
Uniform Transfers to Minors Act (UTMA).
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR OTHER
GROUPS
Requires a special application.
HOW TO BUY SHARES
EACH FUND'S SHARE PRICE, called net asset value (NAV), is calculated every
business day. Each money market fund is managed to keep its share price
stable at $1.00. Each fund's shares are sold without a sales charge.
Shares are purchased at the next share price calculated after your
investment is received and accepted. Share price is normally calculated at
4 p.m. Eastern time.
IF YOU ARE NEW TO FIDELITY, complete and sign an account application and
mail it along with your check. You may also open your account in person or
by wire as described on page . If there is no application accompanying this
prospectus, call 1-800-544-8888.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(bullet) Mail in an application with a check, or
(bullet) Open your account by exchanging from another Fidelity fund.
If you buy shares by check or Fidelity Money Line(Registered trademark),
and then sell those shares by any method other than by exchange to another
Fidelity fund, the payment may be delayed for up to seven business
days to ensure that your previous investment has cleared.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $2,500
For the money m arket funds $5,000
TO ADD TO AN ACCOUNT $250
For the money m arket funds $500
Through automatic investment plans $100
MINIMUM BALANCE $1,000

<TABLE>
<CAPTION>
<S> <C> <C>
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
Mail (mail_graphic) (bullet) Complete and sign the (bullet) Make your check
application. Make your payable to the complete
check payable to the name of the fund .
complete name of the Indicate your fund
fund of your choice. account number on
Mail to the address your check and m ail to
indicated on the the address printed on
application. your account statement.
(bullet) Exchange by mail: call
1-800-544-6666 for
instructions.

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
Wire (wire_graphic) (bullet) Call 1-800-544-7777 to (bullet) Wire to:
set up your account Bankers Trust
and to arrange a wire Company,
transaction. Bank Routing
(bullet) Wire within 24 hours to: #021001033,
Bankers Trust Account #00163053.
Company, Specify the complete
Bank Routing name of the fund and
#021001033, include your account
Account #00163053. number and your
Specify the complete name.
name of the fund and
include your new
account number and
your name.

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118

</TABLE>

HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares. Your shares will be sold at
the next share price calculated after your order is received and accepted.
Share price is normally calculated at 4 p.m. Eastern time.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least $1,000
worth of shares in the account to keep it open.
TO SELL SHARES BY BANK WIRE OR FIDELITY MONEY LINE, you will need to sign
up for these services in advance.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to
protect you and Fidelity from fraud. Your request must be made in writing
and include a signature guarantee if any of the following situations apply:
(bullet) You wish to redeem more than $100,000 worth of shares,
(bullet) Your account registration has changed within the last 30 days,
(bullet) The check is being mailed to a different address than the one on
your account (record address),
(bullet) The check is being made payable to someone other than the account
owner, or
(bullet) The redemption proceeds are being transferred to a Fidelity
account with a different registration.
You should be able to obtain a signature guarantee from a bank, broker
(including Fidelity Investor Centers) dealer, credit union (if authorized
under state law), securities exchange or association, clearing agency, or
savings association. A notary public cannot provide a signature guarantee.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(bullet) Your name,
(bullet) The fund's name,
(bullet) Your fund account number,
(bullet) The dollar amount or number of shares to be redeemed, and
(bullet) Any other applicable requirements listed in the table at right.
Unless otherwise instructed, Fidelity will send a check to the record
address. Deliver your letter to a Fidelity Investor Center, or mail it to:
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
CHECKWRITING
If you have a checkbook for your account, you may write an unlimited number
of checks. Do not, however, try to close out your account by check.
ACCOUNT TYPE SPECIAL REQUIREMENTS

<TABLE>
<CAPTION>
<S> <C> <C>
Phone 1-800-544-777 (phone_graphic) All account types (bullet) Maximum check request:
$100,000.
(bullet) For Money Line transfers to
your bank account; minimum:
$10; maximum: $100,000.
(bullet) You may exchange to other
Fidelity funds if both
accounts are registered with
the same name(s), address,
and taxpayer ID number.

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
Check (check_graphic) All account types (bullet) Minimum check: $500.
(bullet) All account owners must sign
a signature card to receive a
checkbook.

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118

</TABLE>

24-HOUR SERVICE
ACCOUNT ASSISTANCE
1-800-544-6666
ACCOUNT BALANCES
1-800-544-7544
ACCOUNT TRANSACTIONS
1-800-544-7777
PRODUCT INFORMATION
1-800-544-8888
QUOTES
1-800-544-8544
RETIREMENT ACCOUNT
ASSISTANCE
1-800-544-4774
AUTOMATED SERVICE
(checkmark)
To reduce expenses, only one copy of most financial reports will be mailed
to your household, even if your household has more than one account in the
fund. Call 1-800-544-6666 if you need copies of financial reports or
historical account information.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your fund shares and buy shares of other
Fidelity funds by telephone or in writing.
Note that exchanges out of a fund are limited to four per calendar year
(except for the money market funds) , and that they may have tax
consequences for you. For complete policies and restrictions governing
exchanges, including circumstances under which a shareholder's exchange
privilege may be suspended or revoked, see page .
SYSTEMATIC WITHDRAWAL PLANS let you set up monthly or quarterly redemptions
from your account.
FIDELITY MONEY LINE(Registered trademark) enables you to transfer money by
phone between your bank account and your fund account. Most transfers are
complete within three business days of your call.
REGULAR INVESTMENT PLANS
One easy way to pursue your financial goals is to invest money regularly.
Fidelity offers convenient services that let you transfer money into your
fund account, or between fund accounts, automatically. While regular
investment plans do not guarantee a profit and will not protect you against
loss in a declining market, they can be an excellent way to invest for a
home, educational expenses, and other long-term financial goals.
REGULAR INVESTMENT PLANS

FIDELITY AUTOMATIC ACCOUNT BUILDERSM
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY FUND

<TABLE>
<CAPTION>
<S> <C> <C>
DIRECT DEPOSIT
TO SEND ALL OR A PORTION OF YOUR PAYCHECK OR GOVERNMENT CHECK TO A FIDELITY FUNDA

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
FIDELITY AUTOMATIC EXCHANGE SERVICE
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND TO ANOTHER FIDELITY FUND

</TABLE>

A BECAUSE BOND FUND SHARE PRICES FLUCTUATE, THOSE FUNDS MAY NOT BE
APPROPRIATE CHOICES FOR DIRECT DEPOSIT OF YOUR ENTIRE CHECK.
DIVIDENDS, CAPITAL GAINS, AND TAXES
Each fund distributes substantially all of its net investment income and
capital gains if any, to shareholders each year. Income dividends are
declared daily and paid monthly. Capital gains earned by the bond funds are
normally distributed in February and December .
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. If the option you prefer is not listed on the
application, call 1-800-544-6666 for instructions. Each fund offers four
options (three for the money market funds) :
1. REINVESTMENT OPTION. Your dividend and capital gain distributions, if
any, will be automatically reinvested in additional shares of the fund. If
you do not indicate a choice on your application, you will be assigned this
option.
2. INCOME-EARNED OPTION. Your capital gain distributions, if any, will be
automatically reinvested, but you will be sent a check for each dividend
distribution. This option is not available for the money market
funds.
3. CASH OPTION. You will be sent a check for your dividend and capital gain
distributions, if any.
4. DIRECTED DIVIDENDS(Registered trademark) OPTION. Your dividend and
capital gain distributions, if any, will be automatically invested in
another identically registered Fidelity fund.
Dividends will be reinvested at the fund's NAV on the last day of the
month. Capital gain distributions, if any, will be reinvested at the NAV as
of the date the fund deducts the distribution from its NAV. The mailing of
distribution checks will begin within seven days , or longer for a
December ex-dividend date.
TAXES
UNDERSTANDING
DISTRIBUTIONS
As a fund shareholder, you
are entitled to your share of
the fund's net income and
gains on its investments. The
fund passes its earnings
along to its investors as
DISTRIBUTIONS.
Each fund earns interest from
its investments. These are
passed along as DIVIDEND
DISTRIBUTIONS. The fund may
realize capital gains if it sells
securities for a higher price
than it paid for them. These
are passed along as CAPITAL
GAIN DISTRIBUTIONS. Money
market funds usually don't
make capital gain
distributions.
(checkmark)
As with any investment, you should consider how an investment in a tax-free
fund could affect you. Below are some of the funds' tax implications.
TAXES ON DISTRIBUTIONS. Interest income that a fund earns is distributed to
shareholders as income dividends. Interest that is federally tax-free
remains tax-free when it is distributed.
However, gain on the sale of tax-free bonds results in taxable
distributions. Short-term capital gains and a portion of the gain on bonds
purchased at a discount are taxed as dividends. Long-term capital gain
distributions are taxed as long-term capital gains. These distributions are
taxable when they are paid, whether you take them in cash or reinvest them.
However, distributions declared in December and paid in January are taxable
as if they were paid on December 31. Fidelity will send you and the
Internal Revenue Service (IRS) a statement showing the tax status of the
distributions paid to you in the previous year.
The interest from some municipal securities is subject to the federal
alternative minimum tax. Each money market fund may invest up to 100%,
and each bond fund may invest up to 20%, of its assets in these
securities. Individuals who are subject to the tax must report this
interest on their tax returns.
To the extent that each fund's distributions are derived from state
tax-free obligations of its respective state, its income dividends will be
exempt from state taxes. For Ohio residents, dividends will be free from
the Ohio individual income tax, a school district tax, and the net income
base of the Ohio corporation franchise tax. For Michigan residents,
dividends will be free from the Michigan income, intangibles, single
business taxes, and corporation franchise tax . For Minnesota residents
dividends will be free from the Minnesota personal income tax.
Unless 95% or more of Minnesota Tax-Free's tax-exempt dividends are
derived from obligations of the State of Minnesota or its political
subdivisions, all of the fund's dividends will be subject to the Minnesota
tax. FMR intends to meet the 95% requirement, but there is no assurance it
will do so.
Each year, Fidelity will send you a breakdown of your fund's income from
each state to help you calculate your taxes.
During fiscal 1993, 100 % of each fund's income dividends was free
from federal and state income taxes and the following were the
percentage of each fund's income dividends that were subject to the
alternative minimum tax.
ALTERNATIVE MINIMUM TAX
Michigan Municipal Money Market 48.1
%

Ohio Municipal Money Market 41.8
%

Michigan Tax-Free High Yield 6.6
%

Minnesota Tax-Free 8.6
%

Ohio Tax-Free High Yield 3.4
%

TAXES ON TRANSACTIONS. Your bond fund redemptions - including exchanges to
other Fidelity funds - are subject to capital gains tax. A capital gain or
loss is the difference between the cost of your shares and the price you
receive when you sell them.
Whenever you sell shares of a fund, Fidelity will send you a confirmation
statement showing how many shares you sold and at what price. You will also
receive a consolidated transaction statement every January. However, it is
up to you or your tax preparer to determine whether this sale resulted in a
capital gain and, if so, the amount of tax to be paid. Be sure to keep your
regular account statements; the information they contain will be essential
in calculating the amount of your capital gains.
"BUYING A DIVIDEND." If you buy shares just before a bond fund
deducts a distribution from its NAV, you will pay the full price for the
shares and then receive a portion of the price back in the form of a
taxable distribution.
SHAREHOLDER AND ACCOUNT POLICIES

TRANSACTION DETAILS
THE FUNDS ARE OPEN FOR BUSINESS each day the New York Stock Exchange (NYSE)
is open. Fidelity normally calculates each fund's net asset value as of the
close of business of the NYSE, normally 4 p.m. Eastern time.
EACH FUND'S NAV is the value of a single share. The NAV is computed by
adding the value of the fund's investments, cash, and other assets,
subtracting its liabilities, and then dividing the result by the number of
shares outstanding.
The money market funds value the securities they own on the basis of
amortized cost. This method minimizes the effect of changes in a security's
market value and helps the fund to maintain a stable $1.00 share price. For
the bond funds, assets are valued primarily on the basis of market
quotations, if available. Since market quotations are often unavailable,
assets are usually valued by a method that the Board of Trustees believes
accurately reflects fair value.
EACH FUND'S OFFERING PRICE (price to buy one share) and REDEMPTION PRICE
(price to sell one share) are its NAV.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that
your Social Security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require a fund to
withhold 31% of your taxable distributions and redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Note that Fidelity will
not be responsible for any losses resulting from unauthorized transactions
if it follows reasonable procedures designed to verify the identity of the
caller. Fidelity will request personalized security codes or other
information, and may also record calls. You should verify the accuracy of
your confirmation statements immediately after you receive them. If you do
not want the ability to redeem and exchange by telephone, call Fidelity for
instructions.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during periods
of unusual market activity), consider placing your order by mail or by
visiting a Fidelity Investor Center.
EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. Each fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions"
on page . Purchase orders may be refused if, in FMR's opinion, they are of
a size that would disrupt management of a fund.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your order will be processed at the
next offering price calculated after your order is received and accepted.
Note the following:
(bullet) All of your purchases must be made in U.S. dollars and checks
must be drawn on U.S. banks.
(bullet) Fidelity does not accept cash.
(bullet) When making a purchase with more than one check, each check must
have a value of at least $50.
(bullet) Each fund reserves the right to limit the number of checks
processed at one time.
(bullet) If your check does not clear, your purchase will be cancelled and
you could be liable for any losses or fees a fund or its transfer agent has
incurred.
(bullet) You begin to earn dividends as of the first business day
following the day of your purchase.
TO AVOID THE COLLECTION PERIOD associated with check and Money Line
purchases, consider buying shares by bank wire, U.S. Postal money order,
U.S. Treasury check, Federal Reserve check, or direct deposit instead.
YOU MAY BUY OR SELL SHARES OF THE FUNDS THROUGH A BROKER, who may charge
you a fee for this service. If you invest through a broker or other
institution, read its program materials for any additional service features
or fees that may apply.
CERTAIN FINANCIAL INSTITUTIONS that have entered into sales agreements with
Fidelity Distributors Corporation (FDC) may enter confirmed purchase orders
on behalf of customers by phone, with payment to follow no later than the
time when a fund is priced on the following business day. If payment is not
received by that time, the financial institution could be held liable for
resulting fees or losses.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the
next NAV calculated after your request is received and accepted. Note the
following:
(bullet) Normally, redemption proceeds will be mailed to you on the next
business day, but if making immediate payment could adversely affect a
fund, it may take up to seven days to pay you.
(bullet) Shares will earn dividends through the date of redemption;
however, shares redeemed on a Friday or prior to a holiday will continue to
earn dividends until the next business day.
(bullet) Fidelity Money Line redemptions generally will be credited to
your bank account on the second or third business day after your phone
call.
(bullet) Each fund may hold payment on redemptions until it is reasonably
satisfied that investments made by check or Fidelity Money Line have been
collected, which can take up to seven business days.
(bullet) Redemptions may be suspended or payment dates postponed when the
NYSE is closed (other than weekends or holidays), when trading on the NYSE
is restricted, or as permitted by the SEC.
(bullet) If you sell shares by writing a check and the amount of the check
is greater than the value of your account, your check will be returned to
you and you may be subject to additional charges.
IF YOUR ACCOUNT BALANCE FALLS BELOW $1,000, you will be given 30 days'
notice to reestablish the minimum balance. If you do not increase your
balance, Fidelity reserves the right to close your account and send the
proceeds to you. Your shares will be redeemed at the NAV on the day your
account is closed.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
FDC may, at its own expense, provide promotional incentives to qualified
recipients who support the sale of shares of the funds without
reimbursement from the funds. Qualified recipients are securities dealers
who have sold fund shares or others, including banks and other financial
institutions, under special arrangements in connection with FDC's sales
activities. In some instances, these incentives may be offered only to
certain institutions whose representatives provide services in connection
with the sale or expected sale of significant amounts of shares.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging shares of a fund for
shares of other Fidelity funds. However, you should note the following:
(bullet) The fund you are exchanging into must be registered for sale in
your state.
(bullet) You may only exchange between accounts that are registered in the
same name, address, and taxpayer identification number.
(bullet) Before exchanging into a fund, read its prospectus.
(bullet) If you exchange into a fund with a sales charge, you pay the
percentage-point difference between that fund's sales charge and any sales
charge you have previously paid in connection with the shares you are
exchanging. For example, if you had already paid a sales charge of 2% on
your shares and you exchange them into a fund with a 3% sales charge, you
would pay an additional 1% sales charge.
(bullet) Exchanges may have tax consequences for you.
(bullet) Because excessive trading can hurt fund performance and
shareholders, each bond fund reserves the right to temporarily or
permanently terminate the exchange privilege of any investor who makes more
than four exchanges out of the fund per calendar year. Accounts under
common ownership or control, including accounts with the same taxpayer
identification number, will be counted together for purposes of the four
exchange limit.
(bullet) Each fund reserves the right to refuse exchange purchases by any
person or group if, in FMR's judgment, the fund would be unable to invest
the money effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
(bullet) Your exchanges may be restricted or refused if a fund receives or
anticipates simultaneous orders affecting significant portions of the
fund's assets. In particular, a pattern of exchanges that coincide with a
"market timing" strategy may be disruptive to a fund.
Although the funds will attempt to give you prior notice whenever they are
reasonably able to do so, they may impose these restrictions at any time.
The funds reserve the right to terminate or modify the exchange privilege
in the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
administrative fees of up to $7.50 and redemption fees of up to 1.50% on
exchanges. Check each fund's prospectus for details.
<r>THE FUNDS IN DETAIL</r>

CHARTER
EACH FUND IS A MUTUAL FUND: an investment that pools shareholders' money
and invests it toward a specified goal. In technical terms, Ohio Tax-Free
High Yield, Michigan Tax-Free High Yield, and Minnesota Tax-Free are
currently non-diversified funds of Fidelity Municipal Trust.
Michigan Municipal Money Market and Ohio Municipal Money Market are
currently non-diversified funds of Fidelity Municipal Trust II. Both
trusts are open-end management investment companies. Fidelity
Municipal Trust was organized as a Maryland corporation on November 22,
1976, and reorganized as a Massachusetts business trust on June 22, 1984.
Fidelity Municipal Trust II was organized as a Delaware business
trust on June 20, 1991. There is a remote possibility that one fund might
become liable for a misstatement in the prospectus about another fund.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES, which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet throughout the year to oversee the funds' activities,
review contractual arrangements with companies that provide services to the
funds, and review performance. The majority of trustees are not otherwise
affiliated with Fidelity.
THE FUNDS MAY HOLD SPECIAL MEETINGS AND MAIL PROXY MATERIALS. These
meetings may be called to elect or remove trustees, change fundamental
policies, approve a management contract, or for other purposes.
Shareholders not attending these meetings are encouraged to vote by proxy.
Fidelity will mail proxy materials in advance, including a voting card and
information about the proposals to be voted on. Money market fund
shareholders are entitled to one vote for each share they own. For bond
fund shareholders the number of votes you are entitled to is
based upon the dollar value of your investment.
FMR AND ITS AFFILIATES
The funds are managed by FMR, which chooses their investments and handles
their business affairs. FTX has primary responsibility for providing
investment management services for the money market funds.
Peter Allegrini is vice president and manager of Ohio Tax-Free High Yield
and Michigan Tax-Free High Yield, both of which he has managed since
November 1985. Mr. Allegrini also manages Advisor High Income Municipal and
Spartan Connecticut Municipal High Yield. He joined Fidelity in 1982.
Steve Harvey is manager of Minnesota Tax-Free, which he has managed since
October 1993. Mr. Harvey also manages Spartan Maryland Municipal Income and
Spartan Pennsylvania Municipal High Yield. Previously, he was an analyst
following tax-free bonds. He joined Fidelity in 1986.
FDC distributes and markets Fidelity's funds and services. Fidelity Service
Co. (FSC) performs transfer agent servicing functions for the funds.
FMR Corp. is the parent company of these organizations. Through ownership
of voting common stock, Edward C. Johnson 3d (President and a trustee of
the trusts), Johnson family members, and various trusts for the benefit of
the Johnson family form a controlling group with respect to FMR Corp.
United Missouri Bank, N.A., is each fund's transfer agent, although it
employs FSC to perform these functions for the funds. It is located at 1010
Grand Avenue, Kansas City, Missouri.
TO CARRY OUT THE FUNDS' TRANSACTIONS, FMR may use its broker-dealer
affiliates and other firms that sell fund shares, provided that a fund
receives services and commission rates comparable to those of other
broker-dealers.
BREAKDOWN OF EXPENSES
Like all mutual funds, the funds pay fees related to their daily
operations. Expenses paid out of a fund's assets are reflected in its share
price or dividends; they are neither billed directly to shareholders nor
deducted from shareholder accounts.
Each fund pays a MANAGEMENT FEE to FMR for managing its investments and
business affairs. FMR in turn pays fees to an affiliate who provides
assistance with these services. The funds also pay other expenses which are
explained below.
FMR may, from time to time, agree to reimburse the funds for management
fees and other expenses above a specified limit. FMR retains the ability to
be repaid by a fund if expenses fall below the specified limit prior to the
end of the fiscal year. Reimbursement arrangements, which may be terminated
at any time without notice, can decrease a fund's expenses and boost its
performance.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month. The fee is
calculated by adding a group fee rate to an individual fund fee rate, and
multiplying the result by a fund's average net assets.
The group fee rate is based on the average net assets of all the mututal
funds advised by FMR. This rate cannot rise above .37%, and it drops as
total assets under management increase.
For December 1993, the group fee rate was .1621%. Each fund's individual
fund fee rate is .25%. The total management fees for fiscal 1993 are
presented in the table below.
UNDERSTANDING THE
MANAGEMENT FEE
The basic fee FMR receives
is designed to be responsive
to changes in FMR's total
assets under management.
Building this variable into the
fee calculation assures
shareholders that they will
pay a lower rate as FMR's
assets under management
increase.
(checkmark)
MANAGEMENT FEES
Michigan Municipal .42
Money Market %

Ohio Municipal Money .42
Market %

Michigan Tax-Free High .42
Yield %

Minnesota Tax-Free .42
%

Ohio Tax-Free High .41
Yield %

FMR HAS SUB-ADVISORY AGREEMENTS with FTX, which has primary responsibility
for providing investment management, while FMR retains responsibility for
providing other management services. FMR pays FTX 50% of its management fee
(before expense reimbursements) for these services. FMR paid FTX .21% of
each money market fund's average net assets for fiscal 1993.
OTHER EXPENSES
While the management fee is a significant component of the fund s'
annual operating costs, the fund s ha ve other expenses as
well.
FSC performs many transaction and accounting functions. These services
include processing shareholder transactions, valuing each fund's
investments, and handling securities loans. In fiscal 1993, FSC received
fees equal to the following percentage of each fund ' s
average net assets.
OTHER EXPENSES
Michigan Municipal .18
Money Market %

Ohio Municipal Money .15
Market %

Michigan Tax-Free High .15
Yield %

Minnesota Tax-Free .17
%

Ohio Tax-Free High .14
Yield %

The fund s also pay other expenses, such as legal, audit, and
custodian fees; proxy solicitation costs; and the compensation of trustees
who are not affiliated with Fidelity.
Each fund has adopted a Distribution and Service Plan. These plans
recognize that FMR may use its resources, including management fees, to pay
expenses associated with the sale of fund shares. This may include payments
to third parties, such as banks or broker-dealers, that provide shareholder
support services or engage in the sale of the fund's shares. It is
important to note, however, that the funds do not pay FMR any separate fees
for this service.
The table below shows each bond fund ' s portfolio turnover
rate for fiscal 1993. These rates vary from year to year.
PORTFOLIO TURNOVER RATES
Michigan Tax-Free High .33
Yield %

Minnesota Tax-Free .37
%

Ohio Tax-Free High .41
Yield %

INVESTMENT PRINCIPLES
MICHIGAN MUNICIPAL MONEY MARKET and OHIO MUNICIPAL MONEY MARKET seek
high current income that is exempt from federal income tax, its state
income tax, and other taxes in Michigan and Ohio, while maintaining a
stable share price by investing in high-quality, short-term municipal
securities of all types. As a result, when you sell your shares, they
should be worth the same amount as when you bought them. Of course,
there is no guarantee that the funds will maintain a stable $1.00 share
price. FMR normally invests so that at least 80% of each fund's income
distributions are free from federal and state income taxes.
The funds follow industry-standard guidelines on the quality and maturity
of their investments, which are designed to help maintain a stable $1.00
share price. The funds will purchase only high-quality securities that FMR
believes present minimal credit risks and will observe maturity
restrictions on securities it buys. It is possible that a major change in
interest rates or a default on the funds' investments could cause their
share prices (and the value of your investment) to change.
MICHIGAN TAX-FREE HIGH YIELD, MINNESOTA TAX-FREE , and OHIO
TAX-FREE HIGH YIELD seek high current income that is exempt from
federal income tax, its state income tax, and other taxes in Michigan and
Ohio by investing primarily in municipal securities judged by FMR to be
of investment-grade quality, although they can also invest in some
lower-quality securities. The funds normally invest in long-term bonds,
generally maintaining a dollar-weighted average maturity of 15 years or
longer, although they may invest in obligations of any maturity. FMR
normally invests so that at least 80% of each fund's income is free from
both federal and state income taxes.
EACH FUND'S yield and each bond fund's share price change daily based on
interest rate changes and on the quality and maturity of its investments.
In general, bond prices rise when interest rates fall, and vice versa. This
effect is usually more pronounced for longer-term securities. Lower-quality
securities offer higher yields, but also carry more risk.
Each fund's performance is closely tied to the economic and political
conditions within its respective state. Michigan's economy is dominated by
automobile-related industries, which tend to be especially vulnerable to
economic downturns. Also, the state's unemployment rate is typically higher
than average. Minnesota has been experiencing a decline in jobs in
construction, mining, and agriculture. While these declines have been
accompanied by increases in the service sector, this trend may not
continue. Ohio's economy, like that of other industrially developed states,
tends to be more cyclical and vulnerable to economic downturns than the
economies of some other states and the United Staets as a whole.
If you are subject to the federal alternative minimum tax, you should note
that each money market fund may invest 100% of its assets in municipal
securities issued to finance private activities. Each bond fund may invest
so that up to 20% of its income is derived from private activity
securities. The interest from these investments is a tax-preference item
for purposes of the tax.
FMR normally invests each fund's assets according to its investment
strategy. The funds do not expect to invest in federally taxable
obligations, and the bond funds also do not expect to invest in state
taxable obligations. When FMR considers it appropriate for defensive
purposes , however, it temporarily may i nvest substantially in
short-term instruments, may hold a substantial amount of univested cash, or
may invest more than is normally permitted in taxable obligations.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which the funds may invest, and strategies FMR may employ in
pursuit of the funds' investment objectives. A summary of risks and
restrictions associated with these instrument types and investment
practices is included as well. Policies and limitations are considered at
the time of purchase; the sale of instruments is not required in the event
of a subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these techniques to
the full extent permitted unless it believes that doing so will help the
funds achieve their goals. As a shareholder, you will receive financial
reports every six months detailing fund holdings and describing recent
investment activities.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers to
borrow money from investors. The issuer pays the investor a fixed or
variable rate of interest, and must repay the amount borrowed at maturity.
Some debt securities, such as zero coupon bonds, do not pay current
interest, but are purchased at a discount from their face values. Debt
securities have varying degrees of quality and varying levels of
sensitivity to changes in interest rates. Longer-term bonds are generally
more sensitive to interest rate changes than short-term bonds.
Lower-quality debt securities may have speculative characteristics, and
involve greater risk of default or price changes due to changes in the
issuers' creditworthiness. The market prices of these securities may
fluctuate more than higher-quality securities and may decline significantly
in periods of general or regional economic difficulty.
The tables on page 32 and 33 provide a summary of ratings
assigned to debt holdings (not including money market instruments) in each
bond fund's portfolio. These figures are dollar-weighted averages of
month-end portfolio holdings during fiscal 1993, and are presented as a
percentage of total investments. These percentages are historical and do
not necessarily indicate the funds' current or future debt holdings.
RESTRICTIONS: Each bond fund does not currently intend to
invest more than one-third of its assets in bonds judged by FMR to be
equivalent to those rated Ba or lower by Moody's or BB or lower
by S&P, and does not currently intend to invest in securities
of equivalent quality to those rated lower than B. The funds do not
currently intend to invest in bonds rated below Caa by Moody's or CCC
by S&P.
MICHIGAN HIGH YIELD
Fiscal 199 3 Debt Holdings, by Rating MOODY'S STANDARD &
POOR'S
INVESTORS SERVICE, INC. CORPORATION
Rating Average A Rating Averag
eA
INVESTMENT GRADE
Highest quality Aaa AAA
High quality Aa 58.0 % AA 69.0 %
Upper-medium grade A A
Medium grade Baa 11.1 % BBB 5.5 %
LOWER QUALITY
Moderately speculative Ba 0.4 % BB 0.7 %
Speculative B 3.9 % B 4.7 %
Highly speculative Caa 0.0 % CCC 0.0 %
Poor quality Ca 0.0 % CC 0.0 %
Lowest quality, no interest C C
In default, in arrears -- D 0.0 %
73.4 % 79.9 %

MINNESOTA TAX-FREE
Fiscal 1993 Debt Holdings, by Rating MOODY'S STANDARD &
POOR'S

INVESTORS SERVICE, INC. CORPORATION
Rating Average A Rating Averag
eA
INVESTMENT GRADE

Highest quality Aaa AAA

High quality Aa 58.2% AA 76.6%

Upper-medium grade A A

Medium grade Baa 9.8% BBB 6.8%
LOWER QUALITY

Moderately speculative Ba 0.0% BB 0.5%

Speculative B 0.0% B 0.0%

Highly speculative Caa 0.0% CCC 3.0%

Poor quality Ca 0.0% CC 0.0%

Lowest quality, no interest C C

In default, in arrears -- D 0.0%

68.0% 86.9%
A THE DOLLAR-WEIGHTED AVERAGE OF DEBT SECURITIES NOT RATED BY MOODY'S
OR
S&P AMOUNTED TO 10.7% FOR MICHIGAN HIGH YIELD AND 5.8% FOR
MINNESOTA TAX-FREE. THIS MAY INCLUDE SECURITIES RATED BY OTHER
NATIONALLY
RECOGNIZED RATING SERVICES, AS WELL AS UNRATED SECURITIES. UNRATED
SECURITIES ARE NOT NECESSARILY LOWER-QUALITY SECURITIES. REFER TO THE
FUND'S
STATEMENT OF ADDITIONAL INFORMATION FOR A MORE COMPLETE DISCUSSION OF

THESE RATINGS.

OHIO HIGH YIELD
Fiscal 1993 Debt Holdings, by Rating MOODY'S STANDARD & POOR'S

INVESTORS SERVICE, INC. CORPORATION
Rating Average A Rating Averag
eA
INVESTMENT GRADE

Highest quality Aaa AAA

High quality Aa 53.6% AA 51.5%

Upper-medium grade A A

Medium grade Baa 15.2% BBB 11.3%
LOWER QUALITY

Moderately speculative Ba 4.0% BB 1.0%

Speculative B 0.0% B 0.4%

Highly speculative Caa 0.0% CCC 0.0%

Poor quality Ca 0.0% CC 0.0%

Lowest quality, no interest C C

In default, in arrears -- D 0.0%

72.8% 64.2%
A THE DOLLAR-WEIGHTED AVERAGE OF DEBT SECURITIES NOT RATED BY MOODY'S
OR
S&P AMOUNTED TO 15.3%. THIS MAY INCLUDE SECURITIES RATED BY OTHER
NATIONALLY RECOGNIZED RATING SERVICES, AS WELL AS UNRATED SECURITIES.

UNRATED SECURITIES ARE NOT NECESSARILY LOWER-QUALITY SECURITIES. REFER
TO THE
FUND'S STATEMENT OF ADDITIONAL INFORMATION FOR A MORE COMPLETE
DISCUSSION
OF THESE RATINGS.

MUNICIPAL SECURITIES are issued to raise money for a variety of public
purposes, including general financing for state and local governments, or
financing for specific projects or public facilities. Municipal securities
may be issued in anticipation of future revenues, and may be backed by the
full taxing power of a municipality, the revenues from a specific project,
or the credit of a private organization. A security's credit may be
enhanced by a bank, insurance company, or other financial institution. A
fund may own a municipal security directly or through a participation
interest.
STATE TAX-FREE SECURITIES include municipal obligations issued by a
state or its counties, municipalities, authorities, or other subdivisions.
The ability of issuers to repay their debt can be affected by many factors
that impact the economic vitality of either the state or a region within
the state.
Other state tax-free securities include general obligations of U.S.
territories and possessions such as Guam, the Virgin Islands, and Puerto
Rico, and their political subdivisions and public corporations. The economy
of Puerto Rico is closely linked to the U.S. economy, and will depend on
the strength of the U.S. dollar, interest rates, the price stability of oil
imports, and the continued existence of favorable tax incentives. Recent
legislation reduced these incentives, but it is impossible to predict what
impact the changes will have.
MUNICIPAL LEASE OBLIGATIONS are used by municipalities to acquire land,
equipment, or facilities. If the municipality stops making payments or
transfers its obligations to a private entity, the obligation could lose
value or become taxable.
PRIVATE ENTITIES may be involved in some municipal securities. For example,
industrial revenue bonds are backed by private entities, and resource
recovery bonds often involve private corporations. The viability of a
project or tax incentives could affect the value and credit quality of
these securities.
ASSET-BACKED SECURITIES may include pools of purchase contracts, financing
leases, or sales agreements entered into by municipalities. These
securities usually rely on continued payments by a municipality, and may
also be subject to prepayment risk.
VARIABLE- AND FLOATING-RATE INSTRUMENTS may have interest rates that move
in tandem with a benchmark, helping to stabilize their prices. Inverse
floaters have interest rates that move in the opposite direction from the
benchmark, making the instrument's market value more volatile.
PUT FEATURES entitle the holder to put (sell back) an instrument to the
issuer or a financial intermediary. In exchange for this benefit, a fund
may pay periodic fees or accept a lower interest rate. Demand features,
standby commitments, and tender options are types of put features.
ADJUSTING INVESTMENT EXPOSURE. A fund can use various techniques to
increase or decrease its exposure to changing security prices, interest
rates, or other factors that affect security values. These techniques may
involve derivative transactions such as buying and selling options and
futures contracts and purchasing indexed securities.
FMR can use these practices to adjust the risk and return characteristics
of a fund's portfolio of investments. If FMR judges market conditions
incorrectly or employs a strategy that does not correlate well with the
fund's investments, these techniques could result in a loss, regardless of
whether the intent was to reduce risk or increase return. These techniques
may increase the volatility of the fund and may involve a small investment
of cash relative to the magnitude of the risk assumed. In addition, these
techniques could result in a loss if the counterparty to the transaction
does not perform as promised.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS are trading practices in
which payment and delivery for the securities take place at a future date.
The market value of a security could change during this period, which could
affect a fund's yield or the market value of its assets.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by
FMR, under the supervision of the Board of Trustees, to be illiquid, which
means that they may be difficult to sell promptly at an acceptable price.
The sale of other securities may be subject to legal restrictions.
Difficulty in selling securities may result in a loss or may be costly to a
fund.
RESTRICTIONS: A fund may not purchase a security if, as a result, more than
10% of its assets would be invested in illiquid securities.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the
risks of investing. This may include limiting the amount of money invested
in any one issuer or, on a broader scale, in any one industry or type of
project. Economic, business, or political changes can affect all securities
of a similar type. A fund that is not diversified may be more sensitive to
these changes, and also to changes in the market value of a single issuer
or industry.
RESTRICTIONS: The funds are considered non-diversified. Generally, to meet
federal tax requirements at the close of each quarter, a fund does not
invest more than 25% of its total assets in any one issuer and, with
respect to 50% of total assets, does not invest more than 5% of its
total assets in any one issuer. These limitations do not apply to
U.S. government securities. A fund may invest more than 25% of its total
assets in tax-free securities that finance similar types of projects.
BORROWING. A fund may borrow from banks or from other funds advised by FMR,
or through reverse repurchase agreements. If a bond fund borrows money, its
share price may be subject to greater fluctuation until the borrowing is
paid off. If the fund makes additional investments while borrowings are
outstanding, this may be considered a form of leverage.
RESTRICTIONS: A fund may borrow only for temporary or emergency purposes,
but not in an amount exceeding 33% of its total assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraphs restate all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraphs, can be changed without shareholder approval.
MICHIGAN MUNICIPAL MONEY MARKET seeks as a high level of current income,
exempt from federal income tax and Michigan personal income tax, as is
consistent with the preservation of capital. The fund will normally invest
so that at least 80% of its income distributions are exempt from federal
and state income tax.
OHIO MUNICIPAL MONEY MARKET seeks a high level of current income, exempt
from federal income tax and from Ohio personal income tax, as is consistent
with the preservation of capital. The fund will normally invest so that at
least 80% of its income distributions are exempt from federal and state
income tax.
MICHIGAN TAX-FREE HIGH YIELD seeks a high level of current income exempt
from federal income tax and from the Michigan personal income tax by
investing primarily in investment-grade municipal bonds. The fund also
seeks income exempt from certain business or corporate taxes. The fund
will normally invest so that at least 80% of its income is exempt from
federal and state income taxes. During periods when FMR believes that state
tax-free obligations that meet the fund's standards are not available, the
fund may invest up to 20% of its assets in obligations whose interest
payments are only federally tax-exempt. The fund may invest up to one-third
of its assets in bonds judged by FMR to be of equivalent quality to
those rated lower than BBB or Baa but not lower than B.
MINNESOTA TAX-FREE seeks a high level of current income exempt from federal
income tax and Minnesota personal income tax by investing primarily in
investment-grade municipal bonds. The fund will normally invest so that at
least 80% of its income is exempt from federal and state income taxes.
During periods when FMR believes that state tax-free obligations that meet
the fund's standards are not available, the fund may invest up to 20% of
its assets in obligations whose interest payments are only federally
tax-exempt. The fund may invest up to one-third of its assets in bonds
judged by FMR to be of equivalent quality to those rated lower than BBB or
Baa but not lower than B.
OHIO TAX-FREE HIGH YIELD seeks a high level of current income exempt from
federal income tax and Ohio personal income tax by investing primarily in
investment-grade municipal bonds. The fund also seeks income exempt from
certain business or corporate taxes. The fund will normally invest so
that at least 80% of its income is exempt from federal and state income
taxes. During periods when FMR believes that state tax-free obligations
that meet the fund's standards are not available, the fund may invest up to
20% of its assets in obligations whose payments are only federally
tax-exempt. The fund may invest up to one-third of its assets in bonds
judged by FMR to be of equivalent quality to those rated lower than BBB or
Baa but not lower than B.
EACH FUND may borrow only for temporary or emergency purposes, but
not in an amount exceeding 33% of its total assets.

This prospectus is printed on recycled paper using soy-based inks.

FIDELITY OHIO TAX-FREE HIGH YIELD PORTFOLIO
FIDELITY MICHIGAN TAX-FREE HIGH YIELD PORTFOLIO
FIDELITY MINNESOTA TAX-FREE PORTFOLIO
FUNDS OF FIDELITY MUNICIPAL TRUST
STATEMENT OF ADDITIONAL INFORMATION
FEBRUARY 17, 1994
This Statement is not a prospectus but should be read in conjunction with
the funds' current Prospectus (dated February 17, 1994 ). Please
retain this document for future reference. Each fund's Annual Report for
the fiscal year ended December 31, 199 3 is incorporated herein by
reference. To obtain an additional copy of the Prospectus or the Annual
Reports, please call Fidelity Distributors Corporation at 1-800-544-8888.
TABLE OF CONTENTS PAGE
Investment Policies and Limitations

Special Factors Affecting Ohio

Special Factors Affecting Michigan

Special Factors Affecting Minnesota

Portfolio Transactions

Valuation of Portfolio Securities

Performance

Additional Purchase and Redemption Information

Distributions and Taxes

FMR

Trustees and Officers

Management Contract

Distribution and Service Plan

Interest of FMR Affiliates

Description of the Trust

Financial Statements

Appendix

INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
CUSTODIAN AND TRANSFER AGENTS
United Missouri Bank, N.A. (United Missouri) and Fidelity Service Company
(FSC)
OMM-ptb-294
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or
limitation states a maximum percentage of a fund's assets that may be
invested in any security or other asset, or sets forth a policy regarding
quality standards, such standard or percentage limitation will be
determined immediately after and as a result of the fund's acquisition of
such security or other asset. Accordingly, any subsequent change in
values, net assets, or other circumstances will not be considered when
determining whether the investment complies with the fund's investment
policies and limitations.
Each fund's fundamental investment policies and limitations cannot be
changed without approval by a "majority of outstanding voting securities"
(as defined in the Investment Company Act of 1940) of that fund.
INVESTMENT LIMITATIONS OF FIDELITY OHIO TAX-FREE HIGH YIELD
PORTFOLIO
(THE OHIO FUND)
THE FOLLOWING ARE THE OHIO FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE OHIO FUND MAY NOT:
(1) issue senior securities , except as permitted under the Investment
Company Act of 1940;
(2) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed
this amount will be reduced within three days (not including Sundays and
holidays) to the extent necessary to comply with the 33 1/3%
limitation;
(3) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(4) purchase the securities of any issuer (other than securities issued
or guaranteed by the U.S. government or any of its agencies or
instrumentalities, or tax-exempt obligations issued or guaranteed by a U.S.
territory or possession or a state or local government, or a political
subdivision of any of the foregoing) if, as a result, more than 25% of the
fund's total assets would be invested in securities of companies whose
principal business activities are in the same industry;
(5) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from investing in securities or other instruments backed by real
estate or securities of companies engaged in the real estate business);
(6) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities);
(7) lend any security or make any other loan if, as a result, more than
33 1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements, or
(8) invest in companies for the purpose of exercising control or
management.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short, unless
it owns or has the right to obtain securities equivalent in kind and amount
to the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) To meet federal tax requirements for qualification as a "regulated
investment company," the fund limits its investments so that at the close
of each quarter of its taxable year: (a) with regard to at least 50% of
total assets, no more than 5% of total assets are invested in the
securities of a single issuer, and (b) no more than 25% of total assets are
invested in the securities of a single issuer. Limitations (a) and (b) do
not apply to "Government securities" as defined for federal tax purposes.
(iii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a registered
investment company or fund for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation {2}). The fund will not
borrow from other funds advised by FMR or its affiliates if total
outstanding borrowings immediately after such borrowing would exceed 15% of
the fund's total assets.
(v) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal, or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(vi) The fund does not currently intend to engage in repurchase agreements
or make loans, but this limitation does not apply to purchases of debt
securities.
(vii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(viii) The fund does not currently intend to invest in oil, gas, or
other mineral exploration or development programs or leases.
(ix) The fund does not currently intend to purchase the securities of
any issuer if those officers and Trustees of the trust and those officers
and directors of FMR who individually own more than 1/2 of 1% of the
securities of such issuer together own more than 5% of such issuer's
securities.
For purposes of limitations (4) and (ii), FMR identifies the issuer
of a security depending on its terms and conditions. In identifying the
issuer, FMR will consider the entity or entities responsible for payment of
interest and repayment of principle and the source of such payments; the
way in which assets and revenues of an issuing political subdivision are
separated from those of other political entities; and whether a government
body is guaranteeing the security.
For the fund's limitations on futures contracts and options transactions,
see the section entitled "Limitations on Futures and Options Transactions"
beginning on page .
INVESTMENT LIMITATIONS OF FIDELITY MICHIGAN TAX-FREE HIGH YIELD
PORTFOLIO
(THE MICHIGAN FUND)
THE FOLLOWING ARE THE MICHIGAN FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS
SET FORTH IN THEIR ENTIRETY. THE MICHIGAN FUND MAY NOT:
(1) issue senior securities , except as permitted under the Investment
Company Act of 1940 ;
(2) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed
this amount will be reduced within three days (not including Sundays and
holidays) to the extent necessary to comply with the 33 1/3%
limitation;
(3) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(4) purchase the securities of any issuer (other than securities issued
or guaranteed by the U.S. government or any of its agencies or
instrumentalities, or tax-exempt obligations issued or guaranteed by a U.S.
territory or possession or a state or local government, or a political
subdivision of any of the foregoing) if, as a result, more than 25% of the
fund's total assets would be invested in securities of companies whose
principal business activities are in the same industry;
(5) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from investing in securities or other instruments backed by real
estate or securities of companies engaged in the real estate business);
(6) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities);
(7) lend any security or make any other loan if, as a result, more than
33 1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements, or
(8) invest in companies for the purpose of exercising control or
management.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short, unless
it owns or has the right to obtain securities equivalent in kind and amount
to the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) To meet federal tax requirements for qualification as a "regulated
investment company," the fund limits its investments so that at the close
of each quarter of its taxable year: (a) with regard to at least 50% of
total assets, no more than 5% of total assets are invested in the
securities of a single issuer, and (b) no more than 25% of total assets are
invested in the securities of a single issuer. Limitations (a) and (b) do
not apply to "Government securities" as defined for federal tax purposes.
(iii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a registered
investment company or fund for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation {2}). The fund will not
borrow from other funds advised by FMR or its affiliates if total
outstanding borrowings immediately after such borrowing would exceed 15% of
the fund's total assets.
(v) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal, or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(vi) The fund does not currently intend to engage in repurchase agreements
or make loans, but this limitation does not apply to purchases of debt
securities.
(vii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(viii) The fund does not currently intend to invest in oil, gas, or
other mineral exploration or development programs or leases;
(ix) The fund does not currently intend to purchase the securities of
any issuer if those officers and Trustees of the trust and those officers
and directors of FMR who individually own more than 1/2 of 1% of the
securities of such issuer together own more than 5% of such issuer's
securities.
For purposes of limitations (4) and (ii) , FMR identifies the issuer
of a security depending on its terms and conditions. In identifying the
issuer, FMR will consider the entity or entities responsible for payment of
interest and repayment of principle and the source of such payments; the
way in which assets and revenues of an issuing political subdivision are
separated from those of other political entities; and whether a government
body is guaranteeing the security.
For the fund's limitations on futures contracts and options transactions,
see the section entitled "Limitations on Futures and Options Transactions"
beginning on page .
INVESTMENT LIMITATIONS OF FIDELITY MINNESOTA TAX-FREE
PORTFOLIO
(THE MINNESOTA FUND)
THE FOLLOWING ARE THE MINNESOTA FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS
SET FORTH IN THEIR ENTIRETY. THE MINNESOTA FUND MAY NOT:
(1) issue senior securities , except as permitted under the Investment
Company Act of 1940;
(2) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed
this amount will be reduced within three days (not including Sundays and
holidays) to the extent necessary to comply with the 33 1/3%
limitation;
(3) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(4) purchase the securities of any issuer (other than securities issued
or guaranteed by the U.S. government or any of its agencies or
instrumentalities, or tax-exempt obligations issued or guaranteed by a U.S.
territory or possession or a state or local government, or a political
subdivision of any of the foregoing) if, as a result, more than 25% of the
fund's total assets would be invested in securities of companies whose
principal business activities are in the same industry;
(5) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from investing in securities or other instruments backed by real
estate or securities of companies engaged in the real estate business);
(6) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities);
(7) lend any security or make any other loan if, as a result, more than
33 1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements, or
(8) invest in companies for the purpose of exercising control or
management.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short, unless
it owns or has the right to obtain securities equivalent in kind and amount
to the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) To meet federal tax requirements for qualification as a "regulated
investment company," the fund limits its investments so that at the close
of each quarter of its taxable year: (a) with regard to at least 50% of
total assets, no more than 5% of total assets are invested in the
securities of a single issuer, and (b) no more than 25% of total assets are
invested in the securities of a single issuer. Limitations (a) and (b) do
not apply to "Government securities" as defined for federal tax purposes.
(iii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a registered
investment company or fund for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation {2}). The fund will not
borrow from other funds advised by FMR or its affiliates if total
outstanding borrowings immediately after such borrowing would exceed 15% of
the fund's total assets.
(v) The fund does not currently intend to purchase any security if, as
a result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal, or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(vi) The fund does not currently intend to engage in repurchase agreements
or make loans, but this limitation does not apply to purchases of debt
securities.
(vii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(viii) The fund does not currently intend to invest in oil, gas, or
other mineral exploration or development programs or leases.
(ix) The fund does not currently intend to purchase the securities of
any issuer if those officers and Trustees of the trust and those officers
and directors of FMR who individually own more than 1/2 of 1% of the
securities of such issuer together own more than 5% of such issuer's
securities.
For purposes of limitations (4) and (ii) , FMR identifies the issuer
of a security depending on its terms and conditions. In identifying the
issuer, FMR will consider the entity or entities responsible for payment of
interest and repayment of principle and the source of such payments; the
way in which assets and revenues of an issuing political subdivision are
separated from those of other political entities; and whether a government
body is guaranteeing the security.
For the fund's limitations on futures contracts and options transactions,
see the section entitled "Limitations on Futures and Options Transactions"
beginning on page .
AFFILIATED BANK TRANSACTIONS. Pursuant to exemptive orders issued by
the Securities and Exchange Commission (SEC), each fund may engage in
transactions with banks that are, or may be considered to be, "affiliated
persons" of the fund under the Investment Company Act of 1940. Such
transactions may be entered into only pursuant to procedures established
and periodically reviewed by the Board of Trustees. These transactions may
include repurchase agreements with custodian banks; purchases, as
principal, of short-term obligations of, and repurchase agreements with,
the 50 largest U.S. banks (measured by deposits); transactions in municipal
securities; and transactions in U.S. government securities with affiliated
banks that are primary dealers in these securities.
DELAYED-DELIVERY TRANSACTIONS. Each fund may buy and sell
securities on a delayed-delivery or when-issued basis. These transactions
involve a commitment by the fund to purchase or sell specific securities at
a predetermined price or yield, with payment and delivery taking place
after the customary settlement period for that type of security (and more
than seven days in the future). Typically, no interest accrues to the
purchaser until the security is delivered. The funds may receive fees for
entering into delayed-delivery transactions.
When purchasing securities on a delayed-delivery basis, each fund
assumes the rights and risks of ownership, including the risk of price and
yield fluctuations. Because a fund is not required to pay for
securities until the delivery date, these risks are in addition to the
risks associated with the fund's other investments. If a fund remains
substantially fully invested at a time when delayed-delivery purchases are
outstanding, the delayed-delivery purchases may result in a form of
leverage. When delayed-delivery purchases are outstanding, the fund will
set aside appropriate liquid assets in a segregated custodial account to
cover its purchase obligations. When a fund has sold a security on a
delayed-delivery basis, the fund does not participate in further gains or
losses with respect to the security. If the other party to a
delayed-delivery transaction fails to deliver or pay for the securities,
the fund could miss a favorable price or yield opportunity, or could suffer
a loss.
Each fund may renegotiate delayed-delivery transactions after they are
entered into, and may sell underlying securities before they are delivered,
which may result in capital gains or losses.
REFUNDING CONTRACTS. The funds may purchase securities on a when-issued
basis in connection with the refinancing of an issuer's outstanding
indebtedness. Refunding contracts require the issuer to sell and the fund
to buy refunded municipal obligations at a stated price and yield on a
settlement date that may be several months or several years in the future.
The funds generally will not be obligated to pay the full purchase price if
they fail to perform under a refunding contract. Instead, refunding
contracts generally provide for payment of liquidated damages to the issuer
(currently 15-20% of the purchase price). A fund may secure its obligations
under a refunding contract by depositing collateral or a letter of credit
equal to the liquidated damages provisions of the refunding contract. When
required by SEC guidelines, each fund will place liquid assets in a
segregated custodial account equal in amount to its obligations under
refunding contracts.
INVERSE FLOATERS are instruments whose interest rates bear an
inverse relationship to the interest rate on another security or the value
of an index. Changes in the interest rate on the other security or index
inversely affect the residual interest rate paid on the inverse floater,
with the result that the inverse floater's price will be considerably more
volatile than that of a fixed-rate bond. For example, a municipal issuer
may decide to issue two variable-rate instruments instead of a single
long-term, fixed-rate bond. The interest rate on one instrument reflects
short-term interest rates, while the interest rate on the other instrument
(the inverse floater) reflects the approximate rate the issuer would have
paid on a fixed-rate bond, multiplied by two, minus the interest rate paid
on the short-term instrument. Depending on market availability, the two
portions may be recombined to form a fixed-rate municipal bond. The market
for inverse floaters is relatively new.
VARIABLE OR FLOATING RATE OBLIGATIONS bear variable or floating interest
rates and carry rights that permit holders to demand payment of the unpaid
principal balance plus accrued interest from the issuers or certain
financial intermediaries. Floating rate instruments have interest rates
that change whenever there is a change in a designated base rate while
variable rate instruments provide for a specified periodic adjustment in
the interest rate. These formulas are designed to result in a market value
for the instrument that approximates its par value.
TENDER OPTION BONDS are created by coupling an intermediate or long-term
fixed-rate tax-exempt bond (generally held pursuant to a custodial
arrangement) with a tender agreement that gives the holder the option to
tender the bond at its face value. As consideration for providing the
tender option, the sponsor (usually a bank, broker-dealer, or other
financial institution) receives periodic fees equal to the difference
between the bond's fixed coupon rate and the rate (determined by a
remarketing or similar agent) that would cause the bond, coupled with the
tender option, to trade at par on the date of such determination. After
payment of the tender option fee, the fund effectively holds a demand
obligation that bears interest at the prevailing short-term tax-exempt
rate. In selecting tender option bonds for the funds, FMR will consider
the creditworthiness of the issuer of the underlying bond, the custodian,
and the third party provider of the tender option. In certain instances, a
sponsor may terminate a tender option if, for example, the issuer of the
underlying bond defaults on interest payments.
ZERO COUPON BONDS do not make regular interest payments. Instead,
they are sold at a deep discount from their face value and are redeemed at
face value when they mature. Because zero coupon bonds do not pay current
income, their prices can be very volatile when interest rates change. In
calculating its daily dividend, a fund takes into account as income a
portion of the difference between a zero coupon bond's purchase price and
its face value.
STANDBY COMMITMENTS are puts that entitle holders to same-day
settlement at an exercise price equal to the amortized cost of the
underlying security plus accrued interest, if any, at the time of exercise.
Each fund may acquire standby commitments to enhance the liquidity of
portfolio securities.
Ordinarily a fund will not transfer a standby commitment to a third
party, although it could sell the underlying municipal security to a third
party at any time. A fund may purchase standby commitments separate from or
in conjunction with the purchase of securities subject to such commitments.
In the latter case, the fund would pay a higher price for the securities
acquired, thus reducing their yield to maturity.
Issuers or financial intermediaries may obtain letters of credit or
other guarantees to support their ability to buy securities on demand. FMR
may rely upon its evaluation of a bank's credit in determining whether to
support an instrument supported by a letter of credit. In evaluating a
foreign bank's credit, FMR will consider whether adequate public
information about the bank is available and whether the bank may be subject
to unfavorable political or economic developments, currency controls, or
other governmental restrictions that might affect the bank's ability to
honor its credit commitment.
Standby commitments are subject to certain risks, including the ability
of issuers of standby commitments to pay for securities at the time the
commitments are exercised; the fact that standby commitments are not
marketable by the funds; and the possibility that the maturities of the
underlying securities may be different from those of the commitments.
MUNICIPAL LEASE OBLIGATIONS. Each fund may invest a portion of
its assets in municipal leases and participation interests therein. These
obligations, which may take the form of a lease, an installment purchase,
or a conditional sale contract, are issued by state and local governments
and authorities to acquire land and a wide variety of equipment and
facilities. Generally, the funds will not hold such obligations directly as
a lessor of the property, but will purchase a participation interest in a
municipal obligation from a bank or other third party. A participation
interest gives a fund a specified, undivided interest in the obligation in
proportion to its purchased interest in the total amount of the
obligation.
Municipal leases frequently have risks distinct from those associated
with general obligation or revenue bonds. State constitutions and statutes
set forth requirements that states or municipalities must meet to incur
debt. These may include voter referenda, interest rate limits, or public
sale requirements. Leases, installment purchases, or conditional sale
contracts (which normally provide for title to the leased asset to pass to
the governmental issuer) have evolved as a means for governmental issuers
to acquire property and equipment without meeting their constitutional and
statutory requirements for the issuance of debt. Many leases and contracts
include "non-appropriation clauses" providing that the governmental issuer
has no obligation to make future payments under the lease or contract
unless money is appropriated for such purposes by the appropriate
legislative body on a yearly or other periodic basis. Non-appropriation
clauses free the issuer from debt issuance limitations.
FEDERALLY TAXABLE OBLIGATIONS. The funds do not intend to invest in
securities whose interest is federally taxable; however, from time to time,
each fund may invest a portion of its assets on a temporary basis in
fixed-income obligations whose interest is subject to federal income tax.
For example, each fund may invest in obligations whose interest is
federally taxable pending the investment or reinvestment in municipal
securities of proceeds from the sale of its shares or sales of portfolio
securities.
Should a fund invest in federally taxable obligations, it would purchase
securities that in FMR's judgment are of high quality. These would include
obligations issued or guaranteed by the U.S. government or its agencies or
instrumentalities; obligations of domestic banks; and repurchase
agreements. The funds standards for high-quality, taxable obligations are
essentially the same as those described by Moody's Investors Service, Inc.
(Moody's) in rating corporate obligations within its two highest ratings of
Prime-1 and Prime-2, and those described by Standard & Poor's
Corporation (S&P) in rating corporate obligations within its two
highest ratings of A-1 and A-2.
Proposals to restrict or eliminate the federal income tax exemption for
interest on municipal obligations are introduced before Congress from time
to time. Proposals also may be introduced before the Ohio, Michigan, and
Minnesota state legislatures that would affect the state tax treatment of
the funds' distributions. If such proposals were enacted, the availability
of municipal obligations and the value of the funds' holdings would be
affected and the Trustees would reevaluate the funds' investment objectives
and policies.
Each fund anticipates being as fully invested as practicable in
municipal securities; however, there may be occasions when, as a result of
maturities of portfolio securities, sales of fund shares, or in order to
meet redemption requests, a fund may hold cash that is not earning income.
In addition, there may be occasions when, in order to raise cash to meet
redemptions, a fund may be required to sell securities at a loss.
LOWER-RATED MUNICIPAL SECURITIES. The funds may each invest a portion of
assets in lower-rated municipal securities as described in the Prospectus.
While the market for Ohio, Michigan, and Minnesota municipal securities is
considered to be substantial, adverse publicity and changing investor
perceptions may affect the ability of outside pricing services used by a
fund to value its portfolio securities, and the fund's ability to dispose
of lower-rated bonds. The outside pricing services are consistently
monitored to assure that securities are valued by a method that the Board
believes accurately reflects fair value. The impact of changing investor
perceptions may be especially pronounced in markets where municipal
securities are thinly traded.
A fund may choose, at it's expense or in conjunction with others, to pursue
litigation or otherwise exercise its rights as a security holder to seek to
protect the interests of security holders if they determine this to be in
the best interest of the fund's shareholders.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund purchases a
security and simultaneously commits to resell that security to the seller
at an agreed upon price on an agreed upon date within a number of days from
the date of purchase. The resale price reflects the purchase price plus an
agreed upon incremental amount which is unrelated to the coupon rate or
maturity of the purchased security. A repurchase agreement involves the
obligation of the seller to pay the agreed upon price, which obligation is
in effect secured by the value (at least equal to the amount of the agreed
upon resale price and marked to market daily) of the underlying security.
Each fund may engage in repurchase agreements with respect to any security
in which it is authorized to invest. While it does not presently appear
possible to eliminate all risks from these transactions (particularly the
possibility of a decline in the market value of the underlying securities,
as well as delays and costs to the funds in connection with bankruptcy
proceedings), it is each fund's current policy to limit repurchase
agreement transactions to those parties whose creditworthiness has been
reviewed and found satisfactory by FMR.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund
sells a portfolio instrument to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase the instrument
at a particular price and time. While a reverse repurchase agreement is
outstanding, the fund will maintain appropriate liquid assets in a
segregated custodial account to cover its obligation under the agreement.
The funds will enter into reverse repurchase agreements only with parties
whose creditworthiness is deemed satisfactory by FMR. Such transactions
may increase fluctuations in the market value of the fund's assets and may
be viewed as a form of leverage.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of
in the ordinary course of business at approximately the prices at which
they are valued. Under the supervision of the Board of Trustees, FMR
determines the liquidity of the fund's investments and, through reports
from FMR, the Board monitors investments in illiquid instruments. In
determining the liquidity of the fund's investments, FMR may consider
various factors, including (1) the frequency of trades and quotations, (2)
the number of dealers and prospective purchasers in the marketplace, (3)
dealer undertakings to make a market, (4) the nature of the security
(including any demand or tender features), and (5) the nature of the
marketplace for trades (including the ability to assign or offset the
fund's rights and obligations relating to the investment). Investments
currently considered by the funds to be illiquid include over-the-counter
options. Also, FMR may determine some restricted securities and municipal
lease obligations to be illiquid. However, with respect to
over-the-counter options a fund writes, all or a portion of the value of
the underlying instrument may be illiquid depending on the assets held to
cover the option and the nature and terms of any agreement a fund may have
to close out the option before expiration. In the absence of market
quotations, illiquid investments are priced at fair value as determined in
good faith by a committee appointed by the Board of Trustees. If through a
change in values, net assets, or other circumstances, a fund were in a
position where more than 10% of its net assets were invested in illiquid
securities, it would seek to take appropriate steps to protect
liquidity.
RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, the fund may be obligated to pay all or part of
the registration expense and a considerable period may elapse between the
time it decides to seek registration and the time the fund may be permitted
to sell a security under an effective registration statement. If, during
such a period, adverse market conditions were to develop, the fund might
obtain a less favorable price than prevailed when it decided to seek
registration of the security.
INDEXED SECURITIES. Each fund may purchase securities whose prices are
indexed to the prices of other securities, securities indices, or other
financial indicators. Indexed securities typically, but not always, are
debt securities or deposits whose value at maturity or coupon rate is
determined by reference to a specific instrument or statistic. Indexed
securities may have principal payments as well as coupon payments that
depend on the performance of one or more interest rates. Their coupon
rates or principal payments may change by several percentage points for
every 1% interest rate change. One example of indexed securities is
inverse floaters.
The performance of indexed securities depends to a great extent on the
performance of the security or other instrument to which they are indexed,
and may also be influenced by interest rate changes. At the same time,
indexed securities are subject to the credit risks associated with the
issuer of the security, and their values may decline substantially if the
issuer's creditworthiness deteriorates. Indexed securities may be more
volatile than the underlying instruments.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. Each fund has filed a
notice of eligibility for exclusion from the definition of the term
"commodity pool operator" with the Commodity Futures Trading Commission
(CFTC) and the National Futures Association, which regulate trading in the
futures markets. The funds intend to comply with Section 4.5 of the
regulations under the Commodity Exchange Act, which limits the extent to
which the funds can commit assets to initial margin deposits and option
premiums.
In addition, each fund will not: (a) sell futures contracts, purchase
put options, or write call options if, as a result, more than 25% of the
fund's total assets would be hedged with futures and options under normal
conditions; (b) purchase futures contracts or write put options if, as a
result, the fund's total obligations upon settlement or exercise of
purchased futures contracts and written put options would exceed 25% of its
total assets; or (c) purchase call options if, as a result, the current
value of option premiums for call options purchased by the fund would
exceed 5% of the fund's total assets. These limitations do not apply to
options attached to or acquired or traded together with their underlying
securities, and do not apply to securities that incorporate features
similar to options.
The above limitations on the funds' investments in futures contracts and
options, and the funds' policies regarding futures contracts and options
discussed elsewhere in this Statement of Additional Information, are not
fundamental policies and may be changed as regulatory agencies permit.
FUTURES CONTRACTS. When a fund purchases a futures contract, it agrees to
purchase a specified underlying instrument at a specified future date.
When the fund sells a futures contract, it agrees to sell the underlying
instrument at a specified future date. The price at which the purchase and
sale will take place is fixed when a fund enters into the contract. Some
currently available futures contracts are based on specific securities ,
such as U.S. Treasury bonds or notes, and some are based on indices of
securities prices, such as the Bond Buyer Municipal Bond Index. Futures
can be held until their delivery dates, or can be closed out before then if
a liquid secondary market is available.
The value of a futures contract tends to increase and decrease in tandem
with the value of its underlying instrument. Therefore, purchasing futures
contracts will tend to increase the fund's exposure to positive and
negative price fluctuations in the underlying instrument, much as if it had
purchased the underlying instrument directly. When a fund sells a futures
contract, by contrast, the value of its futures position will tend to move
in a direction contrary to the market. Selling futures contracts,
therefore, will tend to offset both positive and negative market price
changes, much as if the underlying instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract is
not required to deliver or pay for the underlying instrument unless the
contract is held until the delivery date. However, both the purchaser and
seller are required to deposit "initial margin" with a futures broker,
known as a futures commission merchant (FCM), when the contract is entered
into. Initial margin deposits are typically equal to a percentage of the
contract's value. If the value of either party's position declines, that
party will be required to make additional "variation margin" payments to
settle the change in value on a daily basis. The party that has a gain may
be entitled to receive all or a portion of this amount. Initial and
variation margin payments do not constitute purchasing securities on margin
for purposes of the fund's investment limitations. In the event of the
bankruptcy of an FCM that holds margin on behalf of the fund, the fund may
be entitled to return of margin owed to it only in proportion to the amount
received by the FCM's other customers, potentially resulting in losses to
the fund.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, a fund
obtains the right (but not the obligation) to sell the option's underlying
instrument at a fixed strike price. In return for this right, the fund
pays the current market price for the option (known as the option premium).
Options have various types of underlying instruments, including specific
securities, indices of securities prices, and futures contracts. The fund
may terminate its position in a put option it has purchased by allowing it
to expire or by exercising the option. If the option is allowed to expire,
the fund will lose the entire premium it paid. If the fund exercises the
option, it completes the sale of the underlying instrument at the strike
price. A fund may also terminate a put option position by closing
it out in the secondary market at its current price, if a liquid secondary
market exists.
The buyer of a typical put option can expect to realize a gain if security
prices fall substantially. However, if the underlying instrument's price
does not fall enough to offset the cost of purchasing the option, a put
buyer can expect to suffer a loss (limited to the amount of the premium
paid, plus related transaction costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's
strike price. A call buyer typically attempts to participate in potential
price increases of the underlying instrument with risk limited to the cost
of the option if security prices fall. At the same time, the buyer can
expect to suffer a loss if security prices do not rise sufficiently to
offset the cost of the option.
WRITING PUT AND CALL OPTIONS. When a fund writes a put option, it takes
the opposite side of the transaction from the option's purchaser. In
return for receipt of the premium, the fund assumes the obligation to pay
the strike price for the option's underlying instrument if the other party
to the option chooses to exercise it. When writing an option on a futures
contract the fund will be required to make margin payments to an FCM as
described above for futures contracts. A fund may seek to terminate
its position in a put option it writes before exercise by closing out the
option in the secondary market at its current price. If the secondary
market is not liquid for a put option the fund has written, however, the
fund must continue to be prepared to pay the strike price while the option
is outstanding, regardless of price changes, and must continue to set aside
assets to cover its position.
If security prices rise, a put writer would generally expect to profit,
although its gain would be limited to the amount of the premium it
received. If security prices remain the same over time, it is likely that
the writer will also profit, because it should be able to close out the
option at a lower price. If security prices fall, the put writer would
expect to suffer a loss. This loss should be less than the loss from
purchasing the underlying instrument directly, however, because the premium
received for writing the option should mitigate the effects of the decline.
Writing a call option obligates a fund to sell or deliver the
option's underlying instrument, in return for the strike price, upon
exercise of the option. The characteristics of writing call options are
similar to those of writing put options, except that writing calls
generally is a profitable strategy if prices remain the same or fall.
Through receipt of the option premium, a call writer mitigates the effects
of a price decline. At the same time, because a call writer must be
prepared to deliver the underlying instrument in return for the strike
price, even if its current value is greater, a call writer gives up some
ability to participate in security price increases.
COMBINED POSITIONS. A fund may purchase and write options in combination
with each other, or in combination with futures or forward contracts, to
adjust the risk and return characteristics of the overall position. For
example, a fund may purchase a put option and write a call option on
the same underlying instrument, in order to construct a combined position
whose risk and return characteristics are similar to selling a futures
contract. Another possible combined position would involve writing a call
option at one strike price and buying a call option at a lower price, in
order to reduce the risk of the written call option in the event of a
substantial price increase. Because combined options positions involve
multiple trades, they result in higher transaction costs and may be more
difficult to open and close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of types
of exchange-traded options and futures contracts, it is likely that the
standardized contracts available will not match a fund's current or
anticipated investments exactly. The fund s may invest in options
and futures contracts based on securities with different issuers,
maturities, or other characteristics from the securities in which
they typically invest , which involves a risk that the options
or futures position will not track the performance of a fund's other
investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match a
fund's investments well. Options and futures prices are affected by such
factors as current and anticipated short-term interest rates, changes in
volatility of the underlying instrument, and the time remaining until
expiration of the contract, which may not affect security prices the same
way. Imperfect correlation may also result from differing levels of demand
in the options and futures markets and the securities markets, from
structural differences in how options and futures and securities are
traded, or from imposition of daily price fluctuation limits or trading
halts. A fund may purchase or sell options and futures contracts
with a greater or lesser value than the securities it wishes to hedge or
intends to purchase in order to attempt to compensate for differences in
volatility between the contract and the securities, although this may not
be successful in all cases. If price changes in a fund's options or
futures positions are poorly correlated with its other investments, the
positions may fail to produce anticipated gains or result in losses that
are not offset by gains in other investments.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a liquid
secondary market will exist for any particular options or futures contract
at any particular time. Options may have relatively low trading volume and
liquidity if their strike prices are not close to the underlying
instrument's current price. In addition, exchanges may establish daily
price fluctuation limits for options and futures contracts, and may halt
trading if a contract's price moves upward or downward more than the limit
in a given day. On volatile trading days when the price fluctuation limit
is reached or a trading halt is imposed, it may be impossible for a
fund to enter into new positions or close out existing positions. If the
secondary market for a contract is not liquid because of price fluctuation
limits or otherwise, it could prevent prompt liquidation of unfavorable
positions, and potentially could require a fund to continue to hold
a position until delivery or expiration regardless of changes in its value.
As a result, a fund's access to other assets held to cover its
options or futures positions could also be impaired.

OTC OPTIONS. Unlike exchange-traded options, which are standardized with
respect to the underlying instrument, expiration date, contract size, and
strike price, the terms of over-the-counter options (options not traded on
exchanges) generally are established through negotiation with the other
party to the option contract. While this type of arrangement allows the
fund s greater flexibility to tailor an option to its needs, OTC
options generally involve greater credit risk than exchange-traded options,
which are guaranteed by the clearing organization of the exchanges where
they are traded.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. The funds will comply
with guidelines established by the Securities and Exchange Commission with
respect to coverage of options and futures strategies by mutual funds, and
if the guidelines so require will set aside appropriate liquid assets in a
segregated custodial account in the amount prescribed. Securities held in
a segregated account cannot be sold while the futures or option strategy is
outstanding, unless they are replaced with other suitable assets. As a
result, there is a possibility that segregation of a large percentage of
a fund's assets could impede portfolio management or the fund's
ability to meet redemption requests or other current obligations.
ELECTRIC UTILITIES INDUSTRY. The electric utilities industry has been
experiencing, or may experience in the future, problems, including (a) the
effects of inflation upon construction and operating costs, (b) the
availability and cost of fuel, (c) the availability and cost of capital,
(d) the effects of conservation on energy demand, (e) the effects of
rapidly changing environmental, safety, and licensing requirements, and
other federal, state, and local regulations, (f) timely and sufficient rate
increases, (g) opposition to nuclear power, and (h) increased competition.
HEALTH CARE INDUSTRY. The health care industry is subject to regulatory
action by a number of private and governmental agencies, including federal,
state, and local governmental agencies. A major source of revenues for the
health care industry is payments from the Medicare and Medicaid programs.
As a result, the industry is sensitive to legislative changes and
reductions in governmental spending for such programs. Numerous other
factors may affect the industry, such as general and local economic
conditions; demand for services; expenses (including malpractice insurance
premiums); and competition among health care providers. In the future, the
following elements may adversely affect health care facility operations:
adoption of legislation proposing a national health insurance program;
medical and technological advances which dramatically alter the need for
health services or the way in which such services are delivered; and
efforts by employers, insurers, and governmental agencies to reduce the
costs of health insurance and healthcare services.
HOUSING. Housing revenue bonds are generally issued by a state, county,
city, local housing authority, or other public agency. They are secured by
the revenues derived from mortgages purchased with the proceeds of the bond
issue. It is extremely difficult to predict the supply of available
mortgages to be purchased with the proceeds of an issue or the future cash
flow from the underlying mortgages. Consequently, there are risks that
proceeds will exceed supply, resulting in early retirement of bonds, or
that homeowner repayments will create an irregular cash flow.
Many factors may affect the financing of multi-family housing projects,
including acceptable completion of construction, proper management,
occupancy and rent levels, economic conditions, and changes to current laws
and regulations.
EDUCATION. In general, there are two types of education-related bonds;
those issued to finance projects for public colleges and universities, and
those representing pooled interests in student loans. Bonds issued to
supply public educational institutions with funds are subject to the risk
of unanticipated revenue decline, primarily the result of decreasing
student enrollment. Among the factors that may affect enrollment are
restrictions on students' ability to pay tuition, availability of state and
federal funding, and general economic conditions.
Student loan revenue bonds are backed by pools of student loans and are
generally offered by state (or substate) authorities or commissions.
Student loans are guaranteed by state guarantee agencies and reinsured by
the Department of Education. The risks associated with these issues is
that default on the student loans may result in prepayment to bondholders
and an earlier-than-anticipated retirement of the bond.
SPECIAL FACTORS AFFECTING OHIO
The following only highlights some of Ohio 's more significant
financial trends and problems, and is based on information drawn from
official statements and prospectuses relating to securities offerings of
the State of Ohio, its agencies, and instrumentalities as available on the
date of this Statement of Additional Information. FMR has not
independently verified any of the information contained in such official
statements and other publicly available documents, but is not aware of any
fact that would render such information inaccurate.
The State of Ohio operates on the basis of a fiscal biennium for its
appropriations and expenditures. Under current law the biennium for
operating purposes runs from July 1 in an odd-numbered year to June 30 in
the next odd-numbered year with fiscal years within a fiscal biennium
running from July 1 to June 30 (references to a particular fiscal year
refer to the fiscal year ending on June 30 of each year) . The State is
effectively precluded by law from ending a fiscal year or a biennium in a
deficit position. The Governor has the power to order state agencies to
operate within their means. The State carries out most of its operations
through the general revenue fund (GRF) which receives general State
revenues not otherwise dedicated. GRF revenues are derived mainly from
personal income, sales/use, corporate, and corporation franchise taxes.
There is no present constitutional limit on the rates of state-levied
taxes, except for taxes on intangible property.
Economic activity in Ohio, as in many other industrially developed
states, tends to be more cyclical than in some other states and the nation
as a whole. In the 1980's Ohio experienced an unemployment rate
generally higher than the United States average, largely due to the
importance of heavy industry and manufacturing to Ohio's economy. This
trend has not continued in the 1990's. Although manufacturing (including
automobile-related manufacturing) in Ohio remains an important part of the
state's economy, the greatest growth in employment in Ohio in recent
years, consistent with national trends, has been in the non-manufacturing
areas. The State's experience is similar to that of other midwestern
states with comparable economic structures.
Budgetary shortfalls in recessionary periods have required emergency
spending reductions by the Governor and the adoption of temporary and
permanent tax increases and/or new tax measures by the General
Assembly to meet the State's constitutional requirement that the State end
each year without a deficit. No appropriations for debt service, however,
were affected by the spending reductions, and the State has, in fact, ended
each fiscal year with a budget surplus
The 1989-91 recession in the United States has had an adverse effect on
both the economy in Ohio and the financial condition of the State of Ohio
and its underlying municipalities. In December of 1991, the Ohio Office of
Budget and Management (OBM) projected a 1992 fiscal year imbalance in the
GRF . As an initial action, the Governor ordered most state agencies
to reduce GRF appropriations spending in the final six months of fiscal
year 1992, by approximately $184 million and the General Assembly
authorized the OBM to transfer to the GRF the $100.4 million balance in the
Budget Stabilization Fund. Other revenue and spending actions,
legislative and administrative, resolved the remaining GRF imbalance for
fiscal year 1992.
In response to OBM's projections of a $520 million GRF shortfall for
fiscal year 1993, the Governor ordered, effective July 1, 1992; selected
GRF appropriations reductions totalling $300 million. Subsequent executive
and legislative actions - including tax revisions that produced an
additional $194.5 million in fiscal 1993, and an additional $50 million in
appropriations spending reductions - resulted in positive biennium-ending
GRF balances. Appropriations for debt service were expressly excluded from
the Governor's appropriation orders.
The GRF appropriations bill for the 1994-95 biennium was passed on June
30, 1993, and signed, with selective vetoes, by the Governor. The
appropriations acts as passed and signed include all necessary
appropriations for debt service on State obligations.
A number of local Ohio communities and school districts have also faced
significant financial problems. The State has esta blished procedures
for municipal fiscal emergencies, under which joint state/local commissions
are established to monitor the fiscal affairs of a financially troubled
municipality, and the municipality must develop a financial plan to
eliminate deficits and cure any defaults. Since their adoption in 1979,
these procedures have been applied to twenty- three cities and
villages, including the City of Cleveland; in eighteen of these
communities, the fiscal situation has been resolved and the procedures
terminated.
Local school districts in Ohio receive a major portion of their operational
funds from state subsidies, but are dependent upon local taxes for
significant portions of their budgets. Local school districts are also
authorized to submit for voter approval an income tax on the district
income of individuals and estates. In part because of provisions of
some State laws, such as the law partially limiting (without voter
approval) the increase in property tax collections that would otherwise
result from increased assessed valuations, some school districts in recent
years have experienced difficulty in meeting mandated and discretionary
increased costs. In addition, the Governor's appropriations reduction
orders described above have, in some instances, included reductions in
appropriations for state school subsidy programs. A small number of
local school districts have required emergency advances from the State in
order to prevent year-end deficits. The number of districts applying for
aid has fluctuated over the years; during the 1979 fiscal year through the
1989 fiscal year, a total of 143 loans totaling $137.4 million had been
made to school districts (with enhanced provisions for individual district
borrowing) replaced the emergency advance loan program for fiscal years
subsequent to fiscal year 1989. In fiscal year 1993, there were 43 loans
made for an aggregate amount of $94.5 million (including one loan of $75
million to the Cleveland City School District). As of December 30, 1993,
twelve school districts have approval for loans totaling $5.7 million in
fiscal 1994.
Litigation contesting the Ohio system of school funding is pending in
two Ohio courts. One case, brought by among others, the Cleveland City
School District, is stated to be in the nature of a class action on behalf
of all similarly situated Ohio school districts. Named as defendants in
both actions are the state and several state agencies and officials. Among
other relief sought, the complaints request decrees as may be required to
compel the State and the General Assembly to devise and enact a
constitutionally acceptable system of school funding. Since the trial has
begun in one of these cases is not yet completed, and since in any case the
trial court judgement is subject to appeal, it is not possible at this time
to state whether either suit will be successful or, should plaintiffs
prevail, the effect on the state's present school funding system.
SPECIAL FACTORS AFFECTING MICHIGAN
The following only highlights some of Michigan's more significant
financial trends and problems, and is based in part on information drawn
from official statements and prospectuses relating to securities offerings
of the State of Michigan, its agencies and instrumentalities as available
on the date of this Statement of Additional Information. FMR has not
independently verified any of the information contained in such official
statements and other publicly available documents, but is not aware of any
fact that would render such information inaccurate.
Constitutional State Revenue Limitations. Under the Michigan
Constitution, the Legislature is prohibited from imposing taxes of any kind
for any fiscal year which, together with other revenues of the State
(federal aid excluded), exceed 10% of the total income received by persons
in Michigan from all sources as reported by the United States Department of
Commerce in the prior calendar year or 10% of the average of such total
income in the previous three calendar years, whichever is greater. Unless
approved by the majority of the qualified electors voting on the question,
this revenue limit may not be exceeded except in the case of a specific
emergency declared by a two-thirds vote, at the request of the Governor, of
the members elected and serving in each House of the Legislature. The
foregoing revenue limit does not apply to taxes imposed for the payment of
principal of and interest on bonds of the State, if the bonds are approved
by voters and authorized by a vote at the request of two-thirds of the
members of each House of the Legislature.
The Constitution prohibits the State from reducing the proportion of
total State spending paid to all local units of government, taken as a
group, below that proportion in effect in the 1978-79 fiscal year or from
requiring new or increased levels of activities of services to be provided
by such units unless a State appropriation is made to pay the affected
units for any necessary increased costs.
Constitutional Local Tax Limitations. Under the Michigan Constitution,
the total amount of general ad valorem taxes imposed on taxable property in
any year cannot exceed certain millage limitations specified by the
Constitution, statute or charter. The Constitution was amended by popular
vote in November 1978 (effective December 23, 1978) to prohibit local units
of government from levying any tax not authorized by law or charter, or
from increasing the rate of an existing tax above the rate authorized by
law or charter, at the time the amendments were ratified, without the
approval of a majority of the electors of the local unit voting on the
question.
Local units of government and local authorities are authorized to issue
bonds and other evidences of indebtedness in a variety of situations
without the approval of electors, but the ability of the obligor to levy
taxes for the payment of such obligations is subject to the foregoing
limitations unless the obligations were authorized before December 23, 1978
or approved by the electors.
The 1978 amendments to the Constitution also contain millage reduction
provisions. Under such provisions, should the value of taxable property
(exclusive of new construction and improvements) increase at a percentage
greater than the percentage increase in the Consumer Price Index, the
maximum authorized tax rate would be reduced by a factor which would result
in the same maximum potential tax revenues to the local taxing unit as if
the valuation of taxable property (less new construction and improvements)
had grown only at the Consumer Price Index rate instead of at the higher
actual growth rate. Thus, if taxable property values rise faster than
consumer prices, the maximum authorized tax rate would be reduced
accordingly. Conversely, if consumer prices rise faster than taxable
property values, the maximum authorized tax rate would be increased
accordingly, but never higher than the tax rate authorized on December 23,
1978, without elector approval.
Property Tax Reform Proposals. In recent years, numerous property tax
reform proposals have been introduced in the Michigan legislature. In
November 1992, the electorate defeated two proposed constitutional
amendments that would have reduced property taxes for local school
operating purposes or capped tax assessment increase. A third proposal was
rejected at a special election in June 1993.
In August 1993, the Governor signed into law legislation ("Act 145")
that exempted all property in Michigan from millage levied for local school
operating purposes (except for community college operations). However, Act
145 did not provide a method for replacing school operating revenues lost
by the exemption or provide any other means of financing public education.
Act 145 did not affect taxes levied for the payment of debt service on
general obligation bonds or other obligations, subject to the limitations
described above under "Constitutional Local Tax Limitations".
On December 24, 1993, the Legislature adopted legislation that provides
for school operating revenues to replace those that Act 145 eliminated.
The legislation provides for a ballot proposal that will be placed before
the voters in a March 15, 1994 special election and a statutory plan that
will take effect if the ballot proposal is not adopted.
The ballot proposal provides for, among other things, an increase in the
sales tax from 4% to 6%, a 2% tax on the transfer of property, a reduction
in the income tax from 4.6% to 4.4% and a reinstatement of certain property
taxes (6 mills on homesteads and up to 24 mills on other property, a
reduction in the income tax from 4.6% to 6%, an increase in the single
business tax from 2.35% to 2.75%, a 1% tax on the transfer of property and
a reinstatement of certain property taxes (12 mills on homesteads and up to
24 mills on other property), but no increase in the current 4% sales tax.
The ballot proposal and the statutory plan both include certain cigarette
and tobacco tax increases and new taxes on interstate telephone calls.
Neither the ultimate impact of these latest tax reform measures, nor the
nature, extent or impact of any other tax reform proposals that may be
adopted, can be predicted.
Effect of Limitations on Ability to Pay Bonds. The ability of the State
of Michigan to pay the principal of and interest on its general obligation
bonds may be affected by the limitations described above under
"Constitutional State Revenue Limitations." Similarly, the ability of
local units of government to levy taxes to pay the principal of and
interest on their general obligation bonds is subject to the
constitutional, statutory, and charter limitations described above under
"Constitutional Local Tax Limitations."
In general, revenue bonds issued by the State, by local units of
government, or by authorities created by the State or local units of
government are payable solely from such specified revenues (other than tax
revenues) as are pledged for that purpose, and such authorities generally
have no taxing power.
Effect of General Economic Conditions in Michigan. Michigan is an
industrialized state, the economy of which is dominated by the automobile
industry and related industries and tends to be more vulnerable to economic
downturns than the economies of many other states and the nation as a
whole. These industries have been characterized as having excess capacity,
resulting in plant closings and permanent reductions in the workforce, many
of which have occurred in Michigan and more of which are likely. Tourism
and agriculture are two other important, but less significant, industries
in the State, both of which have been affected adversely by the recent
general recession.
The Michigan unemployment rate continues to be higher than the national
rate. The State's seasonally adjusted December 1993 unemployment rate was
7.2% compared to the seasonally adjusted national rate of 8.0% for the
month. The table on the following page shows the State and national
unemployment rates published by the Michigan Employment Security Commission
and the U.S. Bureau of Labor Statistics, respectively, for the years
indicated.
Period Michigan United States

1984 11.2% 7.4%

1985 9.9% 7.1%

1986 8.8% 6.9%

1987 8.2% 6.1%

1988 7.6% 5.5%

1989 7.1% 5.3%

1990 7.5% 5.5%

1991 9.2% 6.7%

1992 8.8% 7.4%

1993 7.0 % 6.8 %

Although most of the bonds in the Michigan fund are expected to be
obligations of local units of government or local authorities in the State,
rather than general obligations of the State itself, there can be no
assurance that the same factors that adversely affect the economy of the
State generally will not also affect adversely the market value or
marketability of obligations issued by local units of government or local
authorities in the State or the ability of the obligors to pay the
principal of or interest on such obligations.
State Litigation. A significant number of lawsuits, involving
substantial dollars, have been filed against the State and are pending.
These include tax refund claims, including claims for Single Business
Taxes, condemnation actions, claims relating to funding for county courts,
and other types of actions. The extent to which parties will ultimately
prevail against the State cannot be predicted at this time.
SPECIAL FACTORS AFFECTING MINNESOTA
The following only highlights some of the more significant financial
trends and problems affecting Minnesota, and is based on information drawn
from official statements and prospectuses relating to securities offerings
of the State of Minnesota, its agencies, and instrumentalities as available
on the date of this Statement of Additional Information. FMR has not
independently verified any of the information contained in such official
statements and other publicly available documents, but is not aware of any
fact which would render such information inaccurate.
Constitutional State Revenue Limitations. Minnesota's constitutionally
prescribed fiscal period is a biennium, and the state operates on a
biennial budget basis. An agency or other entity may not expend monies in
excess of its allotment. If revenues are insufficient to balance total
available resources and expenditures, the State's Commissioner of Finance,
with the approval of the Governor, is required to reduce allotments to the
extent necessary to balance expenditures and forecast available resources
for the then current biennium. The Governor may seek legislative action
when a large reduction in expenditures appears necessary, and if the
State's legislature is not in session the Governor is empowered to convene
a special session.
Effect of Limitations on Ability to Pay Bonds. There are no
constitutional or statutory provisions which would impair the ability of
Minnesota municipalities to meet their bond obligations if the bonds have
been properly issued.
Minnesota's Economy. There are no constitutional or statutory
provisions which would impair the ability of Minnesota municipalities to
meet their bond obligations if the bonds have been properly issued.
Minnesota's seasonally adjusted October 1993 unemployment rate was 5.1
percent which was lower than the seasonally adjusted national rate of 6.8
percent for the month. Non-agricultural employment in the state increased
20.3% from 1980 to 1990 but only increased 2.6% from 1990 to 1992. A major
continuing trend for Minnesota, as for the nation, is the large employment
gain in the service industries. Over the past year, almost all private
sector jobs added have been in services and in finance, insurance and real
estate. Accompanying this will be a decline in jobs in construction and
mining.
Minnesota resident population grew from 4,480,000 in 1992 or, at an
average annual compound rate of .8%. In comparison, U.S. population grew
at an annual compound rate of 1 percent during this period. Minnesota
population is currently forecast to grow at an annual compound rate of .6
percent between 1990 and 2000. In the period 1980 to 1992, Minnesota's
overall employment growth increased 19.7% compared to national growth of
19.18%.
Manufacturing has proven to be a strong sector, with Minnesota
employment growth in this area outperforming its U.S. counterpart in both
the 1980-1990 and 1990-1992 periods. Minnesota's manufacturing industries
accounted for 17.5 percent of the state's employment mix in 1992. In the
durable goods industries, the state's employment in 1992 was highly
concentrated in the industrial machinery, fabricated metals, instrument and
miscellaneous categories. Of particular importance is the industrial
machinery category in which 32.4% of the state's durable goods employment
was concentrated in 1992, as compared to 18.8% for the United States as a
whole. The emphasis is partly explained by the location in the state of
Ceridian, Unisys, IBM, Cray Research, and other computer equipment
manufacturers which are included in the industrial machinery
classification.
The importance of the state's rich resource base for overall employment
is apparent in the employment mix in non-durable goods industries. In
1992, 29.6% of the state's non-durable goods employment was concentrated in
food and kindred industries, and 19.4% in paper and allied industries.
This compares to 21.3% and 8.9%, respectively, for comparable sectors in
the national economy. Both of these rely heavily on renewable resources in
the state. Over half of the state's acreage is devoted to agricultural
purposes, and nearly one-third to forestry. Printing and publishing is
also relatively more important in Minnesota than in the U.S.
The state is situated in the midst of the family farm belt. Although a
decline in jobs in agriculture is forecasted due to technological
improvements and the trend away from small family farms, in 1992 Minnesota
ranked seventh among all states in total cash receipts derived from
agricultural products and seventh among all states in percentage of income
derived from farming. In order of receipts, the six major agricultural
products in 1992 were dairy, corn, soybeans, cattle and calves, hogs and
what.
Minnesota ranks seventh among all states in agricultural exports. The
state's major agricultural commodities exported in 1992, were in order of
value, feed grains and products, soybeans and products, wheat and wheat
products, live animals and meat, vegetables and feed and fodder. The
average farm net income in 1992 was $16,824, compared to the 1991 average
farm net income of $21,363. In 1992, the state's average value of farm
land per acre was $912, an increase from $853 in 1991.
Mining is currently a less significant factor in the state economy than
it once was. Mining employment, primarily in the iron ore or taconite
industry, dropped from 17.3 thousand in 1979 to 7.6 thousand in 1992. It
is not expected that mining employment will return to 1979 levels.
However, Minnesota retains vast quantities of taconite as well as copper,
nickel, cobalt, and peat, which may be utilized in the future.
The fastest growing sector of the economy in Minnesota and the rest of
the country is the service sector. Business services employment is
projected to increase by 23% from 1989 to 1996, and health care services
(exclusive of hospitals and nursing homes) is projected to grow by 18%.
Minnesota's service industries accounted for 27% of 1992 nonfarm
employment.
In 1992, 26 Minnesota based public companies and 9 private companies
reported revenues of over $650 million. These companies are involved in a
varied group of industries including manufacturing, food and kindred
products and services.
Since 1980, state per capita personal income has been within three
percentage points of national per capita personal income. In 1992,
Minnesota per capita personal income was 101.0 percent of its U.S.
counterpart.
Minnesota revenues are now forecast to total $16.143 billion during the
1994-1995 biennium, up $133 (0.8 percent) from end of session estimates.
Revised planning estimates for 1996-1997 indicate a $389 million balance by
the end of the next biennium. With continued prudent financial management,
Minnesota is well positioned to maintain a balanced budget and adequate
reserve over the next four years.
SPECIAL FACTORS AFFECTING PUERTO RICO
The following only highlights some of the more significant financial
trends and problems affecting the Commonwealth of Puerto Rico (the
"Commonwealth" or "Puerto Rico"), and is based on information drawn from
official statements and prospectuses relating to the securities offerings
of Puerto Rico, its agencies and instrumentalities, as available on the
date of this Statement of Additional Information. FMR has not
independently verified any of the information contained in such official
statements, prospectuses and other publicly available documents, but is not
aware of any fact which would render such information materially
inaccurate.
The economy of Puerto Rico is closely linked with that of the United
States, and in fiscal 1992 trade with the United States accounted for
approximately 88% of Puerto Rico's exports and approximately 68% of its
imports. In this regard, in fiscal 1992 Puerto Rico experienced a
$2,940,300,000 positive adjusted merchandise trade balance. Since fiscal
1987 personal income, both aggregate and per capita, have increased
consistently each fiscal year. In fiscal 1992 aggregate personal income
was $22.7 billion and personal per capita income was $6,360. Gross
domestic product in fiscal 1989, 1990, 1991 and 1992 was $19,954,000,
$21,619,000, 22,857,000, and $23,620,000 respectively. For fiscal 1993, an
increase in gross domestic product of 2.9% over fiscal 1992 is forecasted.
However, actual growth in the Puerto Rico economy will depend on several
factors including the condition of the U.S. economy, the exchange rate for
the U.S. dollar, the price stability of oil imports, and interest rates.
Due to these factors there is no assurance that the economy of Puerto Rico
will continue to grow.
Puerto Rico has made marked improvements in fighting unemployment.
Unemployment is at a low level compared to that of the late 1970s, but it
still remains significantly above the United States average. Despite long
term improvements the unemployment rate rose from 15.2% to 16.5% from
fiscal 1991 to fiscal 1992. At the end of the third quarter of fiscal 1993
the unemployment rate in Puerto Rico stood at 17.3%. There is a
possibility that the unemployment rate will continue to increase.
The economy of Puerto Rico has undergone a transformation in the later
half of this century from one centered around agriculture, to one dominated
by the manufacturing and service industries. Manufacturing is the
cornerstone of Puerto Rico's economy, accounting for $13.2 billion or 38.7%
of gross domestic product in 1992. However, manufacturing has experienced
a basic change over the years as a result of the influx of higher wage,
high technology industries such as the pharmaceutical industry,
electronics, computers, micro-processors, scientific instruments and high
technology machinery. The service sector, which includes wholesale and
retail trade, finance and real estate, ranks second in its contribution to
gross domestic product and is the sector that employs the greatest number
of people. In fiscal 1992, the service sector generated $13.0 billion in
gross domestic product or 38.3% of the total and employed over 449,000
workers providing 46% of total employment. The government sector and
tourism also contribute to the island economy each accounting for $3.7
billion and $1.5 billion in fiscal 1992, respectively.
Much of the development of the manufacturing sector of the economy of
Puerto Rico is attributable to federal and Commonwealth tax incentives,
most notably section 936 of the Internal Revenue Code of 1986, as amended
("Section 936") and the Commonwealth's Industrial Incentives Program.
Section 936 currently grants U.S. corporations that meet certain criteria
and elect its application a credit against their U.S. corporate income tax
on the portion of the tax attributable to (i) income derived from the
active conduct of a trade or business in Puerto Rico ("active income"), or
from the sale or exchange of substantially all the assets used in the
active conduct of such trade or business, and (ii) qualified possession
source investment income ("passive income"). The Industrial Incentives
Program, through the 1987 Industrial Incentives Act, grants corporations
engaged in certain qualified activities a fixed 90% exemption from
Commonwealth income and property taxes and a 60% exemption from municipal
license taxes.
On August 16, 1993, President Clinton signed a bill amending Section
936. Under the amendments, U.S. corporations with operations in Puerto
Rico can elect to receive a federal income tax credit equal to: 40% of the
credit currently available, phased in over a five year period, starting at
60% of the current credit, or a credit based on investment and wages. The
investment and wage credit would equal the sum of (i) 60% of qualified
compensation to employees, (ii) a specified percentage of depreciation
deductions with respect to tangible property located in Puerto Rico, and
(iii) a portion of income taxed paid to Puerto Rico, up to a 9% effective
tax rate, subject to certain requirements. It is not possible to determine
at this time whether the reductions in tax incentives for operations in
Puerto Rico will have a significant impact on the economy of Puerto Rico or
the time period in which such impact would arise.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of the funds by FMR pursuant to authority contained in each fund's
management contract. FMR is also responsible for the placement of
transaction orders for other investment companies and accounts for which it
or its affiliates act as investment adviser. In selecting broker-dealers,
subject to applicable limitations of the federal securities laws, FMR will
consider various relevant factors, including, but not limited to the size
and type of the transaction; the nature and character of the markets for
the security to be purchased or sold; the execution efficiency, settlement
capability, and financial condition of the broker-dealer firm; the
broker-dealer's execution services rendered on a continuing basis; and the
reasonableness of any commissions.
The funds may execute fund transactions with broker-dealers who provide
research and execution services to the funds or other accounts over which
FMR or its affiliates exercise investment discretion. Such services may
include advice concerning the value of securities; the advisability of
investing in, purchasing, or selling securities; the availability of
securities or the purchasers or sellers of securities; furnishing analyses
and reports concerning issuers, industries, securities, economic factors
and trends, portfolio strategy, and performance of accounts; and effecting
securities transactions and performing functions incidental thereto (such
as clearance and settlement). The selection of such broker-dealers is
generally made by FMR (to the extent possible consistent with best
execution considerations) based upon the quality of research and execution
services provided.
The receipt of research from broker-dealers who execute transactions on
behalf of the funds may be useful to FMR in rendering investment management
services to the funds or its other clients, and conversely, such research
provided by broker-dealers who have executed transaction orders on behalf
of other FMR clients may be useful to FMR in carrying out its obligations
to the funds. The receipt of such research has not reduced FMR's normal
independent research activities; however, it enables FMR to avoid the
additional expenses which could be incurred if FMR tried to develop
comparable information through its own efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause
the funds to pay such higher commissions, FMR must determine in good faith
that such commissions are reasonable in relation to the value of the
brokerage and research services provided by such executing broker-dealers,
viewed in terms of a particular transaction or FMR's overall
responsibilities to the funds and its other clients. In reaching this
determination, FMR will not attempt to place a specific dollar value on the
brokerage and research services provided, or to determine what portion of
the compensation should be related to those services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of the funds or shares of other Fidelity
funds to the extent permitted by law. FMR may use research services
provided by and place agency transactions with Fidelity Brokerage Services,
Inc. (FBSI) , a subsidiary of FMR Corp., if the commissions are fair,
reasonable, and comparable to commissions charged by non-affiliated,
qualified brokerage firms for similar services.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members of
national securities exchanges from executing exchange transactions for
accounts which they or their affiliates manage, except in accordance with
regulations of the Securities and Exchange Commission. Pursuant to such
regulations, the Board of Trustees has approved a written agreement that
permits FBSI to effect portfolio transactions on national securities
exchanges and to retain compensation in connection with such transactions.
For fiscal 1993, 1992, and 1991, the funds paid no brokerage
commissions.
The Trustees periodically review FMR's performance of its responsibilities
in connection with the placement of portfolio transactions on behalf of
each fund and review the commissions paid by the funds over representative
periods of time to determine if they are reasonable in relation to the
benefits to the funds.
Annual Portfolio Turnover Rate
Fiscal Year Ohio Fund Michigan Fund Minnesota Fund
Ended 12/31

1993 41 % 33 % 37 %

1992 20% 15% 12%

1991 11% 12% 14%

From time to time the Trustees will review whether the recapture for the
benefit of the funds of some portion of the brokerage commissions or
similar fees paid by the funds on portfolio transactions is legally
permissible and advisable. The funds seek to recapture soliciting
broker-dealer fees on the tender of portfolio securities, but at present no
other recapture arrangements are in effect. The Trustees intend to
continue to review whether recapture opportunities are available and are
legally permissible and, if so, to determine in the exercise of their
business judgment whether it would be advisable for the funds to seek such
recapture.
Although the Trustees and officers of the funds are substantially the same
as those of other funds managed by FMR, investment decisions for each fund
are made independently from those of other funds managed by FMR or accounts
managed by FMR affiliates. It sometimes happens that the same security is
held in the portfolio of more than one of these funds or accounts.
Simultaneous transactions are inevitable when several funds are managed by
the same investment adviser, particularly when the same security is
suitable for the investment objective of more than one fund.
When two or more funds are simultaneously engaged in the purchase or sale
of the same security, the prices and amounts are allocated in accordance
with a formula considered by the officers of the funds involved to be
equitable to each fund. In some cases this system could have a detrimental
effect on the price or volume of the security as far as each fund is
concerned. In other cases, however, the ability of the funds to
participate in volume transactions will produce better executions and
prices for the funds. It is the current opinion of the Trustees that the
desirability of retaining FMR as investment adviser to the funds outweighs
any disadvantages that may be said to exist from exposure to simultaneous
transactions.
VALUATION OF PORTFOLIO SECURITIES
Valuations of portfolio securities furnished by the pricing service
employed by the funds are based upon a computerized matrix system or
appraisals by the pricing service, in each case in reliance upon
information concerning market transactions and quotations from recognized
municipal securities dealers. The methods used by the pricing service and
the quality of valuations so established are reviewed by officers of the
funds and FSC under the general supervision of the Trustees. There are a
number of pricing services available and the Trustees, on the basis of
on-going evaluation of these funds' services, may use other pricing
services or discontinue the use of any pricing service in whole or in part.
PERFORMANCE
The funds may quote performance in various ways. All performance
information supplied by the funds in advertising is historical and is not
intended to indicate future returns. Each fund's share price, yield, and
total returns fluctuate in response to market conditions and other factors,
and the value of each fund's shares when redeemed may be more or less than
their original cost.
YIELD CALCULATIONS. A fund's yield used in advertising is computed by
dividing a fund's interest income for a given 30-day or one month period,
net of expenses, by the average number of shares entitled to receive
distributions during the period, dividing this figure by the fund's net
asset value per share at the end of the period, and annualizing the result
(assuming compounding of income) in order to arrive at an annual percentage
rate. Income is calculated for purposes of yield quotations in accordance
with standardized methods applicable to all stock and bond funds. In
general, interest income is reduced with respect to bonds trading at a
premium over their par value by subtracting a portion of the premium from
income on a daily basis, and is increased with respect to bonds trading at
a discount by adding a portion of the discount to daily income. Capital
gains and losses generally are excluded from the calculation.
Income calculated for the purposes of determining the funds' yields differs
from income as determined for other accounting purposes. Because of the
different accounting methods used, and because of the compounding of income
assumed in yield calculations, a fund's yield may not equal its
distribution rate, the income paid to your account, or the income reported
in the fund's financial statements.
A fund's tax-equivalent yield is the rate an investor would have to earn
from a fully taxable investment to equal the fund's tax-free yield.
Tax-equivalent yields are calculated by dividing a fund's yield by the
result of one minus a stated federal or combined federal and state tax
rate. (If only a portion of a fund's yield is tax-exempt, only that
portion is adjusted in the calculation.)
The following tables show the effect of a shareholder's tax status on the
effective yield under federal and state income tax laws for 1993. They
show the approximate yield a taxable security must provide at various
income brackets to produce after-tax yields equivalent to those of
hypothetical tax-exempt obligations yielding from 2% to 10%. Of course, no
assurance can be given that the funds will achieve any specific tax-exempt
yield. While the funds invest principally in obligations whose interest is
exempt from federal and state income taxes, other income received by the
funds may be taxable.

1994 TAX RATES AND TAX EQUIVALENT YIELDS FOR OHIO

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Single Return Joint Return Federal Combined Effective

Taxable Income Taxable Income Tax Bracket Tax Bracket

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C>
$22,751 to $40,000 $38,001 to $40,000 28.0% 31.21%

$40,001 to $55,100 $40,001 to $80,000 28.0% 31.74%

$80,001 to $91,850 28.0% 32.28%

$55,101 to $80, 000 31.0% 34.59%

$80,001 to $100,000 $91,851 to $100,000 31.0% 35.10%

$100,001 to $115,000 $100,001 to $140,000 31.0% 35.76%

$115,001 to $200,000 $140,001 to $200,000 36.0% 40.42%

$200,001 + 250,000 $200,001 + 250,000 36.0% 40.80%

$250,001 + Above $250,001 + Above 39.6% 44.13%

</TABLE>

Having determined your combined effective tax bracket, use the following
table to determine the tax-equivalent yield for a given tax-free yield.
If your combined effective federal and state personal tax rate in 1994
is:

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
31.21% 31.74% 32.28% 34.59% 35.10% 35.76% 40.42% 40.80% 44.13%

</TABLE>

<TABLE>
<CAPTION>
<S> <C>
To match these

tax-free yields: Your taxable investment would have to earn the following yield:

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2% 2.91% 2.93% 2.95% 3.06% 3.08% 3.11% 3.36% 3.38% 3.58%

3% 4.36% 4.40% 4.43% 4.59% 4.62% 4.67% 5.03% 5.07% 5.37%

4% 5.81% 5.86% 5.91% 6.12% 6.16% 6.23% 6.71% 6.76% 7.16%

5% 7.27% 7.33% 7.38% 7.64% 7.70% 7.78% 8.39% 8.45% 8.95%

6% 8.72% 8.79% 8.86% 9.17% 9.25% 9.34% 10.07% 10.14% 10.74%

7% 10.18% 10.26% 10.34% 10.70% 10.79% 10.90% 11.75% 11.82% 12.53%

8% 11.63% 11.72% 11.81% 12.23% 12.33% 12.45% 13.43% 13.51% 14.32%

9% 13.08% 13.19% 13.29% 13.76% 13.87% 14.01% 15.10% 15.20% 16.11%

10% 14.54% 14.65% 14.77% 15.29% 15.41% 15.57% 16.89% 16.89% 17.90%

</TABLE>

1994 TAX RATES AND TAX EQUIVALENT YIELDS FOR MICHIGAN

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Single Return Joint Return Federal Combined Effective

Taxable Income Taxable Income Tax Bracket Tax Bracket

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C>
$22,751 to $55,100 $38,001 to $91,850 28.0% 31.31%

$55,101 to $115,000 $91,851 to $140,000 31.0% 34.17%

$115,001 to $250,000 $140,001 to $250,000 36.0% 38.94%

$250,001 + Above $250,001 + Above 39.6% 42.38%

</TABLE>

<TABLE>
<CAPTION>
<S> <C>
To match these

tax-free yields: Your taxable investment would have to earn the following yield:

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
2% 2.91% 3.04% 3.28% 3.47%

3% 4.37% 4.56% 4.91% 5.21%

4% 5.82% 6.08% 6.55% 6.94%

5% 7.28% 7.60% 8.19% 8.68%

6% 8.74% 9.11% 9.83% 10.41%

7% 10.19% 10.63% 11.46% 12.15%

8% 11.65% 12.15% 13.10% 13.88%

9% 13.10% 13.67% 14.74% 15.62%

10% 14.56% 15.19% 16.38% 17.35%

</TABLE>

1994 TAX RATES AND TAX EQUIVALENT YIELDS FOR MINNESOTA

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Single Return Joint Return Federal Combined Effective

Taxable Income Taxable Income Tax Bracket Tax Bracket

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C>
$16,581 to $22,750 $26,161 to $38,000 15.0% 21.80%

$22,751 to $51,380 $38,001 to $91,850 28.0% 33.76%

$51,381 to $55,100 28.0% 34.12%

$91,851 to $92,360 31.0% 36.52%

$55,101 to $115,000 $92,361 to $140,000 31.0% 36.87%

$115,001 to $250,000 $140,001 to $250,000 36.0% 41.44%

$250,001 + Above $250,001 + Above 39.6% 44.73%

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
21.80% 33.76% 34.12% 36.52% 36.87% 41.44% 44.73%

</TABLE>

<TABLE>
<CAPTION>
<S> <C>
To match these

tax-free yields: Your taxable investment would have to earn the following yield:

</TABLE>

2% 2.56% 3.02% 3.04% 3.15% 3.17% 3.42% 3.62%

3% 3.84% 4.53% 4.55% 4.73% 4.75% 5.12% 5.43%

4% 5.12% 6.04% 6.07% 6.30% 6.34% 6.83% 7.24%

5% 6.39% 7.55% 7.59% 7.88% 7.92% 8.54% 9.05%

6% 7.67% 9.06% 9.11% 9.45% 9.50% 10.25% 10.86%

7% 8.95% 10.57% 10.63% 11.03% 11.09% 11.95% 12.67%

8% 10.23% 12.08% 12.14% 12.60% 12.67% 13.66% 14.48%

9% 11.51% 13.59% 13.66% 14.18% 14.26% 15.37% 16.28%

10% 12.79% 15.10% 15.18% 15.75% 15.84% 17.08% 18.09%

</TABLE>

Each fund may invest a portion of its assets in obligations that are
subject to state and/or federal income taxes. When a fund invests in these
obligations, its tax-equivalent yields will be lower. In the tables above,
tax-equivalent yields are calculated assuming investments are 100%
federally and state tax-free.
Yield information may be useful in reviewing each fund's performance and in
providing a basis for comparison with other investment alternatives.
However, each fund's yield fluctuates, unlike investments that pay a fixed
interest rate over a stated period of time. When comparing investment
alternatives, investors should also note the quality and maturity of
the portfolios securities of the respective investment companies
they have chosen to consider.
Investors should recognize that in periods of declining interest rates each
fund's yield will tend to be somewhat higher than prevailing market rates,
and in periods of rising interest rates each fund's yield will tend to be
somewhat lower. Also, when interest rates are falling, the inflow of net
new money to a fund from the continuous sale of its shares will likely be
invested in instruments producing lower yields than the balance of the
fund's holdings, thereby reducing the fund's current yield. In periods of
rising interest rates, the opposite can be expected to occur.
TOTAL RETURN CALCULATIONS. Totals returns quoted in advertising reflect
all aspects of a fund's returns, including the effect of reinvesting
dividends and capital gain distributions (if any), and any change in a
fund's net asset value per share (NAV) over a period. Average annual total
returns are calculated by determining the growth or decline in value of a
hypothetical historical investment in a fund over a stated period, and then
calculating the annually compounded percentage rate that would have
produced the same result if the rate of growth or decline in value had been
constant over the period. For example, a cumulative return of 100% over
ten years would produce an average annual total return of 7.18%, which is
the steady annual rate that would equal 100% growth on a compounded basis
in ten years. While average annual total returns are a convenient means of
comparing investment alternatives, investors should realize that a fund's
performance is not constant over time, but changes from year to year, and
that average annual total returns represent averaged figures as opposed to
the actual year-to-year performance of the fund.
In addition to average annual total returns, a fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, and/or a
series of redemptions, over any time period. Total returns may be broken
down into their components of income and capital (including capital gains
and changes in share price) in order to illustrate the relationship of
these factors and their contributions to total return. An example of this
type of illustration is given below. Total returns, yields, and other
performance information may be quoted numerically or in a table, graph, or
similar illustration.
NET ASSET VALUE. Charts and graphs using the funds' net asset values,
adjusted net asset values, and benchmark indices may be used to exhibit
performance. An adjusted NAV includes any distributions paid by the fund
and reflects all elements of its return. Unless otherwise indicated, the
fund's adjusted NAVs are not adjusted for sales charges, if any.
HISTORICAL FUND RESULTS. The table on the following page shows the funds'
total returns, 30-day yields, and tax-equivalent yields for the periods
ended December 31, 199 3.
Average Annual Total Returns Cumulative Total Returns Yields

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
One Five Life of One Five Life of 30-Day Tax-Equivalent

Year Years Fund Year Years Fund Yield Yield

Ohio Fund 12.56% 10.02% 9.64%* 12.56% 61.16% 111.35%* 4.96 % 8.38%

Michigan Fund 13.83% 10.11% 10.13%** 13.83% 61.89% 119.40%** 5.09 % 8.34%

Minnesota Fund 12.42% 8.99% 8.79%*** 12.42% 53.76% 98.10%*** 5.08 % 8.67%

</TABLE>

* From commencement of operations, November 15, 1985.
** From commencement of operations, November 12, 1985.
*** From commencement of operations, November 21, 1985.
Tax-equivalent yields are based on the highest 1993 combined federal and
state income tax brackets of 44.13 % (Ohio), 42.38 %
(Michigan), and 44.73 % (Minnesota), and reflects that none of the
funds' investments at December 31, 1992 were subject to state taxes.
The following tables show the income and capital elements of each fund's
total returns. During the periods quoted, interest rates and bond prices
fluctuated widely; thus the tables should not be considered representative
of the dividend income or capital gain or loss that would be realized from
an investment in the funds today.

OHIO TAX-FREE HIGH YIELD FUND. During the period from November 15, 1985
(commencement of operations) through December 31, 199 3, a
hypothetical investment of $10,000 in the Ohio Fund would have grown to
$21,135 , assuming all distributions were reinvested.
Value of Value of Value of

Period Ended Initial $10,000 Reinvested Reinvested Total

12/31 Investment Dividends Capital Gains Value

1985* $10,120 $95 $0 $10,215

1986 10,970 926 0 11,896

1987 9,970 1,643 0 11,613

1988 10,500 2,614 0 13,114

1989 10,790 3,634 0 14,424

1990 10,840 4,665 0 15,505

1991 11,320 5,960 0 17,280

1992 11,550 7,227 0 18,777

1993 12,020 8,684 431 21,135

*From November 15, 1985 (commencement of operations).
Explanatory Notes: With an initial investment of $10,000 made on November
15, 1985, the net amount invested in fund shares was $10,000. The cost of
the initial investment ($10,000), together with the aggregate cost of
reinvested dividends for the period covered (their cash value at the time
they were reinvested), amounted to $18,308 . If distributions had
not been reinvested, the amount of distributions earned from the fund over
time would have been smaller, and cash payments for the period would have
amounted to $5,910 for income dividends and $250 for capital
gain distributions .

MICHIGAN TAX-FREE HIGH YIELD FUND. During the period from November 12,
1985 (commencement of operations) through December 31, 199 3, a
hypothetical investment of $10,000 in the Michigan Fund would have grown to
$ 21,940, assuming all dividends and capital gain distributions were
reinvested.
Value of Value of Value of

Period Ended Initial $10,000 Reinvested Reinvested Total

12/31 Investment Dividends Capital Gains Value

1985* $10,270 $95 $0 $10,365

1986 11,380 958 0 12,338

1987 10,250 1,703 39 11,992

1988 10,790 2,722 41 13,552

1989 11,100 3,795 42 14,936

1990 10,890 4,775 41 15,706

1991 11,410 6,143 43 17,596

1992 11,710 7,487 77 19,274

1993 12,340 9,100 500 21,940

*From November 12, 1985 (commencement of operations).

Explanatory Notes: With an initial investment of $10,000 made on November
12, 1985, the net amount invested in fund shares was $10,000. The cost of
the initial investment ($10,000), together with the aggregate cost of
reinvested dividends and capital gain distributions for the period covered
(their cash value at the time they were reinvested), amounted to
$ 18,702. If distributions had not been reinvested, the amount of
distributions earned from the fund over time would have been smaller, and
cash payments for the period would have amounted to $ 6,117 for income
dividends and $300 for capital gain distributions.
MINNESOTA TAX-FREE FUND. During the period from November 21, 1985
(commencement of operations) through December 31, 1993, a hypothetical
investment of $10,000 in the Minnesota Fund would have grown to
$ 19,810 , assuming all dividend and capital gain distributions were
reinvested.
Value of Value of Value of
Period Ended Initial $10,000 Reinvested Reinvested Total
12-31 Investment Dividends Capital Gains Value
1985* 10,090 $75 $0 $10,165
1986 10,990 907
SPARTAN PENNSYLVANIA MUNICIPAL HIGH YIELD PORTFOLIO
CROSS REFERENCE SHEET
FORM N-1A

ITEM NUMBER PROSPECTUS SECTION

<TABLE>
<CAPTION>
<S> <C>
1............................................... Cover Page

2 a............................................ Expenses

b,c.......................................... Contents; The Fund at a Glance; Who May Want To Invest

3 Financial Highlights
a,b............................................

c, Performance
d...........................................

</TABLE>

4 a(i)......................................... Charter

<TABLE>
<CAPTION>
<S> <C>
a(ii)....................................... The Funds at a Glance; Investment Principles; Securities
and Investment Practices

b............................................ Securities and Investment Practices

c............................................. Who May Want to Invest; Investment Principles; Securities
and Investment Practices

5 a............................................ Charter

b(i)........................................ Cover Page; Doing Business with Fidelity; Charter

b(ii)....................................... Charter; Breakdown of Expenses

b(iii)...................................... Expenses; Breakdown of Expenses

c,d........................................ Charter; Breakdown of Expenses; Cover Page; FMR and Its
Affiliates

e............................................ FMR and Its Affiliates

f............................................. Expenses

g............................................ *

5 A........................................ Performance

6 a(i)........................................ Charter

a(ii)....................................... How to Buy Shares; How to Sell Shares; Transaction
Details; Exchange Restrictions

a(iii)..................................... *

b............................................ *

c........................................... Exchange Restrictions

d........................................... *

e........................................... Doing Business with Fidelity; How to Buy Shares; How to
Sell Shares; Investor Services

f,g......................................... Dividends; Capital Gains, and Taxes

7 a........................................... Charter; Cover Page

b........................................... How to Buy Shares; Transaction Details

c........................................... *

d........................................... How to Buy Shares

e........................................... *

f............................................ Breakdown of Expenses

8 .............................................. How to Sell Shares; Investor Services; Transaction Details;
Exchange Restrictions

9 .............................................. *

* Not Applicable

</TABLE>

SPARTAN PENNSYLVANIA MUNICIPAL HIGH YIELD PORTFOLIO
CROSS REFERENCE SHEET
(CONTINUED)

<TABLE>
<CAPTION>
<S> <C>
Part B: Statement of Additional
Information

Form N-1A Item Number SAI Caption

10,11......................................... Cover Page

12.............................................. *

13 a,b,c.................................... Investment Policies and Limitations

d........................................... *

14 a,b........................................ Trustees and Officers

c........................................... *

15 a,b,c..................................... *

16 a(i)....................................... FMR

a(ii)....................................... Trustees and Officers

a(iii),b................................... Management Contract; Interest of FMR Affiliates

c,d,e...................................... *

f............................................ Distribution and Service Plan

g........................................... *

h........................................... Description of the Trust

i............................................ Interest of FMR Affiliates

17 a........................................ Portfolio Transactions

b........................................... *

c........................................... Portfolio Transactions

d,e..................................... *

18 a........................................ Description of the Trust

b........................................... *

19 a....................................... Additional Purchase and Redemption Information

b........................................... Valuation of Portfolio Securities; Additional Purchase and
Redemption Information

c........................................... *

20.............................................. Distributions and Taxes

21 a(i),(ii)................................. Interest of FMR Affiliates

a(iii),b,c................................ *

22.............................................. Performance

23.............................................. Financial Statements

</TABLE>

Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how each
fund invests and the services available to shareholders.
A Statement of Additional Information dated February 17, 1994 has been
filed with the Securities and Exchange Commission, and is incorporated
herein by reference (is legally considered a part of this prospectus). The
Statement of Additional Information is available free upon request by
calling Fidelity at 1-800-544-8888.
Investments in the money market fund are neither insured nor guaranteed by
the U.S. government, and there can be no assurance that the fund will
maintain a stable $1.00 share price.
Mutual fund shares are not deposits or obligations of, or endorsed or
guaranteed by, any bank, nor are they federally insured or otherwise
protected by the FDIC, the Federal Reserve Board, or any other agency.
The funds seek a high level of current income free from federal income tax
and Pennsylvania personal income tax. Spartan Pennsylvania Municipal Money
Market invests in high-quality, short-term instruments and is designed to
maintain a stable $1.00 share price. Spartan Pennsylvania Municipal
High Yield invests in a broader range of securities.
SPARTAN(Registered trademark)
PENNSYLVANIA
MUNICIPAL MONEY
MARKET
PORTFOLIO
and
SPARTAN(Registered trademark)
PENNSYLVANIA
MUNICIPAL
HIGH YIELD
PORTFOLIO
PROSPECTUS
FEBRUARY 17, 1994
LIKE ALL MUTUAL
FUNDS, THESE
SECURITIES HAVE NOT
BEEN APPROVED OR
DISAPPROVED BY THE
SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION, NOR HAS
THE SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION PASSED
UPON THE ACCURACY
OR ADEQUACY OF THIS
PROSPECTUS. ANY
REPRESENTATION TO
THE CONTRARY IS A
CRIMINAL OFFENSE.
PFR-pro-294
(Registered trademark)
(Registered trademark)
82 Devonshire Street, Boston, MA 0210
9
CONTENTS

KEY FACTS THE FUNDS AT A GLANCE

WHO MAY WANT TO INVEST

EXPENSES AND PERFORMANCE EXPENSES Each fund's yearly
operating expenses.

FINANCIAL HIGHLIGHTS A summary
of each fund's financial data.

PERFORMANCE How each fund has
done over time.

YOUR ACCOUNT DOING BUSINESS WITH FIDELITY

TYPES OF ACCOUNTS Different
ways to set up your account.

HOW TO BUY SHARES Opening an
account and making additional
investments.

HOW TO SELL SHARES Taking money
out and closing your account.

INVESTOR SERVICES Services to
help you manage your account.

DIVIDENDS, CAPITAL GAINS, AND
TAXES

SHAREHOLDER AND TRANSACTION DETAILS Share price
ACCOUNT POLICIES calculations and the timing of
purchases and redemptions.

EXCHANGE RESTRICTIONS

THE FUNDS IN DETAIL 22 CHARTER How each fund is
organized.

23 BREAKDOWN OF EXPENSES How
operating costs are calculated and
what they include.

24 INVESTMENT PRINCIPLES Each
fund's overall approach to
investing.

25 SECURITIES AND INVESTMENT
PRACTICES

<r>KEY FACTS</r>

THE FUNDS AT A GLANCE
MANAGEMENT: Fidelity Management & Research Company (FMR) is the
management arm of Fidelity Investments, which was established in 1946 and
is now America's largest mutual fund manager. FMR Texas Inc. (FTX), a
subsidiary of FMR, chooses investments for Spartan Pennsylvania Municipal
Money Market.
As with any mutual fund, there is no assurance that a fund will achieve its
goal.
SPARTAN PENN MONEY MARKET
GOAL: High current tax-free income for Pennsylvania residents while
maintaining a stable share price.
STRATEGY: Invests in high-quality, short-term securities whose interest is
free from federal income tax and Pennsylvania personal income tax.
SIZE: As of December 31, 1993, the fund had over $ 240 million in
assets.
SPARTAN PENN HIGH YIELD
GOAL: High current tax-free income for Pennsylvania residents.
STRATEGY: Invests mainly in long-term, investment-grade securities whose
interest is free from federal income tax and Pennsylvania personal income
tax.
SIZE: As of December 31, 1993, the fund had over $ 306 million in
assets.
WHO MAY WANT TO INVEST
These non-diversified funds may be appropriate for investors in higher tax
brackets who seek high current income that is free from federal
income tax and Pennsylvania personal income tax. Each fund's level of risk
and potential reward depend on the quality and maturity of its investments.
Spartan Pennsylvania Municipal Money Market is managed to maintain its
share price stable at $1.00. Spartan Pennsylvania Municipal High Yield,
with its broader range of investments, has the potential for higher yields,
but also carries a higher degree of risk.
By themselves, these funds do not constitute a balanced investment
plan. The value of the funds' investments and the income they generate
will vary from day to day, generally reflecting changes in interest rates,
market conditions, and other federal and state political and economic news.
When you sell your shares of Spartan Pennsylvania Municipal High Yield,
they may be worth more or less than what you paid for them.
The Spartan family of funds is designed for cost-conscious investors
looking for higher yields through lower costs. The Spartan
Approach(Registered trademark) requires investors to make high minimum
investments and, in some cases, to pay for individual transactions.
EXPENSES AND PERFORMANCE

EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell
shares of a fund. See page 13 for more information.
Maximum sales charge on purchases and
reinvested dividends None
Deferred sales charge on redemptions None
Redemption fee
(on shares held less than 180 days)
for Spartan Penn Money Market None
for Spartan Penn High Yield .50%
Exchange and wire transaction fees $5.00
Checkwriting fee, per check written
(available for Spartan Pennsylvania
Municipal Money Market) $ 2 .00
Account closeout fee $5.00
THESE FEES ARE WAIVED (except for the redemption fee) if your account
balance at the time of the transaction is $50,000 or more.
ANNUAL FUND OPERATING EXPENSES are paid out of each fund's assets. Each
fund pays a management fee to FMR. Expenses are factored into each fund's
share price or dividends and are not charged directly to shareholder
accounts (see page 23 ).
The following are projections based on historical expenses, and are
calculated as a percentage of average net assets.
SPARTAN PENN MONEY MARKET
Management fee . 50 %
12b-1 fee None
Other expenses 0 %
Total fund operating expenses . 50 %
SPARTAN PENN HIGH YIELD
Management fee . 55 %
12b-1 fee None
Other expenses 0 %
Total fund operating expenses . 55 %
EXAMPLES: Let's say, hypothetically, that each fund's annual return is 5%
and that its operating expenses are exactly as just described. For every
$1,000 you invested, here's how much you would pay in total expenses after
the number of years indicated, first assuming that you leave your account
open, and then assuming that you close your account at the end of the
period:
SPARTAN PENN MONEY MARKET
Account open Account closed
After 1 year $ 5 $ 10
After 3 years $ 1 6 $ 21
After 5 years $ 28 $ 33
After 10 years $ 63 $ 68
SPARTAN PENN HIGH YIELD
Account open Account closed
After 1 year $ 6 $ 11
After 3 years $ 18 $ 23
After 5 years $ 31 $ 36
After 10 years $ 69 $ 74
These examples illustrate the effect of expenses, but are not meant to
suggest actual or expected costs or returns, all of which may vary.
FINANCIAL HIGHLIGHTS
The tables that follow have been audited by Coopers & Lybrand,
independent accountants. Their unqualified report is included in
the fund s' Annual Report. The fund s' Annual Report
is incorporated by reference into (is legally a part of) the Statement of
Additional Information.
SPARTAN PENNSYLVANIA MUNICIPAL MONEY MARKET

<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C>
1.Selected Per-Share Data

and Ratios

2.Years ended
1986B 1987 1988 1989 1990 1991 1992 1993
December 31

3.Net asset value,
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
beginning
of period

4.Income from
.015 .042 .049 .062 .059 .045 .029 .022
Investment
Operations
Net interest
income

5. Dividends from
(.015) (.042) (.049) (.062) (.059) (.045) (.029) (.022)
net
interest income

6.Net asset value,
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
end of period

7.Total returnC
1.51%D 4.27%D 5.05%D 6.35%D 6.05%D 4.55%D 2.90%D 2.21%

8.Net assets, end
$ 19,00 $ 64,18 $ 117,0 $ 176,9 $ 319,9 $ 289,8 $ 243,3 $ 240,9
of period
1 0 79 98 82 26 35 83
(000 omitted)

9.Ratio of
.30%A .50% .30% .28% .13% .34% .47% .50%
expenses to
average net assets

10.Ratio of
2.14%A .85% .79% .73% .57% .50% .50% .50%
expenses to
average net assets
before expense
reductions

11.Ratio of net
3.73%A 4.26% 5.02% 6.17% 5.92% 4.47% 2.88% 2.19%
interest income
to average net
assets

</TABLE>

<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C>
12.Selected Per-Share Data

and Ratios

13.Years ended
1986B 1987 1988 1989 1990 1991 1992 1993
December 31

14.Net asset value,
$ 10.000 $ 10.35 $ 9.070 $ 9.660 $ 9.900 $ 9.880 $ 10.37 $ 10.59
beginning
0 0 0
of period

15.Income from
.270 .695 .661 .676 .701 .701 .693 .679
Investment
Operations
Net investment
income

16. Net realized
.350 (1.280) .590 .240 (.020) .489 .219 .679
and unrealized
gain (loss) on
investments

17. Total from
.620 (.585) 1.251 .916 .681 1.190 .912 1.358
investment
operations

18.Less
(.270) (.695) (.661) (.676) (.701) (.701) (.693) (.679)
Distributions
From net interest
income

19. From net
-- -- -- -- -- -- -- (.140)
realized gain
on investments

20. Total
(.270) (.695) (.661) (.676) (.701) (.701) (.693) (.819)
distributions

21. Redemption
-- -- -- -- -- .001 .001 .001
fees added
to paid in capital

22.Net asset value,
$ 10.350 $ 9.070 $ 9.660 $ 9.900 $ 9.880 $ 10.37 $ 10.59 $ 11.13
end of period
0 0 0

23.Total returnC
6.23%D (5.73)% 14.21 9.80% 7.20% 12.49 9.11% 13.18

D %D D D % %

24.Net assets, end
$ 7,904 $ 41,65 $ 62,50 $ 104,2 $ 142,9 $ 199,4 $ 242,3 $ 306,2
6 9 02 06 99 75 46
(000 omitted)

25.Ratio of
.30%A .63% .84% .78% .60% .55% .55% .55%
expenses to
average net assets

26.Ratio of
2.45%A 1.08% .96% .82% .66% .55% .55% .55%
average net assets
before expense
reductions

27.Ratio of net
6.66%A 7.28% 7.05% 6.90% 7.22% 6.96% 6.65% 6.13%
interest income
to average net
assets

28.Portfolio
38%A 54% 31% 23% 8% 6% 8% 38%
turnover rate

</TABLE>

A ANNUALIZED
B FROM AUGUST 6, 1986 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31,
1986
C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
D THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
PERFORMANCE
Mutual fund performance can be measured as TOTAL RETURN or YIELD. The total
returns and yields that follow are based on historical fund results and do
not reflect the effect of any transaction fees you may have paid. The
figures would be lower if fees were taken into account.
Each fund's fiscal year runs from January 1 through December 31. The tables
below show each fund's performance over past fiscal years compared to a
measure of inflation. The charts on page 8 help you compare the
yields of these funds to those of their competitors.
SPARTAN PENN MONEY MARKET
Fiscal periods ended Past 1 Past 5 Life of
December 31, 1993 year years fundA
Average annual
total return 2.21% 4.40% 4.43%
Cumulative
total return 2.21% 24.03% 37.90%
Consumer Price
Index 2.75% 21.0% 33.15%
SPARTAN PENN HIGH YIELD
Fiscal periods ended Past 1 Past 5 Life of
December 31, 1993 year years fundA
Average annual
total return 13.18% 10.34% 8.82%
Cumulative
total return 13.18% 63.53% 87.04%
Consumer Price
Index 2.75% 21.0% 33.15%
A FROM AUGUST 6, 1986
EXPLANATION OF TERMS
UNDERSTANDING
PERFORMANCE
YIELD illustrates the income
earned by a fund over a
recent period. Seven-day
yields are the most common
illustration of money market
performance. 30-day yields
are usually used for bond
funds. Yields change daily,
reflecting changes in interest
rates.
TOTAL RETURN reflects both the
reinvestment of income and
capital gain distributions, and
any change in a fund's share
price.
(checkmark)
TOTAL RETURN is the change in value of an investment in a fund over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return
if performance had been constant over the entire period. Average annual
total returns smooth out variations in performance; they are not the same
as actual year-by-year results.
YIELD refers to the income generated by an investment in a fund over a
given period of time, expressed as an annual percentage rate. When a money
market fund yield assumes that income earned is reinvested, it is called an
EFFECTIVE YIELD. A TAX-EQUIVALENT YIELD shows what an investor would have
to earn before taxes to equal a tax-free yield. Yields for the bond fund
are calculated according to a standard that is required for all stock and
bond funds. Because this differs from other accounting methods, the quoted
yield may not equal the income actually paid to shareholders.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. government.
SPARTAN PENNSYLVANIA MUNICIPAL MONEY MARKET
7-day yields
Percentage (%)
Row: 1, Col: 1, Value: 5.26
Row: 1, Col: 2, Value: 4.49
Row: 2, Col: 1, Value: 4.659999999999999
Row: 2, Col: 2, Value: 4.0
Row: 3, Col: 1, Value: 5.03
Row: 3, Col: 2, Value: 4.29
Row: 4, Col: 1, Value: 4.83
Row: 4, Col: 2, Value: 4.33
Row: 5, Col: 1, Value: 4.42
Row: 5, Col: 2, Value: 4.01
Row: 6, Col: 1, Value: 4.26
Row: 6, Col: 2, Value: 3.85
Row: 7, Col: 1, Value: 4.39
Row: 7, Col: 2, Value: 3.99
Row: 8, Col: 1, Value: 4.430000000000001
Row: 8, Col: 2, Value: 4.05
Row: 9, Col: 1, Value: 4.85
Row: 9, Col: 2, Value: 4.38
Row: 10, Col: 1, Value: 4.25
Row: 10, Col: 2, Value: 3.89
Row: 11, Col: 1, Value: 4.08
Row: 11, Col: 2, Value: 3.71
Row: 12, Col: 1, Value: 4.75
Row: 12, Col: 2, Value: 4.33
Row: 13, Col: 1, Value: 3.15
Row: 13, Col: 2, Value: 2.69
Row: 14, Col: 1, Value: 3.2
Row: 14, Col: 2, Value: 2.62
Row: 15, Col: 1, Value: 3.45
Row: 15, Col: 2, Value: 2.97
Row: 16, Col: 1, Value: 3.62
Row: 16, Col: 2, Value: 3.07
Row: 17, Col: 1, Value: 3.46
Row: 17, Col: 2, Value: 3.0
Row: 18, Col: 1, Value: 2.71
Row: 18, Col: 2, Value: 2.46
Row: 19, Col: 1, Value: 2.44
Row: 19, Col: 2, Value: 2.14
Row: 20, Col: 1, Value: 2.35
Row: 20, Col: 2, Value: 2.15
Row: 21, Col: 1, Value: 2.84
Row: 21, Col: 2, Value: 2.67
Row: 22, Col: 1, Value: 2.39
Row: 22, Col: 2, Value: 2.13
Row: 23, Col: 1, Value: 2.47
Row: 23, Col: 2, Value: 2.16
Row: 24, Col: 1, Value: 3.04
Row: 24, Col: 2, Value: 2.69
Row: 25, Col: 1, Value: 2.1
Row: 25, Col: 2, Value: 1.81
Row: 26, Col: 1, Value: 2.2
Row: 26, Col: 2, Value: 1.87
Row: 27, Col: 1, Value: 2.3
Row: 27, Col: 2, Value: 1.96
Row: 28, Col: 1, Value: 2.29
Row: 28, Col: 2, Value: 1.98
Row: 29, Col: 1, Value: 2.4
Row: 29, Col: 2, Value: 2.13
Row: 30, Col: 1, Value: 2.02
Row: 30, Col: 2, Value: 1.79
Row: 31, Col: 1, Value: 2.14
Row: 31, Col: 2, Value: 1.86
Row: 32, Col: 1, Value: 2.28
Row: 32, Col: 2, Value: 1.97
Row: 33, Col: 1, Value: 2.47
Row: 33, Col: 2, Value: 2.16
Row: 34, Col: 1, Value: 2.23
Row: 34, Col: 2, Value: 1.95
Row: 35, Col: 1, Value: 2.16
Row: 35, Col: 2, Value: 1.91
Row: 36, Col: 1, Value: 2.41
Row: 36, Col: 2, Value: 2.13
Spartan Penn
Money Market

Competitive funds
average
1992
1991
1993

SPARTAN PENNSYLVANIA MUNICIPAL HIGH YIELD
30-day yields
Percentage (%)
Row: 1, Col: 1, Value: 7.22
Row: 1, Col: 2, Value: 6.45
Row: 2, Col: 1, Value: 7.159999999999999
Row: 2, Col: 2, Value: 6.4
Row: 3, Col: 1, Value: 7.26
Row: 3, Col: 2, Value: 6.359999999999999
Row: 4, Col: 1, Value: 7.22
Row: 4, Col: 2, Value: 6.26
Row: 5, Col: 1, Value: 7.27
Row: 5, Col: 2, Value: 6.26
Row: 6, Col: 1, Value: 7.319999999999999
Row: 6, Col: 2, Value: 6.31
Row: 7, Col: 1, Value: 7.17
Row: 7, Col: 2, Value: 6.23
Row: 8, Col: 1, Value: 7.02
Row: 8, Col: 2, Value: 6.13
Row: 9, Col: 1, Value: 6.92
Row: 9, Col: 2, Value: 6.09
Row: 10, Col: 1, Value: 6.84
Row: 10, Col: 2, Value: 6.01
Row: 11, Col: 1, Value: 6.8
Row: 11, Col: 2, Value: 5.99
Row: 12, Col: 1, Value: 6.68
Row: 12, Col: 2, Value: 5.87
Row: 13, Col: 1, Value: 6.54
Row: 13, Col: 2, Value: 5.76
Row: 14, Col: 1, Value: 6.68
Row: 14, Col: 2, Value: 5.78
Row: 15, Col: 1, Value: 6.75
Row: 15, Col: 2, Value: 5.77
Row: 16, Col: 1, Value: 6.68
Row: 16, Col: 2, Value: 5.76
Row: 17, Col: 1, Value: 6.55
Row: 17, Col: 2, Value: 5.78
Row: 18, Col: 1, Value: 6.470000000000001
Row: 18, Col: 2, Value: 5.649999999999999
Row: 19, Col: 1, Value: 6.159999999999999
Row: 19, Col: 2, Value: 5.26
Row: 20, Col: 1, Value: 6.25
Row: 20, Col: 2, Value: 5.25
Row: 21, Col: 1, Value: 6.33
Row: 21, Col: 2, Value: 5.37
Row: 22, Col: 1, Value: 6.29
Row: 22, Col: 2, Value: 5.42
Row: 23, Col: 1, Value: 6.29
Row: 23, Col: 2, Value: 5.42
Row: 24, Col: 1, Value: 6.29
Row: 24, Col: 2, Value: 5.37
Row: 25, Col: 1, Value: 6.119999999999999
Row: 25, Col: 2, Value: 5.23
Row: 26, Col: 1, Value: 5.59
Row: 26, Col: 2, Value: 4.89
Row: 27, Col: 1, Value: 5.84
Row: 27, Col: 2, Value: 4.75
Row: 28, Col: 1, Value: 5.8
Row: 28, Col: 2, Value: 4.92
Row: 29, Col: 1, Value: 5.72
Row: 29, Col: 2, Value: 4.88
Row: 30, Col: 1, Value: 5.59
Row: 30, Col: 2, Value: 4.75
Row: 31, Col: 1, Value: 5.68
Row: 31, Col: 2, Value: 4.69
Row: 32, Col: 1, Value: 5.49
Row: 32, Col: 2, Value: 4.73
Row: 33, Col: 1, Value: 5.46
Row: 33, Col: 2, Value: 4.54
Row: 34, Col: 1, Value: 5.37
Row: 34, Col: 2, Value: 4.42
Spartan Penn
High Yield

Competitive funds
average
1992
1991
1993
THE TOP CHART SHOWS THE 7-DAY EFFECTIVE YIELD FO R THE FUND AND ITS
COMPETITIVE FUNDS AVERAGE AS OF THE LAST TUESDAY OF EACH MONTH FROM
JANUARY 1991 THROUGH NOVEMBER 1993. THE BOTTOM CHART SHOWS THE
30-DAY ANNUALIZED NET YIELDS FOR THE FUND AND ITS COMPETITIVE FUNDS
AVERAGE AS OF THE LAST DAY OF EACH MONTH FROM JANUARY 1991 THROUGH
NOVEMBER 1993.
THE COMPETITIVE FUNDS AVERAGES for Spartan Pennsylvania Municipal Money
Market are calculated based on the IBC/Donoghue's MONEY FUND
AVERAGES(registered trademark)/All Tax-Free Funds category, which
currently reflects the performance of over 335 mutual funds with
similar objectives. These averages are published in the MONEY FUND
REPORT(Registered trademark) by IBC USA (Publications), Inc. The
competitive funds averages for Spartan Pennsylvania Municipal High Yield
are published by Lipper Analytical Services, Inc. The fund compares its
performance to the Lipper Pennsylvania Averages, which currently reflect
the performance of over 45 mutual funds with similar objectives. Both of
these averages assume reinvestment of distributions.
The funds' recent strategies, performance, and holdings are detailed twice
a year in financial reports, which are sent to all shareholders. For
current performance or a free annual report, call 1-800-544-8888.
TOTAL RETURNS AND YIELDS ARE BASED ON PAST RESULTS AND ARE NOT AN
INDICATION OF FUTURE PERFORMANCE.
<r>YOUR ACCOUNT</r>

DOING BUSINESS WITH FIDELITY
Fidelity Investments was established in 1946 to manage one of America's
first mutual funds. Today, Fidelity is the largest mutual fund company in
the country, and is known as an innovative provider of high-quality
financial services to individuals and institutions.
In addition to its mutual fund business, the company operates one of
America's leading discount brokerage firms, Fidelity Brokerage Services,
Inc. (FBSI). Fidelity is also a leader in providing tax-sheltered
retirement plans for individuals investing on their own or through their
employer.
Fidelity is committed to providing investors with practical information to
make investment decisions. Based in Boston, Fidelity provides customers
with complete service 24 hours a day, 365 days a year, through a network of
telephone service centers around the country.
To reach Fidelity for general information, call these numbers:
(bullet) For mutual funds, 1-800-544-8888
(bullet) For brokerage, 1-800-544-7272
If you would prefer to speak with a representative in person, Fidelity has
over 75 walk-in Investor Centers across the country.
TYPES OF ACCOUNTS
You may set up an account directly in a fund or, if you own or intend to
purchase individual securities as part of your total investment portfolio,
you may consider investing in a fund through a brokerage account.
If you are investing through FBSI or another financial institution or
investment professional, refer to its program materials for any special
provisions regarding your investment in the fund.
The different ways to set up (register) your account with Fidelity are
listed below.
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANTS
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have two or
more owners (tenants).
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and obtain
tax benefits. An individual can give up to $10,000 a year per child without
paying federal gift tax. Depending on state laws, you can set up a
custodial account under the Uniform Gifts to Minors Act (UGMA) or the
Uniform Transfers to Minors Act (UTMA).
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR OTHER
GROUPS
Requires a special application.
HOW TO BUY SHARES
EACH FUND'S SHARE PRICE, called net asset value (NAV), is calculated every
business day. Spartan Pennsylvania Municipal Money Market is managed to
keep its share price stable at $1.00. Each fund's shares are sold without a
sales charge.
Shares are purchased at the next share price calculated after your
investment is received and accepted. Share price is normally calculated at
4 p.m. Eastern time.
IF YOU ARE NEW TO FIDELITY, complete and sign an account application and
mail it along with your check. You may also open your account in person or
by wire as described on page . If there is no application accompanying this
prospectus, call 1-800-544-8888.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(bullet) Mail in an application with a check, or
(bullet) Open your account by exchanging from another Fidelity fund.
If you buy shares by check or Fidelity Money Line(Registered trademark),
and then sell those shares by any method other than by exchange to another
Fidelity fund, the payment may be delayed for up to seven business
days to ensure that your previous investment has cleared.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $10,000
Spartan Penn Money Market $25,000
TO ADD TO AN ACCOUNT $1,000
Through automatic investment plans $500
MINIMUM BALANCE $5,000
Spartan Penn Money Market $10,000

UNDERSTANDING THE
SPARTAN APPROACH(Registered trademark)
Fidelity's Spartan Approach is
based on the principle that
lower fund expenses can
increase returns. The Spartan
funds keep expenses low in
two ways. First, higher
investment minimums reduce
the effect of a fund's fixed
costs, many of which are paid
on a per-account basis.
Second, unlike most mutual
funds that include transaction
costs as part of overall fund
expenses, Spartan
shareholders pay directly for
the transactions they make.
(checkmark)

<TABLE>
<CAPTION>
<S> <C> <C>
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
Mail (mail_graphic) (bullet) Complete and sign the (bullet) Make your check
application. Make your payable to the complete
check payable to the name of the fund.
complete name of the Indicate your fund
fund of your choice. Mail account number on
to the address indicated your check and mail to
on the application. the address printed on
your account statement.
(bullet) Exchange by mail: call
1-800-544-6666 for
instructions.

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
Wire (wire_graphic) (bullet) There may be a $5.00 (bullet) There may be a $5.00
fee for each wire fee for each wire
purchase. purchase.
(bullet) Call 1-800-544-7777 to (bullet) Wire to:
set up your account Bankers Trust
and to arrange a wire Company,
transaction. Bank Routing
(bullet) Wire within 24 hours to: #021001033,
Bankers Trust Account #00163053.
Company, Specify the complete
Bank Routing name of the fund and
#021001033, include your account
Account #00163053. number and your
Specify the complete name.
name of the fund and
include your new
account number and
your name.

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118

</TABLE>

HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares. Your shares will be sold at
the next share price calculated after your order is received and accepted.
Share price is normally calculated at 4 p.m. Eastern time.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least $5,000
worth of shares in the account ($10,000 for Spartan Pennsylvania Municipal
Money Market) to keep it open.
TO SELL SHARES BY BANK WIRE OR FIDELITY MONEY LINE, you will need to sign
up for these services in advance.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to
protect you and Fidelity from fraud. Your request must be made in writing
and include a signature guarantee if any of the following situations apply:
(bullet) You wish to redeem more than $100,000 worth of shares,
(bullet) Your account registration has changed within the last 30 days,
(bullet) The check is being mailed to a different address than the one on
your account (record address),
(bullet) The check is being made payable to someone other than the account
owner, or
(bullet) The redemption proceeds are being transferred to a Fidelity
account with a different registration.
You should be able to obtain a signature guarantee from a bank, broker
(including Fidelity Investor Centers), dealer, credit union (if authorized
under state law), securities exchange or association, clearing agency, or
savings association. A notary public cannot provide a signature guarantee.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(bullet) Your name,
(bullet) The fund's name,
(bullet) Your fund account number,
(bullet) The dollar amount or number of shares to be redeemed, and
(bullet) Any other applicable requirements listed in the table at right.
Unless otherwise instructed, Fidelity will send a check to the record
address. Deliver your letter to a Fidelity Investor Center, or mail it to:
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
CHECKWRITING
If you have a checkbook for your account in Spartan Pennsylvania Municipal
Money Market, you may write an unlimited number of checks. Do not, however,
try to close out your account by check.
ACCOUNT TYPE SPECIAL REQUIREMENTS

<TABLE>
<CAPTION>
<S> <C> <C>
IF YOU SELL SHARES OF SPARTAN PENN HIGH YIELD AFTER HOLDING THEM LESS THAN 180 DAYS,
THE FUND WILL DEDUCT A REDEMPTION FEE EQUAL TO .50% OF THE VALUE OF THOSE SHARES. IF
YOUR ACCOUNT BALANCE IS LESS THAN $50,000, THERE ARE FEES FOR INDIVIDUAL REDEMPTION
TRANSACTIONS: $2.00 FOR EACH CHECK YOU WRITE AND $5.00 FOR EACH EXCHANGE, BANK WIRE,
AND ACCOUNT CLOSEOUT.

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
Phone 1-800-544-777 (phone_graphic) All account types (bullet) Maximum check request:
$100,000.
(bullet) For Money Line transfers to
your bank account; minimum:
$10 ; maximum: $100,000.
(bullet) You may exchange to other
Fidelity funds if both
accounts are registered with
the same name(s), address,
and taxpayer ID number.

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
Check (check_graphic) All account types (bullet) Minimum check: $1,000.
(bullet) All account owners must sign
a signature card to receive a
checkbook.

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118

</TABLE>

24-HOUR SERVICE
ACCOUNT ASSISTANCE
1-800-544-6666
ACCOUNT BALANCES
1-800-544-7544
ACCOUNT TRANSACTIONS
1-800-544-7777
PRODUCT INFORMATION
1-800-544-8888
QUOTES
1-800-544-8544
RETIREMENT ACCOUNT
ASSISTANCE
1-800-544-4774
AUTOMATED SERVICE
(checkmark)
To reduce expenses, only one copy of most financial reports will be mailed
to your household, even if you have more than one account in the fund. Call
1-800-544-6666 if you need copies of financial reports or historical
account information.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your fund shares and buy shares of other
Fidelity funds by telephone or in writing. There may be a $5.00 fee for
each exchange out of the funds, unless you place your transaction on
Fidelity's automated exchange services.
Note that exchanges out of the high yield fund are limited to four
per calendar year, and that they may have tax consequences for you. For
complete policies and restrictions governing exchanges, including
circumstances under which a shareholder's exchange privilege may be
suspended or revoked, see page .
SYSTEMATIC WITHDRAWAL PLANS let you set up monthly or quarterly redemptions
from your account.
FIDELITY MONEY LINE(Registered trademark) enables you to transfer money by
phone between your bank account and your fund account. Most transfers are
complete within three business days of your call.
REGULAR INVESTMENT PLANS
One easy way to pursue your financial goals is to invest money regularly.
Fidelity offers convenient services that let you transfer money into your
fund account, or between fund accounts, automatically. While regular
investment plans do not guarantee a profit and will not protect you against
loss in a declining market, they can be an excellent way to invest for a
home, educational expenses, and other long-term financial goals.
REGULAR INVESTMENT PLANS

FIDELITY AUTOMATIC ACCOUNT BUILDERSM
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY FUND

MINIMUM FREQUENCY SETTING UP OR CHANGING
$500 Monthly or (bullet) For a new account, complete the
quarterly appropriate section on the fund
application.
(bullet) For existing accounts, call
1-800-544-6666 for an application.
(bullet) To change the amount or frequency of
your investment, call 1-800-544-6666 at
least three business days prior to your
next scheduled investment date.

<TABLE>
<CAPTION>
<S> <C> <C>
DIRECT DEPOSIT
TO SEND ALL OR A PORTION OF YOUR PAYCHECK OR GOVERNMENT CHECK TO A FIDELITY FUNDA

</TABLE>

MINIMUM FREQUENCY SETTING UP OR CHANGING
$500 Every pay (bullet) Check the appropriate box on the fund
period application, or call 1-800-544-6666 for an
authorization form.
(bullet) Changes require a new authorization
form.

<TABLE>
<CAPTION>
<S> <C> <C>
FIDELITY AUTOMATIC EXCHANGE SERVICE
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND TO ANOTHER FIDELITY FUND

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
MINIMUM FREQUENCY SETTING UP OR CHANGING
$500 Monthly, (bullet) To establish, call 1-800-544-6666 after
bimonthly, both accounts are opened.
quarterly, or (bullet) To change the amount or frequency of
annually your investment, call 1-800-544-6666.

</TABLE>

A BECAUSE BOND FUND SHARE PRICES FLUCTUATE, THAT FUND MAY NOT BE AN
APPROPRIATE CHOICE FOR DIRECT DEPOSIT OF YOUR ENTIRE CHECK.
DIVIDENDS, CAPITAL GAINS, AND TAXES
Each fund distributes substantially all of its net investment income and
capital gains, if any, to shareholders each year. Income dividends are
declared daily and paid monthly. Capital gains earned by the bond fund are
normally distributed in February and December.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. If the option you prefer is not listed on the
application, call 1-800-544-6666 for instructions. Each fund offers four
options (three for Spartan Pennsylvania Municipal Money Market):
1. REINVESTMENT OPTION. Your dividend and capital gain distributions, if
any, will be automatically reinvested in additional shares of the fund. If
you do not indicate a choice on your application, you will be assigned this
option.
2. INCOME-EARNED OPTION. Your capital gain distributions, if any, will be
automatically reinvested, but you will be sent a check for each dividend
distribution. This option is not available for Spartan Pennsylvania
Municipal Money Market.
3. CASH OPTION. You will be sent a check for your dividend and capital gain
distributions, if any.
4. DIRECTED DIVIDENDS(Registered trademark) OPTION. Your dividend and
capital gain distributions, if any, will be automatically invested in
another identically registered Fidelity fund.
Dividends will be reinvested at the fund's NAV on the last day of the
month. Capital gain distributions, if any, will be reinvested at the NAV as
of the date the fund deducts the distribution from its NAV. The mailing of
distribution checks will begin within seven days , or longer for a
December ex-dividend date.
UNDERSTANDING
DISTRIBUTIONS
As a fund shareholder, you
are entitled to your share of
the fund's net income and
gains on its investments. The
fund passes its earnings
along to its investors as
DISTRIBUTIONS.
Each fund earns interest from
its investments. These are
passed along as DIVIDEND
DISTRIBUTIONS. The fund may
realize capital gains if it sells
securities for a higher price
than it paid for them. These
are passed along as CAPITAL
GAIN DISTRIBUTIONS. Money
market funds usually don't
make capital gain
distributions.
(checkmark)
TAXES
As with any investment, you should consider how an investment in a tax-free
fund could affect you. Below are some of the funds' tax implications.
TAXES ON DISTRIBUTIONS. Interest income that a fund earns is distributed to
shareholders as income dividends. Interest that is federally tax-free
remains tax-free when it is distributed.
However, gain on the sale of tax-free bonds results in taxable
distributions. Short-term capital gains and a portion of the gain on bonds
purchased at a discount are taxed as dividends. Long-term capital gain
distributions are taxed as long-term capital gains. These distributions are
taxable when they are paid, whether you take them in cash or reinvest them.
However, distributions declared in December and paid in January are taxable
as if they were paid on December 31. Fidelity will send you and the IRS a
statement showing the tax status of the distributions paid to you in the
previous year.
The interest from some municipal securities is subject to the federal
alternative minimum tax. Each fund may invest up to 100% of its assets in
these securities. Individuals who are subject to the tax must report this
interest on their tax returns.
To the extent that a fund's distributions are derived from interest on
state tax-free investments, they will be free from the Pennsylvania
personal income tax. Capital gain distributions from the funds will be
fully taxable for purposes of the Pennsylvania personal income tax.
Investments in the funds may be free from the Pennsylvania county
and Pittsburgh city and School District personal property taxes.

During fiscal 1993, 100 % of each fund's income dividends was free
from federal income tax and from the Pennsylvania personal income tax.
51.6 % of Spartan Pennsylvania Municipal Money Market's and 11.6 %
of Spartan Pennsylvania Municipal High Yield's income dividends were
subject to the federal alternative minimum tax.
TAXES ON TRANSACTIONS. Your bond fund redemptions - including exchanges to
other Fidelity funds - are subject to capital gains tax. A capital gain or
loss is the difference between the cost of your shares and the price you
receive when you sell them.
Whenever you sell shares of a fund, Fidelity will send you a confirmation
statement showing how many shares you sold and at what price. You will also
receive a consolidated transaction statement every January. However, it is
up to you or your tax preparer to determine whether this sale resulted in a
capital gain and, if so, the amount of tax to be paid. Be sure to keep your
regular account statements; the information they contain will be essential
in calculating the amount of your capital gains.
"BUYING A DIVIDEND." If you buy shares just before a fund deducts a capital
gain distribution from its NAV, you will pay the full price for the shares
and then receive a portion of the price back in the form of a taxable
distribution.
SHAREHOLDER AND ACCOUNT POLICIES

TRANSACTION DETAILS
THE FUNDS ARE OPEN FOR BUSINESS each day the New York Stock Exchange (NYSE)
is open. Fidelity normally calculates each fund's net asset value as of
the close of business of the NYSE, normally 4 p.m. Eastern time.
EACH FUND'S NAV is the value of a single share. The NAV is computed by
adding the value of the fund's investments, cash, and other assets,
subtracting its liabilities, and then dividing the result by the number of
shares outstanding.
The money market fund values the securities it owns on the basis of
amortized cost. This method minimizes the effect of changes in a security's
market value and helps the fund to maintain a stable $1.00 share price. For
the bond fund, assets are valued primarily on the basis of market
quotations, if available. Since market quotations are often unavailable,
assets are usually valued by a method that the Board of Trustees believes
accurately reflects fair value.
EACH FUND'S OFFERING PRICE (price to buy one share) and REDEMPTION PRICE
(price to sell one share) are its NAV.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that
your Social Security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require a fund to
withhold 31% of your taxable distributions and redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Note that Fidelity will
not be responsible for any losses resulting from unauthorized transactions
if it follows reasonable procedures designed to verify the identity of the
caller. Fidelity will request personalized security codes or other
information, and may also record calls. You should verify the accuracy of
your confirmation statements immediately after you receive them. If you do
not want the ability to redeem and exchange by telephone, call Fidelity for
instructions.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during periods
of unusual market activity), consider placing your order by mail or by
visiting a Fidelity Investor Center.
EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. Each fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions"
on page . Purchase orders may be refused if, in FMR's opinion, they are of
a size that would disrupt management of a fund.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your order will be processed at the
next offering price calculated after your order is received and accepted.
Note the following:
(bullet) All of your purchases must be made in U.S. dollars and checks
must be drawn on U.S. banks.
(bullet) Fidelity does not accept cash.
(bullet) When making a purchase with more than one check, each check must
have a value of at least $50.
(bullet) Each fund reserves the right to limit the number of checks
processed at one time.
(bullet) If your check does not clear, your purchase will be cancelled and
you could be liable for any losses or fees a fund or its transfer agent has
incurred.
(bullet) Spartan Pennsylvania Municipal Money Market reserves the right to
limit all accounts maintained or controlled by any one person to a maximum
total balance of $2 million.
(bullet) You begin to earn dividends as of the first business day
following the day of your purchase.
TO AVOID THE COLLECTION PERIOD associated with check and Money Line
purchases, consider buying shares by bank wire, U.S. Postal money order,
U.S. Treasury check, Federal Reserve check, or direct deposit instead.
YOU MAY BUY OR SELL SHARES OF THE FUNDS THROUGH A BROKER, who may charge
you a fee for this service. If you invest through a broker or other
institution, read its program materials for any additional service features
or fees that may apply.
CERTAIN FINANCIAL INSTITUTIONS that have entered into sales agreements with
Fidelity Distributors Corporation (FDC) may enter confirmed purchase orders
on behalf of customers by phone, with payment to follow no later than the
time when a fund is priced on the following business day. If payment is not
received by that time, the financial institution could be held liable for
resulting fees or losses.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the
next NAV calculated after your request is received and accepted. Note the
following:
(bullet) Normally, redemption proceeds will be mailed to you on the next
business day, but if making immediate payment could adversely affect a
fund, it may take up to seven days to pay you.
(bullet) Shares will earn dividends through the date of redemption;
however, shares redeemed on a Friday or prior to a holiday will continue to
earn dividends until the next business day.
(bullet) Fidelity Money Line redemptions generally will be credited to
your bank account on the second or third business day after your phone
call.
(bullet) Each fund may hold payment on redemptions until it is reasonably
satisfied that investments made by check or Fidelity Money Line have been
collected, which can take up to seven business days.
(bullet) Redemptions may be suspended or payment dates postponed when the
NYSE is closed (other than weekends or holidays), when trading on the NYSE
is restricted, or as permitted by the SEC.
(bullet) If you sell shares by writing a check and the amount of the check
is greater than the value of your account, your check will be returned to
you and you may be subject to additional charges.
THE REDEMPTION FEE for Spartan Pennsylvania Municipal High Yield, if
applicable, will be deducted from the amount of your redemption. This fee
is paid to the fund rather than FMR, and it does not apply to shares that
were acquired through reinvestment of distributions. If shares you are
redeeming were not all held for the same length of time, those shares you
held longest will be redeemed first for purposes of determining whether the
fee applies.
THE FEES FOR INDIVIDUAL TRANSACTIONS are waived if your account balance at
the time of the transaction is $50,000 or more. Otherwise, you should note
the following:
(bullet) The $2.00 checkwriting charge will be deducted from your account.
(bullet) The $5.00 exchange fee will be deducted from the amount of your
exchange.
(bullet) The $5.00 wire fee will be deducted from the amount of your wire.
(bullet) The $5.00 account closeout fee does not apply to exchanges or
wires, but it will apply to checkwriting.
IF YOUR ACCOUNT BALANCE FALLS BELOW $5,000 ($10,000 for Spartan
Pennsylvania Municipal Money Market), you will be given 30 days' notice to
reestablish the minimum balance. If you do not increase your balance,
Fidelity reserves the right to close your account and send the proceeds to
you. Your shares will be redeemed at the NAV on the day your account is
closed and the $5.00 account closeout fee will be charged.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging shares of a fund for
shares of other Fidelity funds. However, you should note the following:
(bullet) The fund you are exchanging into must be registered for sale in
your state.
(bullet) You may only exchange between accounts that are registered in the
same name, address, and taxpayer identification number.
(bullet) Before exchanging into a fund, read its prospectus.
(bullet) If you exchange into a fund with a sales charge, you pay the
percentage-point difference between that fund's sales charge and any sales
charge you have previously paid in connection with the shares you are
exchanging. For example, if you had already paid a sales charge of 2% on
your shares and you exchange them into a fund with a 3% sales charge, you
would pay an additional 1% sales charge.
(bullet) Exchanges may have tax consequences for you.
(bullet) Because excessive trading can hurt fund performance and
shareholders, each fund reserves the right to temporarily or permanently
terminate the exchange privilege of any investor who makes more than four
exchanges out of the fund per calendar year. Accounts under common
ownership or control, including accounts with the same taxpayer
identification number, will be counted together for purposes of the four
exchange limit.
(bullet) Each fund reserves the right to refuse exchange purchases by any
person or group if, in FMR's judgment, the fund would be unable to invest
the money effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
(bullet) Your exchanges may be restricted or refused if a fund receives or
anticipates simultaneous orders affecting significant portions of the
fund's assets. In particular, a pattern of exchanges that coincide with a
"market timing" strategy may be disruptive to a fund.
Although the funds will attempt to give you prior notice whenever they are
reasonably able to do so, they may impose these restrictions at any time.
The funds reserve the right to terminate or modify the exchange privilege
in the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
administrative fees of up to $7.50 and redemption fees of up to 1.50% on
exchanges. Check each fund's prospectus for details.

THE FUNDS IN DETAIL

CHARTER
EACH FUND IS A MUTUAL FUND: an investment that pools shareholders' money
and invests it toward a specified goal. In technical terms, Spartan
Pennsylvania Municipal Money Market is currently a non-diversified fund of
Fidelity Municipal Trust II, and Spartan Pennsylvania Municipal High
Yield is currently a non-diversified fund of Fidelity Municipal
Trust. Both trusts are open-end management investment companies. Fidelity
Municipal Trust II was organized as a Delaware business trust on June 20,
1991. Fidelity Municipal Trust was organized as a Massachusetts business
trust on June 22, 1984. There is a remote possibility that one fund might
become liable for a misstatement in the prospectus about another fund.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES, which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet throughout the year to oversee the funds' activities,
review contractual arrangements with companies that provide services to the
funds, and review performance. The majority of trustees are not otherwise
affiliated with Fidelity.
THE FUNDS MAY HOLD SPECIAL MEETINGS AND MAIL PROXY MATERIALS. These
meetings may be called to elect or remove trustees, change fundamental
policies, approve a management contract, or for other purposes.
Shareholders not attending these meetings are encouraged to vote by proxy.
Fidelity will mail proxy materials in advance, including a voting card and
information about the proposals to be voted on. Money market fund
shareholders are entitled to one vote for each share they own. For bond
fund shareholders, the number of votes you are entitled to is based
upon the dollar value of your investment.
FMR AND ITS AFFILIATES
The funds are managed by FMR, which chooses their investments and handles
their business affairs. FTX has primary responsibility for providing
investment management services for Spartan Pennsylvania Municipal Money
Market.
FIDELITY FACTS
Fidelity offers the broadest
selection of mutual funds
in the world.
(bullet) Number of Fidelity mutual
funds: over 200
(bullet) Assets in Fidelity mutual
funds: over $225 billion
(bullet) Number of shareholder
accounts: over 15 million
(bullet) Number of investment
analysts and portfolio
managers: over 200
(checkmark)
Steven Harvey is manager of Spartan Pennsylvania Municipal High Yield,
which he has managed since October 1993. Mr. Harvey also manages Minnesota
Tax-Free and Spartan Maryland Municipal Income. Previously, he was an
analyst following tax-free bonds. Mr. Harvey joined Fidelity in 1986.
FDC distributes and markets Fidelity's funds and services. Fidelity Service
Co. (FSC) performs transfer agent servicing functions for the funds.
FMR Corp. is the parent company of these organizations. Through ownership
of voting common stock, Edward C. Johnson 3d (President and a trustee of
the trusts), Johnson family members, and various trusts for the benefit of
the Johnson family form a controlling group with respect to FMR Corp.
United Missouri Bank, N.A., is each fund's transfer agent, although it
employs FSC to perform these functions for the funds. It is located at 1010
Grand Avenue, Kansas City, Missouri.
To carry out the funds' transactions, FMR may use its broker-dealer
affiliates and other firms that sell fund shares, provided that a fund
receives services and commission rates comparable to those of other
broker-dealers.
BREAKDOWN OF EXPENSES
Like all mutual funds, the funds pay fees related to their daily
operations. Expenses paid out of a fund's assets are reflected in its share
price or dividends; they are neither billed directly to shareholders nor
deducted from shareholder accounts.
Each fund pays a MANAGEMENT FEE to FMR for managing its investments and
business affairs. FMR in turn pays fees to an affiliate who provides
assistance with these services.
FMR may, from time to time, agree to reimburse the funds for management
fees and other expenses above a specified limit. FMR retains the ability to
be repaid by a fund if expenses fall below the specified limit prior to the
end of the fiscal year. Reimbursement arrangements, which may be terminated
at any time without notice, can decrease a fund's expenses and boost its
performance.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month. Each fund
pays a management fee at a fixed annual rate of its average net assets:
.50% for Spartan Pennsylvania Municipal Money Market and .55% for Spartan
Pennsylvania Municipal High Yield.
FMR HAS SUB-ADVISORY AGREEMENTS with FTX, which has primary responsibility
for providing investment management for Spartan Pennsylvania Municipal
Money Market, while FMR retains responsibility for providing other
management services. FMR pays FTX 50% of its management fee (before expense
reimbursements) for these services.
FSC performs many transaction and accounting functions for the funds. These
services include processing shareholder transactions and calculating each
fund's share price. FMR, and not the funds, pays for these services.
To offset shareholder service costs, FMR or its affiliates also collect the
funds' $5.00 exchange fee, $5.00 account closeout fee, $5.00 fee for wire
purchases and redemptions, and, for Spartan Pennsylvania Municipal Money
Market, the $2.00 checkwriting charge. For fiscal 1993, these fees amounted
to $ 5,950, $ 1,586 , $ 345 , and $ 6,653 ,
respectively, for
Spartan Pennsylvania Municipal Money Market and $ 3,615, $1,055, and
$380 , respectively, for Spartan Pennsylvania Municipal High Yield.
Each fund has adopted a Distribution and Service Plan. These plans
recognize that FMR may use its resources, including management fees, to pay
expenses associated with the sale of fund shares. This may include payments
to third parties, such as banks or broker-dealers, that provide shareholder
support services or engage in the sale of the funds' shares. It is
important to note, however, that the funds do not pay FMR any separate fees
for this service.
For fiscal 1993, the portfolio turnover rate for Spartan Pennsylvania
Municipal High Yield was 38 %. This rate varies from year to
year.
INVESTMENT PRINCIPLES
SPARTAN PENNSYLVANIA MONEY MARKET seeks high current income that is free
from federal income tax and Pennsylvania personal income tax while
maintaining a stable $1.00 share price by investing in high-quality,
short-term municipal securities of all types. As a result, when you
sell your shares, they should be worth the same amount as when you bought
them. Of course, there is no guarantee that the fund will maintain a
stable $1.00 share price. FMR normally invests at least 65% of the
fund's total assets in state tax-free securities, and normally invests so
that at least 80% of its income distributions are free from federal income
tax.
The fund follows industry-standard guidelines on the quality and maturity
of its investments, which are designed to help maintain a stable $1.00
share price. The fund will purchase only high-quality securities that FMR
believes present minimal credit risks and will observe maturity
restrictions on securities it buys. It is possible that a major change in
interest rates or a default on the fund's investments could cause its share
price (and the value of your investment) to change.
SPARTAN PENNSYLVANIA MUNICIPAL HIGH YIELD seeks high current income that
is free from federal income tax and Pennsylvania personal income tax by
investing primarily in municipal securities judged by FMR to be of
investment-grade quality, although it can also invest in some lower quality
securities. The fund normally invests in long-term bonds, generally
maintaining a dollar-weighted average maturity of 15 years or longer,
although it may invest in obligations of any maturity. FMR normally invests
so that at least 80% of the fund's income is free from federal and
Pennsylvania personal income taxes.
EACH FUND'S yield and the bond fund's share price change daily based
on interest rate changes and on the quality and maturity of its
investments. In general, bond prices rise when interest rates fall, and
vice versa. This effect is usually more pronounced for longer-term
securities. Lower-quality securities offer higher yields, but also carry
more risk.
Each fund's performance is closely tied to the economic and political
conditions within the state of Pennsylvania. In particular,
Pennsylvania's continued dependence on manufacturing, mining,
steel, and coal has made the state's economy vulnerable to cyclical
fluctuations, foreign imports, and environmental concerns .
If you are subject to the federal alternative minimum tax, you should
note that each fund may invest all of its assets in municipal securities
issued to finance private activities. The interest from these investments
is a tax-preference item for purposes of the tax.
FMR normally invests each fund's assets according to its investment
strategy. The funds do not expect to invest in federally taxable
obligations, and Spartan Pennsylvania Municipal High Yield also does not
expect to invest in state taxable obligations. When FMR considers it
appropriate for defensive purposes, however, it temporarily may invest
substantially in short-term instruments, may hold a substantial amount of
uninvested cash, or may invest more than normally permitted in taxable
obligations.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which the funds may invest, and strategies FMR may employ in
pursuit of the funds' investment objectives. A summary of risks and
restrictions associated with these instrument types and investment
practices is included as well. Policies and limitations
are considered at the time of purchase; the sale of instruments is not
required in the event of a subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these techniques to
the full extent permitted unless it believes that doing so will help the
funds achieve their goals. As a shareholder, you will receive financial
reports every six months detailing fund holdings and describing recent
investment activities.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers to
borrow money from investors. The issuer pays the investor a fixed or
variable rate of interest, and must repay the amount borrowed at maturity.
Some debt securities, such as zero coupon bonds, do not pay current
interest, but are purchased at a discount from their face values. Debt
securities have varying degrees of quality and varying levels of
sensitivity to changes in interest rates. Longer-term bonds are generally
more sensitive to interest rate changes than short-term bonds.
Lower-quality debt securities may have speculative characteristics,
and involve greater risk of default or price changes due to changes in
the issuer's creditworthiness. The market prices of these securities may
fluctuate more than higher-quality securities and may decline significantly
in periods of general or regional economic difficulty.
The table on page 2 7 provides a summary of ratings assigned to debt
holdings (not including money market instruments) in Spartan Pennsylvania
Municipal High Yield's portfolio. These figures are dollar-weighted
averages of month-end portfolio holdings during fiscal 1993, and are
presented as a percentage of total investments. These percentages are
historical and do not necessarily indicate the fund's current or future
debt holdings.
SPARTAN PENNSYLVANIA MUNICIPAL HIGH YIELD
FISCAL 1993 DEBT HOLDINGS, BY RATING MOODY'S STANDARD &
POOR'S
INVESTORS SERVICE, INC. CORPORATION
Rating Average A Rating Averag
eA
INVESTMENT GRADE
Highest quality Aaa AAA
High quality Aa 44.7 % AA 55.0 %
Upper-medium grade A A
Medium grade Baa 15.9 % BBB 16.7 %
LOWER QUALITY
Moderately speculative Ba 4.0 % BB 0 %
Speculative B 0 % B 0 %
Highly speculative Caa 0 % CCC 0 %
Poor quality Ca 0 % CC 0 %
Lowest quality, no interest C C
In default, in arrears -- D 0 %
64.6 % 71.7 %
A THE DOLLAR-WEIGHTED AVERAGE OF DEBT SECURITIES NOT RATED BY MOODY'S OR
S&P AMOUNTED TO 17.4 %. THIS MAY INCLUDE SECURITIES RATED BY
OTHER
NATIONALLY RECOGNIZED RATING SERVICES, AS WELL AS UNRATED SECURITIES.
UNRATED SECURITIES ARE NOT NECESSARILY LOWER-QUALITY SECURITIES. REFER TO
THE
FUND'S STATEMENT OF ADDITIONAL INFORMATION FOR A MORE COMPLETE DISCUSSION
OF THESE RATINGS.

RESTRICTIONS: Spartan Pennsylvania Municipal High Yield does not
currently intend to invest more than one-third of its assets in bonds
judged by FMR to be of equivalent quality to those rated Ba
or lower by Moody's and BB or lower by S&P, and d oes not currently
intend to invest in bonds of equivalent quality to bonds rated
lower than B. The fund does not currently intend to invest in bonds
rated below Caa by Moody's or CCC by S&P.
MUNICIPAL SECURITIES are issued to raise money for a variety of
public purposes, including general financing for state and local
governments, or financing for specific projects or public facilities.
Municipal securities may be issued in anticipation of future revenues, and
may be backed by the full taxing power of a municipality, the revenues from
a specific project, or the credit of a private organization. A security's
credit may be enhanced by a bank, insurance company, or other financial
institution. A fund may own a municipal security directly through a
participation interest.
STATE TAX-FREE SECURITIES include municipal obligations issued by
the Commonwealth of Pennsylvania or its counties, municipalities,
authorities, or other subdivisions. The ability of issuers to
repay their debt can be affected by many factors that impact the economic
vitality of either the state or a region within the state.
Other state tax-free securities include general obligations
of U.S. territories and possessions such as Guam, the Virgin Islands, and
Puerto Rico, and their political subdivisions and public corporations. The
economy of Puerto Rico is closely linked to the U.S. economy, and will
depend on the strength of the U.S. dollar, interest rates, the price
stability of oil imports, and the continued existence of favorable tax
incentives. Recent legislation reduced these incentives, but it is
impossible to predict what impact the changes will have.
MUNICIPAL LEASE OBLIGATIONS are used by municipalities to acquire land,
equipment, or facilities. If the municipality stops making payments or
transfers its obligations to a private entity, the obligation could lose
value or become taxable.
PRIVATE ENTITIES may be involved in some municipal securities. For example,
industrial revenue bonds are backed by private entities, and resource
recovery bonds often involve private corporations. The viability of a
project or tax incentives could affect the value and credit quality of
these securities.
ASSET-BACKED SECURITIES may include pools of purchase contracts, financing
leases, or sales agreements entered into by municipalities. These
securities usually rely on continued payments by a municipality, and may
also be subject to prepayment risk.
VARIABLE- AND FLOATING-RATE INSTRUMENTS may have interest rates that move
in tandem with a benchmark, helping to stabilize their prices. Inverse
floaters have interest rates that move in the opposite direction from the
benchmark, making the instrument's market value more volatile.
PUT FEATURES entitle the holder to put (sell back) an instrument to the
issuer or a financial intermediary. In exchange for this benefit, a fund
may pay periodic fees or accept a lower interest rate. Demand features,
standby commitments, and tender options are types of put features.
ADJUSTING INVESTMENT EXPOSURE. A fund can use various techniques to
increase or decrease its exposure to changing security prices, interest
rates, or other factors that affect security values. These techniques may
involve derivative transactions such as buying and selling options and
futures contracts and purchasing indexed securities.
FMR can use these practices to adjust the risk and return characteristics
of a fund's portfolio of investments. If FMR judges market conditions
incorrectly or employs a strategy that does not correlate well with the
fund's investments, these techniques could result in a loss, regardless of
whether the intent was to reduce risk or increase return. These techniques
may increase the volatility of the fund and may involve a small investment
of cash relative to the magnitude of the risk assumed. In addition, these
techniques could result in a loss if the counterparty to the transaction
does not perform as promised.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS are trading practices in
which payment and delivery for the securities take place at a future date.
The market value of a security could change during this period, which could
affect a fund's yield or the market value of its assets.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by
FMR, under the supervision of the Board of Trustees, to be illiquid, which
means that they may be difficult to sell promptly at an acceptable price.
The sale of other securities may be subject to legal restrictions.
Difficulty in selling securities may result in a loss or may be costly to a
fund.
RESTRICTIONS: A fund may not purchase a security if, as a result, more than
10% of its assets would be invested in illiquid securities.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the
risks of investing. This may include limiting the amount of money invested
in any one issuer or, on a broader scale, in any one industry or type of
project. Economic, business, or political changes can affect all securities
of a similar type. A fund that is not diversified may be more sensitive to
these changes, and also to changes in the market value of a single issuer
or industry.
RESTRICTIONS: The funds are considered non-diversified. Generally, to
meet federal tax requirements at the close of each quarter, a fund does not
invest more than 25% of its total assets in any one issuer and, with
respect to 50% of total assets, does not invest more than 5% of its total
assets in any one issuer. These limitations do not apply to U.S.
government securities. A fund may invest more than 25% of its total assets
in tax-free securities that finance similar types of projects.
BORROWING. A fund may borrow from banks or from other funds advised by FMR,
or through reverse repurchase agreements. If a bond fund borrows money, its
share price may be subject to greater fluctuation until the borrowing is
paid off. If the fund makes additional investments while borrowings are
outstanding, this may be considered a form of leverage.
RESTRICTIONS: A fund may borrow only for temporary or emergency purposes,
but not in an amount exceeding 33% of its total assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraphs restate all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraphs, can be changed without shareholder approval.
SPARTAN PENNSYLVANIA MUNICIPAL MONEY MARKET seeks as high a level of
current income, exempt from federal income tax and Pennsylvania personal
income tax, as is consistent with preservation of capital. The fund will
normally invest so that at least 80% of its income distributions are exempt
from federal income tax.
SPARTAN PENNSYLVANIA MUNICIPAL HIGH YIELD seeks as a high a level of
current income, exempt from federal income tax and Pennsylvania personal
income tax, as is consistent with its investment characteristics. The fund
will normally invest so that at least 80% of its income is exempt from
federal and Pennsylvania income taxes. FMR anticipates that the fund
ordinarily will be fully invested in obligations whose interest is exempt
from federal income tax and Pennsylvania personal income tax. The fund
invests primarily in municipal bonds judged by FMR to be of
investment-grade quality, although it may invest up to one-third of its
assets in lower quality bonds. The fund may not purchase bonds that are
judged by FMR to be equivalent quality to those rated lower than B.
EACH FUND may borrow only for temporary or emergency purposes, but
not in an amount exceeding 33% of its total assets.

This prospectus is printed on recycled paper using soy-based inks.

SPARTAN(registered trademark) PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO
A FUND OF FIDELITY MUNICIPAL TRUST II
SPARTAN(registered trademark) PENNSYLVANIA MUNICIPAL HIGH YIELD PORTFOLIO
A FUND OF FIDELITY MUNICIPAL TRUST
STATEMENT OF ADDITIONAL INFORMATION
FEBRUARY 17, 1994
This Statement is not a prospectus but should be read in conjunction with
the funds' current Prospectus (dated February 17, 1994). Please retain this
document for future reference. The Annual Report for the fiscal year ended
December 31, 1993 is incorporated herein by reference. To obtain an
additional copy of the Prospectus or the Annual Report, please call
Fidelity Distributors Corporation at 1-800-544-8888.
TABLE OF CONTENTS PAGE
Investment Policies and Limitations
Special Factors Affecting Pennsylvania
Special Factors Affecting Puerto Rico
Portfolio Transactions
Valuation of Portfolio Securities
Performance
Additional Purchase and Redemption Information
Distributions and Taxes
FMR
Trustees and Officers
Management Contracts
Distribution and Service Plans
Interest of FMR Affiliates
Description of the Trusts
Financial Statements
Appendix
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
INVESTMENT SUB-ADVISER (Money Market Fund only)
FMR Texas Inc. (FMR Texas)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENT
United Missouri Bank, N.A. (United Missouri) and Fidelity Service Co. (FSC)
PFR-ptb-294
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or
limitation states a maximum percentage of a fund's assets that may be
invested in any security or other asset, or sets forth a policy regarding
quality standards, such standard or percentage limitation will be
determined immediately after and as a result of the fund's acquisition of
such security or other asset. Accordingly, any subsequent change in values,
net assets, or other circumstances will not be considered when determining
whether the investment complies with the fund's investment policies and
limitations.
A fund's fundamental investment policies and limitations cannot be changed
without approval by a "majority of the outstanding voting securities" (as
defined in the Investment Company Act of 1940) of the fund. However, with
respect to the money market fund, except for the fundamental investment
limitations set forth below, the investment policies and limitations
described in this Statement of Additional Information are not fundamental
and may be changed without shareholder approval.
INVESTMENT LIMITATIONS OF SPARTAN PENNSYLVANIA MUNICIPAL MONEY MARKET
PORTFOLIO
(MONEY MARKET FUND)
THE FOLLOWING ARE THE MONEY MARKET FUND'S FUNDAMENTAL INVESTMENT
LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) sell securities short (except by selling futures contracts), unless it
owns, or by virtue of ownership of other securities has the right to
obtain, securities equivalent in kind and amount to the securities sold;
(3) purchase securities on margin, except for such short-term credits as
are necessary for the clearance of transactions, and provided that the fund
may make initial and variation margin payments in connection with the
purchase or sale of futures contracts or of options on futures contracts;
(4) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed
this amount will be reduced within three days (not including Sundays and
holidays) to the extent necessary to comply with the 33 1/3% limitation;
(5) underwrite securities issued by others, except to the extent that the
purchase of municipal bonds in accordance with the fund's investment
objective, policies, and limitations, either directly from the issuer, or
from an underwriter for an issuer, may be deemed to be underwriting;
(6) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities, or tax-exempt obligations issued or guaranteed by a U.S.
territory or possession or a state or local government, or a political
subdivision of any of the foregoing) if, as a result, more than 25% of the
fund's total assets would be invested in securities of companies whose
principal business activities are in the same industry;
(7) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(8) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments;
(9) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties (but this limit
does not apply to purchases of debt securities or to repurchase
agreements); or
(10) invest in oil, gas or other mineral exploration or development
programs.
IN ADDITION, THE FUND MAY:
(11) notwithstanding any other fundamental investment policy or limitation,
invest all of its assets in the securities of a single open-end management
investment company with substantially the same fundamental investment
objectives, policies, and limitations as the fund.

THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) To meet federal tax requirements for qualification as a "regulated
investment company," the fund limits its investments so that at the close
of each quarter of its taxable year: (a) with regard to at least 50% of
total assets, no more than 5% of total assets are invested in the
securities of a single issuer, and (b) no more than 25% of total assets are
invested in the securities of a single issuer. Limitations (a) and (b) do
not apply to "Government securities" as defined for federal tax purposes.
(ii) The fund does not currently intend to sell securities short.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (4)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The fund does not currently intend to invest more than 25% of its total
assets in industrial revenue bonds related to a single industry.
(vi) The fund does not currently intend to purchase or sell futures
contracts or call options. This limitation does not apply to options
attached to, or acquired or traded together with, their underlying
securities, and does not apply to securities that incorporate features
similar to options or futures contracts.
(vii) The fund does not currently intend to engage in repurchase agreements
or make loans, but this limitation does not apply to purchases of debt
securities.
(viii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(ix) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(x) The fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objectives, policies, and
limitations as the fund.
For purposes of limitations (6) and (i), FMR identifies the issuer of a
security depending on its terms and conditions. In identifying the issuer,
FMR will consider the entity or entities responsible for payment of
interest and repayment of principal and the source of such payments; the
way in which assets and revenues of an issuing political subdivision are
separated from those of other political entities; and whether a
governmental body is guaranteeing the security.
INVESTMENT LIMITATIONS OF SPARTAN PENNSYLVANIA MUNICIPAL HIGH YIELD
PORTFOLIO
(HIGH YIELD FUND)
THE FOLLOWING ARE THE HIGH YIELD FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS
SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed
this amount will be reduced within three days (not including Sundays and
holidays) to the extent necessary to comply with the 33 1/3% limitation;
(3) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(4) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities, or tax-exempt obligations issued or guaranteed by a U.S.
territory or possession or a state or local government, or a political
subdivision of any of the foregoing) if, as a result, more than 25% of the
fund's total assets would be invested in securities of companies whose
principal business activities are in the same industry;
(5) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(6) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this limit
does not apply to purchases of debt securities or to repurchase agreements.
Investment limitation (2) is construed in conformity with the 1940 Act,
and, accordingly, "three days" means three days exclusive of Sundays and
holidays.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) To meet federal tax requirements for qualification as a "regulated
investment company," the fund limits its investments so that at the close
of each quarter of its taxable year: (a) with regard to at least 50% of
total assets, no more than 5% of total assets are invested in the
securities of a single issuer, and (b) no more than 25% of total assets are
invested in the securities of a single issuer. Limitations (a) and (b) do
not apply to "Government securities" as defined for federal tax purposes.
(ii) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(iii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (2)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(v) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(vi) The fund does not currently intend to invest more than 25% of its
total assets in industrial revenue bonds related to a single industry.
(vii) The fund does not currently intend to engage in repurchase agreements
or make loans, but this limitation does not apply to purchases of debt
securities.
(viii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(ix) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(x) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
For purposes of limitations (4) and (i), FMR identifies the issuer of a
security depending on its terms and conditions. In identifying the issuer,
FMR will consider the entity or entities responsible for payment of
interest and repayment of principal and the source of such payments; the
way in which assets and revenues of an issuing political subdivision are
separated from those of other political entities; and whether a
governmental body is guaranteeing the security.
For the high yield fund's limitations on futures and options transactions,
see the section entitled "Limitations on Futures and Options Transactions"
beginning on page .
QUALITY AND MATURITY. Pursuant to procedures adopted by the Board of
Trustees, the fund may purchase only high-quality securities that FMR
believes present minimal credit risks. To be considered high quality, a
security must be rated in accordance with applicable rules in one of the
two highest categories for short-term securities by at least two nationally
recognized rating services (or by one, if only one rating service has rated
the security) or, if unrated, judged to be equivalent quality by FMR.
The fund must limit its investments to securities with remaining maturities
of 397 days or less and must maintain a dollar-weighted average maturity of
90 days or less.
AFFILIATED BANK TRANSACTIONS. Pursuant to exemptive orders issued by the
Securities and Exchange Commission (SEC), the funds may engage in
transactions with banks that are, or may be considered to be, "affiliated
persons" of the funds under the Investment Company Act of 1940. Such
transactions may be entered into only pursuant to procedures established
and periodically reviewed by the Board of Trustees. These transactions may
include repurchase agreements with custodian banks; purchases, as
principal, of short-term obligations of, and repurchase agreements with,
the 50 largest U.S. banks (measured by deposits); transactions in municipal
securities; and transactions in U.S. government securities with affiliated
banks that are primary dealers in these securities.
DELAYED-DELIVERY TRANSACTIONS. Each fund may buy and sell securities on a
delayed-delivery or when-issued basis. These transactions involve a
commitment by a fund to purchase or sell specific securities at a
predetermined price or yield, with payment and delivery taking place after
the customary settlement period for that type of security (and more than
seven days in the future). Typically, no interest accrues to the purchaser
until the security is delivered. The high yield fund may receive fees for
entering into delayed-delivery transactions.
When purchasing securities on a delayed-delivery basis, each fund assumes
the rights and risks of ownership, including the risk of price and yield
fluctuations. Because a fund is not required to pay for securities until
the delivery date, these risks are in addition to the risks associated with
the fund's other investments. If a fund remains substantially fully
invested at a time when delayed-delivery purchases are outstanding, the
delayed-delivery purchases may result in a form of leverage. When
delayed-delivery purchases are outstanding, the fund will set aside
appropriate liquid assets in a segregated custodial account to cover its
purchase obligations. When a fund has sold a security on a delayed-delivery
basis, the fund does not participate in further gains or losses with
respect to the security. If the other party to a delayed-delivery
transaction fails to deliver or pay for the securities, the fund could miss
a favorable price or yield opportunity, or could suffer a loss.
Each fund may renegotiate delayed-delivery transactions after they are
entered into, and may sell underlying securities before they are delivered,
which may result in capital gains or losses.
REFUNDING CONTRACTS. The high yield fund may purchase securities on a
when-issued basis in connection with the refinancing of an issuer's
outstanding indebtedness. Refunding contracts require the issuer to sell
and the fund to buy refunded municipal obligations at a stated price and
yield on a settlement date that may be several months or several years in
the future. The fund generally will not be obligated to pay the full
purchase price if it fails to perform under a refunding contract. Instead,
refunding contracts generally provide for payment of liquidated damages to
the issuer (currently 15-20% of the purchase price). The fund may secure
its obligations under a refunding contract by depositing collateral or a
letter of credit equal to the liquidated damages provisions of the
refunding contract. When required by SEC guidelines, the fund will place
liquid assets in a segregated custodial account equal in amount to its
obligations under refunding contracts.
INVERSE FLOATERS. The high yield fund may invest in inverse floaters,
which are instruments whose interest rates bear an inverse relationship to
the interest rate on another security or the value of an index. Changes in
the interest rate on the other security or index inversely affect the
residual interest rate paid on the inverse floater, with the result that
the inverse floater's price will be considerably more volatile than that of
a fixed-rate bond. For example, a municipal issuer may decide to issue two
variable-rate instruments instead of a single long-term, fixed-rate bond.
The interest rate on one instrument reflects short-term interest rates,
while the interest rate on the other instrument (the inverse floater)
reflects the approximate rate the issuer would have paid on a fixed-rate
bond, multiplied by two, minus the interest rate paid on the short-term
instrument. Depending on market availability, the two portions may be
recombined to form a fixed-rate municipal bond. The market for inverse
floaters is relatively new.
VARIABLE OR FLOATING RATE OBLIGATIONS bear variable or floating interest
rates and carry rights that permit holders to demand payment of the unpaid
principal balance plus accrued interest from the issuers or certain
financial intermediaries. Floating rate instruments have interest rates
that change whenever there is a change in a designated base rate while
variable rate instruments provide for a specified periodic adjustment in
the interest rate. These formulas are designed to result in a market value
for the instrument that approximates its par value.
With respect to the money market fund, a demand instrument with a
conditional demand feature must have received both a short-term and a
long-term high-quality rating or, if unrated, have been determined to be of
comparable quality pursuant to procedures adopted by the Board of Trustees.
A demand instrument with an unconditional demand feature may be acquired
solely in reliance upon a short-term high-quality rating or, if unrated,
upon a finding of comparable short-term quality pursuant to procedures
adopted by the Board of Trustees.
The funds may invest in fixed-rate bonds that are subject to third party
puts and in participation interests in such bonds held in trust or
otherwise. These bonds and participation interests have tender options or
demand features that permit a fund to tender (or put) the bonds to an
institution at periodic intervals and to receive the principal amount
thereof. A fund considers variable rate instruments structured in this way
(Participating VRDOs) to be essentially equivalent to other VRDOs it
purchases. The IRS has not ruled whether the interest on Participating
VRDOs is tax-exempt and, accordingly, a fund intends to purchase these
instruments based on opinions of bond counsel.
The money market fund may invest in variable or floating rate instruments
that ultimately mature in more than 397 days, if the fund acquires a right
to sell the instruments that meets certain requirements set forth in Rule
2a-7. Variable rate instruments (including instruments subject to a demand
feature) that mature in 397 days or less may be deemed to have maturities
equal to the period remaining until the next readjustment of the interest
rate. Other variable rate instruments with demand features may be deemed to
have a maturity equal to the period remaining until the next adjustment of
the interest rate or the period remaining until the principal amount can be
recovered through demand. A floating rate instrument subject to a demand
feature may be deemed to have a maturity equal to the period remaining
until the principal amount can be recovered through demand.
TENDER OPTION BONDS are created by coupling an intermediate- or long-term,
fixed-rate, tax-exempt bond (generally held pursuant to a custodial
arrangement) with a tender agreement that gives the holder the option to
tender the bond at its face value. As consideration for providing the
tender option, the sponsor (usually a bank, broker-dealer, or other
financial institution) receives periodic fees equal to the difference
between the bond's fixed coupon rate and the rate (determined by a
remarketing or similar agent) that would cause the bond, coupled with the
tender option, to trade at par on the date of such determination. After
payment of the tender option fee, a fund effectively holds a demand
obligation that bears interest at the prevailing short-term tax-exempt
rate. Subject to applicable regulatory requirements, the money market fund
may buy tender option bonds if the agreement gives the fund the right to
tender the bond to its sponsor no less frequently than once every 397 days.
In selecting tender option bonds for the funds, FMR will consider the
creditworthiness of the issuer of the underlying bond, the custodian, and
the third party provider of the tender option. In certain instances, a
sponsor may terminate a tender option if, for example, the issuer of the
underlying bond defaults on interest payments.
ZERO COUPON BONDS do not make regular interest payments. Instead, they are
sold at a deep discount from their face value and are redeemed at face
value when they mature. Because zero coupon bonds do not pay current
income, their prices can by very volatile when interest rates change. In
calculating its daily dividend, a fund takes into account as income a
portion of the difference between a zero coupon bond's purchase price and
its face value.
STANDBY COMMITMENTS are puts that entitle holders to same-day settlement at
an exercise price equal to the amortized cost of the underlying security
plus accrued interest, if any, at the time of exercise. Each fund may
acquire standby commitments to enhance the liquidity of portfolio
securities, but, in the case of the money market fund, only when the
issuers of the commitments present minimal risk of default.
Ordinarily a fund will not transfer a standby commitment to a third party,
although it could sell the underlying municipal security to a third party
at any time. A fund may purchase standby commitments separate from or in
conjunction with the purchase of securities subject to such commitments. In
the latter case, the fund would pay a higher price for the securities
acquired, thus reducing their yield to maturity. Standby commitments will
not affect the dollar-weighted average maturity of the money market fund,
or the valuation of the securities underlying the commitments.
Issuers or financial intermediaries may obtain letters of credit or other
guarantees to support their ability to buy securities on demand. FMR may
rely upon its evaluation of a bank's credit in determining whether to
support an instrument supported by a letter of credit. In evaluating a
foreign bank's credit, FMR will consider whether adequate public
information about the bank is available and whether the bank may be subject
to unfavorable political or economic developments, currency controls, or
other governmental restrictions that might affect the bank's ability to
honor its credit commitment.
Standby commitments are subject to certain risks, including the ability of
issuers of standby commitments to pay for securities at the time the
commitments are exercised; the fact that standby commitments are not
marketable by the funds; and the possibility that the maturities of the
underlying securities may be different from those of the commitments.
MUNICIPAL LEASE OBLIGATIONS. Each fund may invest a portion of its assets
in municipal leases and participation interests therein. These obligations,
which may take the form of a lease, an installment purchase, or a
conditional sale contract, are issued by state and local governments and
authorities to acquire land and a wide variety of equipment and facilities.
Generally, the funds will not hold such obligations directly as a lessor of
the property, but will purchase a participation interest in a municipal
obligation from a bank or other third party. A participation interest gives
a fund a specified, undivided interest in the obligation in proportion to
its purchased interest in the total amount of the obligation.
Municipal leases frequently have risks distinct from those associated with
general obligation or revenue bonds. State constitutions and statutes set
forth requirements that states or municipalities must meet to incur debt.
These may include voter referenda, interest rate limits, or public sale
requirements. Leases, installment purchases, or conditional sale contracts
(which normally provide for title to the leased asset to pass to the
governmental issuer) have evolved as a means for governmental issuers to
acquire property and equipment without meeting their constitutional and
statutory requirements for the issuance of debt. Many leases and contracts
include "non-appropriation clauses" providing that the governmental issuer
has no obligation to make future payments under the lease or contract
unless money is appropriated for such purposes by the appropriate
legislative body on a yearly or other periodic basis. Non-appropriation
clauses free the issuer from debt issuance limitations.
FEDERALLY TAXABLE OBLIGATIONS. The funds do not intend to invest in
securities whose interest is federally taxable; however, from time to time,
each fund may invest a portion of its assets on a temporary basis in
fixed-income obligations whose interest is subject to federal income tax.
For example, each fund may invest in obligations whose interest is
federally taxable pending the investment or reinvestment in municipal
securities of proceeds from the sale of its shares or sales of portfolio
securities.
Should a fund invest in federally taxable obligations, it would purchase
securities that in FMR's judgment are of high quality. These would include
obligations issued or guaranteed by the U.S. government or its agencies or
instrumentalities; obligations of domestic banks; and repurchase
agreements. The high yield fund's standards for high-quality taxable
obligations are essentially the same as those described by Moody's
Investors Service, Inc. (Moody's) in rating corporate obligations within
its two highest ratings of Prime-1 and Prime-2, and those described by
Standard & Poor's Corporation (S&P) in rating corporate obligations
within its two highest ratings of A-1 and A-2. The money market fund will
purchase taxable obligations only if they meet its quality requirements.
Proposals to restrict or eliminate the federal income tax exemption for
interest on municipal obligations are introduced before Congress from time
to time. Proposals also may be introduced before the Pennsylvania
legislature that would affect the state tax treatment of the funds'
distributions. If such proposals were enacted, the availability of
municipal obligations and the value of the funds' holdings would be
affected and the Trustees would reevaluate the funds' investment objectives
and policies.
Each fund anticipates being as fully invested as practicable in municipal
securities; however, there may be occasions when, as a result of maturities
of portfolio securities, sales of fund shares, or in order to meet
redemption requests, a fund may hold cash that is not earning income. In
addition, there may be occasions when, in order to raise cash to meet
redemptions, a fund may be required to sell securities at a loss.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund purchases a
security and simultaneously commits to resell that security to the seller
at an agreed-upon price on an agreed-upon date within a number of days from
the date of purchase. The resale price reflects the purchase price plus an
agreed-upon incremental amount which is unrelated to the coupon rate or
maturity of the purchased security. A repurchase agreement is a taxable
obligation which involves the obligation of the seller to pay the
agreed-upon price, which obligation is in effect secured by the value (at
least equal to the amount of the agreed-upon resale price and marked to
market daily) of the underlying security. Each fund may engage in
repurchase agreements with respect to any security in which it is
authorized to invest, even if the underlying security matures in more than
397 days. While it does not presently appear possible to eliminate all
risks from these transactions (particularly the possibility of a decline in
the market value of the underlying securities, as well as delays and costs
to a fund in connection with bankruptcy proceedings), it is each fund's
policy to limit repurchase agreement transactions to parties whose
creditworthiness has been reviewed and found satisfactory by FMR.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund
sells a portfolio instrument to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase the instrument
at a particular price and time. While a reverse repurchase agreement is
outstanding, a fund will maintain appropriate liquid assets in a segregated
custodial account to cover its obligation under the agreement. Each fund
will enter into reverse repurchase agreements only with parties whose
creditworthiness has been found satisfactory by FMR. Such transactions may
increase fluctuations in the market value of a fund's assets and may be
viewed as a form of leverage.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which they
are valued. Under the supervision of the Boards of Trustees, FMR determines
the liquidity of each fund's investments and, through reports from FMR, the
Boards monitor investments in illiquid instruments. In determining the
liquidity of each fund's investments, FMR may consider various factors,
including (1) the frequency of trades and quotations, (2) the number of
dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including
any demand or tender features), and (5) the nature of the marketplace for
trades (including the ability to assign or offset a fund's rights and
obligations relating to the investment). Investments currently considered
by the money market fund to be illiquid include restricted securities and
municipal lease obligations determined by FMR to be illiquid. Investments
currently considered by the high yield fund to be illiquid include
over-the-counter options. Also, FMR may determine some restricted
securities and municipal lease obligations to be illiquid. However,
with respect to over-the-counter options the high yield fund writes, all or
a portion of the value of the underlying instrument may be illiquid
depending on the assets held to cover the option and the nature and terms
of any agreement the fund may have to close out the option before
expiration. In the absence of market quotations, illiquid investments are
valued for purposes of monitoring amortized cost valuation (money market
fund) and priced (high yield fund) at fair value as determined in
good faith by a committee appointed by the Board of Trustees. If through a
change in values, net assets, or other circumstances, a fund were in a
position where more than 10% of its net assets were invested in illiquid
securities, it would seek to take appropriate steps to protect liquidity.
RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, a fund may be obligated to pay all or part of the
registration expense and a considerable period may elapse between the time
it decides to seek registration and the time the fund may be permitted to
sell a security under an effective registration statement. If, during such
a period, adverse market conditions were to develop, a fund might obtain a
less favorable price than prevailed when it decided to seek registration of
the security. However, in general, the money market fund anticipates
holding restricted securities to maturity or selling them in an exempt
transaction.
INDEXED SECURITIES. The high yield fund may purchase securities whose
prices are indexed to the prices of other securities, securities indices,
or other financial indicators. Indexed securities typically, but not
always, are debt securities or deposits whose value at maturity or coupon
rate is determined by reference to a specific instrument or statistic.
Indexed securities may have principal payments as well as coupon payments
that depend on the performance of one or more interest rates. Their coupon
rates or principal payments may change by several percentage points for
every 1% interest rate change. One example of indexed securities is inverse
floaters.
The performance of indexed securities depends to a great extent on the
performance of the security or other instrument to which they are indexed,
and may also be influenced by interest rate changes. At the same time,
indexed securities are subject to the credit risks associated with the
issuer of the security, and their values may decline substantially if the
issuer's creditworthiness deteriorates. Indexed securities may be more
volatile than the underlying instruments.
LOWER-RATED MUNICIPAL SECURITIES. The high yield fund may invest a portion
of its assets in lower-rated municipal securities as described in the
Prospectus.
While the market for Pennsylvania municipal securities is considered to be
substantial, adverse publicity and changing investor perceptions may affect
the ability of outside pricing services used by the fund to value its
portfolio securities, and the fund's ability to dispose of lower-rated
bonds. The outside pricing services are consistently monitored to assure
that securities are valued by a method that the Board of Trustees believes
accurately reflects fair value. The impact of changing investor perceptions
may be especially pronounced in markets where municipal securities are
thinly traded.
The high yield fund may choose, at its expense or in conjunction with
others, to pursue litigation or otherwise exercise its rights as a security
holder to seek to protect the interests of security holders if it
determines this to be in the best interest of the fund's shareholders.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS (HIGH YIELD FUND). The fund
has filed a notice of eligibility for exclusion from the definition of the
term "commodity pool operator" with the Commodity Futures Trading
Commission (CFTC) and the National Futures Association, which regulate
trading in the futures markets. The fund intends to comply with Section 4.5
of the regulations under the Commodity Exchange Act which limits the extent
to which the fund can commit assets to initial margin deposits and option
premiums.
In addition, the fund will not: (a) sell futures contracts, purchase put
options, or write call options if, as a result, more than 25% of the fund's
total assets would be hedged with futures and options under normal
conditions; (b) purchase futures contracts or write put options if, as a
result, the fund's total obligations upon settlement or exercise of
purchased futures contracts and written put options would exceed 25% of its
total assets; or (c) purchase call options if, as a result, the current
value of option premiums for call options purchased by the fund would
exceed 5% of the fund's total assets. These limitations do not apply to
options attached to or acquired or traded together with their underlying
securities, and do not apply to securities that incorporate features
similar to options.
The above limitations on the fund's investments in futures contracts and
options, and the fund's policies regarding futures contracts and options
discussed elsewhere in this Statement of Additional Information, are not
fundamental policies and may be changed as regulatory agencies permit.
FUTURES CONTRACTS. When the fund purchases a futures contract, it agrees to
purchase a specified underlying instrument at a specified future date. When
the fund sells a futures contract, it agrees to sell the underlying
instrument at a specified future date. The price at which the purchase and
sale will take place is fixed when the fund enters into the contract. Some
currently available futures contracts are based on specific securities,
such as U.S. Treasury bonds or notes, and some are based on indices of
securities prices, such as the Bond Buyer Municipal Bond Index. Futures can
be held until their delivery dates, or can be closed out before then if a
liquid secondary market is available.
The value of a futures contract tends to increase and decrease in tandem
with the value of its underlying instrument. Therefore, purchasing futures
contracts will tend to increase the fund's exposure to positive and
negative price fluctuations in the underlying instrument, much as if it had
purchased the underlying instrument directly. When the fund sells a futures
contract, by contrast, the value of its futures position will tend to move
in a direction contrary to the market. Selling futures contracts,
therefore, will tend to offset both positive and negative market price
changes, much as if the underlying instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract is
not required to deliver or pay for the underlying instrument unless the
contract is held until the delivery date. However, both the purchaser and
seller are required to deposit "initial margin" with a futures broker,
known as a futures commission merchant (FCM), when the contract is entered
into. Initial margin deposits are typically equal to a percentage of the
contract's value. If the value of either party's position declines, that
party will be required to make additional "variation margin" payments to
settle the change in value on a daily basis. The party that has a gain may
be entitled to receive all or a portion of this amount. Initial and
variation margin payments do not constitute purchasing securities on margin
for purposes of the fund's investment limitations. In the event of the
bankruptcy of an FCM that holds margin on behalf of the fund, the fund may
be entitled to return of margin owed to it only in proportion to the amount
received by the FCM's other customers, potentially resulting in losses to
the fund.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, the fund
obtains the right (but not the obligation) to sell the option's underlying
instrument at a fixed strike price. In return for this right, the fund pays
the current market price for the option (known as the option premium).
Options have various types of underlying instruments, including specific
securities, indices of securities prices, and futures contracts. The fund
may terminate its position in a put option it has purchased by allowing it
to expire or by exercising the option. If the option is allowed to expire,
the fund will lose the entire premium it paid. If the fund exercises the
option, it completes the sale of the underlying instrument at the strike
price. The fund may also terminate a put option position by closing it out
in the secondary market at its current price, if a liquid secondary market
exists.
The buyer of a typical put option can expect to realize a gain if security
prices fall substantially. However, if the underlying instrument's price
does not fall enough to offset the cost of purchasing the option, a put
buyer can expect to suffer a loss (limited to the amount of the premium
paid, plus related transaction costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's
strike price. A call buyer typically attempts to participate in potential
price increases of the underlying instrument with risk limited to the cost
of the option if security prices fall. At the same time, the buyer can
expect to suffer a loss if security prices do not rise sufficiently to
offset the cost of the option.
WRITING PUT AND CALL OPTIONS. When the fund writes a put option, it takes
the opposite side of the transaction from the option's purchaser. In return
for receipt of the premium, the fund assumes the obligation to pay the
strike price for the option's underlying instrument if the other party to
the option chooses to exercise it. When writing an option on a futures
contract the fund will be required to make margin payments to an FCM as
described above for futures contracts. The fund may seek to terminate its
position in a put option it writes before exercise by closing out the
option in the secondary market at its current price. If the secondary
market is not liquid for a put option the fund has written, however, the
fund must continue to be prepared to pay the strike price while the option
is outstanding, regardless of price changes, and must continue to set aside
assets to cover its position.
If security prices rise, a put writer would expect to profit, although its
gain would be limited to the amount of the premium it received. If security
prices remain the same over time, it is likely that the writer will also
profit, because it should be able to close out the option at a lower price.
If security prices fall, the put writer would expect to suffer a loss. This
loss should be less than the loss from purchasing the underlying instrument
directly, however, because the premium received for writing the option
should mitigate the effects of the decline.
Writing a call option obligates the fund to sell or deliver the option's
underlying instrument, in return for the strike price, upon exercise of the
option. The characteristics of writing call options are similar to those of
writing put options, except that writing calls generally is a profitable
strategy if prices remain the same or fall. Through receipt of the option
premium, a call writer mitigates the effects of a price decline. At the
same time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price, even if its current value is
greater, a call writer gives up some ability to participate in security
price increases.
COMBINED POSITIONS. The fund may purchase and write options in combination
with each other, or in combination with futures or forward contracts, to
adjust the risk and return characteristics of the overall position. For
example, the fund may purchase a put option and write a call option on the
same underlying instrument, in order to construct a combined position whose
risk and return characteristics are similar to selling a futures contract.
Another possible combined position would involve writing a call option at
one strike price and buying a call option at a lower price, in order to
reduce the risk of the written call option in the event of a substantial
price increase. Because combined options positions involve multiple trades,
they result in higher transaction costs and may be more difficult to open
and close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of types
of exchange-traded options and futures contracts, it is likely that the
standardized contracts available will not match the fund's current or
anticipated investments exactly. The fund may invest in options and futures
contracts based on securities with different issuers, maturities, or other
characteristics from the securities in which it typically invests, which
involves a risk that the options or futures position will not track the
performance of the fund's other investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match the fund's
investments well. Options and futures prices are affected by such factors
as current and anticipated short-term interest rates, changes in volatility
of the underlying instrument, and the time remaining until expiration of
the contract, which may not affect security prices the same way. Imperfect
correlation may also result from differing levels of demand in the options
and futures markets and the securities markets, from structural differences
in how options and futures and securities are traded, or from imposition of
daily price fluctuation limits or trading halts. The fund may purchase or
sell options and futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to attempt to
compensate for differences in volatility between the contract and the
securities, although this may not be successful in all cases. If price
changes in the fund's options or futures positions are poorly correlated
with its other investments, the positions may fail to produce anticipated
gains or result in losses that are not offset by gains in other
investments.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a liquid
secondary market will exist for any particular options or futures contract
at any particular time. Options may have relatively low trading volume and
liquidity if their strike prices are not close to the underlying
instrument's current price. In addition, exchanges may establish daily
price fluctuation limits for options and futures contracts, and may halt
trading if a contract's price moves upward or downward more than the limit
in a given day. On volatile trading days when the price fluctuation limit
is reached or a trading halt is imposed, it may be impossible for the fund
to enter into new positions or close out existing positions. If the
secondary market for a contract is not liquid because of price fluctuation
limits or otherwise, it could prevent prompt liquidation of unfavorable
positions, and potentially could require the fund to continue to hold a
position until delivery or expiration regardless of changes in its value.
As a result, the fund's access to other assets held to cover its options or
futures positions could also be impaired.
OTC OPTIONS. Unlike exchange-traded options, which are standardized with
respect to the underlying instrument, expiration date, contract size, and
strike price, the terms of over-the-counter options (options not traded on
exchanges) generally are established through negotiation with the other
party to the option contract. While this type of arrangement allows the
fund greater flexibility to tailor an option to its needs, OTC options
generally involve greater credit risk than exchange-traded options, which
are guaranteed by the clearing organization of the exchanges where they are
traded.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. The fund will comply with
guidelines established by the SEC with respect to coverage of options and
futures strategies by mutual funds, and if the guidelines so require will
set aside appropriate liquid assets in a segregated custodial account in
the amount prescribed. Securities held in a segregated account cannot be
sold while the futures or option strategy is outstanding, unless they are
replaced with other suitable assets. As a result, there is a possibility
that segregation of a large percentage of the fund's assets could impede
portfolio management or the fund's ability to meet redemption requests or
other current obligations.
HEALTH CARE INDUSTRY. The health care industry is subject to regulatory
action by a number of private and governmental agencies, including federal,
state, and local governmental agencies. A major source of revenues for the
health care industry is payments from the Medicare and Medicaid programs.
As a result, the industry is sensitive to legislative changes and
reductions in governmental spending for such programs. Numerous other
factors may affect the industry, such as general and local economic
conditions; demand for services; expenses (including malpractice insurance
premiums); and competition among health care providers. In the future, the
following elements may adversely affect health care facility operations:
adoption of legislation proposing a national health insurance program;
medical and technological advances which dramatically alter the need for
health services or the way in which such services are delivered; and
efforts by employers, insurers, and governmental agencies to reduce the
costs of health insurance and healthcare services.
EDUCATION . In general, there are two types of education-related
bonds; those issued to finance projects for public colleges and
universities, and those representing pooled interests in student loans.
Bonds issued to supply public educational institutions with funds are
subject to the risk of unanticipated revenue decline, primarily the result
of decreasing student enrollment. Among the factors that may affect
enrollment are restrictions on students' ability to pay tuition,
availability of state and federal funding, and general economic
conditions.
Student loan revenue bonds are backed by pools of student loans and are
generally offered by state (or substate) authorities or commissions.
Student loans are guaranteed by state guarantee agencies and reinsured by
the Department of Education. The risks associated with these issues is that
default on the student loans may result in prepayment to bondholders and an
earlier-than anticipated retirement of the bond.
SPECIAL FACTORS AFFECTING PENNSYLVANIA
The following highlights only some of the more significant financial trends
and problems affecting Pennsylvania, and is based on information drawn from
official statements and prospectuses relating to securities offerings of
the Commonwealth of Pennsylvania, its agencies and instrumentalities, as
available on the date of this Statement of Additional Information. FMR has
not independently verified any of the information contained in such
official statements and other publicly available documents, but is not
aware of any fact which would render such information inaccurate.
OVERVIEW. Because the funds concentrate their investments in Pennsylvania,
there are risks associated with the funds that would not exist if the
funds' investments were more widely diversified. These risks include the
possible enactment of new legislation in Pennsylvania that could affect
obligations of the state or its political subdivisions, municipalities or
agencies, economic factors that could affect such obligations, and varying
levels of supply and demand for obligations of the Commonwealth and its
political subdivisions, municipalities, and agencies.
CONSTITUTIONAL AND STATUTORY REVENUE LIMITATIONS. The Constitution of
Pennsylvania requires that all taxes shall be uniform, upon the same class
of subjects, within the territorial limits of the authority levying the
tax, and shall be levied and collected under the general laws of the
Commonwealth of Pennsylvania.
The Constitution of Pennsylvania provides that the General Assembly may
exempt from taxation certain persons and property. For instance, the
General Assembly may establish exemption or special tax treatment
for classes based on age, disability, infirmity, or poverty.
Local taxes (other than Philadelphia) are generally authorized under the
Local Tax Enabling Act. This statute generally authorizes, and imposes
limits on, the ability of political subdivisions to impose taxes.
Pennsylvania's political subdivisions consist of counties, municipalities,
and school districts. The Local Tax Enabling Act does not apply to counties
whose taxing authority is limited for the most part to real estate and
personal property taxes. Most Philadelphia taxes (other than real estate
and personal property taxes) are imposed pursuant to the general authority
of the Sterling Act and the Little Sterling Act, applicable to the City and
School District, respectively. Each of these statutes grants broad taxing
powers, but generally prohibits taxing what the Commonwealth taxes. The
Philadelphia business privilege tax is imposed under the authority of the
First Class City Tax Reform Act. Other local taxes are specially
enacted or authorized for certain classes of localities, including
Philadelphia and Pittsburgh.
PENNSYLVANIA TAXES. Although Pennsylvania state taxes had, in general, been
lowered during the 1980s, the fiscal 1992 budget for the Commonwealth
included in excess of $2.7 billion of tax increases, consisting largely of
tax-rate increases and expansion of the existing tax base. Some of the more
significant tax changes include an increase in the personal income tax rate
from 2.1% to 2.8% (with an additional .3% surtax for the period July 1,
1991 through June 30, 1992); an increase in the Pennsylvania corporate net
income tax rate from 8.5% to 10.5% (plus an additional surtax of 1.75%);
repeal of the Pennsylvania corporate net income tax net operating loss
carryover; an increase in the Pennsylvania capital stock/foreign franchise
tax rate from 9.5 mills to 13 mills (dropping to 12.75 mills for taxable
years beginning on or after January 1, 1992); and an expansion of the sales
and use tax base. During 1992 and 1993 , there were no significant
tax changes.
GENERAL ECONOMIC CONDITIONS IN PENNSYLVANIA. Historically, the key
industries in Pennsylvania were in the areas of manufacturing and mining,
with steel and coal industries of national importance. These industries
have made Pennsylvania vulnerable not only to cyclical economic
fluctuations, but also to pronounced long-term changes in the nation's
economic structure. In recent years, the state has experienced growth in
the services sector, including trade, medical and health services,
education, and financial institutions. Manufacturing has fallen behind both
the services sector and the trade sector as the largest single source of
employment within the Commonwealth. This growth in the services and trade
sector has helped diversify Pennsylvania's economy and reduce the state's
unemployment rate.
During the fiscal years ending in 1986, 1987, and 1989, the Commonwealth's
General Fund recorded revenues and other sources in excess of expenditures
and other uses, determined in accordance with generally accepted accounting
principles. During fiscal 1988, 1990, and 1991, below average revenue
increases, particularly for tax revenues, and near average expenditure
growth rates, produced operating deficits during those fiscal years. During
fiscal 1990, the General Fund incurred a $718.2 million operating deficit
causing the fund balance to fall to a negative $119.8 million at June 30,
1990, and during fiscal 1991, the General Fund incurred a $861.2 million
operating deficit causing the fund balance to fall further to a negative
$980.9 million at June 30, 1991.
For fiscal year ended June 30, 1992, the General Fund recorded a $1.1
billion operating surplus, resulting in an increase of the fund balance to
$87.5 million. The 1993 fiscal year closed with revenues higher than
anticipated and expenditures about as projected, resulting in an ending
unappropriated balance surplus (on a budgetary basis) of $242.3 million.
Cash revenues were $41.5 million above the budget estimate and totalled
$14.633 billion representing less than a 1% increase over revenues for the
1992 fiscal year. A reduction in the personal income tax rate in July, 1992
and revenues from retroactive corporate tax increases received in fiscal
1992 were responsible for the low rate of revenue growth. Financial results
from fiscal 1992 on a generally accepted accounting principles basis are
not yet available.
The fiscal 1994 budget provides for $14.999 billion of appropriations.
The budget estimates revenue growth of 3.7% over fiscal 1993 actual
revenues. The revenue estimate is based on an expectation of continued
economic recovery, but at a slow rate.
There is various litigation pending against the Commonwealth, its
officers, and employees. An adverse decision in one or more of those cases
could materially affect the Commonwealth's governmental operations.
Certain Pennsylvania municipalities and political subdivisions have also
experienced economic downturns. For example, the financial condition of the
City of Philadelphia had impaired its ability to borrow and
resulted in its obligations being downgraded by the major rating
services to below investment grade. Legislation provided for the
establishment of the Pennsylvania Intergovernmental Cooperation Authority
(PICA) to assist Philadelphia in remedying fiscal emergencies was enacted
by the General Assembly and approved by the Governor in June 1991. PICA is
designed to provide assistance through the issuance of funding debt to
liquidate budget deficits and to make factual findings and recommendations
to the City concerning its budgetary and fiscal affairs. At this time
Philadelphia is operating under a five-year fiscal plan approved by PICA on
April 6, 1992. Full implementation of the five-year plan was delayed due to
the labor negotiations that were not completed until October 1992. The
terms of the new labor contracts are estimated to cost approximately $144.0
million more than what was budgeted in the original five year plan. An
unended five year plan was approved by PICA in May, 1993. The amended five
year plan projected a General Fund balance deficit of $6.6 million for the
fiscal year ended June 30, 1993. The fiscal 1994 budget projects no deficit
and a balanced budget.
All of the foregoing factors could affect the outstanding obligations of
the Commonwealth and its municipalities and political subdivisions,
including obligations held by the funds.
After taking office in January 1987, the Governor, by executive order
established the Economic Development Partnership, a public/private
partnership between business, labor, academic, and governmental communities
in Pennsylvania, which was designed to facilitate a comprehensive
reorganization and retargeting of economic development programs of the
Commonwealth.
The following table shows the average annual unemployment rate for
Pennsylvania and the nation for the periods indicated. This information is
drawn from official statements and prospectuses relating to securities
offerings of the state of Pennsylvania, its agencies, and
instrumentalities. No independent verification of the information contained
in such official statements and other publicly available documents has been
made.
Period Pennsylvania United States

1985 8.0% 7.2%

1986 6.8% 7.0%

1987 5.7% 6.2%

1988 5.1% 5.5%

1989 4.5% 5.3%

1990 5.4% 5.5%

1991 6.9% 6.7%

1992 7.5% 7. 4 %

In July 1993, the seasonally adjusted unemployment rate for the
Commonwealth was 7.3 %.
There can be no assurance that the same factors that adversely affect the
economy of the Commonwealth generally will not also adversely affect the
market value or marketability of obligations issued by local units of
government or local authorities in the Commonwealth, or the ability of the
obligators to pay the principal of or interest on such obligations. In
September 1993 , Pennsylvania General Obligation Bonds were rated A1
by Moody's and AA- by Fitch and S&P .
SPECIAL FACTORS AFFECTING PUERTO RICO
The following only highlights some of the more significant financial trends
and problems affecting the Commonwealth of Puerto Rico (the "Commonwealth"
or "Puerto Rico"), and is based on information drawn from official
statements and prospectuses relating to the securities offerings of Puerto
Rico, its agencies and instrumentalities, as available on the date of this
Statement of Additional Information. FMR has not independently verified any
of the information contained in such official statements, prospectuses and
other publicly available documents, but is not aware of any fact which
would render such information materially inaccurate.
The economy of Puerto Rico is closely linked with that of the United
States, and in fiscal 1992 trade with the United States accounted for
approximately 88% of Puerto Rico's exports and approximately 68% of its
imports. In this regard, in fiscal 1992 Puerto Rico experienced a
$2,940,300,000 positive adjusted merchandise trade balance. Since fiscal
1987 personal income, both aggregate and per capita, have increased
consistently each fiscal year. In fiscal 1992 aggregate personal income was
$22.7 billion and personal per capita income was $6,360. Gross domestic
product in fiscal 1989, 1990, 1991 and 1992 was $19,954,000, $21,619,000,
$22,857,000, and $23,620,000 respectively. For fiscal 1993, an increase in
gross domestic product of 2.9% over fiscal 1992 is forecasted. However,
actual growth in the Puerto Rico economy will depend on several factors
including the condition of the U.S. economy, the exchange rate for the U.S.
dollar, the price stability of oil imports, and interest rates. Due to
these factors there is no assurance that the economy of Puerto Rico will
continue to grow.
Puerto Rico has made marked improvements in fighting unemployment.
Unemployment is at a low level compared to that of the late 1970s, but it
still remains significantly above the United States average. Despite long
term improvements the unemployment rate rose from 15.2% to 16.5% from
fiscal 1991 to fiscal 1992. At the end of the third quarter of fiscal 1993
the unemployment rate in Puerto Rico stood at 17.3%. There is a possibility
that the unemployment rate will continue to increase.
The economy of Puerto Rico has undergone a transformation in the later half
of this century from one centered around agriculture, to one dominated by
the manufacturing and service industries. Manufacturing is the cornerstone
of Puerto Rico's economy, accounting for $13.2 billion or 38.7% of gross
domestic product in 1992. However, manufacturing has experienced a basic
change over the years as a result of the influx of higher wage, high
technology industries such as the pharmaceutical industry, electronics,
computers, micro-processors, scientific instruments and high technology
machinery. The service sector, which includes wholesale and retail trade,
finance and real estate, ranks second in its contribution to gross domestic
product and is the sector that employs the greatest number of people. In
fiscal 1992, the service sector generated $13.0 billion in gross domestic
product or 38.3% of the total and employed over 449,000 workers providing
46% of total employment. The government sector and tourism also contribute
to the island economy each accounting for $3.7 billion and $1.5 billion in
fiscal 1992, respectively.
Much of the development of the manufacturing sector of the economy of
Puerto Rico is attributable to federal and Commonwealth tax incentives,
most notably section 936 of the Internal Revenue Code of 1986, as amended
("Section 936") and the Commonwealth's Industrial Incentives Program.
Section 936 currently grants U.S. corporations that meet certain criteria
and elect its application a credit against their U.S. corporate income tax
on the portion of the tax attributable to (i) income derived from the
active conduct of a trade or business in Puerto Rico ("active income"), or
from the sale or exchange of substantially all the assets used in the
active conduct of such trade or business, and (ii) qualified possession
source investment income ("passive income"). The Industrial Incentives
Program, through the 1987 Industrial Incentives Act, grants corporations
engaged in certain qualified activities a fixed 90% exemption from
Commonwealth income and property taxes and a 60% exemption from municipal
license taxes.
On August 16, 1993, President Clinton signed a bill amending Section 936.
Under the amendments, U.S. corporations with operations in Puerto Rico can
elect to receive a federal income tax credit equal to: 40% of the credit
currently available, phased in over a five year period, starting at 60% of
the current credit, or a credit based on investment and wages. The
investment and wage credit would equal the sum of (i) 60% of qualified
compensation to employees, (ii) a specified percentage of depreciation
deductions with respect to tangible property located in Puerto Rico, and
(iii) a portion of income taxed paid to Puerto Rico, up to a 9% effective
tax rate, subject to certain requirements. It is not possible to determine
at this time whether the reductions in tax incentives for operations in
Puerto Rico will have a significant impact on the economy of Puerto Rico or
the time period in which such impact would arise.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of the funds by FMR (either directly or through affiliated
sub-advisers) pursuant to authority contained in the management contracts.
FMR is also responsible for the placement of transaction orders for other
investment companies and accounts for which it or its affiliates act as
investment adviser. Securities purchased and sold by the money market fund
generally will be traded on a net basis (i.e., without commission). In
selecting broker-dealers, subject to applicable limitations of the federal
securities laws, FMR will consider various relevant factors, including, but
not limited to: the size and type of the transaction; the nature and
character of the markets for the security to be purchased or sold; the
execution efficiency, settlement capability, and financial condition of the
broker-dealer firm; the broker-dealer's execution services rendered on a
continuing basis; and the reasonableness of any commissions.
The funds may execute portfolio transactions with broker-dealers who
provide research and execution services to the funds or other accounts over
which FMR or its affiliates exercise investment discretion. Such services
may include advice concerning the value of securities; the advisability of
investing in, purchasing, or selling securities; the availability of
securities or the purchasers or sellers of securities; furnishing analyses
and reports concerning issuers, industries, securities, economic factors
and trends, portfolio strategy, and performance of accounts; and effecting
securities transactions and performing functions incidental thereto (such
as clearance and settlement). FMR maintains a listing of broker-dealers who
provide such services on a regular basis. However, as many transactions on
behalf of the money market fund are placed with broker-dealers (including
broker-dealers on the list) without regard to the furnishing of such
services, it is not possible to estimate the proportion of such
transactions directed to such broker-dealers solely because such services
were provided. The selection of such broker-dealers generally is made by
FMR (to the extent possible consistent with execution considerations) based
upon the quality of research and execution services provided.
The receipt of research from broker-dealers that execute transactions on
behalf of the funds may be useful to FMR in rendering investment management
services to the funds or its other clients, and, conversely, such research
provided by broker-dealers who have executed transaction orders on behalf
of other FMR clients may be useful to FMR in carrying out its obligations
to the funds. The receipt of such research has not reduced FMR's normal
independent research activities; however, it enables FMR to avoid
additional expenses that could be incurred if FMR tried to develop
comparable information through its own efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause a
fund to pay such higher commissions, FMR must determine in good faith that
such commissions are reasonable in relation to the value of the brokerage
and research services provided by such executing broker-dealers, viewed in
terms of a particular transaction or FMR's overall responsibilities to the
funds and its other clients. In reaching this determination, FMR will not
attempt to place a specific dollar value on the brokerage and research
services provided, or to determine what portion of the compensation should
be related to those services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of the funds or shares of other Fidelity
funds to the extent permitted by law. FMR may use research services
provided by and place agency transactions with Fidelity Brokerage Services,
Inc. (FBSI), and Fidelity Brokerage Services, LTD. (FBSL) , subsidiaries of
FMR Corp., if the commissions are fair, reasonable, and comparable to
commissions charged by non-affiliated, qualified brokerage firms for
similar services.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members of
national securities exchanges from executing exchange transactions for
accounts which they or their affiliates manage, except in accordance with
regulations of the Securities and Exchange Commission. Pursuant to such
regulations, the Boards of Trustees have approved a written agreement that
permits FBSI to effect portfolio transactions on national securities
exchanges and to retain compensation in connection with such transactions.
For the fiscal years ended December 31, 1993, 1992, and 1991, the funds
paid no brokerage commissions.
The Trustees periodically review FMR's performance of its responsibilities
in connection with the placement of portfolio transactions on behalf of
each fund and review the commissions paid by each fund over representative
periods of time to determine if they are reasonable in relation to the
benefits to each fund.
The high yield fund's turnover rates for fiscal 1993 and 1992 were
38 % and 8%, respectively.
From time to time the Trustees will review whether the recapture for the
benefit of the funds of some portion of the brokerage commissions or
similar fees paid by the funds on portfolio transactions is legally
permissible and advisable. Each fund seeks to recapture soliciting
broker-dealer fees on the tender of portfolio securities, but at present no
other recapture arrangements are in effect. The Trustees intend to continue
to review whether recapture opportunities are available and are legally
permissible and, if so, to determine in the exercise of their business
judgment whether it would be advisable for each fund to seek such
recapture.
Although the Trustees and officers of the funds are substantially the same
as those of other funds managed by FMR, investment decisions for each fund
are made independently from those of other funds managed by FMR or accounts
managed by FMR affiliates. It sometimes happens that the same security is
held in the portfolio of more than one of these funds or accounts.
Simultaneous transactions are inevitable when several funds are managed by
the same investment adviser, particularly when the same security is
suitable for the investment objective of more than one fund.
When two or more funds are simultaneously engaged in the purchase or sale
of the same security, the prices and amounts are allocated in accordance
with a formula considered by the officers of the funds involved to be
equitable to each fund. In some cases, this system could have a detrimental
effect on the price or value of the security as far as the funds are
concerned. In other cases, however, the ability of the funds to participate
in volume transactions will produce better executions and prices for the
funds. It is the current opinion of the Board of Trustees that the
desirability of retaining FMR as investment adviser to the funds outweighs
any disadvantages that may be said to exist from exposure to simultaneous
transactions.
VALUATION OF PORTFOLIO SECURITIES
HIGH YIELD FUND. Valuations of portfolio securities furnished by the
pricing service employed by the high yield fund are based upon a
computerized matrix system or appraisals by the pricing service, in each
case in reliance upon information concerning market transactions and
quotations from recognized municipal securities dealers. The methods used
by the pricing service and the quality of valuations so established are
reviewed by officers of the fund and FSC under the general supervision of
the Board of Trustees. There are a number of pricing services available,
and the Trustees, or officers acting on behalf of the Trustees, on the
basis of on-going evaluation of these services, may use other pricing
services or discontinue the use of any pricing service in whole or in part.
MONEY MARKET FUND. The money market fund values its investments on the
basis of amortized cost. This technique involves valuing an instrument at
its cost as adjusted for amortization of premium or accretion of discount
rather than its value based on current market quotations or appropriate
substitutes which reflect current market conditions. The amortized cost
value of an instrument may be higher or lower than the price the fund would
receive if it sold the instrument.
Valuing the fund's instruments on the basis of amortized cost and use of
the term "money market fund" are permitted by Rule 2a-7 under the
Investment Company Act of 1940. The fund must adhere to certain conditions
under Rule 2a-7; these conditions are summarized in the Prospectus.
The Board of Trustees of the trust oversees FMR's adherence to SEC rules
concerning money market funds, and has established procedures designed to
stabilize the fund's NAV at $1.00. At such intervals as they deem
appropriate, the Trustees consider the extent to which NAV calculated by
using market valuations would deviate from $1.00 per share. If the Trustees
believe that a deviation from the fund's amortized cost per share may
result in material dilution or other unfair results to shareholders, the
Trustees have agreed to take such corrective action, if any, as they deem
appropriate to eliminate or reduce, to the extent reasonably practicable,
the dilution or unfair results. Such corrective action could include
selling portfolio instruments prior to maturity to realize capital gains or
losses or to shorten average portfolio maturity; withholding dividends;
redeeming shares in kind; establishing NAV by using available market
quotations; and such other measures as the Trustees may deem appropriate.
During periods of declining interest rates, the fund's yield based on
amortized cost may be higher than the yield based on market valuations.
Under these circumstances, a shareholder in the fund would be able to
obtain a somewhat higher yield than would result if the fund utilized
market valuations to determine its NAV. The converse would apply in a
period of rising interest rates.
PERFORMANCE
The funds may quote performance in various ways. All performance
information supplied by the funds in advertising is historical and is not
intended to indicate future returns. The high yield fund's share price and
both of the funds' yields and total returns fluctuate in response to market
conditions and other factors. The value of the high yield fund's shares
when redeemed may be more or less than their original cost.
YIELD CALCULATIONS. To compute the MONEY MARKET FUND'S yield for a period,
the net change in value of a hypothetical account containing one share
(exclusive of capital gains) reflects the value of additional shares
purchased with dividends from the one original share and dividends declared
on both the original share and any additional shares. The net change is
then divided by the value of the account at the beginning of the period to
obtain a base period return. This base period return is annualized to
obtain a current annualized yield. The money market fund may also calculate
a compound effective yield by compounding the base period return over a
one-year period. In addition to the current yield, the fund may quote
yields in advertising based on any historical seven-day period. Yields for
the money market fund are calculated on the same basis as other money
market funds, as required by regulation.
For the HIGH YIELD FUND, yields used in advertising are computed by
dividing the fund's interest income for a given 30-day or one-month period,
net of expenses, by the average number of shares entitled to receive
dividends during the period, dividing this figure by the fund's net asset
value per share at the end of the period, and annualizing the result
(assuming compounding of income) in order to arrive at an annual percentage
rate. Yields do not reflect the fund's .50% redemption fee, which applies
to shares held less than 180 days. Income is calculated for purposes of the
high yield fund's yield quotations in accordance with standardized methods
applicable to all stock and bond funds. In general, interest income is
reduced with respect to bonds trading at a premium over their par value by
subtracting a portion of the premium from income on a daily basis, and is
increased with respect to bonds trading at a discount by adding a portion
of the discount to daily income. Capital gains and losses generally are
excluded from the calculation.
Income calculated for the purposes of determining the high yield fund's
yield differs from income as determined for other accounting purposes.
Because of the different accounting methods used, and because of the
compounding of income assumed in yield calculations, the high yield fund's
yield may not equal its distribution rate, the income paid to your account,
or the income reported in the fund's financial statements.
A fund's tax-equivalent yield is the rate an investor would have to earn
from a fully taxable investment after taxes to equal the fund's tax-free
yield. Tax-equivalent yields are calculated by dividing a fund's yield by
the result of one minus a stated federal or combined federal and state tax
rate. (If only a portion of the fund's yield is tax-exempt, only that
portion is adjusted in the calculation.)

1994 TAX RATES AND TAX-EQUIVALENT YIELDS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Marginal Combined Pennsylvania

Taxable Income Taxable Income Federal Income Pennsylvania and Federal Income

Single Return Joint Return Tax Bracket Marginal Rate Tax Bracket*

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
$ 22, 751 - 5 5,1 00 $ 3 8,001 - 91,850 28% 2.8% 30.02%

5 5 , 1 01 - 115,000 91,851 - 140,000 31% 2.8% 32.93%

115,001 - 250,000 140,001 - 250,000 36% 2.8% 37.79%

250,001 & 250,001 & 39.6% 2.8% 41.29%
above above

</TABLE>

* Effective tax bracket takes into account Pennsylvania personal income tax
rate of 2.8%, tax-effected to reflect the federal tax benefit for persons
who itemize deductions.
The tables on page 16 show the effect of a shareholder's tax status on
effective yield under federal and state income tax laws for 1994. They show
the approximate yield a taxable security must provide at various income
brackets to produce after-tax yields equivalent to those of hypothetical
tax-exempt obligations yielding from 2.0% to 7.0%. Of course, no assurance
can be given that the funds will achieve any specific tax-exempt yield.
While the funds invest principally in obligations whose interest is exempt
from federal and state income tax, other income received by the funds may
be taxable. The tables do not take into account local taxes, if any,
payable on fund distributions
Having determined your effective tax bracket above, use the table below to
determine the tax-equivalent yield for a given tax-free yield.
If your combined effective federal and state personal income tax rate in
1994 is:
30.02% 32.93% 37.79% 41.29%

To match these
tax-free rates: Your taxable investment would have to earn the following
yield:
2.0% 2.86% 2.98% 3.22% 3.41%

3.0% 4.29% 4.47% 4.82% 5.11%

4.0% 5.72% 5.96% 6.43% 6.81%

5.0% 7.14% 7.46% 8.04% 8.52%

6.0% 8.57% 8.95% 9.65% 10.22%

7.0% 10.00% 10.44% 11.25% 11.92%

Each fund may invest a portion of its assets in obligations that are
subject to state or federal income taxes. When a fund invests in these
obligations, its tax-equivalent yield will be lower. In the table above,
tax-equivalent yields are calculated assuming investments are 100%
federally and state tax-free.
Yield information may be useful in reviewing the funds' performance and in
providing a basis for comparison with other investment alternatives.
However, the funds' yields fluctuate, unlike investments that pay a fixed
interest rate over a stated period of time. When comparing investment
alternatives, investors should also note the quality and maturity of the
portfolio securities of respective investment companies they have chosen to
consider.
Investors should recognize that in periods of declining interest rates the
funds' yields will tend to be somewhat higher than prevailing market rates,
and in periods of rising interest rates the funds' yields will tend to be
somewhat lower. Also, when interest rates are falling, the inflow of net
new money to the funds from the continuous sale of their shares will likely
be invested in instruments producing lower yields than the balance of the
funds' holdings, thereby reducing the funds' current yields. In periods of
rising interest rates, the opposite can be expected to occur.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect all
aspects of a fund's returns, including the effect of reinvesting dividends
and capital gain distributions (if any), and any change in the fund's net
asset value per share (NAV) over the period. Average annual total returns
are calculated by determining the growth or decline in value of a
hypothetical historical investment in a fund over a stated period, and then
calculating the annually compounded percentage rate that would have
produced the same result if the rate of growth or decline in value had been
constant over the period. For example, a cumulative total return of 100%
over ten years would produce an average annual total return of 7.18%, which
is the steady annual rate of return that would equal 100% growth on a
compounded basis in ten years. While average annual total returns are a
convenient means of comparing investment alternatives, investors should
realize that a fund's performance is not constant over time, but changes
from year to year, and that average annual total returns represent averaged
figures as opposed to the actual year-to-year performance of a fund.
In addition to average annual returns, a fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, or a series of
redemptions, over any time period. Total returns may be broken down into
their components of income and capital (including capital gains and changes
in share price) in order to illustrate the relationship of these factors
and their contributions to total return. An example of this type of
illustration is given below. Total returns, yields, and other performance
information may be quoted numerically or in a table, graph, or similar
illustration, and may omit or include the effects of each fund's $5.00
account closeout fee and, with respect to the high yield fund, the .50%
redemption fee, or other charges for special transactions or services.
Omitting fees and charges will cause the funds' total return figures to be
higher.
NET ASSET VALUE. Charts and graphs using a fund's net asset values,
adjusted net asset values, and benchmark indices may be used to exhibit
performance. An adjusted NAV includes any distributions paid by the fund
and reflects all elements of its return. Unless otherwise indicated, the
fund's adjusted NAVs are not adjusted for sales charges, if any.
HISTORICAL FUND RESULTS . The following table shows the funds' total
returns for the periods ended December 31, 199 3 . Figures for the
high yield fund do not include the effect of the fund's .50% redemption
fee, applicable to shares held less than 180 days. The figures include the
effect of each fund's $5.00 account closeout fee.
AVERAGE ANNUAL TOTAL RETURNS* CUMULATIVE TOTAL RETURNS*

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
One Year Five Years Life of Fund** One Year Five Years
Life of Fund**

Money Market Fund 2.21% 4.40% 4.43% 2.21% 24.02% 37.89%

High Yield Fund 13.17% 10.33% 8.82% 13.17% 63.51% 87.03%

</TABLE>

* If FMR had not reimbursed certain fund expenses, returns would have been
lower.
** From August 6, 1986 (commencement of operations).
The money market fund's seven-day yield as of December 31, 1993 was
2.49 %, with a corresponding tax-equivalent yield of 4 %. The
high yield fund's 30-day yield as of December 31, 1993 was 5.46 %,
with a corresponding tax-equivalent yield of 8.78 %. Tax-equivalent
yields are based on the 1993 combined federal and state income tax bracket
of 37.79%. These yields do not reflect the fund's $5.00 account closeout
fee.
The following tables show the income and capital elements of each fund's
total returns from commencement of operations through December 31, 1993.
The tables compare each fund's return to the record of the Standard &
Poor's 500 Composite Stock Price Index (S&P 500), the Dow Jones
Industrial Average (DJIA), and the cost of living (measured by the Consumer
Price Index, or CPI) over the same period. The S&P 500 and DJIA
comparisons are provided to show how each fund's total return compared to
the return of a broad average of common stocks and a narrower set of stocks
of major industrial companies, respectively, over the same period. Of
course, since the funds invest in money market and fixed-income securities,
common stocks represent a different type of investment from the funds.
Common stocks generally offer greater potential growth than the funds, but
generally experience greater price volatility which means a greater
potential for loss. In addition, common stocks generally provide lower
income than a money market or bond fund investment such as the funds. The
S&P 500 and DJIA are based on the prices of unmanaged groups of stocks
and, unlike the funds' returns, their returns do not include the effect of
paying brokerage commissions or other costs of investing.
MONEY MARKET FUND. During the period August 6, 1986 (commencement of
operations) through December 31, 1993, a hypothetical $10,000 investment in
the money market fund would have grown to $ 13,790 , assuming all
distributions were reinvested.
INDICES

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Initial Value of Value of

Period Ended $10,000 Reinvested Reinvested Total Cost of

December 31, Investment Dividends Capital Gains Value S&P DJIA Living**
500

1986* $ 10,000 $ 151 $ 0 $ 10,151 $ 10,359 $ 10,828 $ 10,091

1987 10,000 584 0 10,584 10,904 11,416 10,539

1988 10,000 1,118 0 11,118 12,715 13,234 11,005

1989 10,000 1,825 0 11,825 16,743 17,437 11,516

1990 10,000 2,540 0 12,540 16,222 17,343 12,219

1991 10,000 3,111 0 13,111 21,167 21,565 12,594

1992 10,000 3,491 0 13,491 22,784 23,138 12,959

1993 10,000 3,790 0 13,790 25,081 27,081 13,315

</TABLE>

* From August 6, 1986 (commencement of operations).
** From month-end closest to initial investment date.
EXPLANATORY NOTES. With an initial investment of $10,000 made on August 6,
1986, the net amount invested in fund shares was $10,000. The cost of the
initial investment ($10,000), together with the aggregate cost of
reinvested dividends for the period covered (their cash value at the time
they were reinvested), amounted to $ 13,790 . If distributions had not
been reinvested, the amount of distributions earned from the fund over time
would have been smaller, and cash payments (dividends) for the period would
have amounted to $ 3,220 . There were no capital gain distributions
during this period. If FMR had not reimbursed certain fund expenses during
some of the periods shown, the fund's returns would have been lower. The
figures in the table do not include the effect of the fund's $5.00 account
closeout fee.
HIGH YIELD FUND. During the period August 6, 1986 (commencement of
operations) through December 31, 1993, a hypothetical $10,000 investment in
the high yield fund would have grown to $ 18,704 , assuming all
distributions were reinvested.
INDICES

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Initial Value of Value of

Period Ended $10,000 Reinvested Reinvested Total Cost of

December Investment Dividends Capital Gains Value S&P DJIA Living**
31, 500

1986(dagger)$ 10,350 $ 273 $ 0 $ 10,623 $ 10,359 $ 10,828 $ 10,091

1987 9,070 945 0 10,015 10,904 11,416 10,539

1988 9,660 1,778 0 11,438 12,715 13,234 11,005

1989 9,900 2,660 0 12,560 16,743 17,437 11,516

1990 9,880 3,584 0 13,464 16,222 17,343 12,219

1991 10,370 4,776 0 15,146 21,167 21,565 12,594

1992 10,590 5,936 0 16,526 22,784 23,138 12,959

1993 11,130 7,342 232 18,704 25,081 27,081 13,315

</TABLE>

(dagger) From August 6, 1986 (commencement of operations).
(dagger)(dagger) From month-end closest to initial investment date.
EXPLANATORY NOTES. With an initial investment of $10,000 made on August 6,
1986, the net amount invested in fund shares was $10,000. The cost of the
initial investment ($10,000), together with the aggregate cost of
reinvested dividends and capital gain distributions for the period covered
(their cash value at the time they were reinvested), amounted to
$ 16,862 . If distributions had not been reinvested, the amount of
distributions earned from the fund over time would have been smaller, and
cash payments (dividends) for the period would have amounted to $ 5,077,
and capital gain distributions would have amounted to $140. If
FMR had not reimbursed certain fund expenses during some of the periods
shown, the fund's returns would have been lower. The figures in the table
do not include the effect of the fund's $5.00 account closeout fee, or the
.50% redemption fee applicable to shares held less than 180 days.
The fund's performance may be compared to the performance of other mutual
funds in general, or to the performance of particular types of mutual
funds. These comparisons may be expressed as mutual fund rankings prepared
by Lipper Analytical Services, Inc. (Lipper), an independent service
located in Summit, New Jersey that monitors the performance of mutual
funds. Lipper generally ranks funds on the basis of total return, assuming
reinvestment of distributions, but does not take sales charges or
redemption fees into consideration, and is prepared without regard to tax
consequences. Lipper may also rank funds based on yield. In addition to the
mutual fund rankings, a fund's performance may be compared to mutual fund
performance indices prepared by Lipper.
From time to time, a fund's performance may also be compared to other
mutual funds tracked by financial or business publications and periodicals.
For example, the fund may quote Morningstar, Inc. in its advertising
materials. Morningstar, Inc. is a mutual fund rating service that rates
mutual funds on the basis of risk-adjusted performance. Rankings that
compare the performance of Fidelity funds to one another in appropriate
categories over specific periods of time may also be quoted in advertising.
Fidelity may provide information designed to help individuals understand
their investment goals and explore various financial strategies. For
example, Fidelity's FundMatchsm Program includes a workbook describing
general principles of investing, such as asset allocation, diversification,
risk tolerance, and goal setting; a questionnaire designed to help create a
personal financial profile; and an action plan offering investment
alternatives. Materials may also include discussions of Fidelity's three
asset allocation funds and other Fidelity funds, products, and services.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical
returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury
bills, the U.S. rate of inflation (based on the CPI), and combinations of
various capital markets. The performance of these capital markets is based
on the returns of different indices.
Fidelity funds may use the performance of these capital markets in order to
demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any
of these capital markets. The risks associated with the security types in
any capital market may or may not correspond directly to those of the
funds. Ibbotson calculates total returns in the same method as the funds.
The funds may also compare performance to that of other compilations or
indices that may be developed and made available in the future.
The fund may compare its performance or the performance of securities in
which it may invest to averages published by IBC USA (Publications), Inc.
of Ashland, Massachusetts. These averages assume reinvestment of
distributions. The IBC/Donoghue's MONEY FUND AVERAGES(registered
trademark)/All tax-free, which is reported in the MONEY FUND
REPORT(registered trademark), covers over 330 tax-free money market
funds. The Bond Fund Report AverageS(registered trademark)/All tax-free,
which is reported in the BOND FUND REPORT(registered trademark), covers
over 350 tax-free bond funds. When evaluating comparisons to money
market funds, investors should consider the relevant differences in
investment objectives and policies. Specifically, money market funds invest
in short-term, high-quality instruments and seek to maintain a stable $1.00
share price. The fund, however, invests in longer-term instruments and its
share price changes daily in response to a variety of factors.
The high yield fund may compare and contrast in advertising the relative
advantages of investing in a mutual fund versus an individual municipal
bond. Unlike tax-free mutual funds, individual municipal bonds offer a
stated rate of interest and, if held to maturity, repayment of principal.
Although some individual municipal bonds might offer a higher return, they
do not offer the reduced risk of a mutual fund that invests in many
different securities. The initial investment requirements and sales charges
of many tax-free mutual funds are lower than the purchase cost of
individual municipal bonds, which are generally issued in $5,000
denominations and are subject to direct brokerage costs.
In advertising materials, Fidelity may reference or discuss its products
and services, which may include: other Fidelity funds; retirement
investing; brokerage products and services; the effects of periodic
investment plans and dollar cost averaging; saving for college; charitable
giving; and the Fidelity credit card. In addition, Fidelity may quote
financial or business publications and periodicals, including model
portfolios or allocations, as they relate to fund management, investment
philosophy, and investment techniques. Fidelity may also reprint, and use
as advertising and sales literature, articles from Fidelity Focus, a
quarterly magazine provided free of charge to Fidelity fund shareholders.
A fund may present its fund number, Quotron(registered trademark) number,
and CUSIP number, and discuss or quote its current portfolio manager.
The high yield fund may advertise examples of the effects of periodic
investment plans, including the principle of dollar cost averaging. In such
a program, an investor invests a fixed dollar amount in a fund at periodic
intervals, thereby purchasing fewer shares when prices are high and more
shares when prices are low. While such a strategy does not assure a profit
or guard against loss in a declining market, the investor's average cost
per share can be lower than if fixed numbers of shares are purchased at the
same intervals. In evaluating such a plan, investors should consider their
ability to continue purchasing shares during periods of low price levels.
As of December 31, 1993, FMR advised 43 tax-free funds with a total
value of over $ 25 billion, and 30 Spartan funds with
approximately $ 20 billion in assets. According to the Investment
Company Institute, over the past ten years, assets in tax-exempt money
market funds increased from $ 16.8 billion in 1983 to approximately
$ 103.2 billion at the end of 1993. The money market fund may
reference the growth and variety of money market funds and the advisor's
innovation and participation in the industry.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Each fund is open for business and its net asset value per share (NAV) is
calculated each day the New York Stock Exchange (NYSE) is open for trading.
The NYSE has designated the following holiday closings for 1994:
Washington's Birthday (observed), Good Friday, Memorial Day (observed),
Independence Day (observed), Labor Day, Thanksgiving Day, and Christmas Day
(observed). Although FMR expects the same holiday schedule, with the
addition of New Year's Day, to be observed in the future, the NYSE may
modify its holiday schedule at any time.
FSC normally determines each fund's NAV as of the close of the NYSE
(normally 4:00 p.m. Eastern time). However, NAV may be calculated earlier
if trading on the NYSE is restricted or as permitted by the SEC. To the
extent that portfolio securities are traded in other markets on days when
the NYSE is closed, a fund's NAV may be affected on days when investors do
not have access to the fund to purchase or redeem shares.
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing a fund's NAV. Shareholders receiving securities or other property
on redemption may realize a gain or loss for tax purposes, and will incur
any costs of sale, as well as the associated inconveniences.
Pursuant to Rule 11a-3 under the Investment Company Act of 1940 (the 1940
Act), each fund is required to give shareholders at least 60 days' notice
prior to terminating or modifying its exchange privilege. Under the Rule,
the 60-day notification requirement may be waived if (i) the only effect of
a modification would be to reduce or eliminate an administrative fee,
redemption fee, or deferred sales charge ordinarily payable at the time of
an exchange, or (ii) the fund suspends the redemption of the shares to be
exchanged as permitted under the 1940 Act or the rules and regulations
thereunder or the fund to be acquired su s pends the sale of its
shares because it is unable to invest amounts effectively in accordance
with its investment objective and policies.
In the Prospectus, each fund has notified shareholders that it reserves the
right at any time, without prior notice, to refuse exchange purchases by
any person or group if, in FMR's judgment, the fund would be unable to
invest effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and the
U.S. Postal Service cannot deliver your checks, or if your checks remain
uncashed for six months, Fidelity may reinvest your distributions at the
then-current NAV. All subsequent distributions will then be reinvested
until you provide Fidelity with alternate instructions.
DIVIDENDS. To the extent that each fund's income is derived from federally
tax-exempt interest, the daily dividends declared by each fund also are
federally tax-exempt. The funds will send each shareholder a notice in
January describing the tax status of dividends and capital gain
distributions (if any) for the prior year.
Shareholders are required to report tax-exempt income on their federal tax
returns. Shareholders who earn other income, such as social security
benefits, may be subject to federal income tax on up to one half of such
benefits to the extent that their income, including tax-exempt income,
exceeds certain base amounts.
Each fund purchases municipal obligations based on opinions of bond counsel
regarding the federal income tax status of the obligations. These opinions
generally will be based upon covenants by the issuers regarding continuing
compliance with federal tax requirements. If the issuer of an obligation
fails to comply with its covenants at any time, interest on the obligation
could become federally taxable retroactive to the date the obligation was
issued.
As a result of the Tax Reform Act of 1986, interest on certain "private
activity" securities (referred to as "qualified bonds" in the Internal
Revenue Code) is subject to the federal alternative minimum tax (AMT),
although the interest continues to be excludable from gross income for
other tax purposes. Interest from private activity securities will be
considered tax-exempt for purposes of the funds' policies of investing so
that at least 80% of their income distributions (money market fund) and
income (high yield fund) is free from federal income tax. Interest from
private activity securities is a tax-preference item for the purposes of
determining whether a taxpayer is subject to the AMT and the amount of AMT
to be paid, if any. Private activity securities issued after August 7, 1986
to benefit a private or industrial user or to finance a private facility
are affected by this rule.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by the funds on
the sale of securities and distributed to shareholders are federally
taxable as long-term capital gains, regardless of the length of time that
shareholders have held their shares. If a shareholder receives a long-term
capital gain distribution on shares of a fund and such shares are held six
months or less and are sold at a loss, the portion of the loss equal to the
amount of the long-term capital gain distribution will be considered a
long-term loss for tax purposes.
A portion of the gain on bonds purchased at a discount after April 30, 1993
and short-term capital gains distributed by the funds are federally taxable
to shareholders as dividends, not as capital gains. Distributions from
short-term capital gains do not qualify for the dividends-received
deduction. Dividend distributions from a recharacterization of a gain from
the sale of bonds purchased at a discount after April 30, 1993 are not
considered income for purposes of the funds' policy of investing so that at
least 80% of their income distributions (money market fund) and income
(high yield fund) is free from federal income tax. The money market fund
may distribute any net realized short-term capital gains once a year or
more often as necessary to maintain its net asset value at $1.00 a share.
As of December 31, 1993, the money market fund had capital loss
carryovers aggregating approximately $ 9,500 available to offset
future capital gains of which $4,600 and $4,900 , will expire
on December 31, 1997 and 1998 , respectively.
PERSONAL PROPERTY TAXES. To the extent a fund's investments consist of (i)
municipal obligations of the Commonwealth of Pennsylvania and its political
subdivisions or municipal authorities, and (ii) obligations of the United
States, including certain obligations of Puerto Rico, the Virgin Islands
and Guam, and any U.S. territories or possessions whose obligations are
immune from state and local taxation under federal law, collectively
referred to as exempt obligations, shares purchased as an investment in
either of the funds will not be taxable for purposes of the Pennsylvania
county personal property tax, the City of Pittsburgh personal property tax,
or the School District of Pittsburgh personal property tax. Any holdings
other than exempt obligations may result in shares of the funds being
wholly or partially subject to the taxes described above.
STATE AND LOCAL INCOME TAXES. To the extent that each fund's distributions
are derived from interest on state tax-free obligations, its income
dividends will be exempt from the Pennsylvania personal income tax.
However, distributions attributable to capital gains from state tax-free
obligation are not exempt from the Pennsylvania personal income tax.
Distributions of interest earned from non-exempt obligations are not exempt
from the Pennsylvania personal income tax. The funds' dividends may
or may not be exempt from current or future taxes of certain Pennsylvania
municipalities.
TAX STATUS OF THE FUNDS. Each fund has qualified and intends to continue to
qualify each year as a "regulated investment company" for tax purposes so
that it will not be liable for federal tax on income and capital gains
distributed to shareholders. In order to qualify as a regulated investment
company and avoid being subject to federal income or excise taxes at the
fund level, each fund intends to distribute all of its net investment
income and net realized capital gains (if any) within each calendar year as
well as on a fiscal year basis. Each fund also intends to comply with other
tax rules applicable to regulated investment companies, including a
requirement that capital gains from the sale of securities held less than
three months constitute less than 30% of the fund's gross income for each
fiscal year. Gains from some futures contracts and options are included in
this 30% calculation, which may limit the high yield fund's investments in
such instruments. Fidelity Municipal Trust treats each of its funds
(including the high yield fund) as a separate entity for tax purposes.
Fidelity Municipal Trust II also treats each of its funds (including the
money market fund) as a separate entity for tax purposes.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax considerations generally affecting the funds and their
shareholders, and no attempt has been made to discuss individual tax
consequences. Investors should consult their tax advisers to determine
whether the funds are suitable to their particular tax situations.
FMR
FMR is a wholly owned subsidiary of FMR Corp., a parent company organized
in 1972. At present, the principal operating activities of FMR Corp. are
those conducted by three of its divisions as follows: FSC, which is the
transfer and shareholder servicing agent for certain of the funds advised
by FMR; Fidelity Investments Institutional Operations Company, which
performs shareholder servicing functions for certain institutional
customers; and Fidelity Investments Retail Marketing Company, which
provides marketing services to various companies within the Fidelity
organization.
Several affiliates of FMR are also engaged in the investment advisory
business. Fidelity Management Trust Company provides trustee, investment
advisory, and administrative services to retirement plans and corporate
employee benefit accounts. Fidelity Management & Research (U.K.) Inc.
(FMR U.K.) and Fidelity Management & Research (Far East) Inc. (FMR Far
East), both wholly owned subsidiaries of FMR formed in 1986, supply
investment research, and may supply portfolio management services, to FMR
in connection with certain funds advised by FMR. Analysts employed by FMR,
FMR U.K., and FMR Far East research and visit thousands of domestic and
foreign companies each year. FMR Texas, a wholly owned subsidiary of FMR
formed in 1989, supplies portfolio management and research services in
connection with certain money market funds advised by FMR.
TRUSTEES AND OFFICERS
The Trustees and executive officers of the trusts are listed below. Except
as indicated, each individual has held the office shown or other offices in
the same company for the last five years. Trustees and officers elected or
appointed to Fidelity Municipal Trust prior to the money market fund's
conversion from a series of Fidelity Municipal Trust to a series of
Fidelity Municipal Trust II served Fidelity Municipal Trust in identical
capacities. All persons named as Trustees also serve in similar capacities
for other funds advised by FMR. Unless otherwise noted, the business
address of each Trustee and officer is 82 Devonshire Street, Boston,
Massachusetts 02109, which is also the address of FMR. Those Trustees who
are "interested persons" (as defined in the Investment Company Act of 1940)
by virtue of their affiliation with either trust or with FMR are indicated
by an asterisk (*).
*EDWARD C. JOHNSON 3d, Trustee and President, is Chairman, Chief Executive
Officer and a Director of FMR Corp.; a Director and Chairman of the Board
and of the Executive Committee of FMR; Chairman and a Director of FMR Texas
Inc. (1989), Fidelity Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.
*J. GARY BURKHEAD, Trustee and Senior Vice President, is President of FMR;
and President and a Director of FMR Texas Inc. (1989), Fidelity Management
& Research (U.K.) Inc. and Fidelity Management & Research (Far
East) Inc.
RALPH F. COX , 200 Rivercrest Drive, Fort Worth, TX, Trustee (1991),
is President of Greenhill Petroleum Corporation (petroleum exploration and
production, 1990). Prior to his retirement in March 1990, Mr. Cox was
President and Chief Operating Officer of Union Pacific Resources Company
(exploration and production). He is a Director of Bonneville Pacific
Corporation (independent power, 1989) and CH2M Hill Companies
(engineering). In addition, he served on the Board of Directors of the
Norton Company (manufacturer of industrial devices, 1983-1990) and
continues to serve on the Board of Directors of the Texas State Chamber of
Commerce, and is a member of advisory boards of Texas A&M University
and the University of Texas at Austin.
PHYLLIS BURKE DAVIS , 340 E. 64th Street #22C, New York, NY, Trustee
(1992). Prior to her retirement in September 1991, Mrs. Davis was the
Senior Vice President of Corporate Affairs of Avon Products, Inc. She is
currently a Director of BellSouth Corporation (telecommunications), Eaton
Corporation (manufacturing, 1991), and the TJX Companies, Inc. (retail
stores, 1990), and previously served as a Director of Hallmark Cards, Inc.
(1985-1991) and Nabisco Brands, Inc. In addition, she serves as a Director
of the New York City Chapter of the National Multiple Sclerosis Society,
and is a member of the Advisory Council of the International Executive
Service Corps. and the President's Advisory Council of The University of
Vermont School of Business Administration.
RICHARD J. FLYNN, 77 Fiske Hill, Sturbridge, MA, Trustee, is a financial
consultant. Prior to September 1986, Mr. Flynn was Vice Chairman and a
Director of the Norton Company (manufacturer of industrial devices). He is
currently a Director of Mechanics Bank and a Trustee of College of the Holy
Cross and Old Sturbridge Village, Inc.
E. BRADLEY JONES, 3881-2 Lander Road, Chagrin Falls, OH , Trustee
(1990). Prior to his retirement in 1984, Mr. Jones was Chairman and Chief
Executive Officer of LTV Steel Company. Prior to May 1990, he was Director
of National City Corporation (a bank holding company) and National City
Bank of Cleveland. He is a Director of TRW Inc. (original equipment and
replacement products), Cleveland-Cliffs Inc (mining), NACCO Industries,
Inc. (mining and marketing), Consolidated Rail Corporation, Birmingham
Steel Corporation (1988), Hyster-Yale Materials Handling, Inc. (1989), and
RPM, Inc. (manufacturer of chemical products, 1990). In addition, he serves
as a Trustee of First Union Real Estate Investments; Chairman of the Board
of Trustees and a member of the Executive Committee of the Cleveland Clinic
Foundation, a Trustee and a member of the Executive Committee of University
School (Cleveland), and a Trustee of Cleveland Clinic Florida.
DONALD J. KIRK, 680 Steamboat Road, Apartment #1-North, Greenwich, CT,
Trustee, is a Professor at Columbia University Graduate School of Business
and a financial consultant. Prior to 1987, he was Chairman of the Financial
Accounting Standards Board. Mr. Kirk is a Director of General Re
Corporation (reinsurance ) and Valuation Research Corp.
(appraisals and valuations, 1993 ) . In addition, he serves as Vice
Chairman of the Board of Directors of the National Arts Stabilization
Fund and Vice Chairman of the Board of Trustees of the Greenwich
Hospital Association.
*PETER S. LYNCH, Trustee (1990) is Vice Chairman of FMR (1992). Prior to
his retirement on May 31, 1990, he was a Director of FMR (1989) and
Executive Vice President of FMR (a position he held until March 31, 1991);
Vice President of Fidelity Magellan Fund and FMR Growth Group Leader; and
Managing Director of FMR Corp. Mr. Lynch was also Vice President of
Fidelity Investments Corporate Services (1991-1992). He is a Director of
W.R. Grace & Co. (chemicals, 1989) and Morrison Knudsen Corporation
(engineering and construction). In addition, he serves as a Trustee of
Boston College, Massachusetts Eye & Ear Infirmary, Historic Deerfield
(1989) and Society for the Preservation of New England Antiquities, and as
an Overseer of the Museum of Fine Arts of Boston (1990).
GERALD C. McDONOUGH, 135 Aspenwood Drive, Cleveland, OH, Trustee (1989), is
Chairman of G.M. Management Group (strategic advisory services). Prior to
his retirement in July 1988, he was Chairman and Chief Executive Officer of
Leaseway Transportation Corp. (physical distribution services). Mr.
McDonough is a Director of ACME-Cleveland Corp. (metal working,
telecommunications and electronic products), Brush-Wellman Inc. (metal
refining), York International Corp. (air conditioning and refrigeration,
1989), Commercial Intertech Corp. (water treatment equipment, 1992) and
Associated Estates Realty Corporation (a real estate investment trust,
1993).
EDWARD H. MALONE, 5601 Turtle Bay Drive #2104, Naples, FL, Trustee. Prior
to his retirement in 1985, Mr. Malone was Chairman, General Electric
Investment Corporation and a Vice President of General Electric Company. He
is a Director of Allegheny Power Systems, Inc. (electric utility), General
Re Corporation (reinsurance) and Mattel Inc. (toy manufacturer). He is also
a Trustee of Rensselaer Polytechnic Institute and of Corporate Property
Investors and a member of the Advisory Boards of Butler Capital Corporation
Funds and Warburg, Pincus Partnership Funds.
MARVIN L. MANN, 55 Railroad Avenue, Greenwich, CT, Trustee (1993) is
Chairman of the Board, President, and Chief Executive Officer of Lexmark
International, Inc. (office machines, 1991). Prior to 1991, he held the
positions of Vice President of International Business Machines Corporation
("IBM") and President and General Manager of various IBM divisions and
subsidiaries. Mr. Mann is a Director of M.A. Hanna Company (chemicals,
1993) and Infomart (marketing services, 1991), a Trammell Crow Co. In
addition, he serves as the Campaign Vice Chairman of the Tri-State United
Way (1993) and is a member of the University of Alabama President's Cabinet
(1990).
THOMAS R. WILLIAMS , 21st Floor, 191 Peachtree Street, N.E., Atlanta,
GA, Trustee, is President of The Wales Group, Inc. (management and
financial advisory services). Prior to retiring in 1987, Mr. Williams
served as Chairman of the Board of First Wachovia Corporation (bank holding
company), and Chairman and Chief Executive Officer of The First National
Bank of Atlanta and First Atlanta Corporation (bank holding company). He is
currently a Director of BellSouth Corporation (telecommunica tions),
C onAgra, Inc. (agricultural products), Fisher Business Systems, Inc.
(computer software), Georgia Power Company (electric utility), Gerber Alley
& Associates, Inc. (computer software), National Life Insurance Company
of Vermont, American Software, Inc. (1989), and AppleSouth, Inc.
(restaurants, 1992).
GARY L. FRENCH, Treasurer (1991). Prior to becoming Treasurer of the
Fidelity funds, Mr. French was Senior Vice President, Fund Accounting -
Fidelity Accounting & Custody Services Co. (1991); Vice President, Fund
Accounting - Fidelity Accounting & Custody Services Co. (1990); and
Senior Vice President, Chief Financial and Operations Officer - Huntington
Advisers, Inc. (1985-1990).
ARTHUR S. LORING, Secretary, is Senior Vice President and General Counsel
of FMR, Vice President-Legal of FMR Corp., and Clerk of FDC.
DEBORAH F. WATSON, Vice President of the money market fund (1992), is Vice
President of other funds advised by FMR and is an employee of FMR.
THOMAS D. MAHER, Assistant Vice President (1990), is Assistant Vice
President of Fidelity's money market funds and Vice President and Associate
General Counsel of FMR Texas Inc. (1990).
Under a retirement program that became effective on November 1, 1989,
Trustees, upon reaching age 72, become eligible to participate in a defined
benefit retirement program under which they receive payments during their
lifetime from the funds based on their basic trustee fees and length
of service. Currently, Messrs. Robert L. Johnson, William R. Spaulding,
Bertram H. Witham, and David L. Yunich participate in the program
As of December 31, 1993, the Trustees and officers of the funds owned, in
the aggregate, less than 1 % of the outstanding shares of each fund.
MANAGEMENT CONTRACTS
Each fund employs FMR to furnish investment advisory and other services.
Under its management contract with each fund, FMR acts as investment
adviser and, subject to the supervision of the Board of Trustees, directs
the investments of each fund in accordance with its investment objective,
policies, and limitations. FMR also provides the funds with all necessary
office facilities and personnel for servicing the funds' investments, and
compensates all officers of the trusts, all Trustees who are "interested
persons" of the trusts or of FMR, and all personnel of the trusts or FMR
performing services relating to research, statistical, and investment
activities.
In addition, FMR or its affiliates, subject to the supervision of the Board
of Trustees, provide the management and administrative services necessary
for the operation of the funds. These services include providing facilities
for maintaining each fund's organization; supervising relations with
custodians, transfer and pricing agents, accountants, underwriters, and
other persons dealing with the funds; preparing all general shareholder
communications and conducting shareholder relations; maintaining each
fund's records and the registration of each fund's shares under federal and
state law; developing management and shareholder services for the funds;
and furnishing reports, evaluations, and analyses on a variety of subjects
to the trusts' Board of Trustees.
FMR is responsible for the payment of all expenses of the funds with
certain exceptions. Specific expenses payable by FMR include, without
limitation, the fees and expenses of registering and qualifying the trusts,
the funds, and their shares for distribution under federal and state
securities laws; expenses of typesetting for printing the Prospectus and
Statement of Additional Information; custodian charges; audit and legal
expenses; insurance expense; association membership dues; and the expenses
of mailing reports to shareholders, shareholder meetings, and proxy
solicitations. FMR also provides for transfer agent and dividend disbursing
services and portfolio and general accounting record maintenance through
FSC.
FMR pays all other expenses of the funds with the following exceptions:
fees and expenses of all Trustees of the trusts who are not "interested
persons" of the trusts or of FMR (the non-interested Trustees); interest on
borrowings; taxes; brokerage commissions (if any); and such nonrecurring
expenses as may arise, including costs of any litigation to which the funds
may be a party, and any obligation the trusts or funds may have to
indemnify the officers and Trustees with respect to litigation.
FMR is manager of the high yield fund pursuant to a management contract
dated August 1, 1990, which was approved by shareholders on July 18, 1990.
FMR is manager of the money market fund pursuant to a management contract
dated February 28, 1992, which was approved by Fidelity Municipal Trust as
sole shareholder of the money market fund on February 28, 1992, in
conjunction with an Agreement and Plan to convert the fund from a series of
a Massachusetts business trust to a series of a Delaware business trust.
The Agreement and Plan was approved by public shareholders of the money
market fund on December 11, 1991. The money market fund's contract is
identical to the fund's prior contract with FMR, dated August 1, 1990.
For the services of FMR under the contracts, the money market fund and the
high yield fund pay FMR monthly management fees at the annual rates of .50%
and .55%, respectively, of their average net assets throughout the month.
FMR reduces its fee by an amount equal to the fees and expenses of the
non-interested Trustees.
FMR may, from time to time, voluntarily reimburse all or a portion of a
fund's operating expenses (excluding interest, taxes, brokerage commissions
(if any), and extraordinary expenses). The tables below outline such
expense limitations (as a percentage of average net assets) and state both
the amount of the management fees and the amount reimbursed, from fiscal
1991 to the date of this Statement of Additional Information:
MONEY MARKET FUND:
Voluntary

From: To: Expense Limitation

January 1, 1991 January 31, 1991 .25%

February 1, 1991 February 28, 1991 .30%

March 1, 1991 October 31, 1991 .35%

November 1, 1991 March 1, 1992 .40%

March 1, 1992 May 1, 1992 .45%

Fiscal Year Ended Management Fees Amount of Total Expense

December 31 Before Reimbursement Reimbursements

1991 $ 1,511,864 $ 470,162

1992 1,245,915 67,166

1993 1,092,498 0

HIGH YIELD FUND:
Fiscal Year Ended Management Fees Amount of Total Expense

December 31 Before Reimbursement Reimbursements

1991 $ 923,349 $ 0

1992 1,205,412 0

1993 1,555,647 0

To defray shareholder service costs, FMR or its affiliates also collect the
funds' $5.00 exchange fee, $5.00 account closeout fee, $5.00 fee for wire
purchases and redemptions, and $2.00 checkwriting charge. Shareholder
transaction fees and charges collected for fiscal 1993, 1992, and 1991 are
indicated in the tables below .
MONEY MARKET FUND:

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Fiscal Year Ended Exchange Account Wire Checkwriting

December 31 Fees Closeout Fees Fees Charges

1991 $ 2,945 $ 1,095 $ 1,375 $ 8,592

1992 11,475 2,009 1,605 13,461

1993 5,950 1,586 345 6,653

</TABLE>

HIGH YIELD FUND:

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Fiscal Year Ended Exchange Account Wire

December 31 Fees Closeout Fees Fees

1991 $ 1,645 $ 635 $ 490

1992 5,010 1,093 750

1993 3,615 1,055 380

</TABLE>

SUB-ADVISER. With respect to the money market fund, FMR has entered into a
sub-advisory agreement with FMR Texas pursuant to which FMR Texas has
primary responsibility for providing portfolio investment management
services to the fund. Under the sub-advisory agreement, FMR pays FMR Texas
a fee equal to 50% of the management fee payable to FMR under its
management contract with the fund. The fees paid to FMR Texas are not
reduced by any voluntary or mandatory expense reimbursements that may be in
effect from time to time. For fiscal 1993 and 1992, FMR paid FMR Texas fees
of $ 546,249 and $622,958.
DISTRIBUTION AND SERVICE PLANS
Each fund has adopted a distribution and service plan (the plans) under
Rule 12b-1 under the Investment Company Act of 1940 (the Rule). The Rule
provides in substance that a mutual fund may not engage directly or
indirectly in financing any activity that is primarily intended to result
in the sale of shares of the fund except pursuant to a plan adopted by the
fund under the Rule. The Board of Trustees has adopted the plans to allow
the funds and FMR to incur certain expenses that might be considered to
constitute indirect payment by the funds of distribution expenses. Under
the plans, if payment by a fund to FMR of management fees should be deemed
to be indirect financing by the fund of the distribution of its shares,
such payment is authorized by the fund's plan.
The plans specifically recognize that FMR, either directly or through FDC,
may use its management fee revenue, past profits, or other resources,
without limitation, to pay promotional and administrative expenses in
connection with the offer and sale of shares of the funds. In addition, the
plans provide that FMR may use its resources, including its management fee
revenue, to make payments to third parties that provide assistance in
selling the funds' shares, or to third parties, including banks, that
render shareholder support services. As of December 31, 1993, no such
payments were made.
Each fund's plan has been approved by the Trustees. As required by the
Rule, the Trustees carefully considered all pertinent factors relating to
the implementation of the plans prior to their approval, and have
determined that there is a reasonable likelihood that the plans will
benefit the funds and their shareholders. In particular, the Trustees noted
that the plans do not authorize payments by the funds other than those made
to FMR under its management contracts with the funds. To the extent that
the plans give FMR and FDC greater flexibility in connection with the
distribution of shares of the funds, additional sales of the funds' shares
may result. Additionally, certain shareholder support services may be
provided more effectively under the plans by local entities with whom
shareholders have other relationships. The high yield fund's plan was
approved by the shareholders on December 31, 1986. The money market fund's
plan was approved by Fidelity Municipal Trust on February 28, 1992, as the
sole shareholder of the fund, pursuant to an Agreement and Plan of
Conversion and Termination approved by public shareholders of the money
market fund on December 11, 1991.
The Glass-Steagall Act generally prohibits federally and state chartered or
supervised banks from engaging in the business of underwriting, selling, or
distributing securities. Although the scope of this prohibition under the
Glass-Steagall Act has not been clearly defined by the courts or
appropriate regulatory agencies, FDC believes that the Glass-Steagall Act
should not preclude a bank from performing shareholder support services or
servicing and recordkeeping functions. FDC intends to engage banks only to
perform such functions. However, changes in federal or state statutes and
regulations pertaining to the permissible activities of banks and their
affiliates or subsidiaries, as well as further judicial or administrative
decisions or interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a bank were
prohibited from so acting, the Trustees would consider what actions, if
any, would be necessary to continue to provide efficient and effective
shareholder services. In such event, changes in the operation of the funds
might occur, including possible termination of any automatic investment or
redemption or other services then provided by the bank. It is not expected
that shareholders would suffer any adverse financial consequences as a
result of any of these occurrences. The funds may execute portfolio
transactions with and purchase securities issued by depository institutions
that receive payments under the plans. No preference will be shown in the
selection of investments for the instruments of such depository
institutions. In addition, state securities laws on this issue may differ
from the interpretations of federal law expressed herein, and banks and
other financial institutions may be required to register as dealers
pursuant to state law.
INTEREST OF FMR AFFILIATES
United Missouri is each fund's custodian and transfer agent. United
Missouri has entered into sub-contracts with FSC, an affiliate of FMR,
under the terms of which FSC performs the processing activities associated
with providing transfer agent and shareholder servicing functions for each
fund. United Missouri has additional sub-contracts with FSC, pursuant to
which FSC performs the calculations necessary to determine each fund's net
asset value per share and dividends and maintains the funds' accounting
records. United Missouri is entitled to reimbursement for fees paid to FSC
from FMR, which must bear these costs pursuant to its management contract
with each fund.
Each fund has a distribution agreement with FDC, a Massachusetts
corporation organized on July 18, 1960. FDC is a broker-dealer registered
under the Securities Exchange Act of 1934 and is a member of the National
Association of Securities Dealers, Inc. The distribution agreement calls
for FDC to use all reasonable efforts, consistent with its other business,
to secure purchasers for shares of each fund, which are continuously
offered at net asset value. Promotional and administrative expenses in
connection with the offer and sale of shares are paid by FMR.
DESCRIPTION OF THE TRUSTS
TRUSTS' ORGANIZATION. Fidelity Municipal Trust (the Massachusetts trust) is
an open-end management investment company originally organized as a
Maryland corporation on November 22, 1976 and reorganized as a
Massachusetts business trust on June 22, 1984, at which time its name
changed from Fidelity Municipal Bond Fund, Inc. to Fidelity Municipal Bond
Fund. On March 1, 1986, the trust's name was changed to Fidelity Municipal
Trust. Currently, there are seven funds of the Massachusetts trust:
Fidelity Municipal Bond Portfolio; Fidelity Aggressive Tax-Free Portfolio;
Fidelity Insured Tax-Free Portfolio; Fidelity Ohio Tax-Free High Yield
Fund; Fidelity Michigan Tax-Free High Yield Fund; Fidelity Minnesota
Tax-Free Portfolio; and Spartan Pennsylvania Municipal High Yield
Portfolio. The Massachusetts trust's Declaration of Trust permits the
Trustees to create additional funds.
Fidelity Municipal Trust II (the Delaware trust) is an open-end management
investment company organized as a Delaware business trust on June 20, 1991.
Currently, there are three funds of the Delaware trust: Fidelity Ohio
Municipal Money Market Portfolio; Fidelity Michigan Municipal Money Market
Portfolio; and Spartan Pennsylvania Municipal Money Market Portfolio.
Spartan Pennsylvania Municipal Money Market Portfolio, now a series of
the Delaware trust, entered into an agreement to acquire all of the
assets of Spartan Pennsylvania Municipal Money Market Portfolio, a series
of the Massachusetts trust, on February 28, 1992. The Delaware trust's
Trust Instrument permits the Trustees to create additional funds.
In the event that FMR ceases to be investment adviser to a trust or any of
its funds, the right of the trust or the fund to use the identifying names
"Fidelity" and "Spartan" may be withdrawn. There is a remote possibility
that one fund might become liable for any misstatement in its prospectus or
statement of additional information about another fund.
The assets of each trust received for the issue or sale of shares of each
of its funds and all income, earnings, profits, and proceeds thereof,
subject only to the rights of creditors, are especially allocated to such
fund, and constitute the underlying assets of such fund. The underlying
assets of each fund are segregated on the books of account, and are to be
charged with the liabilities with respect to such fund and with a share of
the general expenses of their respective trusts. Expenses with respect to
the trusts are to be allocated in proportion to the asset value of their
respective funds, except where allocations of direct expense can otherwise
be fairly made. The officers of the trusts, subject to the general
supervision of the Boards of Trustees, have the power to determine which
expenses are allocable to a given fund, or which are general or allocable
to all of the funds of a certain trust. In the event of the dissolution or
liquidation of a trust, shareholders of each fund of that trust are
entitled to receive as a class the underlying assets of such fund available
for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY - MASSACHUSETTS TRUST. The Massachusetts
trust is an entity of the type commonly known as a "Massachusetts business
trust." Under Massachusetts law, shareholders of such a trust may, under
certain circumstances, be held personally liable for the obligations of the
trust. The Declaration of Trust provides that the Massachusetts trust shall
not have any claim against shareholders except for the payment of the
purchase price of shares and requires that each agreement, obligation, or
instrument entered into or executed by the Massachusetts trust or its
Trustees shall include a provision limiting the obligations created thereby
to the Massachusetts trust and its assets. The Declaration of Trust
provides for indemnification out of each fund's property of any
shareholders held personally liable for the obligations of the fund. The
Declaration of Trust also provides that each fund shall, upon request,
assume the defense of any claim made against any shareholder for any act or
obligation of the fund and satisfy any judgment thereon. Thus, the risk of
a shareholder incurring financial loss on account of shareholder liability
is limited to circumstances in which the fund itself would be unable to
meet its obligations. FMR believes that, in view of the above, the risk of
personal liability to shareholders is remote.
The Declaration of Trust further provides that the Trustees, if they have
exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declaration of Trust protects a Trustee
against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office.
SHAREHOLDER AND TRUSTEE LIABILITY - DELAWARE TRUST. The Delaware trust is a
business trust organized under Delaware law. Delaware law provides that
shareholders shall be entitled to the same limitations of personal
liability extended to stockholders of private corporations for profit. The
courts of some states, however, may decline to apply Delaware law on this
point. The Trust Instrument contains an express disclaimer of shareholder
liability for the debts, liabilities, obligations, and expenses of the
Delaware trust and requires that a disclaimer be given in each contract
entered into or executed by the Delaware trust or its Trustees. The Trust
Instrument provides for indemnification out of each fund's property of any
shareholder or former shareholder held personally liable for the
obligations of the fund. The Trust Instrument also provides that each fund
shall, upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the fund and satisfy any judgment
thereon. Thus, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which
Delaware law does not apply, no contractual limitation of liability was in
effect, and the fund is unable to meet its obligations. FMR believes that,
in view of the above, the risk of personal liability to shareholders is
extremely remote.
The Trust Instrument further provides that the Trustees shall not be
personally liable to any person other than the Delaware trust or its
shareholders; moreover, the Trustees shall not be liable for any conduct
whatsoever, provided that Trustee s are not protected against
any liability to which they would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of
the duties involved in the conduct of their office.
VOTING RIGHTS - BOTH TRUSTS. Each fund's capital consists of shares of
beneficial interest. As a shareholder of the money market fund, you are
entitled to one vote for each share you own of the fund. Shareholders of
the high yield fund receive one vote for each dollar of net asset value per
share that they own. The shares have no preemptive or conversion rights;
voting and dividend rights, the right of redemption, and the privilege of
exchange are described in the Prospectus. Shares are fully paid and
nonassessable, except as set forth under the respective "Shareholder and
Trustee Liability" headings above. Shareholders representing 10% or more of
a trust or one of its funds may, as set forth in the Declaration of Trust
or Trust Instrument, call meetings of the trust or fund for any purpose
related to the trust or fund, as the case may be, including, in the case of
a meeting of an entire trust, the purpose of voting on removal of one or
more Trustees.
A trust or any fund may be terminated upon the sale of its assets to (or,
in the case of the Delaware trust and its funds, merger with) another
open-end management investment company or series thereof, or upon
liquidation and distribution of its assets. For shareholders of the
Massachusetts Trust, generally such terminations must be approved by the
vote of the holders of a majority of the trust of the fund, as determined
by the current value of each shareholder's investment in the fund or trust.
For shareholders in the Delaware trust, generally such terminations
must be approved by vote of the holders of a majority of the outstanding
shares of the trust or the fund . H owever, the Trustees of the
Delaware trust may, without prior shareholder approval, change the form of
the organization of the Delaware trust by merger, consolidation, or
incorporation. If not so terminated or reorganized, the trusts and their
funds will continue indefinitely.
Under the Trust Instrument, the Trustees may, without shareholder vote,
cause the Delaware trust to merge or consolidate into one or more trusts,
partnerships, or corporations, so long as the surviving entity is an
open-end management investment company that will succeed to or assume the
Delaware trust registration statement, or cause the Delaware trust to be
incorporated under Delaware law. The Delaware trust may also invest all of
its assets in another investment company.
CUSTODIAN. United Missouri, 1010 Grand Avenue, Kansas City, Missouri is
custodian of the assets of the funds. The custodian is responsible for the
safekeeping of the funds' assets and the appointment of subcustodian banks
and clearing agencies. The custodian takes no part in determining the
investment policies of the funds or in deciding which securities are
purchased or sold by a fund. A fund may, however, invest in obligations of
the custodian and may purchase securities from or sell securities to the
custodian.
FMR, its officers and directors, its affiliated companies, and the trusts'
Trustees may from time to time have transactions with various banks,
including banks serving as custodian for certain of the funds advised by
FMR. Transactions that have occurred to date include mortgages and personal
and general business loans. In the judgment of FMR, the terms and
conditions of those transactions were not influenced by existing or
potential custodial or other fund relationships.
AUDITOR. Coopers & Lybrand, One Post Office Square, Boston,
Massachusetts (high yield fund) and 1999 Bryan Street, Dallas, Texas (money
market fund) serves as the trusts' independent accountant. The auditor
examines financial statements for the funds and provides other audit, tax,
and related services.
FINANCIAL STATEMENTS
The funds' Annual Report for the fiscal year ended December 31, 1993 is a
separate report supplied with this Statement of Additional Information and
is incorporated herein by reference.
APPENDIX
DOLLAR-WEIGHTED AVERAGE MATURITY is derived by multiplying the value of
each investment by the number of days remaining to its maturity, adding
these calculations, and then dividing the total by the value of the high
yield fund's portfolio. An obligation's maturity is typically determined on
a stated final maturity basis, although there are some exceptions to this
rule.
For example, if it is probable that the issuer of an instrument will take
advantage of a maturity-shortening device, such as a call, refunding, or
redemption provision, the date on which the instrument will probably be
called, refunded, or redeemed may be considered to be its maturity date.
When a municipal bond issuer has committed to call an issue of bonds and
has established an independent escrow account that is sufficient to, and is
pledged to, refund that issue, the number of days to maturity for the
prerefunded bond is considered to be the number of days to the announced
call date of the bonds.
The descriptions that follow are examples of eligible ratings for the
funds. A fund may, however, consider the ratings for other types of
investments and the ratings assigned by other rating organizations when
determining the eligibility of a particular investment.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S RATINGS OF STATE AND
MUNICIPAL NOTES:
Moody's ratings for state and municipal and other short-term obligations
will be designated Moody's Investment Grade (MIG, or VMIG for variable rate
obligations). This distinction is in recognition of the difference between
short-term credit risk and long-term credit risk. Factors affecting the
liquidity of the borrower and short-term cyclical elements are critical in
short-term ratings, while other factors of major importance in bond risk,
long-term secular trends for example, may be less important in the short
run. Symbols used will be as follows:
MIG-1/VMIG-1 - This designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity support, or
demonstrated broad-based access to the market for refinancing.
MIG-2/VMIG-2 - This designation denotes high quality. Margins of protection
are ample although not so large as in the preceding group.
MIG-3/VMIG-3 - This designation denotes favorable quality, with all
security elements accounted for, but there is lacking the undeniable
strength of the preceding grades. Liquidity and cash flow protection may be
narrow and market access for refinancing is likely to be less well
established.
MIG-4/VMIG-4 - This designation denotes adequate quality protection
commonly regarded as required of an investment security is present and,
although not distinctly or predominantly speculative, there is specific
risk.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S RATINGS OF STATE AND
MUNICIPAL NOTES:
SP-1 - Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be
given a plus (+) designation.
SP-2 - Satisfactory capacity to pay principal and interest.
SP-3 - Speculative capacity to pay principal and interest.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S MUNICIPAL BOND RATINGS:
AAA - Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such issues.
AA - Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long term risks appear somewhat larger than
in Aaa securities.
A - Bonds rated A possess many favorable investment attributes and are to
be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
BAA - Bonds rated Baa are considered as medium-grade obligations, i.e, they
are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any
great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
BA - Bonds rated Ba are judged to have speculative elements. Their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded
during both good and bad times in the future. Uncertainty of position
characterizes bonds in this class.
B - Bonds rated B generally lack characteristics of a desirable investment.
Assurance of interest and principal payments of or maintenance of other
terms of the contract over any long period of time may be small.
CAA - Bonds rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.
Those bonds in the Aa, A, Baa, Ba, and B groups which Moody's believes
possess the strongest investment attributes are designated by the symbols
Aa1, A1, Baa1, Ba1, and B1.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S MUNICIPAL BOND RATINGS:
AAA - Debt rated AAA has the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay principal
is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest-rated debt issues only in small
degree.
A - Debt rated A has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher-rated
categories.
BB - Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
B - Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is
also used for debt subordinated to senior debt that is assigned an actual
or implied BB or BB- rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal.
In the event of adverse business, financial, or economic conditions, it is
not likely to have the capacity to pay interest and repay principal.
The ratings from AA to CCC may be modified by the addition of a plus or
minus to show relative standing within the major rating categories.
FIDELITY INSURED TAX-FREE PORTFOLIO
CROSS REFERENCE SHEET
FORM N-1A

ITEM NUMBER PROSPECTUS SECTION

<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 .............................. Cover Page

2 a .............................. Expenses

b, c .............................. Contents; The Fund at a Glance; Who May Want
to Invest

3 a .............................. Financial Highlights

b .............................. Financial Highlights

c, d .............................. Performance

4 a i............................. Charter

ii........................... The Fund at a Glance; Investment Principles;
Securities and Investment Practices

b .............................. Securities and Investment Practices

c .............................. Who May Want to Invest; Investment Principles;
Securities and Investment Practices

5 a .............................. Charter

b i............................. Doing Business with Fidelity; Charter

ii........................... Charter; Breakdown of Expenses

iii.......................... Expenses; Breakdown of Expenses

c, d .............................. Charter; Breakdown of Expenses; Cover Page;
FMR and Its Affiliates

e .............................. FMR and its Affiliates

f .............................. Expenses

g .............................. *

5A .............................. Annual Reports

6 a i............................. Charter

ii........................... How to Buy Shares; How to Sell Shares;
Transaction Details; Exchange Restrictions

iii.......................... *

b ............................. *

c .............................. Exchange Restrictions

d .............................. *

e .............................. Doing Business with Fidelity; How to Buy Shares;
How to Sell Shares; Investor Services

f, g .............................. Dividends, Capital Gains, and Taxes

7 a .............................. Charter; Cover Page

b .............................. How to Buy Shares; Transaction Details

c .............................. *

d .............................. How to Buy Shares

e .............................. *

f .............................. Breakdown of Expenses

8 .............................. How to Sell Shares; Investor Services; Transaction
Details; Exchange Restrictions

9 .............................. *

</TABLE>

* Not Applicable

CROSS REFERENCE SHEET
(CONTINUED)
FIDELITY INSURED TAX-FREE PORTFOLIO
FORM N-1A

ITEM NUMBER STATEMENT OF ADDITIONAL INFORMATION SECTION

<TABLE>
<CAPTION>
<S> <C> <C> <C>
10, 11 ............................ Cover Page

12 ............................ *

13 a - c ............................ Investment Policies and Limitations

d ............................ *

14 a - c ............................ Trustees and Officers

15 a, b ............................ *

c ............................ Trustees and Officers

16 a i........................... FMR

ii.......................... Trustees and Officers

iii......................... Management Contract

b ............................ Management Contract

c, d ............................ Interest of FMR Affiliates

e ............................ *

f ............................ Distribution and Service Plan

g ............................ *

h ............................ Description of the Trust

i ............................ Interest of FMR Affiliates

17 a ............................ Portfolio Transactions

b ............................ *

c ............................ Portfolio Transactions

d, e ............................ *

18 a ............................ Description of the Trust

b ............................ *

19 a ............................ Additional Purchase and Redemption Information

b ............................ Additional Purchase and Redemption Information;
Valuation of Portfolio Securities

c ............................ *

20 ............................ Distributions and Taxes

21 a, b ............................ Interest of FMR Affiliates

c ............................ *

22 ............................ Performance

23 ............................ Financial Statements

</TABLE>

* Not Applicable
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how each
fund invests and the services available to shareholders.
A Statement of Additional Information dated February 19, 1994 has been
filed with the Securities and Exchange Commission, and is incorporated
herein by reference (is legally considered a part of this prospectus). The
Statement of Additional Information is available free upon request by
calling Fidelity at 1-800-544-8888.
Mutual fund shares are not deposits or obligations of, or endorsed or
guaranteed by, any bank, savings association, insured depositary
institution, or government agency, nor are they federally insured or
otherwise protected by the FDIC, the Federal Reserve Board, or any other
agency. Investments in the funds involve investment risk, including
possible loss of principal. The value of the investment and its return will
fluctuate and are not guaranteed. When sold, the value of the investment
may be higher or lower than the amount originally invested.
Each of these funds seeks to approximate the performance of its reference
currency relative to the U.S. dollar while earning a reasonable level of
income.
FIDELITY
FOREIGN CURRENCY
FUNDS
FIDELITY DEUTSCHE MARK PERFORMANCE PORTFOLIO, L.P.
FIDELITY STERLING PERFORMANCE PORTFOLIO, L.P.
FIDELITY YEN PERFORMANCE PORTFOLIO, L.P.
PROSPECTUS
FEBRUARY 19, 1994
(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON, MA 02109
LIKE ALL MUTUAL
FUNDS, THESE
SECURITIES HAVE NOT
BEEN APPROVED OR
DISAPPROVED BY THE
SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION, NOR HAS
THE SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION PASSED
UPON THE ACCURACY
OR ADEQUACY OF THIS
PROSPECTUS. ANY
REPRESENTATION TO
THE CONTRARY IS A
CRIMINAL OFFENSE.
CUR-pro-294

CONTENTS

KEY FACTS THE FUNDS AT A GLANCE

WHO MAY WANT TO INVEST

EXPENSES AND PERFORMANCE EXPENSES Each fund's sales
charge (load) and its yearly
operating expenses.

FINANCIAL HIGHLIGHTS A summary
of each fund's financial data.

PERFORMANCE How each fund has
done over time.

YOUR ACCOUNT DOING BUSINESS WITH FIDELITY

TYPES OF ACCOUNTS Different
ways to set up your account.

HOW TO BUY SHARES Opening an
account and making additional
investments.

HOW TO SELL SHARES Taking money
out and closing your account.

INVESTOR SERVICES Services to
help you manage your account.

DIVIDENDS, CAPITAL GAINS, AND
TAXES

SHAREHOLDER AND TRANSACTION DETAILS Share price
ACCOUNT POLICIES calculations and the timing of
purchases and redemptions.

EXCHANGE RESTRICTIONS

SALES CHARGE WAIVERS

THE FUNDS IN DETAIL CHARTER How each fund is
organized.

BREAKDOWN OF EXPENSES How
operating costs are calculated and
what they include.

INVESTMENT PRINCIPLES Each
fund's overall approach to
investing.

SECURITIES AND INVESTMENT
PRACTICES

APPENDIX Summary of the
Partnership Agreements.

<r>KEY FACTS</r>

THE FUNDS AT A GLANCE
STRATEGY: Invest in high-quality money market instruments either
denominated in the foreign currency , or denominated in U.S. dollars
but coupled with investment techniques to perform as though they were
denominated in the foreign currency.
MANAGEMENT: Fidelity Management & Research Company (FMR) is the
management arm of Fidelity Investments, which was established in 1946 and
is now America's largest mutual fund manager.
As with any mutual fund, there is no assurance that a fund will achieve its
goal.
DEUTSCHE MARK FUND
GOAL: Approximate the performance of the Deutsche Mark relative to the U.S.
dollar while earning a reasonable level of income.
SIZE: As of December 31, 1993, the fund had over $ 5 million in
assets.
STERLING FUND
GOAL: Approximate the performance of the Pound Sterling relative to
the U.S. dollar while earning a reasonable level of income.
SIZE: As of December 31, 1993, the fund had over $ 3 million in
assets.
YEN FUND
GOAL: Approximate the performance of the Yen relative to the U.S. dollar
while earning a reasonable level of income.
SIZE: As of December 31, 1993, the fund had over $ 2 million in
assets.
WHO MAY WANT TO INVEST
These non-diversified funds are designed for those who want to invest a
portion of their assets in one or more of three foreign currency markets.
The funds may be appropriate for investors who :
(bullet) believe the foreign currency will appreciate relative to the U.S.
dollar,
(bullet) want to protect against a decline in the purchasing power of the
U.S. dollar relative to that of the foreign currency, or
(bullet) want to diversify their investments beyond dollar-denominated
securities.
Investors should understand that each fund's share price will change daily.
By themselves t hese funds do not constitute balanced investment
plan s . The value of the funds' investments and the income they
generate will vary from day to day, generally reflecting changes in
interest rates, market conditions, and other political and economic news.
Each fund's performance will also significantly depend on currency values,
foreign economies, and other factors related to foreign investments. When
you sell your shares, they may be worth more or less than what you paid for
them.
EXPENSES AND PERFORMANCE

EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell
shares of a fund. See pages 10-13 for an explanation of how and
when these charges apply.
Maximum sales charge on purchases
(as a % of offering price) 0.40%
Maximum sales charge on
reinvested dividends None
Deferred sales charge on redemptions None
ANNUAL FUND OPERATING EXPENSES are paid out of each fund's assets. Each
fund pays a management fee to FMR. It also incurs other expenses for
services such as maintaining shareholder records and furnishing shareholder
statements and fund reports. A fund's expenses are factored into its share
price and are not charged directly to shareholder accounts (see page ).
The following are projections based on historical expenses, and are
calculated as a percentage of average net assets.
DEUTSCHE MARK FUND
Management fee (after reimbursement) .00%
12b-1 fee None
Other expenses (after reimbursement) 1.50%
Total fund operating expenses 1.50%
STERLING FUND
Management fee (after reimbursement) .00%
12b-1 fee None
Other expenses (after reimbursement) 1.50%
Total fund operating expenses 1.50%
YEN FUND
Management fee (after reimbursement) .00%
12b-1 fee None
Other expenses (after reimbursement) 1.50%
Total fund operating expenses 1.50%
EXAMPLES: Let's say, hypothetically, that each fund's annual return is 5%
and that its operating expenses are exactly as just described. For every
$1,000 you invested, here's how much you would pay in total expenses if you
close your account after the number of years indicated:
After 1 After 3 After 5 After 10
year years years years
Deutsche Mark $ 19 $ 51 $ 86 $ 182
Sterling $ 19 $ 51 $ 86 $ 182
Yen $ 19 $ 51 $ 86 $ 182
These examples illustrate the effect of expenses, but are not meant to
suggest actual or expected costs or returns, all of which may vary.
FMR has voluntarily agreed to temporarily limit each fund's operating
expenses to 1.50% of its average net assets. If this agreement were not in
effect, the management fee, other expenses, and total operating expenses
would be .50 %, 1.71 %, and 2.21 %, respectively ,
for the Deutsche Mark fund; .50 %, 4.25 %, and 4.75 %,
respectively , for the Sterling fund; and .50 %, 2.99 %,
and 3.49 %, respectively, for the Yen fund. Expenses eligible for
reimbursement do not include interest, taxes, brokerage commissions, or
extraordinary expenses.
FINANCIAL HIGHLIGHTS
The tables that follow have been audited by Coopers & Lybrand,
independent accountants. Their unqualified reports are included in the
funds' Annual Report. The funds' Annual Report is incorporated by
reference into (is legally a part of) the Statement of Additional
Information.
DEUTSCHE MARK FUND

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1.Selected Per-Share Data and
Ratios

</TABLE>

2.Year Ended December 31 1989A 1990 1991 1992 1993

3.Net asset value, beginning of $ 10.00 $ 10.94 $ 13.27 $ 14.05 $ 14.20

period

4.Income from Investment

Operations

5. Net interest income .09F .61 .55F .34F .23F

6. Net realized and unrealized gain .85 1.72 .23 (.19) (.40)

(loss) on investments G

7. Total from investment operations .94 2.33 .78 .15 (.17)

8.Net asset value, end of period $ 10.94 $ 13.27 $ 14.05 $ 14.20 $ 14.03

9.Total returnD,E 9.40% 21.30% 5.88 1.07 (1.20)

% % %

10.Net assets, end of period (000 $ 6,230 $ 12,115 $ 24,070 $ 9,007 $ 5,777

omitted)

11.Ratio of expenses to average 1.50%B 1.50% 1.50 1.29 1.50

net assetsC % % %

12.Ratio of expenses to average 2.50%B 2.50% 1.80 1.29 2.21

net assets
,H H % % %
before expense reductionsC

13.Ratio of net interest income to 8.07%B 6.62% 4.38 2.38 1.62

average net assets % % %

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
14.Selected Per-Share Data and
Ratios

15.Year Ended December 31 1989A 1990 1991 1992 1993

16.Net asset value, beginning of $ 10.00 $ 10.32 $ 14.09 $ 14.97 $ 13.16
period

17.Income from Investment
Operations

18. Net interest income .09F .94 .55F .34F .22F

19. Net realized and unrealized .23 2.83 .33 (2.15) .08G
gain (loss) on

investments

20. Total from investment .32 3.77 .88 (1.81) .30
operations

21.Net asset value, end of period $ 10.32 $ 14.09 $ 14.97 $ 13.16 $ 13.46

22.Total returnD,E 3.20% 36.53% 6.25% (12.09) 2.28%
%

23.Net assets, end of period (000 $ 366 $ 3,301 $ 10,857 $ 1,715 $ 3,684
omitted)

24.Ratio of expenses to average 1.50% 1.50% 1.50% 1.50 1.50%
net assetsC B %

25.Ratio of expenses to average 2.50% 2.50% 2.60% 2.34 2.60%
net assets before expense B,H H H % H
reductionsC

26.Ratio of net interest income to 7.76% 6.77% 4.08% 2.27 1.61%
average net assets B %

</TABLE>

YEN FUND

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
27.Selected Per-Share Data and
Ratios

28.Year Ended December 31 1989A 1990 1991 1992 1993

29.Net asset value, beginning of $ 10.00 $ 10.06 $ 11.28 $ 12.97 $ 13.29
period

30.Income from Investment
Operations

31. Net interest income .09F .60 .48 .28F .24F

32. Net realized and unrealized (.03) .62 1.21 .04G 1.50
gain (loss) on investments

33. Total from investment .06 1.22 1.69 .32 1.74
operations

34.Net asset value, end of period $ 10.06 $ 11.28 $ 12.97 $ 13.29 $ 15.03

35.Total returnD,E .60% 12.13% 14.98% 2.47 13.09%
%

36.Net assets, end of period (000 $ 572 $ 4,415 $ 4,796 $ 3,801 $ 2,253
omitted)

37.Ratio of expenses to average 1.50% 1.50% 1.50% 1.50 1.50%
net assetsC B %

38.Ratio of expenses to average 2.50% 2.50% 2.60% 2.60 2.60%
net assets before expense B %
reductionsC,H

39.Ratio of net interest income to 8.35% 6.34% 4.43% 2.13 1.56%
average net assets B %

</TABLE>

A FROM NOVEMBER 16, 1989 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31,
1989.
B ANNUALIZED
C DURING THE PERIOD FROM NOVEMBER 16, 1989 (COMMENCEMENT OF OPERATIONS)
THROUGH DECEMBER 31, 1993, FMR VOLUNTARILY REIMBURSED THE FUND TO THE
EXTENT THAT THE AGGREGATE OPERATING EXPENSES (EXCLUDING INTEREST, TAXES,
BROKERAGE COMMISSIONS AND EXTRAORDINARY EXPENSES) OF A FUND WERE IN EXCESS
OF AN ANNUAL RATE OF 1.50% OF THE AVERAGE NET ASSETS..
D TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS
OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
E THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
F NET INTEREST INCOME PER-SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING.
G THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET LOSS ON FOREIGN CURRENCY CONTRACTS FOR THE PERIOD ENDED DUE
TO THE TIMING OF SALES AND REPURCHASES OF FUND SHARES IN RELATION TO
FLUCTUATING MARKET VALUES OF THE FOREIGN CURRENCY CONTRACTS OF THE FUND
H LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
PERFORMANCE
Each fund's performance can be measured as TOTAL RETURN. The total returns
that follow are based on historical fund results and do not reflect the
effect of taxes.
Each fund's fiscal year runs from January 1 through December 31. The tables
below show each fund's performance over past fiscal years compared to a
measure of inflation.
AVERAGE ANNUAL TOTAL RETURNS
Fiscal periods ended Past 1 Life of
December 31, 1993 year fundA
Deutsche Mark Fund
(load adj. B) -1.59 % 8.44 %
Sterling Fund
(load adj.B) 1.87 % 7.36 %
Yen Fund
(load adj B) 12.64 % 10.26 %
Consumer Price Index 2.75% 3.65 %
CUMULATIVE TOTAL RETURNS
Fiscal periods ended Past 1 Life of
December 31, 1993 year fundA
Deutsche Mark Fund
(load adj. B) -1.59 % 39.74 %
Sterling Fund
(load adj.B) 1.87 % 34.06 %
Yen Fund
(load adj . B) 12.64 % 49.70 %
Consumer Price Index 2.75% 15.81 %
A FROM NOVEMBER 16, 1989
B LOAD-ADJUSTED RETURNS INCLUDE THE EFFECT OF PAYING THE FUND'S MAXIMUM
.40% SALES CHARGE.

EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment in a fund over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return
if performance had been constant over the entire period. Average annual
total returns smooth out variations in performance; they are not the same
as actual year-by-year results.
YIELD refers to the income generated by an investment in a fund over a
given period of time, expressed as an annual percentage rate. However, the
rates on forward contracts include an adjustment factor to reflect the
differential between prevailing money market rates of interest in the two
currencies. When the funds establish synthetic positions, the effective
economic rate of interest earned will not be the same as the nominal rates
earned on the dollar-denominated instruments. As a result the funds do not
quote yields.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. government.
The funds' recent strategies, performance, and holdings are detailed twice
a year in financial reports, which are sent to all shareholders. For
current performance or a free annual report, call 1-800-544-8888.
TOTAL RETURNS ARE BASED ON PAST RESULTS AND ARE NOT AN INDICATION OF FUTURE
PERFORMANCE.
YOUR ACCOUNT

WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANTS
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have two or
more owners (tenants).
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and obtain
tax benefits. An individual can give up to $10,000 a year per child without
paying federal gift tax. Depending on state laws, you can set up a
custodial account under the Uniform Gifts to Minors Act (UGMA) or the
Uniform Transfers to Minors Act (UTMA).
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR OTHER
GROUPS
Requires a special application.
HOW TO BUY SHARES
ONCE EACH BUSINESS DAY, TWO SHARE PRICE S ARE CALCULATED FOR
EACH FUND: the offering price and the net asset value (NAV). The offering
price includes the sales charge, which you pay when you buy shares, unless
you qualify for a waiver as described on page . When you buy shares
at the offering price, Fidelity deducts the sales charge and invests the
rest at the NAV. The sales charge you pay depends upon the amount you
invest.
Sales c harge (as a
Amount % of offering price)
Less than $25,000 0.40%
$25,000 to $100,000 0.30%
More than $100,000 0.20%
Shares are purchased at the next share price calculated after your
investment is received and accepted. Share price is normally calculated at
4 p.m. Eastern time.
IF YOU ARE NEW TO FIDELITY, complete and sign an account application and
mail it along with your check. You may also open your account in person or
by wire as described on page 11 . If there is no application
accompanying this prospectus, call 1-800-544-8888.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(bullet) Mail in an application with a check, or
(bullet) Mail in an application to establish the account, along with
instructions to use the proceeds from a redemption from your existing
account to purchase shares in the Foreign Currency fund of your choice.
If you buy shares by check or Fidelity Money Line(Registered trademark),
and then sell those shares by any method other than by exchange to another
Fidelity fund, the payment may be delayed for up to seven business
days to ensure that your previous investment has cleared.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $5,000
TO ADD TO AN ACCOUNT $1,000
Through Fidelity Money Line $100
MINIMUM BALANCE $1,000

UNDERSTANDING
SHARE PRICE
Let's say you invest $5,000 at
an offering price of $10. Of
the $10 offering price, .40%
($.04) is the maximum sales
charge, and 99.6% ($9.96)
represents the NAV. The
value of your initial
investment will be $4,980
(500 shares worth $9.96
each), and you will have paid
a sales charge of $20.
(checkmark)
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT

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<S> <C> <C>
Phone 1-800-544-777 (phone_graphic) (bullet) Not available. (bullet) Use Fidelity Money Line
to transfer from your
bank account. Call
before your first use to
verify that this service is
in place on your
account. Maximum
Money Line: $50,000.

Mail (mail_graphic) (bullet) Complete and sign the (bullet) Make your check
application. Make your payable to the complete
check payable to the name of the fund.
complete name of the Indicate your fund
fund of your choice. account number on
Mail to the address your check and mail to
indicated on the the address printed on
application. your account statement.

</TABLE>

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<S> <C> <C>
Wire (wire_graphic) (bullet) Call 1-800-544-7777 to (bullet) Wire to:
set up your account Bankers Trust
and to arrange a wire Company,
transaction. Bank Routing
(bullet) Wire within 24 hours to: #021001033,
Bankers Trust Account #00163053.
Company, Specify the complete
Bank Routing name of the fund and
#021001033, include your account
Account #00163053. number and your
Specify the complete name.
name of the fund and
include your new
account number and
your name.

</TABLE>

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<S> <C> <C>
(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118

</TABLE>

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<CAPTION>
<S> <C> <C>
(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118

</TABLE>

INVESTOR SERVICES
Fidelity provides a variety of services to help you manage your account.
INFORMATION SERVICES
FIDELITY'S TELEPHONE REPRESENTATIVES are available 24 hours a day, 365 days
a year. Whenever you call, you can speak with someone equipped to provide
the information or service you need.
24-HOUR SERVICE
ACCOUNT ASSISTANCE
1-800-544-6666
ACCOUNT BALANCES
1-800-544-7544
ACCOUNT TRANSACTIONS
1-800-544-7777
PRODUCT INFORMATION
1-800-544-8888
QUOTES
1-800-544-8544
RETIREMENT ACCOUNT
ASSISTANCE
1-800-544-4774
AUTOMATED SERVICE
(checkmark)
STATEMENTS AND REPORTS that Fidelity sends to you include the following:
(bullet) Confirmation statements (after every transaction, except
reinvestments, that affects your account balance or your account
registration)
(bullet) Account statements (quarterly)
(bullet) Financial reports (every six months)
To reduce expenses, only one copy of most financial reports will be mailed
to your household, even if you have more than one account in the fund. Call
1-800-544-6666 if you need copies of financial reports or historical
account information.
TRANSACTION SERVICES
FIDELITY MONEY LINE(Registered trademark) enables you to transfer money by
phone between your bank account and your fund account. Most transfers are
complete within three business days of your call.
DIVIDENDS, CAPITAL GAINS, AND TAXES
The funds do not intend to distribute their income . I nstead,
each fund's income will be reflected in its share price.
As with any investment, you should consider how your investment will be
taxed. Below are some of the funds' tax implications. Consult your tax
adviser for more information.
FEDERAL INCOME TAX. Each fund is organized for federal income tax
purposes as a partnership. Under current law, partnerships are not subject
to federal income tax.
As a Limited Partner of a fund, you are required to report your
proportionate share of the fund's income, gains, losses, deductions, and
credits when you file your federal tax return. You will be subject to
tax on your share of the fund's taxable income even though
the funds do not distribute their income . Your share of these
items will be reported on your Schedule K-1 federal tax form, which the
funds will send you after the close of the calendar year . Certain
expenses associated with your investment in the partnership, such as
advisory fees, stock transfer fees and investment expenses may not be
deductible by an individual, except to the extent that miscellaneous
itemized deductions (including such fees and expenses) exceed 2% of your
adjusted gross income.
You may realize a capital gain or loss when you redeem your
partnership shares, depending on your capital account in the
partnership for tax purposes and depending on whether you sell all or a
part of your partnership shares. The federal tax treatment will also depend
on your individual tax position. You may also be subject to state and local
taxes, depending on your particular circumstances and the laws of your home
state and locality. It is to your advantage to keep all statements you
receive to assist you in your personal recordkeeping.
The funds will continue to be treated as partnerships for tax purposes
until taxable years beginning in 1998 . Thereafter, the funds may
have to modify their investment policies in order to qualify for treatment
as "regulated investment companies." If a fund failed to qualify as a
partnership or as a regulated investment company, its income would be taxed
at corporate rates, and any income it distributed to you would then be
taxed as a dividend.
OTHER TAX INFORMATION. FMR currently expects that the funds will limit
their investments to instruments that are not subject to foreign
withholding taxes. However, the funds may purchase instruments that are
subject to foreign tax withholding if FMR believes that other investment
considerations outweigh the effects of withholding taxes. If so, your
proportionate share of any foreign taxes withheld would be allocated to you
by your fund, and generally should be allowed as a credit or deduction on
your individual income tax return. A portion of a fund's gross income
may be treated as unrelated business taxable income for qualified pension
plans, individual retirement accounts, charitable organizations, or other
tax-exempt investors, therefore the funds may not be suitable for
individual retirement accounts, qualified pension plans, charitable
organizations, or other tax-exempt investors.
<r>SHAREHOLDER AND ACCOUNT POLICIES</r>

TRANSACTION DETAILS
THE FUNDS ARE OPEN FOR BUSINESS each day the New York Stock Exchange (NYSE)
is open. Fidelity normally calculates each fund's NAV and offering
price as of the close of business of the NYSE, normally 4 p.m. Eastern
time.
EACH FUND'S NAV is the value of a single share. The NAV is computed by
adding the value of the fund's investments, cash, and other assets,
subtracting its liabilities, and then dividing the result by the number of
shares outstanding.
Each fund's assets are valued primarily on the basis of market quotations.
If quotations are not readily available, assets are valued by a method that
the Managing General Partners believe accurately reflects fair
value. Foreign securities are valued on the basis of quotations from the
primary market in which they are traded, and are translated from the local
currency into U.S. dollars using current exchange rates.
THE OFFERING PRICE (price to buy one share) is the fund's NAV plus a sales
charge. The maximum sales charge is .40% of the offering price , and
it drops to as low as .20% as investment size increases. The
REDEMPTION PRICE (price to sell one share) is the fund's NAV.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that
your Social Security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require a fund to
withhold 31% of your taxable distributions and redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Note that Fidelity will
not be responsible for any losses resulting from unauthorized transactions
if it follows reasonable procedures designed to verify the identity of the
caller. Fidelity will request personalized security codes or other
information, and may also record calls. You should verify the accuracy of
your confirmation statements immediately after you receive them. If you do
not want the ability to redeem by telephone, call Fidelity for
instructions.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during periods
of unusual market activity), consider placing your order by mail or by
visiting a Fidelity Investor Center.
EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. Each fund also reserves the right to reject any specific purchase
order. Purchase orders may be refused if, in FMR's opinion, they are of a
size that would disrupt management of a fund.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your order will be processed at the
next offering price calculated after your order is received and accepted.
Note the following:
(bullet) All of your purchases must be made in U.S. dollars and checks
must be drawn on U.S. banks.
(bullet) Fidelity does not accept cash.
(bullet) When making a purchase with more than one check, each check must
have a value of at least $50.
(bullet) Each fund reserves the right to limit the number of checks
processed at one time.
(bullet) If your check does not clear, your purchase will be cancelled and
you could be liable for any losses or fees a fund or its transfer agent has
incurred.
(bullet) Your account will not be opened until your completed application
is on file, because your signature on the application is required to
establish your status as a Limited Partner.
TO AVOID THE COLLECTION PERIOD associated with check and Money Line
purchases, consider buying shares by bank wire, U.S. Postal money order,
U.S. Treasury check, or Federal Reserve check instead.
YOU MAY BUY SHARES OF THE FUNDS (AT THE OFFERING PRICE) OR SELL THEM
THROUGH A BROKER, who may charge you a fee for this service. If you invest
through a broker or other institution, read its program materials for any
additional service features or fees that may apply.
CERTAIN FINANCIAL INSTITUTIONS that have entered into sales agreements with
Fidelity Distributors Corporation (FDC) may enter confirmed purchase orders
on behalf of customers by phone, with payment to follow no later than the
time when a fund is priced on the following business day. If payment is not
received by that time, the financial institution could be held liable for
resulting fees or losses.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the
next NAV calculated after your request is received and accepted. Note the
following:
(bullet) Normally, redemption proceeds will be mailed to you on the next
business day, but if making immediate payment could adversely affect a
fund, it may take up to seven days to pay you.
(bullet) Fidelity Money Line redemptions generally will be credited to
your bank account on the second or third business day after your phone
call.
(bullet) Each fund may hold payment on redemptions until it is reasonably
satisfied that investments made by check or Fidelity Money Line have been
collected, which can take up to seven business days.
(bullet) Redemptions may be suspended or payment dates postponed when the
NYSE is closed (other than weekends or holidays), when trading on the NYSE
is restricted, or as permitted by the SEC.
IF YOUR ACCOUNT BALANCE FALLS BELOW $1,000, you will be given 30 days'
notice to reestablish the minimum balance. If you do not increase your
balance, Fidelity reserves the right to close your account and send the
proceeds to you. Your shares will be redeemed at the NAV on the day your
account is closed.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
EXCHANGE RESTRICTIONS
Most Fidelity funds offer shareholders the privilege of exchanging shares
of a fund for shares of other Fidelity funds without losing credits for
sales charges previously paid. However, the Foreign Currency funds do not
offer an exchange privilege.
If you use money that came from selling shares of other Fidelity funds to
invest directly in the Foreign Currency funds, the sales charge still
applies. However, if your original shares of the other Fidelity funds
carried sales charge credits, you will retain the credits when you sell
shares of the Foreign Currency funds and use the proceeds to invest
directly in other Fidelity funds. Call Fidelity for more information and a
prospectus for any Fidelity fund registered in your state.
SALES CHARGE WAIVERS
A fund's sales charge will not apply:
1. If you are a current or former trustee or officer of a Fidelity fund or
a current or retired officer, director, or full-time employee of FMR Corp.
or its direct or indirect subsidiaries (a Fidelity Managing General
Partner, Trustee, or employee).
2. If you are the spouse of a Fidelity Managing General Partner, Trustee or
employee.
3. If you are a Fidelity Managing General Partner, Trustee, or employee
acting as custodian for a minor child.
4. If you are a person acting as trustee of a trust for the sole benefit of
the minor child of a Fidelity Managing General Partner, Trustee, or
employee.
These waivers must be qualified through FDC in advance.
<r>THE FUNDS IN DETAIL</r>

CHARTER
EACH FUND is an open-end, non-diversified management investment company
organized as a limited partnership in the State of Delaware on April 13,
1987. There is a remote possibility that one fund might become liable for a
misstatement in the prospectus about another fund.
EACH FUND IS GOVERNED BY MANAGING GENERAL PARTNERS who are responsible for
protecting the interests of shareholders (known as Limited Partners). The
Managing General Partners are experienced executives who meet throughout
the year to oversee the funds' activities, review contractual arrangements
with companies that provide services to the funds, and review performance.
The majority of Managing General Partners are not otherwise affiliated with
Fidelity.
THE FUNDS MAY HOLD SPECIAL MEETINGS AND MAIL PROXY MATERIALS. These
meetings may be called to elect or remove Managing General Partners, change
fundamental policies, approve a management contract, or for other purposes.
Shareholders not attending these meetings are encouraged to vote by proxy.
Fidelity will mail proxy materials in advance, including a voting card and
information about the proposals to be voted on. You are entitled to one
vote for each share you own
FMR AND ITS AFFILIATES
The funds are managed by FMR, which chooses their investments and handles
their business affairs. FMR also serves as a Non-Managing General Partner.
Judy Pagliuca is manager of the Deutsche Mark, Sterling, and Yen funds,
which she has managed since June 1989. Ms. Pagliuca also manages Short-Term
World Income. Previously, she managed Global Bond, Intermediate Bond, and
Puritan. Ms. Pagliuca joined Fidelity in 1985.
FDC distributes and markets Fidelity's funds and services. Fidelity Service
Co. (FSC) performs transfer agent servicing functions for the funds.
FMR Corp. is the parent company of these organizations. Through ownership
of voting common stock, Edward C. Johnson 3d (President and a Managing
General Partner), Johnson family members, and various trusts for the
benefit of the Johnson family form a controlling group with respect to FMR
Corp.
To carry out the fund's transactions , FMR may use its broker-dealer
affiliates and other firms that sell fund shares, provided that a fund
receives services and commission rates comparable to those of other
broker-dealers.
FIDELITY FACTS
Fidelity offers the broadest
selection of mutual funds
in the world.
(bullet) Number of Fidelity mutual
funds: over 200
(bullet) Assets in Fidelity mutual
funds: over $ 225 billion
(bullet) Number of shareholder
accounts: over 15 million
(bullet) Number of investment
analysts and portfolio
managers: over 200
(checkmark)
BREAKDOWN OF EXPENSES
Like all mutual funds, the funds pay fees related to their daily
operations. Expenses paid out of a fund's assets are reflected in its share
price or dividends; they are neither billed directly to shareholders nor
deducted from shareholder accounts.
Each fund pays a MANAGEMENT FEE to FMR for managing its investments and
business affairs. Each fund also pays OTHER EXPENSES, which are explained
below.
FMR may, from time to time, agree to reimburse the funds for management
fees and other expenses above a specified limit. FMR retains the ability to
be repaid by a fund if expenses fall below the specified limit prior to the
end of the fiscal year. Reimbursement arrangements, which may be terminated
at any time without notice, can decrease a fund's expenses and boost its
performance.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month. Each fund
pays a management fee at the annual rate of .50% of the fund's average net
assets.
After reimbursement, the Deutsche Mark, Sterling and Yen funds paid no
management fees for fiscal 1993.
OTHER EXPENSES
While the management fee is a significant component of the funds' annual
operating costs, the funds have other expenses as well.
The funds contract with FSC to perform many transaction and accounting
functions. These services include processing shareholder transactions,
valuing each fund's investments, and handling securities loans. In fiscal
1993, the Deutsche Mark, Sterling, and Yen funds paid FSC fees equal
to .71 %, 1.80 %, and 1.38 %, respectively, of average
net assets.
The funds also pay other expenses, such as legal, audit, and custodian
fees; proxy solicitation costs; and the compensation of the Managing
General Partners who are not affiliated with Fidelity.
FMR has voluntarily agreed to limit each fund's total operating expenses to
an annual rate of 1.50% of average net assets.
INVESTMENT PRINCIPLES
Each fund seeks a reasonable level of current income while maintaining
stability of principal in terms of its reference currency. Each fund
invests in high-quality money market instruments that are either
denominated in the foreign currency , or denominated in U.S. dollars
but coupled with investment techniques to perform as though they were
denominated in the foreign currency. If successful, the performance of a
fund would track the performance of its foreign currency relative to the
U.S. dollar. At the same time, it would earn current income at the money
market rates prevailing in its currency, minus costs and expenses.
FMR often uses investment techniques that, together with U.S.
dollar-denominated instruments, duplicate the performance of the foreign
currency. These are called "synthetic" positions in the foreign currency.
For example, a forward currency exchange contract is an agreement to
exchange a specified amount of one currency for a specified amount of
another currency at a future date. Futures, options, swap agreements, and
indexed securities can be used for similar purposes. These techniques rely
on the creditworthiness of the counterparty, and could lose their
effectiveness at tracking a foreign currency if the counterparty defaults.
FMR currently expects that most, if not all, of the funds' investments will
be in synthetic positions, because the market for high-quality money market
instruments denominated in U.S. dollars is deeper and more liquid than the
markets denominated in other currencies. Also, although synthetic positions
involve costs to the funds, these costs are typically lower than direct
investments in foreign currency securities.
Each fund's performance depends heavily on its currency exchange rate,
which is generally determined by supply and demand in the foreign exchange
markets. Governments, central banks, and political and economic
developments can also impact currency exchange rates.
Each fund's share price changes based on interest rate changes and on the
quality and maturity of its investments. In general, bond prices rise when
interest rates fall, and vice versa. This effect is usually more pronounced
for longer-term securities. Therefore, each fund maintains a
dollar-weighted average maturity of 120 days or less, and does not invest
in instruments that mature in more than one year. When you sell your
shares, they may be worth more or less than what you paid for them.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which the funds may invest, and strategies FMR may employ in
pursuit of the funds' investment objectives. A summary of risks and
restrictions associated with these instrument types and investment
practices is included as well. Policies and limitations are considered at
the time of purchase; the sale of instruments is not required in the event
of a subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these techniques to
the full extent permitted unless it believes that doing so will help the
funds achieve their goals. As a shareholder, you will receive financial
reports every six months detailing fund holdings and describing recent
investment activities.
MONEY MARKET INSTRUMENTS may include commercial paper, certificates of
deposit, bankers' acceptances, time deposits, asset-backed securities, and
short-term corporate obligations. Typically, the issuer pays the investor a
fixed or variable rate of interest, and must repay the amount borrowed at
maturity. Some money market instruments do not pay current interest, but
are purchased at a discount from their face values. Money market
instruments have varying degrees of quality and varying levels of
sensitivity to changes in interest rates. Longer-term instruments
are generally more sensitive to interest rate changes than short-term
instruments .
RESTRICTIONS: Each fund does not currently intend to invest in any
security not rated in the two highest rating categories by any nationally
recognized rating service, or in any unrated security judged by FMR to be
of equivalent quality.
U.S. GOVERNMENT SECURITIES are high-quality debt securities issued or
guaranteed by the U.S. Treasury or by an agency or instrumentality of the
U.S. government. Not all U.S. government securities are backed by the full
faith and credit of the United States. For example, securities issued by
the Federal Farm Credit Bank or by the Federal National Mortgage
Association are supported by the instrumentality's right to borrow money
from the U.S. Treasury under certain circumstances. However, securities
issued by the Financing Corporation are supported only by the credit of the
entity that issued them.
FOREIGN SECURITIES and foreign currencies may involve additional risks.
These include currency fluctuations, risks relating to political or
economic conditions in the foreign country, and the potentially less
stringent investor protection and disclosure standards of foreign markets.
In addition to the political and economic factors that can affect foreign
securities, a governmental issuer may be unwilling to repay principal and
interest when due, and may require that the conditions for payment be
renegotiated. These factors could make foreign investments, especially
those in developing countries, more volatile.
ADJUSTING INVESTMENT EXPOSURE. A fund can use various techniques to
increase or decrease its exposure to changing security prices, interest
rates, currency exchange rates, or other factors that affect security
values. These techniques may involve derivative transactions such as buying
and selling options and futures contracts, entering into currency exchange
contracts or swap agreements, and purchasing indexed securities.
FMR can use these practices to adjust the risk and return characteristics
of a fund's portfolio of investments. If FMR judges market conditions
incorrectly or employs a strategy that does not correlate well with the
fund's investments, these techniques could result in a loss, regardless of
whether the intent was to reduce risk or increase return. These techniques
may increase the volatility of the fund and may involve a small investment
of cash relative to the magnitude of the risk assumed. In addition, these
techniques could result in a loss if the counterparty to the transaction
does not perform as promised.
RESTRICTIONS: A fund may not use these techniques unless the
creditworthiness of the counterparty meets the fund's requirements.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund buys a security at
one price and simultaneously agrees to sell it back at a higher price.
Delays or losses could result if the other party to the agreement defaults
or becomes insolvent.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by
FMR, under the supervision of the Managing General Partners , to be
illiquid, which means that they may be difficult to sell promptly at an
acceptable price. The sale of other securities may be subject to legal
restrictions. Difficulty in selling securities may result in a loss or may
be costly to a fund.
RESTRICTIONS: A fund may not purchase a security if, as a result, more than
10% of its assets would be invested in illiquid securities.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the
risks of investing. This may include limiting the amount of money invested
in any one issuer or, on a broader scale, in any one industry. A fund that
is not diversified may be more sensitive to changes in the market value of
a single issuer or industry.
RESTRICTIONS: The funds are considered non-diversified. A fund may not
invest more than 25% of total assets in any one issuer. This limitation
does not apply to U.S. or foreign government securities. A fund also
may not invest more than 25% of its total assets in any one industry. This
limitation does not apply to U.S. government securities.
BORROWING. A fund may borrow from banks or from other funds advised by FMR,
or through reverse repurchase agreements. If a fund borrows money, its
share price may be subject to greater fluctuation until the borrowing is
paid off. If the fund makes additional investments while borrowings are
outstanding, this may be considered a form of leverage.
RESTRICTIONS: A fund may borrow only for temporary or emergency purposes,
but not in an amount exceeding 33% of its total assets.
LENDING. Lending securities to broker-dealers and institutions, including
FBSI, an affiliate of FMR, is a means of earning income. This practice
could result in a loss or a delay in recovering a fund's securities. A fund
may also lend money to other funds advised by FMR.
RESTRICTIONS: Loans, in the aggregate, may not exceed 33% of a fund's total
assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraph restates all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraph, can be changed without shareholder approval.
Each fund seeks stability of principal in terms of its reference currency
and, consistent with that objective, seeks to earn a reasonable
level of current income. Each fund may not invest more that 25% of its
total assets in any one industry. Each fund may borrow only for temporary
or emergency purposes, but not in an amount exceeding 33% of its total
assets. Loans, in the aggregate, may not exceed 33% of a fund's total
assets.
APPENDIX
SUMMARY OF PARTNERSHIP AGREEMENTS
The full text of the Partnership Agreement is set forth in the Statement of
Additional Information (each fund's Partnership Agreement is identical).
The following statements summarize and explain certain provisions of the
Partnership Agreements and are qualified in their entirety by the terms of
the Partnership Agreements. Each Partnership is organized under the
Delaware Revised Uniform Limited Partnership Act (the Delaware Act). Each
investor who becomes a Limited Partner of a fund will be deemed to have
agreed to all of the terms of the applicable Partnership Agreement.
VOTING RIGHTS OF PARTNERS. The Partners have rights required under the
Investment Company Act of 1940 (the 1940 Act), as amended, for
voting security holders. General Partners and Limited Partners have one
vote for each share held. Partners may vote in person or by proxy. Limited
Partners holding more than 10% of a fund's outstanding shares may require
the calling of a special meeting of the Partners. Only holders of shares
who have become Limited Partners by the record date for a meeting of
Partners will be entitled to vote at the meeting.
GENERAL PARTNERS. Each fund has two classes of Partners, General Partners
and Limited Partners. The General Partners consist of a number of
individual Managing General Partners, and one corporate Non-Managing
General Partner. Each fund's Managing General Partners have complete and
exclusive control over the management, conduct, and operation of the fund's
business. The Managing General Partners may amend the Partnership Agreement
at any time and may establish separate series of each fund's assets
with distinct investment policies and separate identification, partnership
shares, voting rights and liabilities.
The General Partners have general liability to creditors for each fund's
obligations. However, t he General Partners are not personally liable to
any Limited Partner, except by reason of their willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of their office. Returns of Limited Partners' investments will
be made only for the assets of the applicable fund, and the General
Partners have no general liability for such returns. A General Partner
is entitled to indemnification from the fund against liabilities and
expenses to which he may be subject in his capacity as a General Partner
provided that his actions do not constitute willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the
conduct of his office. Indemnification is limited to the assets of the
fund.
LIABILITY OF LIMITED PARTNERS. Generally, Limited Partners are not
personally liable for obligations of the funds unless they take part in the
control of the activities of the funds. Under the terms of the Partnership
Agreements, the Limited Partners as such do not have the right to take part
in the control of the funds' activities, but they may exercise the right to
vote on matters requiring approval under the 1940 Act and on certain other
matters.
The contribution of a Limited Partner (being the original purchase price
paid for shares and the purchase price of any shares subsequently purchased
due to reinvestment of distributions or otherwise) is subject to the risks
of the business of the fund and the claims of the fund's creditors.
ADMISSION OF LIMITED PARTNERS. A purchaser of shares is required to execute
an application agreeing to be bound by the Partnership Agreement and
granting Power of Attorney. Admission of a purchaser as a Limited Partner
requires the consent of the Managing General Partners and the addition of
the Limited Partner to the books and records of the fund. The Power Of
Attorney referred to above will be used to add the purchaser as a Limited
Partner and for certain other purposes, as set forth therein. The addition
of the Limited Partner to the books and records of a fund shall evidence
the consent of the Managing General Partners to the admission of such
purchaser. The Managing General Partners, while recognizing that they have
the right to withhold their consent, have stated that they intend to give
such consent as a matter of course. Whether or not an investor executes
an application, any person acquiring shares shall be deemed to have agreed
to the Partnership Agreement, and the further powers of attorney as set
forth in each Partnership Agreement.
PROHIBITION OF ASSIGNMENT OF SHARES. A Limited Partner does not have the
right, except with the prior consent of the Managing General Partners, to
voluntarily transfer or assign his shares to any other person other than to
secure a loan. However, an investor is entitled to redeem shares as
described in the section entitled "How to Sell Shares".
TERM OF EXISTENCE - DISSOLUTION. Each fund will continue until December 31,
2051, but a fund shall be dissolved before that date if and when: (1) the
fund disposes of all or substantially all of its assets; (2) Limited
Partners who are holders of a majority of the fund's outstanding voting
shares (of all series) vote to dissolve the fund; (3) the Managing General
Partners determine by majority vote to dissolve the fund; (4) a Managing
General Partner retires, dies, becomes bankrupt, becomes incapacitated,
resigns or is removed, unless the remaining Managing General Partners elect
to continue the operations of the fund at a meeting called for that purpose
by the Non-Managing General Partner; or (5) the Non-Managing General
Partner withdraws and no successor Non-Managing General Partner is admitted
by the Managing General Partners unless the Managing General
Partners elect to continue the operations of the fund and at least one
Managing General Partner assumes the obligation (if applicable) of the
Non-Managing General Partner to maintain the share interest in the fund
(not less than 0.2%) required by the Agreement. Notwithstanding the
foregoing, if a fund were to dissolve because of the retirement, death,
dissolution, bankruptcy, removal or other withdrawal of all General
Partners, the fund will not be terminated if, within 90 days following the
date of withdrawal of the last remaining General Partner, all Partners
agree in writing to continue the operations of the fund and to the
appointment of one or more successor Managing General Partners and a
successor Non-Managing General Partner.
Distributions by the funds, whether upon redemption, dissolution, or
otherwise, will be in proportion to the numbers of shares held without
regard to the dollar amount contributed to the fund or the amount of any
profits of the fund received.

This prospectus is printed on recycled paper using soy-based inks.

FIDELITY FOREIGN CURRENCY FUNDS
FIDELITY YEN PERFORMANCE PORTFOLIO, L.P.
FIDELITY STERLING PERFORMANCE PORTFOLIO, L.P.
FIDELITY DEUTSCHE MARK PERFORMANCE PORTFOLIO, L.P.
STATEMENT OF ADDITIONAL INFORMATION
FEBRUARY 19, 1994
This Statement is not a prospectus but should be read in conjunction with
the funds' current Prospectus (dated February 19, 1994). Please retain
this document for future reference. The combined Annual Report of the
funds for the fiscal year ended December 31, 1993 is incorporated herein by
reference. To obtain an additional copy of the Prospectus or the Annual
Report, please call Fidelity Distributors Corporation at
1 - 800 - 544 - 8888.
TABLE OF CONTENTS PAGE

Investment Policies and Limitations

Special Considerations Affecting the Funds

Portfolio Transactions

Valuation of Portfolio Securities

Performance

Additional Purchase and Redemption Information

Taxes

FMR

Managing General Partners and Officers

Management Contracts

Contracts With Companies Affiliated With FMR

Description of the Funds

Financial Statements

Appendix

Partnership Agreement 24

INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENT
Fidelity Service Co. (FSC)
CUR - ptb - 294
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or
limitation states a maximum percentage of a fund's assets that may be
invested in any security or other asset, or sets forth a policy regarding
quality standards, such standard or percentage limitation will be
determined immediately after and as a result of the fund's acquisition of
such security or other asset. Accordingly, any subsequent change in
values, net assets, or other circumstances will not be considered when
determining whether the investment complies with a fund's investment policy
and limitations.
Each fund's fundamental investment policies and limitations cannot be
changed without approval of a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940) of the
fund. However, except for the fundamental investment limitations set forth
below, the investment policies and limitations described in this Statement
of Additional Information are not fundamental, and may be changed without
shareholder approval.
INVESTMENT LIMITATIONS FOR FIDELITY YEN PERFORMANCE PORTFOLIO, L.P.
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) sell securities short, unless it owns, or by virtue of ownership of
other securities has the right to obtain, securities equivalent in kind and
amount to the securities sold short, and provided that transactions in
futures contracts are not deemed to constitute short sales;
(3) purchase securities on margin, except that the fund may obtain such
short - term credits as are necessary for the clearance of
transactions, and provided that the fund may make initial and variation
margin payments in connection with transactions in futures contracts and
options on futures contracts;
(4) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of the value of its total assets. Borrowings that exceed
33 1/3% of the fund's total assets by reason of a decline in net assets
will be reduced within three days to the extent necessary to comply with
the 33 1/3% limitation, and reverse repurchase agreements are considered
borrowings for the purposes of this limitation;
(5) underwrite securities issued by others, except to the extent that the
fund may be deemed to be an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(6) purchase the securities of any issuer (other than obligations issued or
guaranteed by the government of the United States or its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets (taken at current value) would be invested in the securities of
issuers having their principal business activities in the same industry;
(7) purchase or sell real estate unless acquired as a result of ownership
of securities (but this shall not prevent the fund from purchasing and
selling marketable securities issued by companies or other entities or
investment vehicles that deal in real estate or interests therein, nor
shall this prevent the fund from purchasing interests in pools of real
estate mortgage loans);
(8) purchase or sell physical commodities unless acquired as a result of
ownership of securities (but this shall not prevent the fund from
purchasing and selling futures contracts or forward contracts); or
(9) make loans if, as a result, more than 33 1/3% of its total assets would
be lent to another party, except (a) by engaging in repurchase agreements
with respect to portfolio securities; or (b) through the purchase of a
portion of an issue of debt securities in accordance with its investment
objective, policies, and limitations.
Investment limitation (4) is construed in conformity with the 1940 Act,
and, accordingly, "three days" means three days exclusive of Sundays and
holidays.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by the U.S. government
or by a foreign government that issues its reference currency, or any
agency, instrumentality, territory, possession or political subdivision of
any of the foregoing) if, as a result thereof, more than 25% of the fund's
total assets would be invested in the securities of that issuer.
(ii) The fund does not currently intend to sell securities short.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (4)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The fund does not currently intend to invest in securities of real
estate investment trusts that are not readily marketable, or to invest in
securities of real estate limited partnerships that are not listed on the
New York Stock Exchange or the American Stock Exchange or traded on the
NASDAQ National Market System.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by lending money (up to 10% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser. (This limitation
does not apply to purchases of debt securities or to repurchase
agreements.)
(vii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open - end investment companies.
Limitations (a) and (b) do not apply to securities received as dividends,
through offers of exchange, or as a result of a reorganization,
consolidation, or merger.
(viii) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(ix) The fund does not currently intend to purchase warrants, valued at the
lower of cost or market, in excess of 5% of the fund's net assets.
Included in that amount, but not to exceed 2% of the fund's net assets, may
be warrants that are not listed on the New York Stock Exchange or the
American Stock Exchange. Warrants acquired by the fund in units or
attached to securities are not subject to these restrictions.
(x) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(xi) The fund does not currently intend to purchase the securities of any
issuer if those officers and Managing General Partners of the fund and
those officers and directors of FMR who individually own more than 1/2 of
1% of the securities of such issuer together own more than 5% of such
issuer's securities.
(xii) The fund does not currently intend to (a) write or purchase any put
or call option, including options on futures contracts, or (b) purchase or
sell futures contracts other than futures contracts relating to foreign
currencies.
INVESTMENT LIMITATIONS FOR FIDELITY STERLING PERFORMANCE PORTFOLIO, L.P.
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) sell securities short, unless it owns, or by virtue of ownership of
other securities has the right to obtain, securities equivalent in kind and
amount to the securities sold short, and provided that transactions in
futures contracts are not deemed to constitute short sales;
(3) purchase securities on margin, except that the fund may obtain such
short - term credits as are necessary for the clearance of
transactions, and provided that the fund may make initial and variation
margin payments in connection with transactions in futures contracts and
options on futures contracts;
(4) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of the value of its total assets. Borrowings that exceed
33 1/3% of the fund's total assets by reason of a decline in net assets
will be reduced within three days to the extent necessary to comply with
the 33 1/3% limitation, and reverse repurchase agreements are considered
borrowings for the purposes of this limitation;
(5) underwrite securities issued by others, except to the extent that the
fund may be deemed to be an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(6) purchase the securities of any issuer (other than obligations issued or
guaranteed by the government of the United States or its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets (taken at current value) would be invested in the securities of
issuers having their principal business activities in the same industry;
(7) purchase or sell real estate unless acquired as a result of ownership
of securities (but this shall not prevent the fund from purchasing and
selling marketable securities issued by companies or other entities or
investment vehicles that deal in real estate or interests therein, nor
shall this prevent the fund from purchasing interests in pools of real
estate mortgage loans);
(8) purchase or sell physical commodities unless acquired as a result of
ownership of securities (but this shall not prevent the fund from
purchasing and selling futures contracts or forward contracts); or
(9) make loans if, as a result, more than 33 1/3% of its total assets would
be lent to another party, except (a) by engaging in repurchase agreements
with respect to portfolio securities; or (b) through the purchase of a
portion of an issue of debt securities in accordance with its investment
objective, policies, and limitations.
Investment limitation (4) is construed in conformity with the 1940 Act,
and, accordingly, "three days" means three days exclusive of Sundays and
holidays.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by the U.S. government
or by a foreign government that issues its reference currency, or any
agency, instrumentality, territory, possession or political subdivision of
any of the foregoing) if, as a result thereof, more than 25% of the fund's
total assets would be invested in the securities of that issuer.
(ii) The fund does not currently intend to sell securities short.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (4)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The fund does not currently intend to invest in securities of real
estate investment trusts that are not readily marketable, or to invest in
securities of real estate limited partnerships that are not listed on the
New York Stock Exchange or the American Stock Exchange or traded on the
NASDAQ National Market System.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by lending money (up to 10% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser. (This limitation
does not apply to purchases of debt securities or to repurchase
agreements.)
(vii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open - end investment companies.
Limitations (a) and (b) do not apply to securities received as dividends,
through offers of exchange, or as a result of a reorganization,
consolidation, or merger.
(viii) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(ix) The fund does not currently intend to purchase warrants, valued at the
lower of cost or market, in excess of 5% of the fund's net assets.
Included in that amount, but not to exceed 2% of the fund's net assets, may
be warrants that are not listed on the New York Stock Exchange or the
American Stock Exchange. Warrants acquired by the fund in units or
attached to securities are not subject to these restrictions.
(x) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(xi) The fund does not currently intend to purchase the securities of any
issuer if those officers and Managing General Partners of the fund and
those officers and directors of FMR who individually own more than 1/2 of
1% of the securities of such issuer together own more than 5% of such
issuer's securities.
(xii) The fund does not currently intend to (a) write or purchase any put
or call option, including options on futures contracts, or (b) purchase or
sell futures contracts other than futures contracts relating to foreign
currencies.
INVESTMENT LIMITATIONS FOR FIDELITY DEUTSCHE MARK PERFORMANCE PORTFOLIO,
L.P.
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) sell securities short, unless it owns, or by virtue of ownership of
other securities has the right to obtain, securities equivalent in kind and
amount to the securities sold short, and provided that transactions in
futures contracts are not deemed to constitute short sales;
(3) purchase securities on margin, except that the fund may obtain such
short - term credits as are necessary for the clearance of
transactions, and provided that the fund may make initial and variation
margin payments in connection with transactions in futures contracts and
options on futures contracts;
(4) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of the value of its total assets. Borrowings that exceed
33 1/3% of the fund's total assets by reason of a decline in net assets
will be reduced within three days to the extent necessary to comply with
the 33 1/3% limitation, and reverse repurchase agreements are considered
borrowings for the purposes of this limitation;
(5) underwrite securities issued by others, except to the extent that the
fund may be deemed to be an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(6) purchase the securities of any issuer (other than obligations issued or
guaranteed by the government of the United States or its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets (taken at current value) would be invested in the securities of
issuers having their principal business activities in the same industry;
(7) purchase or sell real estate unless acquired as a result of ownership
of securities (but this shall not prevent the fund from purchasing and
selling marketable securities issued by companies or other entities or
investment vehicles that deal in real estate or interests therein, nor
shall this prevent the fund from purchasing interests in pools of real
estate mortgage loans);
(8) purchase or sell physical commodities unless acquired as a result of
ownership of securities (but this shall not prevent the fund from
purchasing and selling futures contracts or forward contracts); or
(9) make loans if, as a result, more than 33 1/3% of its total assets would
be lent to another party, except (a) by engaging in repurchase agreements
with respect to portfolio securities; or (b) through the purchase of a
portion of an issue of debt securities in accordance with its investment
objective, policies, and limitations.
Investment limitation (4) is construed in conformity with the 1940 Act,
and, accordingly, "three days" means three days exclusive of Sundays and
holidays.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by the U.S. government
or by a foreign government that issues its reference currency, or any
agency, instrumentality, territory, possession or political subdivision of
any of the foregoing) if, as a result thereof, more than 25% of the fund's
total assets would be invested in the securities of that issuer.
(ii) The fund does not currently intend to sell securities short.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (4)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The fund does not currently intend to invest in securities of real
estate investment trusts that are not readily marketable, or to invest in
securities of real estate limited partnerships that are not listed on the
New York Stock Exchange or the American Stock Exchange or traded on the
NASDAQ National Market System.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by lending money (up to 10% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser. (This limitation
does not apply to purchases of debt securities or to repurchase
agreements.)
(vii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open - end investment companies.
Limitations (a) and (b) do not apply to securities received as dividends,
through offers of exchange, or as a result of a reorganization,
consolidation, or merger.
(viii) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(ix) The fund does not currently intend to purchase warrants, valued at the
lower of cost or market, in excess of 5% of the fund's net assets.
Included in that amount, but not to exceed 2% of the fund's net assets, may
be warrants that are not listed on the New York Stock Exchange or the
American Stock Exchange. Warrants acquired by the fund in units or
attached to securities are not subject to these restrictions.
(x) The fund does not currently intend to invest in oil, gas or other
mineral exploration or development programs or leases.
(xi) The fund does not currently intend to purchase the securities of any
issuer if those officers and Managing General Partners of the fund and
those officers and directors of FMR who individually own more than 1/2 of
1% of the securities of such issuer together own more than 5% of such
issuer's securities.
(xii) The fund does not currently intend to (a) write or purchase any put
or call option, including options on futures contracts, or (b) purchase or
sell futures contracts other than futures contracts relating to foreign
currencies.
For further information on futures contracts, see the section entitled
"Futures Contracts" on page .
ALL FUNDS
AFFILIATED BANK TRANSACTIONS. Pursuant to exemptive orders issued by the
Securities and Exchange Commission (SEC), each fund may engage in
transactions with banks that are, or may be considered to be, "affiliated
persons" of the fund under the Investment Company Act of 1940. Such
transactions may be entered into only pursuant to procedures established
and periodically reviewed by the Managing General Partners. These
transactions may include repurchase agreements with custodian banks;
purchases, as principal, of short - term obligations of, and
repurchase agreements with, the 50 largest U.S. banks (measured by
deposits); transactions in municipal securities; and transactions in U.S.
government securities with affiliated banks that are primary dealers in
these securities.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund purchases a
security and simultaneously commits to resell that security to the seller
at an agreed-upon price on an agreed upon date within a number of days from
the date of purchase. The resale price reflects the purchase price plus an
agreed-upon incremental amount which is unrelated to the coupon rate or
maturity of the purchased security. A repurchase agreement involves the
obligation of the seller to pay the agreed upon price, which obligation is
in effect secured by the value (at least equal to the amount of the agreed
upon resale price and marked to market daily) of the underlying security.
Each fund may engage in repurchase agreements with respect to any security
in which it is authorized to invest. While it does not presently appear
possible to eliminate all risks from these transactions (particularly the
possibility of a decline in the market value of the underlying securities,
as well as delays and costs to a fund in connection with bankruptcy
proceedings), it is each fund's current policy to limit repurchase
agreement transactions to parties whose creditworthiness has been reviewed
and found satisfactory by FMR.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund
sells a portfolio instrument to another party, such as a bank or
broker - dealer, in return for cash and agrees to repurchase the
instrument at a particular price and time. While a reverse repurchase
agreement is outstanding, the fund will maintain appropriate liquid
assets in a segregated custodial account to cover its obligation under the
agreement. A fund will enter into reverse repurchase agreements only with
parties whose creditworthiness has been found satisfactory by FMR. Such
transactions may increase fluctuations in the market value of a fund's
assets and may be viewed as a form of leverage.
INTERFUND BORROWING PROGRAM. The funds have received permission from the
SEC to lend money to and borrow money from other funds advised by FMR or
its affiliates. Interfund loans and borrowings normally will extend
overnight, but can have a maximum duration of seven days. The funds will
lend through the program only when the returns are higher than those
available at the same time from other short-term investments (such as
repu r chase agreements), and will borrow through the program only
when the costs are equal to or lower than the cost of bank loans. Each
fund will not lend more than 10% of its assets to other funds, and will not
borrow through the program if, after doing so, total outstanding borrowings
would exceed 15% of total assets. Loans may be called on one day's notice,
and a fund may have to borrow from a bank at a higher interest rate if an
interfund loan is called or not renewed. Any delay in repayme n t to
a lending fund could result in a lost investment opportunity or additional
borrowing costs.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which they
are valued. Under the supervision of the Managing General Partners ,
FMR determines the liquidity of the funds' investments and, through reports
from FMR, the Managing General Partners monitor investments in
illiquid instruments. In determining the liquidity of the funds'
investments, FMR may consider various factors, including (1) the frequency
of trades and quotations, (2) the number of dealers and prospective
purchasers in the marketplace, (3) dealer undertakings to make a market,
(4) the nature of the security (including any demand or tender features),
and (5) the nature of the marketplace for trades (including the ability to
assign or offset the fund's rights and obligations relating to the
investment). Investments currently considered by the fund to be illiquid
include repurchase agreements not entitling the holder to payment of
principal and interest within seven days, and swap agreements determined by
FMR to be illiquid. In the absence of market quotations, illiquid
investments are priced at fair value as determined in good faith by a
committee appointed by the Managing General Partners . If through a
change in values, net assets, or other circumstances, a fund were in
a position where more than 10% of its net assets were invested in illiquid
securities, it would seek to take appropriate steps to protect liquidity.
RESTRICTED SECURITIES. generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, the fund may be obligated to pay all or part of
the registration expense and a considerable period may elapse between the
time it decides to seek registration and the time the fund may be permitted
to sell a security under an effective registration statement. If, during
such a period, adverse market conditions were to develop, the fund might
obtain a less favorable price than prevailed when it decided to seek
registration of the security.
FOREIGN REPURCHASE AGREEMENTS. Foreign repurchase agreements may include
agreements to purchase and sell foreign securities in exchange for fixed
U.S. dollar amounts, or in exchange for specified amounts of foreign
currency. Unlike typical U.S. repurchase agreements, foreign repurchase
agreements may not be fully collateralized at all times. The value of the
security purchased by the fund may be more or less than the price at which
the counterparty has agreed to repurchase the security. In the event of a
default by the counterparty, the fund may suffer a loss if the value of the
security purchased is less than the agreed - upon repurchase price, or
if the fund is unable to successfully assert a claim to the collateral
under foreign laws. As a result, foreign repurchase agreements may involve
higher credit risks than repurchase agreements in U.S. markets, as well as
risks associated with currency fluctuations. In addition, as with other
emerging market investments, repurchase agreements with counterparties
located in emerging markets or relating to emerging market securities may
involve issuers or counterparties with lower credit ratings than typical
U.S. repurchase agreements.
TRANSACTIONS IN FOREIGN CURRENCY. FMR expects to exchange dollars for the
funds' underlying currencies, and vice versa, in the normal course of
managing the funds' investments. FMR does not expect that the funds will
hold currency that is not earning income on a regular basis, although they
may do so temporarily when suitable investments are not available. The
funds may exchange currencies on a "spot" basis (i.e., for prompt delivery
and settlement), or by entering into forward currency exchange contracts
(forward contracts) or other contracts to purchase and sell currencies for
settlement at a future date. The funds will incur costs in converting
assets from one currency into another. Foreign exchange dealers may charge
a fee for conversion; in addition, they also realize a profit based on the
difference (the spread) between the prices at which they buy and sell
various currencies in the spot and forward markets. Thus, a dealer may
offer to sell a foreign currency to a fund at one rate, and repurchase it
at a lesser rate should the fund desire to resell the currency to the
dealer.
Forward contracts are agreements to exchange a specific amount of one
currency for a specified amount of another at a future date. The date may
be any agreed fixed number of days in the future. The amount of currency
to be exchanged, the price at which the exchange will take place, and the
date of the exchange are negotiated when a fund enters into the contract
and are fixed for the term of the contract. Forward contracts are traded
in an interbank market conducted directly between currency traders (usually
large commercial banks) and their customers. A forward contract generally
has no deposit requirement and is consummated without payment of any
commission. However, the funds may enter into forward contracts with
deposit requirements or commissions.
At the maturity of a forward contract, a fund may complete the contract by
paying for and receiving the underlying currency, may seek to roll forward
its contractual obligation by entering into a new forward contract with a
future settlement date, or may seek to terminate its contractual obligation
by entering into an "offsetting" transaction with the same currency trader
and paying or receiving the difference between the contractual exchange
rate and the current exchange rate. The fund may also be able to enter
into an offsetting contract prior to the maturity of the underlying
contract. There is no assurance that offsetting transactions, or new
forward contracts, will always be available to the funds.
Investors should realize that the use of forward contracts does not
eliminate fluctuations in the underlying prices of the securities. Such
contracts simply establish a rate of exchange that a fund can achieve at
some future point in time. Additionally, although such contracts tend to
minimize the risk of loss due to fluctuations in the value of the hedged
currency when used as a hedge against foreign currency declines, at the
same time they tend to limit any potential gain which might result from the
change in the value of such currency.
Because investments in, and redemptions from, the funds will be in U.S.
dollars, FMR expects that the funds' normal investment activity will
involve a significant amount of currency exchange. For example, the funds
may exchange dollars for their underlying foreign currencies in order to
purchase foreign currency - denominated investments, and may exchange
their underlying foreign currencies for dollars in order to meet
shareholder redemption requests or to pay expenses. These transactions may
be executed in the spot or forward markets.
In addition, each fund may combine forward transactions in its underlying
currency with investments in U.S. dollar - denominated instruments, in
an attempt to construct an investment position whose overall performance
will be similar to that of a security denominated in its underlying
currency. If the amount of dollars to be exchanged is properly matched
with the anticipated value of the dollar - denominated securities, the
fund should be able to "lock in" the foreign currency value of the
securities, and the fund's overall investment return from the combined
position should be similar to the return from purchasing a foreign
currency - denominated instrument. This is referred to as a
"synthetic" investment position.
The execution of a synthetic investment position may not be successful. It
is impossible to forecast with absolute precision what the dollar value of
a particular security will be at any given time. If the value of a
dollar - denominated security is not exactly matched with a fund's
obligation under the forward contract on the contract's maturity date, the
fund may be exposed to some risk of loss from fluctuation of the dollar.
Although FMR will attempt to hold such mismatchings to a minimum, there can
be no assurance that FMR will be successful in doing so.
FUTURES CONTRACTS. The funds may also execute transactions in foreign
currency by purchasing and selling futures contracts relating to foreign
currencies. Such currency futures contracts may be traded on U.S. or
foreign futures exchanges. Each fund intends to comply with Section 4.5 of
the regulations under the Commodity Exchange Act, which limits the extent
to which a fund can commit assets to initial margin deposits and options
premiums.
SWAP AGREEMENTS. Swap agreements can be individually negotiated and
structured to include exposure to a variety of different types of
investments or market factors. Depending on their structure, swap
agreements may increase or decrease a fund's exposure to long- or
short-term interest rates (in the U.S. or abroad), foreign currency values,
mortgage securities, corporate borrowing rates or other factors such as
security prices or inflation rates. Swap agreements can take many
different forms and are known by a variety of names. A fund is not limited
to any particular form of swap agreement if FMR determines it is consistent
with the fund's investment objective and policies.
In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by
the other party. For example, the buyer of an interest rate cap obtains
the right to receive payments to the extent that a specified interest rate
exceeds an agreed-upon level, while the seller of an interest rate floor is
obligated to make payments to the extent that a specified interest rate
falls below an agreed-upon level. An interest rate collar combines
elements of buying a cap and selling a floor.
Swap agreements will tend to shift a fund's investment exposure from one
type of investment to another. For example, if the fund agreed to exchange
payments in dollars for payments in foreign currency, the swap agreement
would tend to decrease the fund's exposure to U.S. interest rates and
increase its exposure to foreign currency and interest rates. Caps and
floors have an effect similar to buying or writing options. Depending on
how they are used, swap agreements may increase or decrease the overall
volatility of a fund's investments and its share price.
The most significant factor in the performance of swap agreements is the
change in the specific interest rate, currency , or other factors that
determines the amount of payments due to and from a fund. If a swap
agreement calls for payments by the fund, the fund must be prepared to make
such payments when due. In addition, if the counterparty's
creditworthiness declined, the value of a swap agreement would be likely to
decline, potentially resulting in losses. Each fund expects to be able to
eliminate its exposure under swap agreements either by assignment or other
disposition, or by entering into an offsetting swap agreement with the same
party or a similarly creditworthy party.
Each fund will maintain appropriate liquid assets in a segregated custodial
account to cover its current obligations under swap agreements. If a fund
enters into a swap agreement on a net basis, it will segregate assets with
a daily value at least equal to the excess, if any, of the fund's accrued
obligations under the swap agreement over the accrued amount the fund is
entitled to receive under the agreement. If a fund enters into a swap
agreement on other than a net basis, it will segregate assets with a value
equal to the full amount of the fund's accrued obligations under the
agreement.
INDEXED SECURITIES. Each fund may purchase securities whose prices are
indexed to the prices of other securities, securities indices, currencies,
precious metals or other commodities, or other financial indicators.
Indexed securities typically, but not always, are debt securities or
deposits whose value at maturity or coupon rate is determined by reference
to a specific instrument or statistic. Gold - indexed securities, for
example, typically provide for a maturity value that depends on the price
of gold, resulting in a security whose price tends to rise and fall
together with gold prices. Currency - indexed securities typically
are short - term to intermediate - term debt securities whose
maturity values or interest rates are determined by reference to the values
of one or more specified foreign currencies, and may offer higher yields
than U.S. dollar - denominated securities of equivalent issuers.
Currency - indexed securities may be positively or negatively indexed;
that is, their maturity value may increase when the specified currency
value increases, resulting in a security that performs similarly to a
foreign - denominated instrument, or their maturity value may decline
when foreign currencies increase, resulting in a security whose price
characteristics are similar to a put on the underlying currency.
Currency - indexed securities may also have prices that depend on the
values of a number of different foreign currencies relative to each
othe r.
The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which they
are indexed, and may also be influenced by interest rate changes in the
U.S. and abroad. At the same time, indexed securities are subject to the
credit risks associated with the issuer of the security, and their values
may decline substantially if the issuer's creditworthiness deteriorates.
Recent issuers of indexed securities have included banks, corporations, and
certain U.S. government agencies.
SECURITIES LENDING. A fund may lend securities to parties such as
broker - dealers or institutional investors, including Fidelity
Brokerage Services, Inc. (FBSI). FBSI is a member of the New York Stock
Exchange and a subsidiary of FMR Corp.
Securities lending allows a fund to retain ownership of the securities
loaned and, at the same time, to earn additional income. Since there may
be delays in the recovery of loaned securities, or even a loss of rights in
collateral supplied should the borrower fail financially, loans will be
made only to parties deemed by FMR to be of good standing. Furthermore,
they will only be made if, in FMR's judgment, the consideration to be
earned from such loans would justify the risk.
FMR understands that it is the current view of the SEC Staff that each fund
may engage in loan transactions only under the following conditions: (1)
the fund must receive 100% collateral in the form of cash or cash
equivalents (e.g., U.S. Treasury bills or notes) from the borrower; (2) the
borrower must increase the collateral whenever the market value of the
securities loaned (determined on a daily basis) rises above the value of
the collateral; (3) after giving notice, the fund must be able to terminate
the loan at any time; (4) the fund must receive reasonable interest on the
loan or a flat fee from the borrower, as well as amounts equivalent to any
dividends, interest, or other distributions on the securities loaned and to
any increase in market value; (5) the fund may pay only reasonable
custodian fees in connection with the loan; and (6) the Managing General
Partners must be able to vote proxies on the securities loaned, either by
terminating the loan or by entering into an alternative arrangement with
the borrower.
Cash received through loan transactions may be invested in any security in
which a fund is authorized to invest. Investing this cash subjects that
investment, as well as the security loaned, to market forces (i.e., capital
appreciation or depreciation).
SPECIAL CONSIDERATIONS AFFECTING THE FUNDS
Investors should carefully consider the risks involved in investments in
securities of companies and governments of foreign nations, which add to
the usual risks inherent in domestic investments. Such special risks
include fluctuations in currency exchange rates; a potentially lower level
of government supervision and regulation of securities markets,
broker - dealers, banks, financial institutions and issuing companies;
unpredictable political and economic developments; and the possible
imposition of exchange controls or other foreign governmental laws or
restrictions. In addition, prices of securities in foreign countries are
generally subject to different economic, financial, political and social
factors than those of securities of United States issuers. Any one of
these factors may have an adverse impact on any of the funds.
Foreign securities and money market instruments generally have less
volume than U.S. markets and may be subject to less governmental
supervision. As a result, securities of foreign issuers may be less liquid
and subject to greater price volatility than their U.S. counterparts.
Foreign broker - dealers and entities with which the funds will engage
in principal transactions also may be subject to less government
supervision than those in the United States, which creates additional risks
for investors. Commissions for transactions in certain foreign markets may
be higher than in U.S. markets, or the spread between bid and asked prices
for principal transactions may be larger than in the United States. The
funds may also experience difficulties in enforcing contractual obligations
abroad.
The funds' net asset values will depend in part on the credit quality of
their investments. The funds try to minimize credit risk by relying on
FMR's credit analysis and limiting their investments to those that FMR
judges to be of high quality. the foreign currency market, however, offers
less protection against defaults in the forward trading of currencies than
is available when trading in currencies on an exchange. Because a forward
contract is not guaranteed by an exchange or clearinghouse, a default on
the contract would deprive a fund of unrealized profits or force it to
cover its commitments for purchase or resale, if any, at the current market
price.
With respect to certain foreign countries, there is the possibility of
adverse changes in investment or exchange control regulations,
expropriation or confiscatory taxation, and limitations on the transfer or
exchange of funds or other assets of the funds. Each fund's ability and
decisions to purchase or sell portfolio securities may be affected by laws
or regulations relating to the convertibility and repatriation of assets.
There is also a risk in certain foreign countries of war, political or
social instability, or adverse diplomatic developments, which could affect
investments by U.S. parties in those countries as well as prices of
securities in those countries. Moreover, individual foreign economies may
differ favorably or unfavorably from the United States' economy in such
respects as growth of gross national product, rate of inflation, capital
reinvestment, resource self - sufficiency and balance of payments
position. All of these factors could have a negative impact on an
investment in any fund.
FMR will keep abreast of the likelihood of the imposition by any foreign
government of exchange control restrictions that would affect the liquidity
of a fund's assets maintained with custodians in such countries, as well as
the degree of risk from political, social and economic events and
developments to which such assets may be exposed. Even such close review
however, may not suffice to detect an unexpected event leading to the
imposition of exchange control restrictions and subsequent loss to
shareholders. No assurance can be given that FMR's appraisal of perceived
risks will always be correct or that exchange control restrictions or
activities of foreign governments or depositories that might materially
adversely affect the value of the funds' investments might not occur.
An increase in a country's inflation rate relative to other countries, or a
relative decrease in its short - term interest rates, will tend to
cause its currency to decline in value relative to other currencies. Rate
of GNP growth is broadly recognized as a barometer of economic health;
consequently, increases in the rate of GNP growth generally suggest
strength in the coun t ry's currency. Similarly, an improving current
account indicates positive trade conditions, which generally accompany
strengthening currency values. The above factors rarely work in isolation
from each other, however, and the future direction of currency fluctuations
cannot be predicted with certainty.
The U.S. government has from time to time in the past imposed restrictions,
through taxation and otherwise, on foreign investments by U.S. investors
such as the funds. If such restrictions should be reinstituted, it might
become necessary for one or more funds to invest all or substantially all
of their assets in U.S. securities. In such event, the Managing General
Partners would reevaluate the funds' investment objectives and policies.
JAPANESE MONEY MARKETS. The Bank of Japan is the central bank for Japan,
and is assisted in implementing monetary policy by the Ministry of Finance.
The Ministry of Finance controls the national budget, licenses all
financial institutions operating in the country, and acts as general
protector of the Japanese economy. The Bank of Japan controls monetary
policy under guidance of the Ministry of Finance to change reserve deposit
requirements and other monetary targets which relate to the public and
private sectors.
Financial institutions, domestic and foreign, which operate in Japan are
subject to licensing or approval by the Ministry of Finance, which has
detailed authority over the individual operations of each licensee.
Yen - denominated money market instruments include certificates of
deposit issued by Japanese banks or foreign banks' branches in Japan,
Japanese treasury bills, gensaki (repurchase agreements) and bankers'
acceptances.
UNITED KINGDOM MONEY MARKETS. Overall supervision of the financial market
in London is exercised by Her Majesty's Treasury and the Bank of England,
which is the central bank for the United Kingdom. The Bank of England
supervises the market by establishing and structuring associations to
monitor market activities.
The Bank of England supervises credit standards in the money markets of the
United Kingdom by determining which obligations it will purchase and the
applicable discount rate. Paper and money market instruments of the
highest quality will be purchased by the Bank of England and discounted at
its prime rate. Paper or money market instruments of a lesser quality will
be purchased and discounted by the Bank at a higher rate. Paper or
instruments of inferior quality will not be purchased. In this manner, the
Bank of England monitors and supervises the creditworthiness of instruments
traded in the United Kingdom money market. The Fidelity Sterling
Performance Portfolio, L.P. may purchase money market instruments which
have been refused for discount by the Bank of England if they are of high
quality in FMR's judgment.
Sterling - denominated money market instruments include Sterling time
deposits and certificates of deposit, commercial paper, treasury bills or
other securities issued or guaranteed as to payments of principal and
interest by the government of the United Kingdom, negotiable bonds issued
by local authorities in the United Kingdom and corporate debt obligations.
GERMAN MONEY MARKETS. Deutsche Mark - denominated investments are
widely used in international markets as a vehicle for foreign exchange
trading. The money market in Germany is highly regulated by the German
central bank, the Bundesbank. Because securities markets are less
prominent in Germany than in other countries, the Bundesbank and the
Federal Supervisory Authority (which licenses, supervises and inspects all
depository institutions in Germany) have greater control over monetary
policy than their counterparts in other countries, such as the Federal
Reserve System in the United States. This may have a significant impact on
the rate of interest earned on Deutsche Mark - denominated securities.
Banks in Germany have an additional source of credit, known as the "Lombard
Credit Line," a 90 - day short - term borrowing based on a
percentage of eligible collateral, which affects interest rates for money
market instruments in Germany. The availability of the Lombard Credit
Line, in addition to rediscount privileges at the Bundesbank, is a factor
affecting the cost of funds in the money market in Germany and the rate of
return to be received for the purchaser of money market instruments.
Available Deutsche Mark - denominated investments include time
deposits, certificates of deposit, trade acceptances, bankers' acceptances,
German treasury bills and acceptances, corporate debt securities and
repurchase agreements.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of the funds by FMR pursuant to authority contained in each fund's
management contract. FMR is also responsible for the placement of
transaction orders for other investment companies and accounts for which it
or its affiliates act as investment adviser. In selecting
broker - dealers, subject to applicable limitations of the federal
securities laws, FMR considers various relevant factors, including, but not
limited to, the size and type of the transaction; the nature and character
of the markets for the security to be purchased or sold; the execution
efficiency, settlement capability, and financial condition of the
broker - dealer firm; the broker - dealer's execution services
rendered on a continuing basis; and the reasonableness of any commissions.
Commissions for foreign investments traded on foreign exchanges will
generally be higher than for U.S. investments and may not be subject to
negotiation.
The funds may execute portfolio transactions with broker - dealers who
provide research and execution services to the funds or other accounts over
which FMR or its affiliates exercise investment discretion. Such services
may include advice concerning the value of securities; the advisability of
investing in, purchasing, or selling securities; the availability of
securities or the purchasers or sellers of securities; furnishing analyses
and reports concerning issuers, industries, securities, economic factors
and trends, portfolio strategy, and performance of accounts; and effecting
securities transactions and performing functions incidental thereto (such
as clearance and settlement). The selection of such broker - dealers
is generally made by FMR (to the extent possible consistent with execution
considerations) in accordance with a ranking of broker - dealers
determined periodically by FMR's investment staff based upon the quality of
research and execution services provided.
The receipt of research from broker - dealers that execute
transactions on behalf of the funds may be useful to FMR in rendering
investment management services to the fund or its other clients, and
conversely, such research provided by broker - dealers who have
executed transaction orders on behalf of other FMR clients may be useful to
FMR in carrying out its obligations to the funds. The receipt of such
research has not reduced FMR's normal independent research activities;
however, it enables FMR to avoid the additional expenses that could be
incurred if FMR tried to develop comparable information through its own
efforts.
Subject to applicable limitations of the federal securities laws,
broker - dealers may receive commissions for agency transactions that
are in excess of the amount of commissions charged by other
broker - dealers in recognition of their research and execution
services. In order to cause the funds to pay such higher commissions, FMR
must determine in good faith that such commissions are reasonable in
relation to the value of the brokerage and research services provided by
such executing broker - dealers, viewed in terms of a particular
transaction or FMR's overall responsibilities to the funds and its other
clients. In reaching this determination, FMR will not attempt to place a
specific dollar value on the brokerage and research services provided, or
to determine what portion of the compensation should be related to those
services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of a fund or shares of other Fidelity funds
to the extent permitted by law. FMR may use research services provided by
and place agency transactions with Fidelity Brokerage Services, Inc. (FBSI)
and Fidelity Brokerage Services, Ltd. (FBSL), subsidiaries of FMR Corp., if
the commissions are fair, reasonable, and comparable to commissions charged
by non - affiliated, qualified brokerage firms for similar services.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members of
national securities exchanges from executing exchange transactions for
accounts which they or their affiliates manage, except in accordance with
regulations of the Securities and Exchange Commission. Pursuant to such
regulations, the Managing General Partners have approved a written
agreement that permits FBSI to effect portfolio transactions on national
securities exchanges and to retain compensation in connection with such
transactions.
The Managing General Partners periodically review FMR's performance of its
responsibilities in connection with the placement of portfolio transactions
on behalf of the funds and review the commissions paid by the funds over
representative periods of time to determine if they are reasonable in
relation to the benefits to the funds.
From time to time the Managing General Partners review whether the
recapture for the benefit of the funds of some portion of the brokerage
commissions or similar fees paid by a fund on portfolio transactions is
legally permissible and advisable. The funds seek to recapture soliciting
broker - dealer fees on the tender of portfolio securities, but at
present no other recapture arrangements are in effect. The Managing
General Partners intend to continue to review whether recapture
opportunities are available and are legally permissible and, if so, to
determine in the exercise of their business judgment whether it would be
advisable for the funds to seek such recapture.
Although the Managing General Partners and officers of the funds are
substantially the same as the Board members and officers of other funds
managed by FMR, investment decisions for the funds are made independently
from those of other funds managed by FMR or accounts managed by FMR
affiliates. It sometimes happens that the same security is held in the
portfolio of more than one of these funds or accounts. Simultaneous
transactions are inevitable when several funds are managed by the same
investment adviser, particularly when the same security is suitable for the
investment objective of more than one fund.
When two or more funds are simultaneously engaged in the purchase or sale
of the same security, the prices and amounts are allocated in accordance
with a formula considered by the officers of the funds involved to be
equitable to each fund. In some cases this system could have a detrimental
effect on the price or value of a security as far as the funds are
concerned. In other cases, however, the ability of the funds to
participate in volume transactions will produce better executions and
prices for the funds. It is the current opinion of the Managing General
Partners that the desirability of retaining FMR as investment adviser to
the funds outweighs any disadvantages that may be said to exist from
exposure to simultaneous transactions.
VALUATION OF PORTFOLIO SECURITIES
Each fund's investments are valued (i) by appraising portfolio securities
that are traded on the New York Stock Exchange (NYSE) or American Stock
Exchange at the closing bid price, or, if no closing price is available, at
the last traded bid price, and (ii) by appraising foreign securities as
nearly as possible in the manner described in clause (i) if traded on any
other U.S. or foreign exchange, and, if not so traded, on the basis of
closing over - the - counter bid prices, if available.
Foreign securities are valued at the last sale price in the principal
market where they are traded or, if last sale prices are unavailable, at
the last bid price available prior to the time a fund's net asset value
(NAV) is determined. Foreign security prices are furnished by quotation
services which express the value of securities in their local currency.
Fidelity Service Company (FSC) translates the value of foreign securities
from the local currency into U.S. dollars at current exchange rates.
Foreign security prices that cannot be obtained by the quotation services
are priced individually by FSC using dealer supplied quotations. All other
securities and other assets are appraised at their fair value as determined
in good faith under consistently applied procedures under the general
supervision of the Managing General Partners.
Generally, the trading in foreign securities, as well as corporate bonds,
U.S. government securities, money market instruments, and repurchase
agreements, is substantially completed each day at various times prior to
the close of the NYSE. The values of any such securities held by a fund
are determined as of such times for the purpose of computing each fund's
NAV. The procedures set forth above need not be used to determine the
value of debt securities owned by a fund if, in the opinion of the Managing
General Partners, some other method (e.g., based on closing
over - the - counter bid prices in the case of debt instruments
traded on an exchange) would more accurately reflect the fair market value
of such debt securities. Foreign currency exchange rates also are
generally determined prior to the close of the NYSE. If an extraordinary
event that is expected to affect the value of a portfolio security occurs
after the close of an exchange on which that security is traded, the
security will be valued at fair value as determined in good faith by a
committee appointed under the direction of the Managing General Partners.
PERFORMANCE
Each fund may quote its performance in various ways. All performance
information supplied by the funds in advertising is historical and is not
intended to indicate future returns. Each fund's share price and total
returns fluctuate in response to market conditions and other factors, and
the value of portfolio shares when redeemed may be more or less than their
original cost.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect all
aspects of a fund's return, including the effect of any change in a fund's
NAV over the period. Average annual returns are calculated by determining
the growth or decline in value of a hypothetical historical investment in a
fund over a stated period, and then calculating the annually compounded
percentage rate that would have produced the same result if the rate of
growth or decline in value had been constant over the period. For example,
a cumulative return of 100% over ten years would produce an average annual
return of 7.18%, which is the steady annual rate of return that would equal
100% growth on a compounded basis in ten years. While average annual
returns are a convenient means of comparing investment alternatives,
investors should realize that a fund's performance is not constant over
time, but changes from year to year, and that average annual returns
represent averaged figures as opposed to the actual
year - to - year performance of a fund.
In addition to average annual returns, a fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, or a series of
redemptions, over any time period. Total returns may be broken down into
their components of income and capital (including capital gains and changes
in share price) in order to illustrate the relationship of these factors
and their contributions to total return. An example of this type of
illustration is given for each of the funds. Total returns may be quoted
with or without taking each fund's .40% maximum sales charge into account.
Excluding the funds' sales charges from a total return calculation produces
a higher total return figure. Total returns and other performance
information may be quoted numerically or in a table, graph, or similar
illustration.
NET ASSET VALUE. Charts and graphs using a fund's net asset values,
adjusted net asset values, and benchmark indices may be used to exhibit
performance. An adjusted NAV includes any distributions paid by the fund
and reflects all elements of its return. Unless otherwise indicated, the
fund's adjusted NAVs are not adjusted for sales charges, if any.
MOVING AVERAGES. A fund may illustrate performance using moving averages.
A long - term moving average is the average of each week's adjusted
closing NAV for a specified period. A short - term moving average is
the average of each day's adjusted closing NAV for a specified period.
Moving Average Activity Indicators combine adjusted closing NAVs from the
last business day of each week with moving averages for a specified period
to produce indicators showing when an NAV has crossed, stayed above, or
stayed below its moving average. On December 31, 1993 , the
13 - week and 39 - week long - term moving averages
were 15.47 and 15.52 , respectively, for the Yen fund, 13.53 and
13.55, respectively, for the Sterling fund, and 14.39 and 14.42,
respectively, for the Deutsche Mark fund.
HISTORICAL FUND RESULTS. The following table shows each fund's total
returns for the periods ended December 31, 1993. The total return figures
below include the effect of paying each fund's .40% maximum sales charge.

Average Annual Total Returns Cumulative Total Returns

One Life of One Life of

Year Fund* Year Fund*

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Deutsche Mark -1.59% 8.44% -1.59% 39.74%

Sterling 1.87% 7.36% 1.87% 34.06%

Yen 12.64% 10.26% 12.64% 49.70%

</TABLE>

*From Commencement of Operations: November 16, 1989.
The following tables show the income and capital elements of each fund's
total returns from November 16, 1989, (commencement of operations) through
December 31, 1993. The tables compare each fund's return to the record of
the Standard & Poor's 500 Composite Stock Price Index (S&P 500),
the Dow Jones Industrial Average (DJIA), and the cost of living (measured
by the Consumer Price Index, or CPI) over the same period. The S&P 500
and DJIA comparisons are provided to show how each fund's total returns
compared to the record of a broad average of common stock prices and a
narrower set of stocks of major industrial companies, respectively, over
the same period. Of course, since the funds are designed to duplicate the
performance of foreign currencies against the U.S. dollar, U.S. common
stocks represent a different type of investment from the funds. Foreign
currencies are not included in the indices. The S&P 500 and DJIA are
based on the prices of unmanaged groups of stocks and, unlike the funds,
their returns do not include the effect of paying brokerage commissions and
other costs of investing.
DEUTSCHE MARK FUND:
During the period November 16, 1989 (commencement of operations) to
December 31, 1993, a hypothetical investment of $10,000 would have
grown to $14,143, assuming the maximum 0.40% sales charge was incurred.
This was a period of widely fluctuating currency exchange rates, and should
not necessarily be considered representative of the capital gain or loss
that may be realized from an investment in the fund today.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Value of

Initial Reinvested Reinvested INDICES

Year Ended $10,000 Income Capital Gain Total

December 31 Investment Distributions Distributions Value S& DJIA Living**
P

1989* 10,896 0 0 10,896 10,424 10,507 10,016

1990 13,217 0 0 13,217 10,099 10,451 10,627

1991 13,994 0 0 13,994 13,177 12,994 10,953

1992 14,143 0 0 14,143 14,184 13,943 11,271

1993 13,974 0 0 13,974 15,614 16,318 11,271

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Value of

Initial Reinvested Reinvested INDICES

Year Ended $10,000 Income Capital Gain Total Cost of

December 31 Investment Distributions Distributions Value S&P DJIA Living**

1989* 10,279 0 0 10,279 10,424 10,507 10,016

1990 14,034 0 0 14,034 10,099 10,451 10,627

1991 14,910 0 0 14,910 13,177 12,994 10,953

1992 13,107 0 0 13,107 14,184 13,943 11,271

1993 13,406 0 0 13,406 15,614 16,318 11,271

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Value of

Initial Reinvested Reinvested INDICES

Year Ended $10,000 Income Capital Gain Total Cost of

December 31 Investment Distributions Distributions Value S&P DJIA Living**

1989*
10,020 0 0 10,020 10,424 10,507 10,016

1990
11,235 0 0 11,235 10,099 10,451 10,627

1991
12,918 0 0 12,918 13,177 12,994 10,953

1992
13,237 0 0 13,237 14,184 13,943 11,271

1993
14,970 0 0 14,970 15,614 16,318 11,581

</TABLE>

* From November 16, 1989 (commencement of operations) through December
31, 1989.
** From month end closest to initial investment date.
Explanatory notes: With an investment of $10,000 made on November 16,
1989 and after deducting the .40% maximum sales charge, the net amount
invested in fund shares was $9,960. The fund does not intend to distribute
its income; instead, the fund's income is reflected in its share price.
There were no dividend or capital gain distributions over the period
covered. Tax consequences of different investments have not been factored
into the above figures.
A fund's performance may be compared to the performance of other mutual
funds in general, or to the performance of particular types of mutual
funds. These comparisons may be expressed as mutual fund rankings prepared
by Lipper Analytical Services, Inc. (Lipper), an independent service
located in Summit, New Jersey that monitors the performance of mutual
funds. Lipper generally ranks funds on the basis of total return, assuming
reinvestment of distributions, but does not take sales charges or
redemption fees into consideration, and is prepared without regard to tax
consequences. In addition to the mutual fund rankings, a fund's
performance may be compared to mutual fund indices prepared by Lipper.
From time to time, a fund's performance may also be compared to other
mutual funds tracked by financial or business publications and periodicals.
For example, the fund may quote Morningstar, Inc. in its advertising
materials. Morningstar, Inc. is a mutual fund rating service that rates
mutual funds on the basis of risk - adjusted performance. Rankings
that compare the performance of Fidelity funds to one another in
appropriate categories over specific periods of time may also be quoted in
advertising.
Fidelity may provide information designed to help individuals understand
their investment goals and explore various financial strategies. For
example, Fidelity's FundMatchsm Program includes a workbook describing
general principles of investing, such as asset allocation, diversification,
risk tolerance, and goal setting; a questionnaire designed to help create a
personal financial profile; and an action plan offering investment
alternatives. Materials may also include discussions of Fidelity's three
asset allocation funds and other Fidelity funds, products, and services.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical
returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury
bills, the U.S. rate of inflation (based on the CPI), and combinations of
various capital markets. The performance of these capital markets is based
on the returns of different indices.
Fidelity funds may use the performance of these capital markets in order to
demonstrate general risk - versus - reward investment scenarios.
Performance comparisons may also include the value of a hypothetical
investment in any of these capital markets. The risks associated with the
security types in any capital market may or may not correspond directly to
those of the funds. Ibbotson calculates total returns in the same method
as the funds. The funds may also compare performance to that of other
compilations or indices that may be developed and made available in the
future.
In advertising materials, Fidelity may reference or discuss its products
and services, which may include: other Fidelity funds; retirement
investing; brokerage products and services; the effects of periodic
investment plans and dollar cost averaging; saving for college; charitable
giving; and the Fidelity credit card. In addition, Fidelity may quote
financial or business publications and periodicals, including model
portfolios or allocations, as they relate to fund management, investment
philosophy, and investment techniques. Fidelity may also reprint, and use
as advertising and sales literature, articles from Fidelity Focus, a
quarterly magazine provided free of charge to Fidelity fund shareholders.
A fund may present its fund number, Quotron(registered trademark) number,
and CUSIP number, and discuss or quote its current portfolio manager.
VOLATILITY. A fund may quote various measures of volatility and benchmark
correlation in advertising. In addition, the fund may compare these
measures to those of other funds. Measures of volatility seek to compare
the fund's historical share price fluctuations or total returns to those of
a benchmark. Measures of benchmark correlation indicate how valid a
comparative benchmark may be. All measures of volatility and correlation
are calculated using averages of historical data.
MOMENTUM INDICATORS indicate a fund's price movements over specific periods
of time. Each point on the momentum indicator represents the fund's
percentage change in price movements over that period.
A fund may advertise examples of the effects of periodic investment plans,
including the principle of dollar cost averaging. In such a program, an
investor invests a fixed dollar amount in a fund at periodic intervals,
thereby purchasing fewer shares when prices are high and more shares when
prices are low. While such a strategy does not assure a profit or guard
against loss in a declining market, the investor's average cost per share
can be lower than if fixed numbers of shares are purchased at the same
intervals. In evaluating such a plan, investors should consider their
ability to continue purchasing shares during periods of low price levels.
FMR, its subsidiaries, and its affiliates maintain a worldwide information
and communications network for the purpose of researching and managing
investments abroad. As of December 31, 1993, FMR managed foreign assets
totalling approximately $ 35 billion.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
As provided for in Rule 22d - 1 under the Investment Company Act of
1940, FDC exercises its right to waive a fund's sales charge normally
assessed for purchases of shares of each fund if you are a current or
former Managing General Partner, Trustee, or officer of a Fidelity fund, or
a current or retired officer, director, or full - time employee of FMR
Corp. or its direct or indirect subsidiaries (a Fidelity Managing General
Partner, Trustee, or employee), the spouse of a Fidelity Managing General
Partner, Trustee, or employee; a Fidelity Managing General Partner, Trustee
or employee acting as custodian for a minor child, or a person acting as
trustee of a trust for the sole benefit of the minor child; of a Fidelity
Managing General Partner, Trustee, or employee. FDC has chosen to waive
sales charges in these cases because of the efficiencies involved in sales
of shares to those investors.
Each fund is open for business and its net asset value per share (NAV) is
calculated each day the New York Stock Exchange (NYSE) is open for trading.
The NYSE has designated the following holiday closings for 1994:
Washington's Birthday (observed), Good Friday, Memorial Day (observed),
Independence Day (observed), Labor Day, Thanksgiving Day, and Christmas Day
(observed). Although FMR expects the same holiday schedule, with the
addition of New Year's Day, to be observed in the future, the NYSE may
modify its holiday schedule at any time.
FSC normally determines each funds' NAVs as of the close of the NYSE
(normally 4:00 p.m. Eastern time). However, NAV may be calculated earlier
if trading on the NYSE is restricted or as permitted by the SEC. To the
extent that portfolio securities are traded in other markets on days when
the NYSE is closed, a fund's NAV may be affected on days when investors do
not have access to the fund to purchase or redeem shares.
If the Managing General Partners determine that existing conditions make
cash payments undesirable, redemption payments may be made in whole or in
part in securities or other property, valued for this purpose as they are
valued in computing a fund's NAV. Shareholders receiving securities or
other property on redemption may realize a gain or loss for tax purposes,
and will incur any costs of sale, as well as the associated inconveniences.
Because the funds invest in securities that are traded in other markets on
days the funds are not open for business, each fund's net asset value per
share may be significantly affected on days when investors do not have
access to the fund to purchase or redeem shares. In addition, investor
requests for purchase and redemption of shares of the funds are processed
only once a day, as of the time net asset value is calculated (generally
4:00 p.m. Eastern time), while currency exchange rates change constantly,
and may experience significant fluctuations outside the normal U.S.
business day. If a fund experiences substantial purchase or redemption
orders, and the fund's investments are not adjusted promptly to reflect the
resulting cash flows, the fund could in effect have more or less than 100%
of its assets invested on a temporary basis. This could have a greater
effect on the funds than on funds that invest in U.S. securities, since
trading in most U.S. securities effectively ceases after 4:00 p.m., and
U.S. securities are not as subject to significant changes in value
overnight as are foreign currencies. The Managing General Partners will
determine fair value of a security if a material event occurs which would
affect net asset value on days when the NYSE is closed or after the end of
trading on any business day.
POWER OF ATTORNEY AND OTHER INFORMATION. You will be required to request
admission as a Limited Partner of the fund and to agree to the Power of
Attorney set forth in Section XIV of the Partnership Agreement and to the
terms of the Partnership Agreement as a part of your application at the
time of your initial purchase of shares of any fund. By doing so, you
agree to the terms of the Partnership Agreements and Powers of Attorney of
all three funds, whether or not you purchase shares of more than one fund,
and your signature on the application for any fund shall be conclusive
evidence of your agreement to their terms. You cannot be accepted as a
Limited Partner until a properly executed application has been received by
the funds. It will be used to add you, with the consent of the Managing
General Partners, to the Limited Partners of your chosen fund. Shares of
the funds may be assigned only to secure a loan or by operation of law.
Although an assignee may not become a Limited Partner until he has executed
and submitted an application, shares will be redeemed by the fund upon the
request of the registered holder at any time at net asset value.
If in the opinion of the Managing General Partners conditions exist that
make cash payment undesirable, redemption payments may be made in whole or
in part in securities or other property, valued for this purpose as they
are valued in computing the net asset value of a fund. Shareholders
receiving any such securities or other property on redemption may realize
either a loss or a taxable gain and will incur any costs of sale as well as
the associated inconveniences.
TAXES
ALLOCATIONS. As a Limited Partner of a fund, you must report your
distributive share of the fund's income, gains and losses for the fund's
tax year ending within or with your most recent tax year. You will be
allocated your proportionate part of the income, gains, losses, deduction
and credits actually realized by your fund for each day you were a
shareholder. Long-term capital gains realized by the funds will be
reportable as long-term capital gains for tax purposes, regardless of how
long you have held your shares. Since income is allocated only when
realized, allocation of a fund's income for tax purposes may differ from
the allocation of such income for financial purposes. For example, if you
purchased shares of a fund when it had net unrealized gains and such gains
were later realized, taxable income may be allocated to you even though the
value of your shares did not change. The funds believe that their
allocations of income and loss correspond to the shareholders' respective
economic interests in the funds and should therefore be given effect for
federal income tax purposes. However, if the Internal Revenue Service
subsequently modifies those allocations, amounts previously reported by
shareholders in their returns would be affected.
Each fund's taxable year ends on December 31.
ADJUSTED TAX BASIS; REDEMPTIONS. You may realize a capital gain or loss
when you redeem or assign your shares. The tax treatment will depend in
part on your adjusted tax basis in the fund shares you own. The adjusted
basis of your shares will be your purchase price (including any sales
charge you paid), increased by the amount of income and capital gain
allocated to you for tax purposes (as shown on you K - 1 tax form),
and reduced, but not below zero, by (i) any capital or other loss allocated
to you, and (ii) the amount of any cash distributions you received in
redemption of shares or otherwise. If you receive a distribution in cash
and it exceeds your adjusted tax basis immediately prior to the
distribution, you generally will realize a capital gain equal to the
excess .
INCOME OF THE FUNDS. Each fund's income will include interest, long and
short - term capital gains, and foreign currency exchange gain or
loss. Forward contracts and investments in foreign currencies and foreign
currency-denominated instruments or securities (other than certain options
and futures contracts, as described below) will generate, in whole or in
part, ordinary income or loss. Unrealized gains or losses on
positions in (i) forward contracts that are traded in the interbank market
and (ii) most exchange - traded foreign currency options and futures
contracts are generally marked - to - market at the end of each
year and treated for tax purposes as realized in such year.
The funds are likely to enter into combinations of investment positions
that may the result in (i) losses on one position
which may be deferred to the extent of any unrecognized gain on
another position or (ii) long - term capital gains or
short - term capital losses which may be recharacterized,
respectively, as short - term gains and long - term losses.
S imilar treatment may apply to combinations consisting of portfolio
transactions and transactions entered into by partners for their own
accounts. Prospective investors should review with their own tax advisers
the potential for such interactions and their possible tax consequences in
light of their individual circumstance s.
TAX STATUS OF THE FUNDS. FMR has been advised that under current Treasury
regulations and rulings, and judicial decisions, each fund will be
classified as a partnership for federal income tax purposes. Under current
Treasury regulations and rulings, and judicial decisions, for each fund:
(1) General Partners and Limited Partners should be treated as partners of
the fund for federal income tax purposes;
(2) The adjusted basis of a partner's interest in the fund should be
determined pursuant to section 705(a) of the Code and will be equal to the
aggregate adjusted basis of all shares of the fund held by the partner;
(3) In determining his or her federal income tax, each partner should take
into account separately his or her distributive share of all items of
partnership income, gain, loss, deduction or credit.
(4) To the extent not otherwise provided in section 736 or 751 of the Code,
no gain should be recognized to a partner on a distribution by the fund in
redemption of the partner's shares or otherwise, except to the extent that
any money distributed to the partner exceeds the adjusted basis of the
partner's partnership interest immediately prior to the distribution; and
(5) No gain or loss should be recognized by the fund on a distribution of
cash or other property to a partner.
As partnerships, the funds are not themselves subject to federal income
tax. However, the continuing status of the funds as partnerships will be
dependent on continued compliance with a number of conditions, including
certain continuing requirements relating to the General Partners' aggregate
interests in the capital and each material item of portfolio income, gain,
loss, deduction and credit of the funds (see "Managing General Partners and
Officers" on page ). If any fund failed to meet these continuing
requirements, the Internal Revenue Service could take the position
(possibly retroactively) that the fund ceased to be a partnership for
federal income tax purposes from the time of the failure, and was instead
taxable as a corporation.
Under federal tax legislation, certain "publicly traded
partnerships" are treated as corporations. The funds may ultimately be
covered by that provision ; they are covered by a ten - year
transition rule that preserves their status as partnerships until December
31, 1997. If the funds were ever treated as corporations (either before or
after December 31, 1997), they might have to modify their investment
policies in order to qualify for federal pass - through tax treatment
available to mutual funds that qualify as "regulated investment companies"
(RICs) under Subchapter M of the Code, so that adverse tax consequences to
shareholders could be avoided to the extent possible. In order to qualify
under Subchapter M as currently constituted, the funds might have to (i)
substantially curtail certain of their investment practices, especially
those involving transactions in foreign currency, which could make it more
difficult for the funds to meet their investment objectives, and (ii)
distribute their income annually. If any fund failed to qualify for tax
purposes as a partnership or as a RIC at any time, its income would be
taxed to the fund at corporate rates; its items of income, gain, loss,
deduction and credit would not flow through to its shareholders; and its
distributions to shareholders in respect of their shares would be treated
pursuant to section 301 of the Code, as (i) dividends taxable to the
shareholders, to the extent of the current and accumulated earnings and
profits of the fund, (ii) then a tax-free return of capital, to the extent
of a shareholder's basis in his fund shares, and (iii) finally, a capital
gain to the extent of any additional amount .
Under current federal tax laws, certain transactions in which the funds
might engage, such as engaging in reverse repurchase agreements, may be
deemed taxable as "unrelated business taxable income" (UBTI) for retirement
plans and other tax-exempt investors.
The tax discussions in this Statement of Additional Information are based
on current interpretations of existing federal tax laws. No assurance can
be given that legislative, judicial or administrative changes may not be
forthcoming that could modify such rulings or statements. Such changes
could be retroactive. The Partnership Agreement provides that the General
Partners shall not be liable to any holder of shares or to any Limited
Partner by reason of any change in federal or state income tax laws as they
apply to each fund and the limited partners, whether such change occurs
through legislative, judicial or administrative action, as long as the
General Partners have acted in good faith and in a manner reasonably
believed to be in the best interests of the Limited Partners.
The foregoing discussion of certain federal income tax consequences of an
investment in a fund is general in nature. Investors are urged to consult
their tax advisers for information regarding the federal, state and local
tax consequences of investment in the funds.
FMR
FMR is a wholly owned subsidiary of FMR Corp., a parent company organized
in 1972. At present, the principal operating activities of FMR Corp. are
those conducted by three of its divisions as follows: FSC, which is the
transfer and shareholder servicing agent for certain of the funds advised
by FMR; Fidelity Investments Institutional Operations Company, which
performs shareholder servicing functions for certain institutional
customers; and Fidelity Investments Retail Marketing Company, which
provides marketing services to various companies within the Fidelity
organization.
Several affiliates of FMR are also engaged in the investment advisory
business. Fidelity Management Trust Company provides trustee, investment
advisory, and administrative services to retirement plans and corporate
employee benefit accounts. Fidelity Management & Research (U.K.) Inc.
(FMR U.K.) and Fidelity Management & Research (Far East) Inc. (FMR Far
East), both wholly owned subsidiaries of FMR formed in 1986, supply
investment research, and may supply portfolio management services, to FMR
in connection with certain funds advised by FMR. Analysts employed by FMR,
FMR U.K., and FMR Far East research and visit thousands of domestic and
foreign companies each year. FMR Texas Inc., a wholly owned subsidiary of
FMR formed in 1989, supplies portfolio management and research services in
connection with certain money market funds advised by FMR.
MANAGING GENERAL PARTNERS AND OFFICERS
Each fund's Managing General Partners and executive officers are listed
below. Except as indicated, each individual has held the office shown or
other offices in the same company for the last five years. All persons
named as Managing General Partners also serve in similar capacities for
other funds advised by FMR. Unless otherwise noted, the business address
of each Managing General Partner and officer is 82 Devonshire Street,
Boston, Massachusetts 02109, which is also the address of FMR. Those
Managing General Partners who are "interested persons" (as defined in the
Investment Company Act of 1940) by virtue of their affiliation with either
the funds or FMR are indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d, Managing General Partner and President, is Chairman,
Chief Executive Officer and a Director of FMR Corp.; a Director and
Chairman of the Board and of the Executive Committee of FMR; Chairman and a
Director of FMR Texas Inc. (1989), Fidelity Management & Research
(U.K.) Inc., and Fidelity Management & Research (Far East) Inc.
*J. GARY BURKHEAD, Managing General Partner (1990) and Senior Vice
President, is President of FMR; and President and a Director of FMR Texas
Inc. (1989), Fidelity Management & Research (U.K.) Inc. and Fidelity
Management & Research (Far East) Inc.
RALPH F. COX, 200 Rivercrest Drive, Fort Worth, TX, Managing General
Partner (1991), is President of Greenhill Petroleum Corporation (petroleum
exploration and production, 1990). Prior to his retirement in March 1990,
Mr. Cox was President and Chief Operating Officer of Union Pacific
Resources Company (exploration and production). He is a Director of
Bonneville Pacific Corporation (independent power, 1989) and CH2M Hill
Companies (engineering). In addition, he served on the Board of Directors
of the Norton Company (manufacturer of industrial devices,
1983 - 1990) and continues to serve on the Board of Directors of the
Texas State Chamber of Commerce, and is a member of advisory boards of
Texas A&M University and the University of Texas at Austin.
PHYLLIS BURKE DAVIS, P.O. Box 264, Bridgehampton, NY, Managing
General Partner (1992). Prior to her retirement in September 1991, Mrs.
Davis was the Senior Vice President of Corporate Affairs of Avon Products,
Inc. She is currently a Director of BellSouth Corporation
(telecommunications), Eaton Corporation (manufacturing, 1991), and the TJX
Companies, Inc. (retail stores, 1990), and previously served as a Director
of Hallmark Cards, Inc. (1985 - 1991) and Nabisco Brands, Inc. In
addition, she serves as a Director of the New York City Chapter of the
National Multiple Sclerosis Society, and is a member of the Advisory
Council of the International Executive Service Corps. and the President's
Advisory Council of The University of Vermont School of Business
Administration .
RICHARD J. FLYNN, 77 Fiske Hill, Sturbridge, MA, Managing General Partner
(1990), is a financial consultant. Prior to September 1986, Mr. Flynn was
Vice Chairman and a Director of the Norton Company (manufacturer of
industrial devices). He is currently a Director of Mechanics Bank and a
Trustee of College of the Holy Cross and Old Sturbridge Village, Inc.
E. BRADLEY JONES, 3881-2 Lander Road, Chagrin Falls , OH, Managing
General Partner (1990). Prior to his retirement in 1984, Mr. Jones was
Chairman and Chief Executive Officer of LTV Steel Company. Prior to May
1990, he was Director of National City Corporation (a bank holding company)
and National City Bank of Cleveland. He is a Director of TRW Inc.
(original equipment and replacement products), Cleveland - Cliffs Inc
(mining), NACCO Industries, Inc. (mining and marketing), Consolidated Rail
Corporation, Birmingham Steel Corporation (1988), Hyster - Yale
Materials Handling, Inc. (1989), and RPM, Inc. (manufacturer of chemical
products, 1990). In addition, he serves as a Trustee of First Union Real
Estate Investments , Chairman of the Board of Trustees and a member
of the Executive Committee of the Cleveland Clinic Foundation, a Trustee
and a member of the Executive Committee of University School (Cleveland),
and a Trustee of Cleveland Clinic Florida.
DONALD J. KIRK, 680 Steamboat Road, Apartment #1-North, Greenwich, CT,
Managing General Partner (1990), is a Professor at Columbia University
Graduate School of Business and a financial consultant. Prior to 1987, he
was Chairman of the Financial Accounting Standards Board. Mr. Kirk is a
Director of General Re Corporation (reinsurance) and Valuation
Research Corporation (appraisals and valuations, 1993). In addition, he
serves as Vice Chairman of the Board of Directors of the National Arts
Stabilization Fund and Vice Chairman of the Board of Trustees of the
Greenwich Hospital Association.
*PETER S. LYNCH, Managing General Partner (1990) is Vice Chairman of FMR
(1992). Prior to his retirement on May 31, 1990, he was a Director of FMR
(1989) and Executive Vice President of FMR (a position he held until
March 31, 1991); Vice President of Fidelity Magellan Fund and FMR Growth
Group Leader; and Managing Director of FMR Corp. Mr. Lynch was also Vice
President of Fidelity Investments Corporate Services (1991 - 1992).
He is a Director of W.R. Grace & Co. (chemicals, 1989) and Morrison
Knudsen Corporation (engineering and construction). In addition, he serves
as a Trustee of Boston College, Massachusetts Eye & Ear Infirmary,
Historic Deerfield (1989) and Society for the Preservation of New England
Antiquities, and as an Overseer of the Museum of Fine Arts of Boston
(1990).
GERALD C. McDONOUGH, 135 Aspenwood Drive, Cleveland, OH, Managing General
Partner (1990), is Chairman of G.M. Management Group (strategic advisory
services). Prior to his retirement in July 1988, he was Chairman and Chief
Executive Officer of Leaseway Transportation Corp. (physical distribution
services). Mr. McDonough is a Director of ACME - Cleveland Corp.
(metal working, telecommunications and electronic products),
Brush - Wellman Inc. (metal refining), and York International Corp.
(air conditioning and refrigeration, 1989) , Commercial Intertech
Corp. (water treatment equipment, 1992) and Associated Estates Realty
Corportion (a real estate investment trust, 1993).
EDWARD H. MALONE, 5601 Turtle Bay Drive #2104, Naples, FL, Managing General
Partner (1990). Prior to his retirement in 1985, Mr. Malone was Chairman,
General Electric Investment Corporation and a Vice President of General
Electric Company. He is a Director of Allegheny Power Systems, Inc.
(electric utility), General Re Corporation (reinsurance) and Mattel Inc.
(toy manufacturer). He is also a Trustee of Rensselaer Polytechnic
Institute and of Corporate Property Investors and a member of the Advisory
Boards of Butler Capital Corporation Funds and Warburg, Pincus Partnership
Funds.
MARVIN L. MANN, 55 Railroad Avenue, Greenwich, CT, Managing General Partner
(1993) is Chairman of the Board, President, and Chief Executive Officer of
Lexmark International, Inc. (office machines, 1991). Prior to 1991, he
held the positions of Vice President of International Business Machines
Corporation ("IBM") and President and General Manager of various IBM
divisions and subsidiaries. Mr. Mann is a Director of M.A. Hanna Company
(chemicals, 1993) and Infomart (marketing services, 1991), a Trammell Crow
Co. In addition, he serves as the Campaign Vice Chairman of the Tri-State
United Way (1993) and is a member of the University of Alabama President's
Cabinet (1990).
THOMAS R. WILLIAMS, 21st Floor, 191 Peachtree Street, N.E., Atlanta, GA,
Managing General Partner (1990), is President of The Wales Group, Inc.
(management and financial advisory services). Prior to retiring in 1987,
Mr. Williams served as Chairman of the Board of First Wachovia Corporation
(bank holding company), and Chairman and Chief Executive Officer of The
First National Bank of Atlanta and First Atlanta Corporation (bank holding
company). He is currently a Director of BellSouth Corporation
(telecommunications), ConAgra, Inc. (agricultural products), Fisher
Business Systems, Inc. (computer software ), Georgia Power Company
(electric utility), Gerber Alley & Associates, Inc. (computer
software), National Life Insurance Company of Vermont, American Software,
Inc. (1989), and AppleSouth, Inc. (restaurants, 1992).
GARY L. FRENCH, Treasurer (1991). Prior to becoming Treasurer of the
Fidelity funds, Mr. French was Senior Vice President, Fund Accounting -
Fidelity Accounting & Custody Services Co. (1991); Vice President,
Fund Accounting - Fidelity Accounting & Custody Services Co.
(1990); and Senior Vice President, Chief Financial and Operations
Officer - Huntington Advisers, Inc. (1985 - 1990).
ARTHUR S. LORING, Secretary, is Senior Vice President and General Counsel
of FMR, Vice President - Legal of FMR Corp., and Vice President
and Clerk of FDC.
*FIDELITY MANAGEMENT & RESEARCH COMPANY, Non - Managing General
Partner, is the investment adviser of the funds and other investment
companies.
Under a retirement program that became effective on November 1, 1989,
Managing General Partners, upon reaching age 72, become eligible to
participate in a defined benefit retirement program under which they
receive payments during their lifetime from the funds based on their basic
Managing General Partner fees and length of service. Currently, Messrs.
Robert L. Johnson, William R. Spaulding, Bertram H. Witham, and David L.
Yunich participate in the program.
Under the Partnership Agreement, (1) FMR, the Non - Managing General
Partner, may not voluntarily resign without giving at least 180 days'
written notice (unless a successor is appointed or its obligations are
otherwise assumed), and (2) the General Partners as a group will, if
required for tax purposes in the opinion of counsel, (a) own at least 1% of
the outstanding number of shares of each fund, or, if total contributions
to a fund exceed $50 million, 1% divided by the ratio of the total
contributions to $50 million (but in no case less than 0.2%) of the
outstanding number of shares of the fund, and (b) maintain a minimum
capital ac c ount balance in each fund equal to 1% of the total
positive capital account balances of the fund or $500,000, whichever is
less. FMR has undertaken to own a sufficient number of shares of each fund
to satisfy the ownership requirements of the preceding sentence (if
applicable) at all times while it is serving as Non - Managing General
Partner. If a fund or the Limited Partners terminate the rights, duties
and obligations of FMR as the Non - Managing General Partner or as
investment adviser, FMR may redeem its shares upon 30 days' written notice.
As of December 31, 1993, FMR, the funds' Non - Managing General
Partner, owned of record approximately 2.4 %, 3.7 %, and
6.7 % of the total outstanding shares of the Deutsche Mark,
Sterling, and Yen funds, respectively. Edward C. Johnson 3d,
President and a Managing General Partner, may be considered a beneficial
owner of these shares by virtue of his controlling interest in FMR Corp.
Each of the other Managing General Partners owns one share of
each of the three funds.
As of December 31, 1993 Earl and Co., 3435 N. 140th Circle, Omaha, NE,
owned of record or beneficially approximately 9.84% and 24.35% of the total
outstanding shares of the Deutsche Mark and Sterling funds, respectively.
Also as of this date, John A. Swanson, P.O. Box 65, Johnson Road, Houston,
PA, owned of record or beneficially approximately 5.51% of the Sterling
fund's total outstanding shares, and Dr. Gerald and Patricia Rehert, 1661
Friar Tuck Road NE, Atlanta, GA; Donald P. Kanak and Kumi Sato, Sibuya-Ku,
Tokyo, Japan; and Peter and Pearl Wu, 1723 Camp Craft Road, Austin, TX,
owned of record or beneficially approximately 11.41%, 6.86%, and 5%,
respectively, of the Yen fund's total outstanding shares.
MANAGEMENT CONTRACTS
Each fund employs FMR to furnish investment advisory and other services.
Under FMR's Management Contract with each fund, FMR acts as investment
adviser and, subject to the supervision of the Managing General Partners,
directs the investments of each fund in accordance with its investment
objective, policies, and limitations. FMR also provides the funds with all
necessary office facilities and personnel for servicing the funds'
investments, and compensates all officers of the funds, all Managing
General Partners who are "interested persons" of the funds or of FMR, and
all personnel of the funds or FMR performing services relating to research,
statistical, and investment activities.
In addition, FMR or its affiliates, subject to the supervision of the
Managing General Partners, provide the management and administrative
services necessary for the operation of each fund. These services include
providing facilities for maintaining a fund's organization; supervising
relations with custodians, transfer and pricing agents, accountants,
underwriters, and other persons dealing with the funds; preparing all
general shareholder communications and conducting shareholder relations;
maintaining each fund's records and the registration of each fund's shares
under federal and state law; developing management and shareholder services
for the funds; and furnishing reports, evaluations, and analyses on a
variety of subjects to each fund's Managing General Partners.
In addition to the management fee payable to FMR and the fees payable to
FSC, each fund pays all its expenses, without limitation, that are not
assumed by those parties. Each fund pays for the typesetting, printing,
and mailing of its proxy material to shareholders, legal expenses and fees
of the custodian, auditor and non - interested Managing General
Partners. Although each fund's current Management Contract provides that
the fund will pay for the typesetting, printing, and mailing of
prospectuses, statements of additional information, notices and reports to
existing shareholders, pursuant to each fund's transfer agent agreement
with FSC, FSC bears the cost of providing these services to existing
shareholders. Other charges paid by the funds include interest, taxes,
brokerage commissions, each fund's proportionate share of insurance
premiums and Investment Company Institute dues, and the costs of
registering shares under federal and state securities laws. Each fund is
also liable to such nonrecurring expenses as may arise, including costs of
any litigation to which the fund is a party, and any obligation it may have
to indemnify its officers and Man a ging General Partners with respect
to litigation.
FMR is each fund's manager, pursuant to management contracts dated December
1, 1990 which were approved by shareholders on November 14, 1990. For the
services of FMR under the contracts, each fund pays a monthly fee at the
annual rate of .50% of the average net assets of the fund throughout the
month. During the fiscal years ended December 31, 1993, 1992, and 1991,
FMR voluntarily agreed to reimburse each fund, to the extent that each
fund's aggregate operating expenses were in excess of 1.50% of the fund's
average net assets. Reimbursement amounts for each fund are shown in the
following tables.
DEUTSCHE MARK FUND:
Management Fees

Before Amount of

Fiscal Period Ended Reimbursement Reimbursement

December 31, 1993 $41,895 $59,586

December 31, 1992 $93,062 $0

December 31, 1991 $62,381 $36,979

STERLING FUND:
Management Fees

Before Amount of

Fiscal Period Ended Reimbursement Reimbursement

December 31, 1993 $14,922 $97,105

December 31, 1992 $36,177 $60,521

December 31, 1991 $32,612 $89,128

YEN FUND:
Management Fees

Before Amount of

Fiscal Period Ended Reimbursement Reimbursement

December 31, 1993 $19,984 $79,725

December 31, 1992 $19,515 $93,280

December 31, 1991 $18,371 $ 107,151

To comply with the California Code of Regulations, FMR will reimburse a
fund if and to the extent that the fund's aggregate annual operating
expenses exceed specified percentages of its average net assets. The
applicable percentages are 2 1/2% of the first $30 million, 2% of the next
$70 million, and 1 1/2% of average net assets in excess of $100 million.
When calculating a fund's expenses for purposes of this regulation, the
fund may exclude interest, taxes, brokerage commissions, and extraordinary
expenses, as well as a portion of its custodian fees attributable to
investments in foreign securities.
CONTRACTS WITH COMPANIES AFFILIATED WITH FMR
FSC is transfer, and shareholders' servicing agent for the funds. Under
each fund's contract with FSC, the funds pay an annual fee of $_____ per
basic retail account with a balance of $5,000 or more, $10 per basic retail
account with a balance of less than $5,000, and a supplemental activity
charge of $5.61 for monetary transactions. These fees and charges are
subject to annual cost escalation based on postal rate changes and changes
in wage and price levels as measured by the National Consumer Price Index
for Urban Areas. With respect to certain institutional client master
accounts, each fund pays FSC a per - account fee of $95 and monetary
transaction charges of $20 or $17.50, depending on the nature of services
provided. With respect to certain institutional broker - dealer
accounts, the funds pay FSC a per - account fee of $30 and a charge of
$6 for monetary transactions. Fees for certain institutional retirement
plan accounts are based on the net assets of all such accounts in the fund.
Under the contracts, FSC pays out - of - pocket expenses
associated with providing transfer agent services. In addition, FSC bears
the expense of typesetting, printing, and mailing prospectuses, statements
of additional information, and all other reports, notices, and statements
to shareholders with the exception of proxy statements.
The following table shows the transfer agent fees paid to FSC the fiscal
years ended December 31, 1993, 1992, and 1991.
TRANSFER AGENT FEES
1993 1992 1991

Deutsche Mark $14,012 $21,463 $17,631

Sterling $8,736 $7,503 $7,843

Yen $10,311 $7,964 $6,470

Each fund's contract with FSC also provides that FSC will perform the
calculations necessary to determine the fund's net asset value per share,
and maintain the fund's accounting records. Prior to July 1, 1991 the
annual fee for these pricing and bookkeeping services was based on
two schedules, one pertaining to each fund's average net assets, and one
pertaining to the type and number of transactions a fund made The fee rates
in effect as of July 1, 1991 are based on a fund's average net assets,
specifically, .06% for the first $500 million of average net assets and
.03% for average net assets in excess of $500 million. The fee is limited
to a minimum of $45,000 and a maximum of $750,000 per year.
The table below shows the fees paid to FSC for pricing and bookkeeping
services, including related out - of - pocket expenses, during
each fund's last three fiscal years:
PRICING AND BOOKKEEPING FEES PAID TO FSC
1993 1992 1991

Deutsche Mark $45,027 $45,502 $46,582

Sterling $45,042 $45,510 $46,622

Yen $45,019 $45,477 $45,952

Each fund has a distribution agreement with FDC , a Massachusetts
corporation organized on July 18, 1960. FDC is a broker - dealer
registered under the Securities Exchange Act of 1934 and a member of the
National Association of Securities Dealers, Inc. The distribution
agreement calls for FDC to use all reasonable efforts, consistent with its
other business, to secure purchasers for shares of the funds, which are
continuously offered. Promotional and administrative expenses in
connection with the offer and sale of shares are paid by FDC. Pursuant
to the agreement, during the fiscal years 1992, 1991, and 1990 FDC received
sales charge revenue as indicated in the following table. Promotional and
administrative expenses in connection with the offer and sale of shares are
paid by FDC.
SALES CHARGE REVENUE PAID TO FDC
1993 1992 1991

Deutsche Mark $39,069 $71,302 $72,236

Sterling $22,596 $39,874 $42,626

Yen $26,466 $20,966 $19,846

DESCRIPTION OF THE FUNDS
Fidelity Deutsche Mark Performance Portfolio, L.P, Fidelity Sterling
Performance Portfolio, L.P., and Fidelity Yen Performance Portfolio,
L.P.., were each organized as a limited partnership in the State of
Delaware on April 13, 1987. The funds were newly organized on that date
and have no prior history. Each Partnership Agreement permits the Managing
General Partners to create additional series of shares (currently, each
fund has only one series). In the event that FMR ceases to be the
investment adviser of a fund, the right of that fund to use the identifying
name "Fidelity" may be withdrawn.
CUSTODIAN. Chase Manhattan Bank N.A., 1211 Avenue of the Americas, New
York, New York, is custodian of the funds' assets. The custodian is
responsible for the safekeeping of the funds' assets and the appointment of
subcustodian banks and clearing agencies. The custodian takes no part in
determining the funds' investment policies, or in deciding which securities
are purchased or sold by the funds. The funds, however, may invest in
obligations of the custodian and may purchase securities from or sell
securities to the custodian. Investors should understand that the expense
of the funds may be higher than those of funds that invest exclusively in
domestic securities since the cost of maintaining the custody of foreign
securities is higher.
FMR, its officers and directors, its affiliated companies and the Managing
General Partners, may from time to time have transactions with various
banks, including banks serving as custodians for certain of the
funds advised by FMR. Transactions that have occurred to date
include mortgages and personal and general business loans. In the
judgment of FMR, the terms and conditions of those transactions were not
influenced by existing or potential custodial or other fund relationships.
AUDITOR. Coopers & Lybrand, One Post Office Square, Boston,
Massachusetts, serves as each fund's independent accountant. The auditor
examines financial statements for the funds and provides other audit, tax,
and related services.
FINANCIAL STATEMENTS
The combined Annual Report of the funds for the fiscal year ended December
31, 1993 is a separate report supplied with this Statement of Additional
Information and is incorporated herein by reference.
APPENDIX
The descriptions that follow are examples of eligible ratings for the
funds. A fund may however, consider the ratings for other types of
investments and the ratings assigned by other rating organizations when
determining the eligibility of a particular investment.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S COMMERCIAL PAPER RATINGS:
Issuers rated PRIME - 1 (or related supporting institutions) have a
superior capacity for repayment of short - term promissory
obligations. Prime - 1 repayment capacity will normally be evidenced
by the following characteristics:
(bullet) Leading market positions in well established industries.
(bullet) High rates of return on funds employed.
(bullet) Conservative capitalization structures with moderate
reliance on debt and ample asset protection.
(bullet) Broad margins in earning coverage of fixed financial charges
and with high internal cash generation.
(bullet) Well established access to a range of financial markets and
assured sources of alternate liquidity.
Issuers rated PRIME - 2 (or related supporting institutions) have a
strong capacity for repayment of short - term promissory obligations.
This will normally be evidenced by many of the characteristics cited above
but to a lesser degree. Earning trends and coverage ratios, while sound,
will be more subject to variation. Capitalization characteristics, while
still appropriate, may be more affected by external conditions. Ample
alternate liquidity is maintained.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S CORPORATE BOND RATINGS:
AAA - Bonds rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.
AA - Bonds rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high - grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long - term risks appear
somewhat larger than in Aaa securities.
Moody's applies numerical modifiers, 1, 2, and 3, in the Aa generic rating
classification in its corporate bond rating system. The modifier 1
indicates that the security ranks in the higher end of the generic rating
category; the modifier 2 indicates a mid - range ranking; and the
modifier 3 indicates that the issue ranks in the lower end of the generic
rating category.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S COMMERCIAL PAPER
RATINGS:
A - Issues assigned this highest rating are regarded as having the
greatest capacity for timely payment. Issues in this category are
delineated with the numbers 1, 2, and 3 to indicate the relative degree of
safety.
A - 1 - This designation indicates that the degree of safety
regarding timely payment is either overwhelming or very strong. Those
issues determined to possess overwhelming safety characteristics will be
denoted with a plus (+) sign designation.
A - 2 - Capacity for timely payment on issues with this
designation is strong. However, the relative degree of safety is not as
high as for issues designated A - 1.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S CORPORATE BOND RATINGS:
AAA - Debt rated AAA has the highest rating assigned by Standard
& Poor's to a debt obligation. Capacity to pay interest and repay
principal is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the higher - rated issues only in
small degree.
An AA rating may be modified by the addition of a plus or minus to show
relative standing within the major rating categories.
Each fund's proper name, "Fidelity Yen Performance Portfolio, L.P.,"
"Fidelity Sterling Performance Portfolio, L.P." and "Fidelity Deutsche Mark
Performance Portfolio, L.P.," appears in its respective partnership
agreement where indicated by "(name of Portfolio)."
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
(Name of Portfolio)
This AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP (the
"Agreement"), dated the 12th day of July, 1989, is executed and delivered
by and among the general partners hereinafter named (collectively, the
"General Partners"), Arthur Loring (the "Initial Limited Partner") and the
other persons who are from time to time admitted as, and are listed in the
books and records of the partnership governed by this Agreement (the
"Fund") as, limited partners (collectively, the "Limited Partners") (the
General Partners and the Limited Partners being hereinafter collectively
referred to as the "Partners").
WHEREAS, the Fund was formed under the Delaware Revised Uniform Limited
Partnership Act (the "Partnership Act") upon the filing, pursuant to an
Agreement of Limited Partnership dated as of April 13, 1987 among the
Initial General Partners (as defined in Section IV(a)(1)) and the Initial
Limited Partner (the "Original Agreement"), of a Certificate of Limited
Partnership (the "Certificate") in the office of the Secretary of State of
the State of Delaware on April 14, 1987; and
WHEREAS, the parties hereto desire to amend and restate the Original
Agreement in its entirety as hereinafter set forth and to continue the
activities of the Fund in accordance with the provisions of this Agreement;
NOW THEREFORE, the parties hereby agree as follows:
I. NAME.
The name of this limited partnership is "(name of Portfolio)." The
Managing General Partners (as defined in Section V(a)) shall have the right
at any time to change the name of the Fund. In the event of any such
change of name, the Managing General Partners shall promptly advise the
Limited Partners of the new name of the Fund. The Managing General
Partners may also adopt (and change from time to time) trade names or
designations for any Series (as defined in Section II(d)) of the Fund.
II. TERM OF THE FUND; INVESTMENT OBJECTIVE; OPERATING POLICY AND POWERS;
SERIES.
(a) Term. The term of the Fund commenced on the date of filing of the
Certificate in the Office of the Secretary of State of Delaware and shall
expire on December 31, 2051, unless sooner dissolved as hereinafter
provided.
(b) Investment Objective. The principal activity of the Fund shall be to
invest and reinvest the assets of each Series in investment securities and
other property.
(c) Operating Policy and Powers. The General Partners will cause the Fund
to operate as an open - end management investment company under the
Investment Company Act of 1940, as amended, and the rules, regulations and
any applicable exemptions thereunder (collectively, the "1940 Act").
Subject to (i) the limitations of the 1940 Act, (ii) this Agreement, and
(iii) the Fund's operating policies and investment and operating
limitations as set forth from time to time in the Fund's then current
prospectus(es) and statement(s) of additional information (collectively,
the "Prospectus") relating to the offer and sale of whole and fractional
units of limited partnership interest in the Fund and/or any Series (the
"Shares"), the Managing General Partners are authorized and empowered on
behalf of the Fund to do any and all acts necessary in pursuit of its
objective and to carry out the activities of the Fund, including, without
limitation, the following:
(1) To invest and reinvest cash and other property and to hold cash or
other property uninvested; to sell, exchange, lend, pledge, mortgage,
hypothecate, write options on and lease any or all assets of the Fund; and
to purchase, sell, exchange, lend, pledge, mortgage, hypothecate or
otherwise deal in options, stand - by commitments, futures contracts,
forward commitments, contracts of all kinds and any security, as defined in
the 1940 Act, consistent with its investment objective;
(2) To adopt by - laws not inconsistent with this Agreement providing
for the conduct of the affairs of the Fund (the "By - laws") and to
amend and repeal them to the extent that they do not reserve that right to
the Limited Partners (which By - laws, as from time to time in effect,
are incorporated herein by reference and form a part of this Agreement);
(3) To elect and remove such officers and appoint and terminate such
agents as they consider appropriate;
(4) To engage professional advisors, investment advisors, depositaries,
custodians and/or administrators to supervise or administer the investments
or affairs of the Fund or any Series and, in general, to do such other acts
and incur such other expenses on behalf of the Fund or any Series as may be
necessary or advisable in connection with the conduct of the affairs of the
Fund or such Series;
(5) To retain a transfer agent and Partner servicing agent, or both;
(6) To provide for the sale and distribution of Shares through an
underwriter or sales agent or by the Fund itself, or both;
(7) To set record dates in the manner hereinafter provided;
(8) To delegate such authority as they consider desirable to any officers
of the Fund and to any agent, custodian or underwriter;
(9) To sell or exchange any or all of the assets of the Fund or any
Series;
(10) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and
deliver powers of attorney to such person or persons as the Managing
General Partners shall deem proper, granting to such person or persons such
power and discretion with relation to securities or property as the
Managing General Partners shall deem proper;
(11) To exercise powers and rights of subscription or otherwise which in
any manner arise out of ownership of securities;
(12) To hold any security or property in a form not indicating any
partnership - whether in bearer, unregistered or other negotiable
form - or either in its own name or in the name of a custodian or a
nominee or nominees, subject in any case to proper safeguards according to
the usual practice of investment companies;
(13) To establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment purposes in
accordance with the provisions of Section II(d));
(14) To allocate assets, liabilities and expenses of the Fund to a
particular Series or to apportion the same between or among two or more
Series, provided that any liabilities or expenses incurred by or on behalf
of a particular Series shall be payable solely out of the assets belonging
to that Series as provided for in Section II(d);
(15) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or concern, any security of
which is held by the Fund; to consent to any contract, lease, mortgage,
purchase or sale of property by any such corporation or concern; and to pay
calls or subscriptions with respect to any security held by the Fund;
(16) To compromise, arbitrate or otherwise adjust claims in favor of or
against the Fund or any matter in controversy including, but not limited
to, claims for taxes;
(17) To make distributions of income and of capital gains to Partners in
the manner hereinafter provided;
(18) To borrow money and to pledge assets belonging to the Fund or any
Series to secure borrowings consistent with its investment objective;
(19) To establish, from time to time, a minimum total investment in the
Fund or any Series and to require the redemption of the Shares of any
Partner or other holder of Shares whose investment is less than such
minimum upon giving notice to such Partner or other holder;
(20) To lend portfolio securities in accordance with applicable policies
of the Securities and Exchange Commission (the "SEC") with respect to the
lending of securities by investment companies under the 1940 Act; and
(21) To exercise any and all other powers which may be necessary or
appropriate to implement the foregoing purposes, policies and powers of the
Fund, including, without limitation, those generally granted to limited
partnerships under the Partnership Act.
(d) Series.
(1) The Managing General Partners may from time to time establish separate
segregated portfolios of Fund assets (the "Series") Each Series may,
within the overall scope of the Fund's investment objective and activities,
have distinct investment policies and shall be separately identified. Each
Series shall be represented by separately designated Shares, divided into
such numbers of whole and fractional Shares as shall be determined by the
Managing General Partners. Each Share of each Series shall be identical to
each other Share of such Series in all economic respects and shall
represent an equal and proportionate interest in the relevant Series with
each other outstanding Share of that Series. The Shares of a particular
Series will be preferred over the Shares of all other Series in respect of,
and will have an interest solely in, the Fund assets belonging to that
Series, as provided in Paragraph (2) below. The Managing General Partners
shall have full power and authority, in their sole discretion and without
obtaining any prior authorization or vote of the Limited Partners holding
Shares of any Series, to create and establish (and to change in any manner)
Shares or any Series or classes thereof with such preferences, voting
powers, rights and privileges as the Managing General Partners may from
time to time determine, to divide or combine the Shares or any Series or
classes thereof into a greater or lesser number, to classify or reclassify
any issued Shares into one or more Series or classes of Shares, to abolish
any one or more Series or classes of Shares and to take such other action
with respect to the Shares as the Managing General Partners may deem
desirable. The identification of each Series and the Shares thereof
existing from time to time, including the relative designations,
preferences participating, optional or other special rights and powers
thereof, shall be set forth from time to time in the Prospectus.
(2) All consideration received by the Fund for the issue or sale of Shares
of a particular Series, together with all assets of the Series in which
such consideration is invested or reinvested, all income, earnings, profits
and proceeds thereof, including any proceeds derived from the sale,
exchange or liquidation of such assets and any funds or payments derived
from any reinvestment of such proceeds in whatever form the same may be,
shall be referred to as "assets belonging to" that particular Series. In
addition, any assets, income, earnings, profits and proceeds thereof, funds
or payments which are not readily identifiable as belonging to any
particular Series shall be allocated by the Managing General Partners to,
between or among any one or more of the Series in such manner as they in
their sole discretion deem fair and equitable and shall be treated for all
purposes as assets belonging to the Series to which they are so allocated.
The assets belonging to a particular Series shall be so recorded upon the
books of the Fund, shall be held by the Managing General Partners solely
for the benefit of the holders of Shares of that Series and shall be
charged with the liabilities, expenses, costs, charges and reserves
(collectively, the "Liabilities") attributable to that Series. Any
Liabilities of the Fund which are not readily identifiable as attributable
to any particular Series shall be allocated and charged by the Managing
General Partners to, between or among any one or more of the Series in such
manner as they in their sole discretion deem fair and equitable. Each
allocation made by the Managing General Partners under this Paragraph and
their determinations as to which assets belong to, and which Liabilities
are attributable to, a particular Series shall be conclusive and binding
upon all Limited Partners and other holders of Shares of all Series for all
purposes. Any creditor of any Series may look only to the assets belonging
to that Series to satisfy such creditor's claims.
III. PLACE OF BUSINESS.
The principal place of business of the Fund shall be located at 82
Devonshire Street Boston, Massachusetts 02109. The Managing General
Partners may from time to time change the location of the Fund's principal
place of business and establish such additional places of business as they
may deem necessary or desirable for the conduct of the Fund's activities.
IV. CAPITAL CONTRIBUTIONS.
(a) General Partners' Contributions.
(1) Each person who signed the Original Agreement as a general partner (an
"Initial General Partner") has purchased the number of Shares and has
contributed the amount in cash to the Fund set forth on Schedule "A" to
this Agreement and incorporated herein by this reference.
(2) Notwithstanding anything to the contrary that may be expressed or
implied herein, the General Partners, taken together, shall at all times
during the Fund's existence maintain a positive balance in their Capital
Accounts (as defined in Section IV(e)), in the aggregate, equal to at least
the lesser of $500,000 or 1% of the aggregate positive Capital Account
balances of all Partners, as long as current law, regulations, Internal
Revenue Service policy or interpretations thereof, in the opinion of
counsel, require the General Partners to maintain such balance in order to
enable the Fund to qualify, or obtain a ruling from the IRS that it
qualifies, as a partnership for federal income tax purposes. In the event
that the Fund has more than one Series, the General Partners shall maintain
positive balances in their Sub - Accounts relating to such Series,
which will satisfy the requirements of this section separately with respect
to each such Series.
(3) The Non - Managing General Partners (as defined in Section V(a)),
collectively, shall purchase, as necessary, that number of Shares of any
Series which, when added to all Shares owned by the Managing General
Partners, will comply with the requirements of Paragraph (2). In addition,
the Non - Managing General Partners, collectively, shall purchase such
additional Shares of any Series as shall enable the General Partners, in
the aggregate, to meet the requirements of Section VII(b)(4).
(b) Limited Partners' Contributions. The Initial Limited Partner has
purchased the number of Shares set forth on Schedule "A: and has
contributed $10 in cash to the Fund for each Share purchased. Subsequently
admitted Limited Partners will contribute, with respect to each Share of
any Series purchased, the "Net Asset Value" thereof, as determined in
accordance with Section IV(d).
(c) Form of Contributions. Contributions may be made only in cash (U.S.
dollars) or such other property or currency which is approved by the
Managing General Partners.
(d) Determination of Net Asset Value. The term "Net Asset Value" of any
Series shall mean that amount by which the assets of that Series exceed its
liabilities, all as determined by or under the direction of the Managing
General Partners, in the manner set forth in the Prospectus. The Net Asset
Value per Share shall be determined on such days and at such times as the
Managing General Partners may determine. The Managing General Partners may
suspend the determination of Net Asset Value as permitted under the 1940
Act. All determinations of Net Asset Value and appraisals of assets and
liabilities made in good faith by the Managing General Partners or their
delegates shall be binding and conclusive upon all Partners, other holders
of Shares and other interested persons.
(e) Capital Accounts. In addition to any capital accounts required to be
maintained for accounting purposes in accordance with generally accepted
accounting principles, the Fund shall maintain a capital account for each
Partner for federal income tax purposes ("Capital Account"). Each Capital
Account shall be maintained in accordance with section 704 of the Internal
Revenue Code of 1986, as amended (the "Code"), and regulations thereunder.
If a Partner owns Shares in more than one Series, that Partner's Capital
Account shall be divided into one sub - account for each such Series
("Sub - Account"), and each addition to or subtraction from any
Capital Account shall be allocated to the Sub - Account of the Series
giving rise to such addition or subtraction. On a daily basis (or such
other basis as may be determined by the Managing General Partners), each
Capital Account and each Sub - Account, as appropriate, shall be
credited with the Partner's share of income and gain, shall be charged with
such Partner's share of deductions, losses, distributions and withholding
taxes (if any) and shall otherwise appropriately reflect transactions of
the Series and the Partners. Each Partner's Capital Account and each
Sub - Account, as appropriate, shall be adjusted to reflect any
purchases and redemptions of Shares by such Partner at such time as
determined by the Managing General Partners. Adjustments to Capital
Accounts and to Sub - Accounts for income tax purposes to take into
account allocations of gains and losses realized by each Series shall be
made in the manner described herein. A substituted Limited Partner shall
be deemed to succeed to the Capital Account and Sub - Accounts of the
Partner whom such substituted Limited Partner replaced.
V. GENERAL PARTNERS.
(a) Identity and Number. The names and addresses of the General Partners
are set forth on Schedule "A: to this Agreement, on which each is
designated either as a "Managing General Partner" or as a
"Non - Managing General Partner." Hereafter, the number of Managing
General Partners shall be fixed from time to time by the Managing General
Partners. A Managing General Partner or Non - Managing General
Partner shall serve until the occurrence of an event described in Section
V(i) or Section V(j), respectively.
(b) Managing General Partners and Non - Managing General Partners.
Only natural persons may act as Managing General Partners, and each General
Partner who is a natural person shall act only as a Managing General
Partner. Any General Partner which is not a natural person shall act as a
Non - Managing General Partner. Except as provided in Sections V(c)
and X(e), a Non - Managing General Partner as such shall take no part
in the management, conduct or operation of the Fund's affairs and shall
have no authority to act on behalf of the Fund or to bind the Fund.
(c) Management and Control. The Fund will be managed by the Managing
General Partners, who will have complete and exclusive control over the
management, conduct and operation of the Fund's affairs. Except as
otherwise specifically provided in this Agreement, the Managing General
Partners shall have the rights, powers and authority, on behalf of the Fund
and in its name, to exercise all of the rights, powers and authority of
partners of a partnership without limited partners under the Partnership
Act. Subject to the provisions of the 1940 Act, (1) the Managing General
Partners may contract on behalf of the Fund with one or more banks, trust
companies, investment advisers or other persons (which may be affiliates of
a General Partner) for the performance of such functions as the Managing
General Partners may determine, but subject always to their continuing
supervision, such functions to include, but not be limited to, the
investment and reinvestment of all or part of the Fund's assets, the
execution of portfolio transactions, the provision of investment advisory,
statistical and research facilities and any or all administrative
functions, and (2) a Non - Managing General Partner or an affiliate of
a General Partner may act as an investment adviser to the Fund or any
Series and shall be compensated for such services in accordance with the
terms of any investment advisory agreement which may be executed by the
Fund or any Series and such Non - Managing General Partner or
affiliate. The Managing General Partners may also appoint agents to
perform such duties on behalf of the Fund as they deem desirable. The
Managing General Partners shall devote themselves to the Fund's activities
to the extent they may determine necessary for the efficient conduct
thereof, which it is understood shall not, however, occupy their full time.
Any General Partner may also engage in other activities or businesses,
whether or not similar in nature to the activities of the Fund, subject to
the limitations of the 1940 Act. Upon the occurrence of an event described
in Section V(i), the Managing General Partners shall, within 90 days after
such event, meet for the purposes of determining whether to continue the
Fund and whether, in their discretion, but subject to the requirements of
Section V(k), to elect a successor Managing General Partner or Partners or
to reduce the number of Managing General Partners.
(d) Action by Managing General Partners. Unless otherwise required by the
1940 Act with respect to any particular action, the Managing General
Partners shall act only by the vote of a majority of the Managing General
Partners in attendance at a meeting, duly called, at which a quorum of the
Managing General Partners is present or by unanimous written consent
without a meeting or by telephone consent (provided a quorum of Managing
General Partners participate in such telephone meeting). At any meeting of
the Managing General Partners, a majority of the Managing General Partners
shall constitute a quorum. No single Managing General Partner shall have
authority to act on behalf of the Fund or to bind the Fund, provided,
however, that the Managing General Partners by majority vote may delegate
to any one or more of their number their authority to approve particular
matters or take particular action on behalf of the Fund. The Managing
General Partners may elect a Chairman who shall preside at meetings and
such other agents or officers of the Fund as they may deem advisable to
carry out its affairs.
(e) Designation of Tax Matters Partner. The Fund's "Tax Matters Partner,"
as defined in section 6231(a)(7) of the Code, shall be designated by the
Managing General Partners and may change from time to time as determined by
the Managing General Partners. The Tax Matters Partner is authorized, at
the Fund's or any affected Series' sole cost and expense, to represent, and
to retain legal counsel and other appropriate assistance to represent, the
Fund or such Series and each Limited Partner or other holder of Shares, in
connection with all examinations of the Fund's or such Series' affairs by
tax authorities, including any resulting claim, action, suit or proceeding
(as defined in Section V(m)). Each Limited Partner or other holder of
Shares agrees to cooperate with the Managing General Partners and to do or
refrain from doing any and all things reasonably required by the Managing
General Partners in connection therewith. The Managing General Partners
may take any other appropriate action with respect to any such tax matters,
including, but not limited to, settlement, compromise or arbitration of any
such examination or any resulting claim, action, suit or proceeding,
without the consent of any Limited Partners or other holders of Shares, and
any such action shall be binding on each Limited Partner or other holder of
Shares
(f) Limitations on Authority of Managing General Partners. The Managing
General Partners shall have no authority, without the vote or written
consent or ratification of all of the Limited Partners, to
(1) do any act in contravention of this Agreement,
(2) do any act which wold make it impossible to carry on the ordinary
activities of the Fund or
(3) possess Fund property, or assign their rights in specific Fund
property, for other than a Fund purposes. However, nothing herein shall
preclude dissolution of the Fund in accordance with this Agreement.
(g) Management and Control by Non - Managing General Partners.
Except as otherwise provided in sections V(c) and X(e), the
Non - Managing General Partners as such shall have no power to engage
in the management, conduct or operation of the Fund's affairs nor to
exercise any of the rights, powers and authority of a Managing General
Partner.
(h) General Partners as Limited Partners. A General Partner may also
become a Limited Partner without obtaining the consent of the Limited
Partners and thereby become entitled to all the rights of a Limited Partner
to the extent of the limited partnership interest so acquired. Such event
shall not, however, be deemed to reduce or otherwise affect any of the
General Partner's liability hereunder as a General Partner. Termination of
a person's status as a General Partner shall not affect such person's
status, if any, as a Limited Partner.
(i) Termination of Status of a Managing General Partner as a General
Partner. A Managing General Partner shall have no further right, power or
authority to act as a general partner of the Fund (except to execute any
amendment to this Agreement and/or the Certificate to evidence the
termination of his status as such), and his interest as a general partner
shall terminate, if he
(1) dies, becomes bankrupt or is incapacitated,
(2) voluntarily withdraws upon not less than 90 days' written notice to
the other Managing General Partners, unless such notice is waived by the
Managing General Partners,
(3) is removed by the other Managing General Partners pursuant to a vote
taken at a meeting, duly held, of the Managing General Partners,
(4) is removed at a meeting of the Limited Partners called for such
purpose by a vote of at least two - thirds of the outstanding Shares
of all Series voting as a single class, or
(5) fails to be elected at a meeting of the Limited Partners called for
such purpose under Section X(e), provided that the termination of his
interest, and his right, power and authority to act, as a general partner
of the Fund shall not occur until his successor has been duly elected and
admitted to the Fund as a Managing General Partner or the number of
Managing General Partners has been reduced by the remaining Managing
General Partners, and provided, further, that the failure of any Managing
General Partner to be reelected shall not cause a dissolution of the Fund
and the operations of the Fund shall be continued by all remaining and
successor Managing General Partners.
A Managing General Partner shall not be entitled to any special payment
from the Fund as a result of the termination of his status as general
partner. A terminated Managing General Partner may, if he chooses to do
so, either redeem his Shares in accordance with Section XI(a) or retain his
Shares as a Limited Partner.
(j) Termination of Status of a Non - Managing General Partner as a
General Partner. A Non - Managing General Partner shall have no
further right, power or authority to act as a general partner of the Fund
(except to execute any amendment to this Agreement and/or Certificate to
evidence this termination of its status as such), and its interest as a
general partner shall terminate, upon the occurrence of any of the
following events:
(1) the Non - Managing General Partner's voluntary withdrawal, upon
90 days' written notice to the Managing General Partners; provided that a
Non - Managing General Partner shall not voluntarily withdraw or
otherwise terminate its status as a Non - Managing General Partner
until the earliest of (A) 90 days from the date such Non - Managing
General Partner gives the Managing General Partners written notice of its
intention to withdraw as a Non - Managing General Partner, (B) either
the date that (i) at least one of the existing Non - Managing General
Partners agrees to assume the obligations of the withdrawing
Non - Managing General Partner under Section IV(a)(3) or (ii) a
successor Non - Managing General Partner, who has agreed to assume
such obligations, is elected by the Managing General Partners or (C) the
date a Managing General Partner assumes the obligations of the withdrawing
Non - Managing General Partner under Section IV(a)(3);
(2) the Non - Managing General Partner is dissolved or otherwise
terminates its existence;
(3) a petition in bankruptcy is filed by the Non - Managing General
Partner;
(4) an involuntary petition in bankruptcy is filed against the
Non - Managing General Partner and a trustee is appointed and
confirmed after an opportunity for a hearing;
(5) the Non - Managing General Partner makes an assignment for the
benefit of creditors of substantially all of its assets; or
(6) the Non - Managing General Partner is removed by vote of the
Managing General Partners.
The retirement, dissolution, bankruptcy or other withdrawal of a
Non - Managing General Partner shall not dissolve the Fund, provided
that the Managing General Partners elect to continue the business and
operations of the Fund and, if there are no other existing
Non - Managing General Partners, either a successor
Non - Managing General Partner is elected by the Managing General
Partners or, if a Non - Managing General Partner is not elected, a
Managing General Partner assumes the obligations of the withdrawing
Non - Managing General Partner under Section IV(a)(3). A
Non - Managing General Partner shall not be entitled to any special
payment from the Fund as a result of the termination of its status as a
general partner. A terminated Non - Managing General Partner may, if
it chooses to do so, redeem its Shares in accordance with Section XI(a) or
retain its Shares as a Limited Partner.
(k) Additional or Successor Managing General Partners. Subject to the
applicable requirements of the 1940 Act, between meetings of Partners the
Managing General Partners may elect additional or successor Managing
General Partners to fill vacancies (whether or not created by an increase
in the number of Managing General Partners) in the number of Managing
General Partners. The number of Managing General Partners shall be fixed
from time to time by the Managing General Partners and, at or after the
commencement of the business of the Fund, shall be not less than one.
Subject to the provisions of Section V(i), each additional or successor
Managing General Partner shall serve as a Managing General Partner until
the next meeting of Partners called for the election of Managing General
Partners and until his respective successor is duly elected and admitted.
If at any time more than a majority of the Managing General Partners
serving as such shall not have been approved at a meeting of Limited
Partners, then the Managing General Partners shall as promptly as possible,
and in any event within 60 days (unless the SEC shall extend such period),
cause a meeting of Limited Partners to be held for the purpose of electing
Managing General Partners such that at least a majority thereof shall have
been elected by the Limited Partners consistent with the requirements of
the 1940 Act.
(l) Liability to Limited Partners. The General Partners shall not be
personally liable for the repayment of the balance of the Capital Account
of any Limited Partner or any other amount standing in the account of any
other holder of Shares, including, but not limited to, contributions with
respect to Shares. Any such repayment shall be solely from the Fund's
assets. The General Partners shall not have any personal liability to any
Limited Partner or any other holder of Shares for any loss, damage or other
costs incurred by reason of (1) any failure to withhold income tax under
federal or state tax laws with respect to income allocated to Limited
Partners or such holders, (2) any change in federal or state income tax
laws, or in interpretations thereof, as they apply to the Fund, the Limited
Partners or such holders, whether such change occurs through legislative,
judicial or administrative action, (3) any error of judgment or mistake of
fact or law or (4) any other action, or failure to act or other matter,
unless the result of willful misfeasance, bad faith, gross negligence or
reckless disregard of their duties. Any such loss, damage or costs shall
be satisfied from the Fund's assets.
(m) Assignment or Transfer of General Partners' Shares. A General Partner
may not assign Shares which he or it holds in his or its capacity as a
General Partner to any party without the consent of a majority of the
Managing General Partners (excluding such General Partner). Any assignee
of a General Partner for which such consent has been granted may not become
a substituted General Partner unless elected as such by the remaining
Managing General Partners, as provided in Section V(k), and shall otherwise
hold such Shares as a Limited Partner.
(n) Reimbursement and Compensation. Any Managing General Partner (other
than one who is an "interested person" as defined under the 1940 Act) may
receive compensation for his services as a Managing General Partner (as
determined by the Managing General Partners from time to time) and will be
reimbursed for all reasonable out - of - pocket expenses incurred
in performing his duties hereunder. Neither the payment of such
compensation nor the reimbursement of such expenses shall be deemed a
distribution for purposes of Section VII(b), nor shall such payment or
reimbursement affect such Partner's right to receive any distribution to
which he would otherwise be entitled as a holder of Shares.
(o) Indemnification.
(1) Subject to the exceptions and limitations contained in Paragraph (2)
below, every person who is, or has been, a General Partner, an officer,
director and/or trustee of a Non - Managing General Partner, an
officer of the Fund, or an agent of any of them (including persons who
serve at the Fund's request as directors, officers, or trustees of another
organization in which the Fund has any interest as a shareholder, creditor,
or otherwise) (a "Covered Person") shall be indemnified by the Fund to the
fullest extent permitted by law against any liability and against all
expenses reasonably incurred or paid by him in connection with any claim,
action, suit, or proceeding in which he becomes involved as a party or
otherwise by virtue of his being or having been a Covered Person, and
against amounts paid or incurred by him in the settlement thereof. The
words "claim," "action," "suit," or "proceeding" shall apply to all claims,
actions, suits or proceeding s(civil, criminal or other, including
appeals), actual or threatened, while in office or thereafter, and the
words "liability" and "expenses" shall include, without limitation,
attorneys' fees, costs, judgments, amounts paid in settlement, fines,
penalties and other liabilities.
(2) No indemnification shall be provided hereunder to a Covered Person
(A) who is finally adjudicated by a court or other body before which the
proceeding was brought (i) to be liable to the Fund or its Partners by
reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office, or (ii) not
to have acted in good faith in the reasonable belief that his action was in
the best interest of the Fund;
(B) in the event of a settlement or other disposition not involving a
final adjudication as provided in (A), unless there has been a
determination that such Covered Person did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office
(i) by the court or other body approving the settlement or other
disposition,
(ii) by the vote of at least a majority of those Managing General
Partners who are neither
interested persons of the Fund nor parties to the matter, based upon a
review of
readily available facts (as opposed to a full trial - type
inquiry), or
(iii) by the written opinion of independent legal counsel based upon a
review of readily
available facts (as opposed to a full trial - type inquiry);
provided, however, that any Partner may, by appropriate legal
proceedings, challenge any
such determination by the Managing General Partners or independent
counsel.
(3) The rights of indemnification herein provided may be insured against
by policies maintained by the Fund, shall be severable, shall not be
exclusive of or affect any other rights to which any Covered Person may now
or hereafter be entitled, shall continue as to a person who has ceased to
occupy the position by virtue of which he was a Covered Person, and shall
inure to the benefit of the heirs, executors and administrators of a
Covered Person. Nothing contained herein shall affect any rights of
indemnification to which Fund personnel, other than Covered Persons, and
other persons may be entitled by contract or otherwise underlaw.
(4) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character described
in Section V(o)(1) may be paid by the Fund from time to time prior to final
disposition thereof upon receipt of an undertaking by or on behalf of such
Covered Person that such amount will be paid over by him to the Fund if it
is ultimately determined that he is not entitled to indemnification under
this Section V(o); provided, however, that either (A) such Covered Person
provides appropriate security for such undertaking, (B) the Fund is insured
against losses arising out of any such advance payments or (C) either a
majority of the Managing General Partners who are neither interested person
of the Fund nor parties to the matter, or independent legal counsel in a
written opinion, determined, based upon a review of readily available facts
(as opposed to a full trial - type inquiry), that there is reason to
believe that such Covered Person will be found entitled to indemnification
under this Section V(o).
(5) The indemnification obligations of the Fund under this Section V(o)
shall be satisfied solely out of Fund assets, and no Limited Partner shall
have any personal liability for the indemnification herein provided.
Further, to the extent that the liabilities and/or expenses to be
indemnified hereunder are incurred or paid in connection with a claim, act,
suit or proceeding involving activities or omissions that relate to one or
less than all of the Series, then such indemnification shall be paid only
from the assets of the relevant Series.
VI. LIMITED PARTNERS.
(a) Identity, Number and Contributions. The name and address of the
Initial Limited Partner and the number of Shares owned by him are set forth
in Schedule "A" to this Agreement. Additional Limited Partners may be
admitted with respect to each Series, and Shares of any Series may be sold
in accordance with procedures established by the Managing General Partners.
No consent of any Limited Partners shall be required in connection
therewith. Any person who purchases Shares, irrespective of whether he, or
his authorized representative, has executed an "account application" or any
other document related hereto, will be deemed to have consented to, and
will be bound by, the terms and conditions of this Agreement, including the
power of attorney set forth in Section XIV(d). The Managing General
Partners reserve the right, in their sole discretion, to reject any
purchaser of Shares as a Limited Partner. The names, addresses, capital
contributions and number (and identity by Series) of Shares held by each
Limited Partner shall be maintained in the books and records of the Fund.
(b) No Power to Control Fund Operations. A Limited Partner shall have no
right to and shall take no part in the management or control of the Fund's
operations and shall have no right or authority to act for or bind the
Fund, but may exercise the rights and powers of a limited partner under
this Agreement and the Partnership Act.
(c) Voting Rights of Limited Partners. Under the circumstances provided
in this Agreement or by the 1940 Act, the Limited Partners shall have the
right to vote (notwithstanding anything to the contrary in Section XIV(c))
on the following material matters relating to the activities of the Fund,
each such vote to be taken at a meeting of the Limited Partners called and
held pursuant to the provisions of Section X and the By - laws, if
any:
(1) The election of Managing General Partners when so required by Section
X(e):
(2) The approval or termination of investment advisory or underwriting
contracts or distribution plans
(which may be with (a) Non - Managing General Partner or an
affiliate thereof);
(3) The approval or termination of the engagement of auditors; and
(4) Any other matters that the 1940 Act requires to be approved by the
Partners.
On any matter submitted to a vote of the Limited Partners, all Shares shall
be voted by individual Series (it being the intent hereof that matters
involving an individual Series shall be voted on only by Limited Partners
holding Shares of that Series) except (i) when required by the 1940 Act,
Shares shall be voted in the aggregate as a single class and not by
individual Series and (ii) when the Managing General Partners have
determined that the matter at issue affects the interests of more than one
Series, then the Limited Partners who are holders of Shares of all affected
Series shall be entitled to vote thereon as a single class.
(d) Limitation of Limited Partners' Liability. No Limited Partner shall
be liable for the debts or obligations of the Fund provided, however, that
the contribution of a Limited Partner shall be subject to the risks of the
operations of the Fund and subject to the claims of the Fund's creditors,
and provided further that, after any Limited Partner has received the
return of any part of his contribution, he will be liable to the Fund to
the extent required by the Partnership Act.
(e) Additional Contributions of Limited Partners; Assessments. No Limited
Partner shall be required to make any contributions to the Fund other than
the purchase price of his Share(s) at the Net Asset Value (including Shares
issued as provided in Section VII), and no Limited Partner shall be
required to lend monies to the Fund. No holder of any Share shall be
subject to additional assessments on or in respect of such Share, except as
provided in Section VI(d).
(f) Death of a Limited Partner. The death of a Limited Partner shall not
dissolve or terminate the Fund. In the event of such death, the personal
representative of the deceased Limited Partner shall have the right to be
substituted as a Limited Partner only in accordance with the provisions of
Section IX(b), but shall have the right to have the Fund redeem his Shares
in accordance with Section XI(a).
VII. DISTRIBUTIONS OF INCOME AND GAINS; TAX ALLOCATIONS.
(a) Distributions of Income and Gains.
(1) The Managing General Partners, in their sole discretion, shall
determine the amounts of net income and net realized capital gains of each
Series, if any, to be distributed to holders of Shares of such Series, the
record date for each such distribution and the time when each such
distribution shall be made; provided, however, that the Managing General
Partners shall not be required to make any distribution of net income or
net realized capital gains for any taxable year. Expenses of each Series
will be accrued on a regular basis determined by the Managing General
Partners. The Managing General Partners are authorized to establish such
reserves as may be required, in their judgment, with respect to any
anticipated or actual liabilities of a Series, including liabilities
relating to a Series' obligation to indemnify any Partner hereunder. For
purposes of this subsection, a person shall be deemed to be a holder of a
Share if he is the record holder thereof on the record date established for
the payment of a distribution therein (regardless of whether such record
holder has been admitted as substituted Limited Partner as herein
provided).
(2) Each distribution pursuant to Paragraph (1) to the holders of the
Shares of any Series shall be made in full and fractional Shares of such
Series valued at the Net Asset Value thereof on the applicable record date.
If so provided in the Prospectus, distributions of net income and net
realized capital and other gains may b made in cash (U.S. dollars) to those
holders of Shares who have made a proper election in the manner set forth
therein.
(b) Tax Allocations.
(1) General. For each fiscal year, items of income, gain, loss,
deduction and credit from operations of a Series (other than from the
disposition of capital assets of the Series) shall be allocated for federal
income tax purposes pro rata among the Partners holding Shares of such
Series in proportion to the number of such Shares owned by each Partner or
in such other manner that the Managing General Partners determine is
required by the federal income tax law. A holder of a Share of a Series
shall be allocated the proportionate part of such items actually realized
by such Series for each full accrual period during which such Share was
owned by such holder For purposes of this subsection, a person shall be
deemed to be a holder of a Share on a specific day if he is the record
holder of such Share on such day (regardless of whether or not such record
holder has been admitted as a substituted Limited Partner as herein
provided). The Partners' Capital Accounts and Sub - Accounts shall be
adjusted to reflect allocations of such items of income, gain, loss,
deduction and credit.
(2) Allocations of Capital Gains and Losses. Capital gains and losses of
a Series shall be allocated for federal income tax purposes pro rata among
the Partners holding Shares of such Series in proportion to the number of
such Shares owned by each Partner, or in such other manner that the
Managing General Partners determine is required by the federal income tax
law, on the respective dates of disposition of the assets giving rise to
the gains or losses and the Partners' Capital Accounts and
Sub - Accounts shall be adjusted accordingly. Purchase of Shares and
partial or complete redemptions of Shares shall be regarding as occurring
at the time the Net Asset Value per Share is determined, after adjustments
to the Partners' Capital Accounts and Sub - Accounts for realized
gains and losses on such day have been made.
(3) Qualified Income Offset. If, during any taxable year, a Partner has
a "Qualified Income Offset Amount" (as defined in the regulations under
section 704 of the Code), then income or gain (or items thereof) shall be
allocated to such Partner in accordance with such regulations.
(4) General Partners' Minimum Interests. Notwithstanding anything herein
to the contrary, the interests (including Limited Partner interests) of all
the General Partners, taken together, in each material item of income,
gain, loss, deduction or credit of each Series, at all times during the
existence of such Series, shall equal at least the lesser of (A) 1% and (B)
the greater of (i) 0.2% and (ii) 1% divided by the ratio that total capital
contributions to such Series by all Partners bears to $50 million.
(c) Special Allocation of Loss. Notwithstanding anything herein to the
contrary, the amount of an item of loss of deduction that would reduce a
Limited Partner's Capital Account below zero shall instead be allocated to
the General Partners in proportion to their respective interests in the
Fund. A General Partner's interest in the Fund shall be expressed as a
fraction, the numerator of which is the sum of the product of (1) the Net
Asset Value per Share of each Series and (2) the number of Shares of each
Series held by the General Partner and the denominator of which is the sum
of all such numerators of all General Partners.
VIII. ACCOUNTING.
(a) Records and Accounting. At all times during the existence of the
Fund, books of account, which shall be adequate and appropriate for the
Fund's operations, shall be kept. Such books and records shall be kept on
a basis consistent with the accounting methods followed by the Fund for
federal income tax purposes and, where deemed appropriate, in accordance
with generally accepted accounting principles and procedures applied in a
consistent manner. Such books and records shall include such separate and
additional accounts for each holder of Shares as shall be necessary to
reflect accurately the rights and interests of such holder and shall
specifically reflect the name and address of each Partner and each other
holder of Shares and the number of Shares of each Series held by each for
the purpose of determining recipients of distributions and notices. The
Fund shall make its books and records available to Limited Partners, upon
five days' written notice, for any proper partnership purpose provided for
under the Partnership Act; however, the Managing General Partners reserve
the right to request a statement of the purposes for which the examination
is being requested.
(b) Fiscal Year. The Fund's fiscal year shall be the calendar year for
financial reporting and federal income tax purposes, unless the Managing
General Partners determine otherwise.
(c) Income Tax Information. The Managing General Partners shall cause to
be transmitted to each Partner and to the appropriate governmental
authorities such reports and information as shall be required by the 1940
Act, the Partnership Act, the Code and any other provision of law.
(d) In the event of a partial or complete redemption of Shares which
results in a distribution in excess of a Partner's tax basis in his Shares,
the Series may make an election to adjust the basis of Series assets under
Section 754 of the Code, and the Series may increase the tax basis of its
assets in accordance with Sections 734, 743(b) and 755 of the Code by the
difference between the amount of the distribution made to the redeeming
Partner in redemption of his Shares and his tax basis in his Shares.
IX. PROHIBITION OF ASSIGNMENT OF SHARES.
(a) Prohibition of Assignment. Except as otherwise provided in this
Section IX, no Limited Partner or other holder of Shares shall have the
right to sell, assign, pledge, hypothecate or otherwise transfer or
encumber (collectively "transfer") all or any part of his Shares except
with the prior consent of the Managing General Partners, which consent may
be withheld in the Managing General Partners' sole discretion. Any
transfer in violation of this Section IX shall be void and shall not be
recognized by the Fund for any purpose. In the case of a transfer (other
than pursuant to subsections (b) and (c)) approved by the Managing General
Partners, the transferee shall be admitted as a substituted Limited Partner
upon his execution of an account application and power of attorney in a
form satisfactory to the Managing General Partners and upon the
satisfaction of such other conditions as may be specified by the Managing
General Partners. If a permitted transferee is not admitted as a
substituted Limited Partner, then (1) such transferee shall become a holder
of record of the Shares transferred to him and shall be entitled to redeem
such Shares in accordance with the provisions of Section XI and to receive
distributions in respect of such Shares as herein provided, but neither
such transferee nor his transferor shall have any other rights of a Limited
Partner (including the right to vote on any matter or to inspect the books
and records of the Fund).
(b) Pledge of Shares; Death, Incompetence or Termination of Existence of a
Limited Partner. A Limited Partner may pledge his Shares as collateral to
a securities broker, bank or financial industry professional if the Limited
Partner gives the Fund prior written notice that a pledge is proposed to be
made. Any person who is holding Shares as collateral and becomes the owner
thereof due to foreclosure or otherwise, or any person who succeeds to the
ownership of Shares upon the death or incompetence of a Limited Partner
(or, in the case of a Limited Partner that is not a natural person, the
merger, dissolution or other termination of existence of such Limited
Partner), shall not be substituted as a Limited Partner without (1) the
consent of the Managing General Partners, which may be withheld in their
sole discretion, and (2) if such consent is given, the execution of an
account application and power of attorney in a form satisfactory to the
Managing General Partners and satisfaction of such other conditions as may
be specified by the Managing General Partners. If a pledgee who has become
the owner of Shares or any such successor in interest is not admitted as a
substituted Limited Partner, then, upon receipt by the Fund of evidence
satisfactory to the Managing General Partners of the pledgee's or the
successor's ownership of Shares, the pledgee or the successor shall become
the holder of record of the subject Shares and shall thereafter have the
same rights as specified in Section IX(a) with respect to a permitted
transferee who is not admitted as a substituted Limited Partner. If that
occurs, however, the Limited Partner who pledged such Shares or the
incompetent Limited Partner, as the case may be, shall cease to possess all
the rights of a Limited Partner (including the right to vote on any matter
or to inspect the books and records of the Fund).
X. MEETING OF LIMITED PARTNERS.
(a) Meeting and Call. Meetings of all Limited Partners or, as applicable,
of Limited Partners holding Shares of any particular Series, shall be held
either within the State of Delaware or at such other places on the date
fixed, from time to time, by the Managing General Partners for the
transaction of such matters as may be presented to the meeting and upon
which Limited Partners have the right to vote hereunder. Meetings shall be
called by the Managing General Partners whenever the holders of Shares of
at least 10% of all votes entitled to be cast at such meeting shall make a
duly authorized request that such meeting be called or as otherwise may be
required by this Agreement, the 1940 Act or the Partnership Act.
(b) Notice or Actual or Constructive Waiver of Notice. Written or printed
notice of each meeting shall state the time and place of the meeting and
the purpose or purposes for which the meeting is called and shall be given
at least ten days in advance of the meeting to each Limited Partner who is
the record holder of Shares of the concerned Series as of the record date
fixed by the Managing General Partners for determining Limited Partners
entitled to vote. Such notice shall be given either by mail at such
holder's address appearing on the books of the Fund or the address supplied
by him for the purpose of notice or by presenting it to him personally or
by leaving it at his residence or usual place of business before the date
of the meeting. If mailed, notice shall be deemed to be given when
deposited in the United States mail with postage thereon prepaid. Any
notice of a meeting of Limited Partners may be waived in writing by a
Limited Partner before or after the meeting. Actual attendance or
representation at any meeting shall be deemed equivalent to the giving of
such notice to such Partner.
(c) Voting. All Shares of each Series shall have equal voting rights, and
each Share shall have one vote. Each Partner shall have the right to vote
at any meeting the number of Shares standing of record in such Partner's
name as of the record date set forth in the notice of the meeting. A
majority of the votes cast at a meeting of Partners, duly called and at
which a quorum is present, shall be sufficient to take or authorize action
upon any matter which may come before the meeting, unless more than a
majority of votes cast is required by this Agreement or the 1940 Act, and a
plurality of all the votes cast at a meeting at which a quorum is present
shall be sufficient to elect a Managing General Partner; provided that
where any provision of law or this Agreement requires or permits that the
Limited Partners who are holders of Shares of any Series shall vote as a
Series, then a majority of the Shares of that Series voted on the matter
shall decide that matter insofar as that Series is concerned.
(d) Quorum. Except where a greater number is required under the terms of
this Agreement or the 1940 Act, a quorum shall consist of a majority of the
Shares entitled to vote at a meeting, whether present in person or
represented by proxy, except that where any provision of law permits or
requires the holders of a Series to vote as a Series, then a majority of
the Shares of that Series entitled to vote shall be necessary to constitute
a quorum for the transaction of business by that Series.
(e) Meeting to Elect Managing General Partners When None Exist. In the
event that no Managing General Partner shall remain for the purpose of
electing pursuant to Section XII(a)(5) to continue the operation of the
Fund, then the Non - Managing General Partners shall promptly call a
meeting of the Limited Partners, to be held within 90 days of the date the
last Managing General Partner ceased to act in such capacity, for the
purpose of determining whether to elect one or more successor Managing
General Partners who, if elected, will continue the operation of the Fund.
For the period of time from such date until the date of admission of one or
more successor Managing General Partners (if elected), the
Non - Managing General Partners shall continue the operations of the
Fund without dissolution and shall be permitted to engage in the
management, conduct and operation of the activities of the Fund and,
otherwise, to exercise during such period all of the powers of the Managing
General Partners hereunder If at the meeting called pursuant to this
subsection the Limited Partners determine not to elect one or more
successor Managing General Partners, then the Fund shall dissolve in
accordance with Section XII and the assets of the Fund shall be distributed
pursuant to Section XIII.
XI. RETURN OF CAPITAL CONTRIBUTIONS.
(a) Redemption of Shares and Full Return of Capital Contributions.
(1) Except as otherwise provided herein and subject to applicable law,
rules, regulations and exemptions therefrom, any holder of Shares may
redeem all or any portion of his Shares at their Net Asset Value next
determined after the receipt by the Fund of a written request for
redemption in proper form. In addition, the Managing General Partners may
require the redemption of the Shares of any holder the value of whose
Shares fall below a specified minimum level established by the Managing
General Partners and set forth in the Prospectus or for any other reason
the Managing General Partners, in their sole discretion, deem appropriate.
(2) A request for redemption shall be deemed in proper form if it
complies which such requirements as are set forth in the Prospectus.
(3) The Managing General Partners reserve the right, in their complete
discretion, to redeem Shares of any Series in whole or in part either in
cash (U.S. dollars or other currency) or by the distribution of one or more
securities of such Series in kind. For this purpose portfolio securities
distributed in kind shall be valued at their fair market value as
determined for purposes of computing the redemption price.
(4) The Managing General Partners may, with respect to any or all Series,
suspend the right of redemption or postpone the date of payment of
redemption proceeds as permitted under the 1940 Act. Such suspension shall
take effect at such time as the Managing General Partners shall specify,
but not later than the close of business on the business day next following
the declaration of the suspension, and thereafter there shall be no right
of redemption or payment until the Managing General Partners shall declare
the suspension at an end. In the case of a suspension of the right of
redemption, a holder of Shares may either withdraw his request for
redemption or receive payment based on the Net Asset Value per Share
existing after the termination of the suspension.
(5) Notwithstanding anything in this Section XI(a) to the contrary, no
Partner shall be entitled to receive the return of any part of the capital
contribution(s) with respect to his Shares unless all liabilities of the
Fund or of the Series to which those Shares relate, except obligations to
General Partners and to Limited Partners on account of their capital
contributions, have been paid or, in the judgment of the Managing General
Partners, there remains property of the Fund or such Series sufficient to
pay them.
(6) Any distribution to a Partner upon redemption pursuant to this
Section XI(a) shall constitute a return in full of such Partner's capital
contribution(s) attributable to the Shares which are redeemed, regardless
of the amount distributed with respect to such Shares, and such Partner
shall not be entitled to any other or additional distribution by reason of
Section 17 - 604 of the Partnership Act or otherwise. No consent of
any of the Partners shall be required for the redemption of any Shares or
return of any redeeming Partner's capital contribution(s).
(b) Partial Returns of Capital Contributions. Except upon dissolution of
the Fund or as provided in Section XI(a), no Partner has the right to
redeem his Shares or demand the return of any part of the capital
contribution(s) with respect to his Shares The Managing General Partners
may, however, from time to time, elect to make partial returns of capital
contributions to Partners who are the holders of Shares of any Series
provided that
(1) all liabilities of the relevant Series to persons other than Partners
(except those liabilities arising pursuant to Section V(n)) have been paid
or, in the judgment of the Managing General Partners, there remains
property of the Series sufficient to pay them and
(2) the consent, express or implied, of all Partners holding Shares of
such Series is obtained.
For purposes of the foregoing, the condition of clause (2) shall be deemed
to have been satisfied if such partial return is made pro rata to the
holders of Shares of the relevant Series based upon the number of Shares
held by each such holder. Each Partner, by becoming a Partner, consents to
all such pro rata distributions theretofore or thereafter made in
accordance or thereafter made in accordance with such provisions.
XII. DISSOLUTION OF THE FUND.
(a) Dissolution of the Fund. The Fund shall be dissolved upon the
earliest to occur of
(1) the expiration of the Fund's term,
(2) the Fund's disposition of all, or substantially all, of its assets,
(3) the determination by Limited Partners who are holders of a majority
of the then outstanding Shares of all Series, at a meeting called for the
purpose, that the Fund should be dissolved,
(4) the determination of the Managing General Partners, by majority vote,
that the Fund should be dissolved,
(5) the occurrence of any event described in Section V(i), where there is
at least one remaining Managing General Partner, unless all the remaining
Managing General Partners elect in writing within 90 days of such event to
continue the operations of the Fund,
(6) the occurrence of any event described in Section V(j), unless the
Managing General Partners elect to continue the operations of the Fund and
either (A) there remains at least one Non - Managing General Partner,
(B) a successor Non - Managing General Partner is unanimously elected
in writing by the Managing General Partners within 90 days of such event or
(C) at least one Managing General Partner assumes the obligations of the
Non - Managing General Partner under Section IV(a)(3) or
(7) the occurrence of an event described in Section V(i) and/or (j) with
respect to a General Partner, unless within 90 days following the date of
withdrawal of the last remaining General Partner, all Limited Partners
agree in writing to continue the operations of the Fund and to the
appointment, effective as of the date of withdrawal of such last remaining
General Partner, of one or more successor Managing General Partners and a
successor Non - Managing General Partner.
(b) Dissolution and Reconstitution of the Partnership Following Withdrawal
of all General Partners. Notwithstanding the provisions of Section XII(a),
in the event of the occurrence of an event described in Section V(i) with
respect to the last remaining Managing General Partner(s), the Fund shall
be dissolved, but it shall be reconstituted and shall not be terminated,
and its operations shall be continued, if the Partners, at a meeting called
by the Non - Managing General Partners in accordance with Section
X(e), elect one or more successor Managing General Partners to continue the
operations of the Fund.
XIII. WINDING UP AND LIQUIDATION OF THE FUND.
(a) Winding Up. Upon the dissolution of the Fund the Managing General
Partners or a liquidator appointed by the Managing General Partners or, if
no Managing General Partners remain, a liquidator appointed by the
Non - Managing General Partner or, if no General Partners remain, by a
liquidator appointed by a majority in interest of all Limited Partners,
shall wind up the holders of Shares shall continue to share profits and
losses during dissolution in the same manner as before dissolution. The
proceeds from the liquidation of the assets of each Series, after paying or
providing for the payment of all liabilities of the Series and the
allowable costs of dissolution, shall be distributed, to the extent
permitted by the Partnership Act, pro rata among the holders of the Shares
of the relevant Series in proportion to them. Notwithstanding the
foregoing, after dissolution and before termination of the Fund the General
Partners will contribute to the Fund an amount equal to the lesser of (1)
the deficit balances, if any, in their respective Capital Accounts or (2)
the excess of 1.01% of the total capital contributions of the Limited
Partners at the time of dissolution of the Fund over the capital previously
contributed by the General Partners, as long as current law, regulations,
Internal Revenue Service policy or interpretations thereof, in the opinion
of counsel, require such contribution in order to enable the Fund to
qualify as a partnership for federal income tax purposes.
(b) Accountant's Statement. Each of the Partners shall be furnished with
a statement prepared by the Fund's accountants which shall set forth the
assets and liabilities of the Fund as at the date of complete liquidator,
as applicable, have complied with the foregoing distribution plan, the
Limited Partners shall cease to be such, and the Managing General Partners
or the liquidator, as applicable, shall execute, acknowledge and cause to
be filed a Certificate of Cancellation of the Fund.
(c) Gains or Losses during Winding Up. Any gain or loss on disposition of
the properties of any Series during the process of winding up the Fund
shall be credited or charged equally among the outstanding Shares of such
Series in accordance with the allocation methods prescribed in accordance
with Section VII. Any property distributed in kind shall be valued and
treated as though the property were sold and the cash proceeds were
distributed.
(d) Winding Up a Series. The winding up of any Series shall be
accomplished in a manner consistent with the principles of this Section
XIII.
XIV. FUND DOCUMENTATION; AMENDMENT OF AGREEMENT; POWER OF ATTORNEY.
(a) Agreement and other Documentation. The Managing General Partners have
caused the Certificate to be filed and recorded in accordance with the
Partnership Act in the Office of the Secretary of State of the State of
Delaware, and, to the extent they believe it is required by local law, in
the appropriate place in each state in which the Fund may hereafter
establish a place of business. The Managing General Partners shall also
cause to be filed, recorded and published such statements of fictitious
business name and other notices, certificates, statements or other
instruments required by the provisions of any applicable law of the United
States or any state or other jurisdiction which governs the formation of
the Fund or the conduct of its business from time to time.
(b) Amendment of Certificate. The Certificate shall be amended upon the
occurrence of any event requiring amendment thereof under the Partnership
Act.
(c) Amendment of Agreement. Except as otherwise required by this
Agreement, the Partnership Act or the 1940 Act, the Managing General
Partners may amend this Agreement with respect to all matters contained
herein. If any amendment of this Agreement requires the vote of the
Partners, pursuant to a provision hereof or of the Partnership Act or the
1940 Act, then upon the prior affirmative vote of the Managing General
Partners such amendment shall be voted upon as provided for in Sections
X(a) through (d). Such amendments shall have the same force and effect as
if they had received the unanimous approval of the Partners, and any
non - consenting Partner or other holder of Shares will be bound
thereby. Notwithstanding the foregoing, no such amendment shall affect the
limited liability of the Limited Partners. This Agreement need not be
amended upon the admission or withdrawal of any Limited Partners.
(d) Power of Attorney.
(1) Each Limited Partner, by virtue of his purchase of Shares and without
the necessity of executing any documentation, (A) is deemed to have
requested admission as a Limited Partner of the Fund and of any of the
following limited partnerships in which such Limited Partner may
participate in the future by purchasing limited partnership interests
("Fund Shares") therein: (i) Fidelity Yen Performance Portfolio, L.P.;
(ii) Fidelity Sterling Performance Portfolio, L.P.; or (iii) Fidelity
Deutsche Mark Performance Portfolio, L.P. (individually, a "Fidelity
Fund"), and (B) makes, constitutes and appoints each person or party who
shall then or thereafter be serving as a General Partner or as a general
partner of any Fidelity Fund (a "Fund General Partner") his true and lawful
attorney, for him and in his name, place and stead with full power of
substitution, to execute, acknowledge, make, swear to, verify, deliver,
record, file and/or publish (i) this Agreement or any other Fidelity Fund
agreement of limited partnership (a "Fidelity Fund Agreement"), (ii) the
Certificate or any similar document relating to a Fidelity Fund, (iii) any
amendment to this Agreement, a Fidelity Fund Agreement or any other
document to reflect any action of the Partners provided for in this
Agreement or of the partners of a Fidelity Fund ("Fund Partners") provided
for in a Fidelity Fund Agreement, whether or not such Limited Partner voted
in favor of or otherwise consented to such action and (iv) any other
instrument, certificate or document, provided such instrument, certificate
or document is consistent with the terms of this Agreement or any
applicable Fidelity Fund Agreement as then in effect.
(2) Each Limited Partner acknowledges and agrees that the respective terms
of this Agreement and the Fidelity Fund Agreement permit certain amendments
thereof to be effected and certain other actions to be taken or omitted by
or with respect to the Fund or any Fidelity Fund, in each case with the
approval of less than all the Partners or Fund Partners thereof, provided
that the holders of a specified percentage of the Shares held by the
Partners of the Fund or, as applicable, Fund Shares held by the Fund
Partners shall have voted in favor of or otherwise consented to such action
or the Managing General Partners (either of this Fund or, as applicable,
any Fidelity Fund) have so consented. Each Partner is fully aware that he
and each other Partner and Fund Partner have granted this power of attorney
and that all Partners and Fund Partners will rely on the effectiveness of
such powers with the view to the orderly administration of the affairs of
the Fund and/or the Fidelity Funds.
(3) The foregoing grant of authority by a Limited Partner (i) is a special
power of attorney coupled with an interest in favor of the General Partners
and the Fund General Partners and as such shall be irrevocable and shall
survive the death or insanity (or, in the case of a Limited Partner that is
not a natural person, the merger, dissolution or other termination of the
existence) of such Limited Partner, (ii) may be exercised for such Limited
Partner by (a) a facsimile signature of any General Partner or Fund General
Partner, as applicable; (b) listing all Limited Partners or all limited
partners of the applicable Fidelity Fund (the "Fund Limited Partners"),
including the Limited Partner, and executing the relevant instrument by a
facsimile signature of any General Partner or Fund General Partner, as
applicable; or (c) stating that all Limited Partners or Fund Limited
Partners, as applicable, while not specifically named, are executing with
relevant instrument, and executing such instrument with a single signature
or facsimile of any General Partner or Fund General Partner, as applicable,
acting as attorney - in - fact for all of them, and (iii) shall
survive the redemption by such Limited Partner of all or any portion of his
Shares and/or his Fund Shares.
(e) Power of Attorney by Additional Limited Partners. A power of attorney
as described in subsection (d) above may be one of the instruments which
the General Partners, under Section IX, shall require a substituted Limited
Partner to execute as a condition of his admission. Such power of attorney
may be set forth on instructions distributed by the Fund to holders of
Shares of any Series from time to time.
(f) Technical Amendments. No vote, approval or other consent shall be
required of the Partners to amend this Agreement or the Certificate in any
of the following respects: (1) to reflect any change in the amount or
character of the contribution of any Limited Partner or General Partner;
(2) to substitute or remove a Limited Partner; (3) to admit any additional
Limited Partner; (4) to reflect the retirement, resignation, death,
insanity or other withdrawal of a Managing General Partner; (5) to reflect
the termination of the status of a Non - Managing General Partner as a
General Partner; (6) to change the name of the Fund or a Series; or (7) to
correct any false or erroneous statement, or (8) to make a change in any
statement in order that such statement shall accurately represent the
agreement among the General and Limited Partners in this Agreement. Any
amendment reflecting the determination of the remaining General Partners to
continue the business of the Fund upon the retirement, withdrawal, death,
dissolution, bankruptcy, insanity or removal of a General Partner need be
signed only by or on behalf of any one remaining Managing General Partner.
The execution of any such amendment on behalf of a Partner may be effected
by his attorney - in - fact.
XV. MISCELLANEOUS MATTERS.
(a) Use of the Name "Fidelity". Fidelity Management & Research
Company ("FMR") has consented to the use by the Fund or any Series of the
identifying word "Fidelity" in the name of the Fund or any Series at some
future date. Such consent is conditioned upon the continued employment of
FMR as investment adviser of each Series. As between the Fund and FMR, FMR
controls the use of the name of the Fund insofar as such name contains the
identifying word "Fidelity." FMR may from time to time use the identifying
word "Fidelity" in other connections and for other purposes, including,
without limitation, in the names of other investment companies,
corporations or businesses which it may manage, advise, sponsor or own or
in which it may have a financial interest FMR may require the Fund or any
Series to cease using the identifying word "Fidelity" in the name of the
Fund or such Series if the Fund or such Series ceases to employ FMR or a
subsidiary or affiliate thereof as investment adviser.
(b) Custodian. All assets of the Fund shall be held by a custodian
meeting the requirements of the 1940 Act and may be registered in the name
of the Fund or such custodian or a nominee. The terms of the custodian
agreement shall be determined by the Managing General Partners, which terms
shall be in accordance with the 1940 Act.
(c) Independent Activities. Each Partner reserves the right to conduct
activities similar to those conducted by the Fund.
(d) Interested Partners. The fact that a General Partner or one or more
of the Limited Partners is directly or indirectly interested in or
connected with any company or person with which or with whom the Fund may
have dealings, including, but not limited to, any company which renders
investment advisory, share transfer or related services, shall not preclude
such dealings or make them void or voidable, and the Fund or any of the
Partners shall not have any rights in or to such dealings or any profits
derived therefrom except any such rights as may inure under the 1940 Act.
(e) Tax Election. No election shall be made by any Partner to be excluded
from the application of the provisions of Subchapter K of the Code or from
any similar provisions of state laws, and no such election shall be made by
the Fund.
(f) Insurance. The Managing General Partners shall procure and maintain
insurance concerning the Fund's activities an amount and covering such
risks as may be appropriate in the judgment of the Managing General
Partners.
(g) Limitation of Liability. In connection with entering into any
contract, loan agreement, instrument or other document on behalf of the
Fund or any Series with a third party, the Managing General Partners shall
have the absolute right to include therein provisions to the effect that
such contract, loan agreement, instrument or other document constitutes a
nonrecourse obligation of the Fund or such Series only and that the
Managing General Partners shall have no liability thereon or thereunder,
and in any such case such third parties contracting with, extending credit
to or having claims against the Fund or such Series shall look only to the
assets of the Fund or such Series, as the case may be, for payment, and
neither the Partners, nor the Fund's officers, employees, agents or
delegates, whether past, present or future, shall be personally liable
therefor.
(h) Notices. All notices required or permitted to be given under this
Agreement in writing shall be given to the parties at the addresses set
forth on Schedule "A" to this Agreement or the most recent address provided
by any holder of Shares to the Fund, or at such other address as any of the
parties may hereafter specify in writing to the Fund.
(i) Captions. Section and Paragraph titles or captions contained in this
Agreement are inserted only as a matter of convenience and for reference
and in no way define, limit, extend or describe the scope of this Agreement
or the intend of any provisions hereof.
(j) Variations in Pronouns. All pronouns and any variations thereof shall
be deemed to refer to the masculine, feminine or neuter, and to the
singular or plural, as the identity of the person or persons may require.
(k) Binding Agreement. This Agreement shall be binding on all of the
parties hereto, notwithstanding that all of the parties have not executed
the same document.
(l) Benefit. Except as herein otherwise provided to the contrary, this
Agreement shall be binding upon and inure to the benefit of the parties
signatory hereto and their respective heirs, executors, guardians,
representatives, successors and assigns.
(m) Nonrecourse Creditors. No creditor making a nonrecourse loan to the
Fund or any Series shall, by reason thereof, acquire any direct or indirect
interest in the profits, capital or property of the Fund or such Series
other than as a secured creditor.
(n) Agent for Service of Process. The Managing General Partners shall
take whatever action is necessary to designate an agent in Delaware upon
whom service of process upon the Fund may lawfully be made.
(o) Principles of Construction; Severability. This Agreement shall be
construed to the maximum extent possible to comply with all applicable
provisions of the 1940 Act and the Partnership Act. If, nevertheless, it
shall be determined by a court of competent jurisdiction that any provision
or wording of this Agreement shall be invalid or unenforceable under the
1940 Act, the Partnership Act or other applicable law, such invalidity or
unenforceability shall not invalidate the entire Agreement. In that case,
this Agreement shall be construed so as to limit any term or provision so
as to make it enforceable or valid within the requirements of such law,
and, in the event such term or provision cannot be so limited, this
Agreement shall be construed to omit such invalid or unenforceable
provision.
(p) Delaware Law. It is the intention of the parties that the internal
laws of the State of Delaware shall govern the validity of this Agreement,
the construction of its terms and the interpretation of the rights and
duties of the parties.
(q) Integrated Agreement. This Agreement constitutes the entire
understanding and agreement among the parties hereto with respect to the
subject matter hereof, and, except for any other written agreements and
representations which the Managing General Partners may require of the
Partners, there are no other agreements, understandings, restrictions,
representations or warranties among the parties other than those set forth
herein.
(xiii) The fund does not currently intend to purchase or sell futures
contracts relating to foreign currencies if, as a result, the sum of assets
hedged with futures contracts and assets segregated to cover futures
contracts would exceed 5% of its net assets.

PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits

(a) Financial Statements.
1. The Financial Statements for Fidelity Aggressive Tax-Free Portfolio
for the fiscal year ended December 31, 1993, are incorporated by reference
in the fund's Statement of Additional Information and are filed herein as
Exhibit 24(a)(1).
2. The Financial Statements for Fidelity Municipal Bond Portfolio for the
fiscal year ended December 31, 1993, are incorporated by reference in the
fund's Statement of Additional Information and are filed herein as Exhibit
24(a)(2).
3. The Financial Statements for Fidelity Insured Tax-Free Portfolio for
the fiscal year ended December 31, 1993, are incorporated by reference in
the fund's Statement of Additional Information and are filed herein as
Exhibit 24(a)(3).
4. The combined Financial Statements for Fidelity Ohio Tax-Free High
Yield Portfolio and Fidelity Ohio Municipal Money Market Portfolio for the
fiscal year ended December 31, 1993, are incorporated by reference in the
funds' Statement of Additional Information and are filed herein as Exhibit
24(a)(4).
5. The combined Financial Statements for Fidelity Michigan Tax-Free High
Yield Portfolio and Fidelity Michigan Municipal Money Market Portfolio for
the fiscal year ended December 31, 1993, are incorporated by reference in
the funds' Statement of Additional Information and are filed herein as
Exhibit 24(a)(5).
6. The Financial Statements for Fidelity Minnesota Tax-Free Portfolio for
the fiscal year ended December 31, 1993, are incorporated by reference in
the fund's Statement of Additional Information and are filed herein as
Exhibit 24(a)(6).
7. The combined Financial Statements for Spartan Pennsylvania Municipal
High Yield Portfolio and Spartan Pennsylvania Municipal Money Market
Portfolio for the fiscal year ended December 31, 1993, are incorporated by
reference in the funds' Statement of Additional Information and are filed
herein as Exhibit 24(a)(7).
8. The Financial Statements for Fidelity High Yield Tax-Free Portfolio
for the fiscal year ended November 30, 1993, are incorporated by reference
in the fund's Statement of Additional Information and are filed herein as
Exhibit 24(a)(8).
9. The Financial Statements for Fidelity Limited Term Municipals for the
fiscal year ended December 31, 1993, are incorporated by reference in the
fund's Statement of Additional Information and are filed herein as Exhibit
24(a)(9).
(b) Exhibits.
1. (a) Declaration of Trust of Registrant, dated as of June 22, 1984, is
incorporated herein by reference to Exhibit 1 to Post-Effective Amendment
No. 28 to Registration Statement No. 2-55725.
(b) Supplement to Declaration of Trust, dated as of January 14, 1985, is
incorporated herein by reference to Post-Effective Amendment No. 30.
(c) Supplement to Declaration of Trust, dated as of March 1, 1986, is
incorporated herein by reference to Exhibit 1(c) to Post-Effective
Amendment No. 39.
(d) Supplement to Declaration of Trust, dated as of January 1, 1987, is
incorporated herein by reference to Exhibit 1(d) to Post-Effective
Amendment No. 43.
(e) Supplement to Declaration of Trust, dated as of December 1, 1988, is
incorporated herein by reference to Exhibit 1(e) as Exhibit 1(e) to
Post-Effective Amendment No. 47.
2. By-laws of Registrant are incorporated herein by reference to Exhibit 2
to Post-Effective Amendment No. 28.
(a) Supplement to the By-laws of Registrant are incorporated herein by
reference to Exhibit 2(a) to Post-Effective Amendment No. 47.
3. Not applicable.
4. Not applicable.
5. (a) Form of Management Contract between Fidelity Municipal Trust:
Fidelity Aggressive Tax-Free Portfolio and Fidelity Management &
Research Company was filed as Exhibit 5(a) to Post-Effective Amendment No.
60.
(b) Form of Management Contract between Fidelity Municipal Trust:
Fidelity Municipal Bond Portfolio and Fidelity Management & Research
Company is filed herein as Exhibit 5(b).
(c) Form of Management Contract between Fidelity Municipal Trust:
Fidelity Insured Tax-Free Portfolio and Fidelity Management & Research
Company is filed herein as Exhibit 5(c).
(d) Management Contract, dated January 1, 1994, between Fidelity
Municipal Trust: Fidelity Michigan Tax-Free High Yield Portfolio and
Fidelity Management & Research Company is filed herein as Exhibit 5(d).
(e) Management Contract, dated January 1, 1994, between Fidelity
Municipal Trust: Fidelity Minnesota Tax-Free Portfolio and Fidelity
Management & Research Company is filed herein as Exhibit 5(e).
(f) Management Contract, dated January 1, 1994, between Fidelity
Municipal Trust: Fidelity Ohio Tax-Free High Yield Portfolio and Fidelity
Management & Research Company is filed herein as Exhibit 5(f).
(g) Management Contract, dated August 1, 1990, between Fidelity Municipal
Trust: Spartan Pennsylvania Municipal High Yield Portfolio and Fidelity
Management & Research Company is incorporated herein by reference to
Exhibit 5(n) to Post-Effective Amendment No. 55.
6. (a) General Distribution Agreement between Fidelity Municipal Trust:
Insured Tax-Free Portfolio and Fidelity Distributors Corporation, dated
April 1, 1987, is incorporated herein by reference to Exhibit 6(a) to
Post-Effective Amendment No. 44.
(b) General Distribution Agreement between Fidelity Municipal Trust:
Aggressive Tax-Free Portfolio and Fidelity Distributors Corporation, dated
April 1, 1987, is incorporated herein by reference to Exhibit 6(b) to
Post-Effective Amendment No. 44.
(c) General Distribution Agreement between Fidelity Municipal Trust:
Municipal Bond Portfolio and Fidelity Distributors Corporation, dated April
1, 1987, is incorporated herein by reference to Exhibit 6(c) to
Post-Effective Amendment No. 44.
(d) General Distribution Agreement between Fidelity Municipal Trust:
Ohio Tax-Free High Yield Portfolio and Fidelity Distributors Corporation,
dated April 1, 1987, is incorporated herein by reference to Exhibit 6(d) to
Post-Effective Amendment No. 44.
(e) General Distribution Agreement between Fidelity Municipal Trust:
Michigan Tax-Free High Yield Portfolio and Fidelity Distributors
Corporations, dated April 1, 1987, is incorporated herein by reference to
Exhibit 6(e) to Post-Effective Amendment No. 44.
(f) General Distribution Agreement between Fidelity Municipal Trust:
Minnesota Tax-Free Portfolio and Fidelity Distributors Corporation, dated
April 1, 1987, is incorporated herein by reference to Exhibit 6(f) to
Post-Effective Amendment No. 44.
(g) General Distribution Agreement between Fidelity Municipal Trust:
Pennsylvania Tax-Free High Yield Portfolio and Fidelity Distributors
Corporation, dated April 1, 1987, is incorporated herein by reference to
Exhibit 6(j) to Post-Effective Amendment No. 44.
(h) Amendment to General Distribution Agreement, dated January 1, 1988,
between Fidelity Municipal Trust: (Insured Tax-Free Portfolio; Aggressive
Tax-Free Portfolio; Municipal Bond Portfolio; Minnesota Tax-Free Portfolio;
and Pennsylvania Tax-Free High Yield Portfolio) and Fidelity Distributors
Corporation is incorporated herein by reference to Exhibit 6(k) to
Post-Effective Amendment No. 47.
7. Retirement Plan for Non-Interested Person Trustees, Directors or
General Partners, effective November 1, 1989, is incorporated herein by
reference to Exhibit 7 to Post-Effective Amendment No. 57.
8. (a) Custodian Contract, dated July 18, 1991, between Fidelity Municipal
Trust and United Missouri Bank, N.A. is incorporated herein by reference to
Exhibit 8(a) to Post-Effective Amendment No. 57.
(b) Appendix A, dated October 1, 1991, to Custodian Contract dated July
18, 1991 between Fidelity Municipal Trust and United Missouri Bank, N.A. is
incorporated herein by reference to Exhibit 8(b) to Post-Effective
Amendment No. 57.
9. (a) Transfer Agency Agreement between the Registrant and State Street
Bank and Trust Company, dated October 1, 1984, is incorporated herein by
reference to Exhibit 9(a) to Post-Effective Amendment No. 33.
(b) Pricing Agreement between the Registrant and State Street Bank and
Trust Company, dated August 31, 1985, is incorporated herein by reference
to Exhibit 9(b) to Post-Effective Amendment No. 38.
(c) Amendment to Transfer Agency Agreement, dated July 1986, is
incorporated herein by reference to Exhibit 9(c) to Post-Effective
Amendment No. 47.
(d) Amended Transfer Agency Agreement between Fidelity Municipal Trust
and Shawmut Bank, dated June 1, 1989, is incorporated herein by reference
to Exhibit 9(d) to Post-Effective Amendment No. 55.
(e) Appointment of Sub-Transfer Agent and Schedule A for Fidelity Ohio
Tax-Free Portfolio, dated June 1, 1989, is incorporated herein by reference
to Exhibit 9(e) to Post-Effective Amendment No. 55.
(f) Appointment of Sub-Transfer Agent and Schedule A for Michigan
Tax-Free Portfolio, dated June 1, 1989, is incorporated herein by reference
to Exhibit 9(g) to Post-Effective Amendment No. 55.
(g) Appointment of Sub-Transfer Agent and Schedule A for Minnesota
Tax-Free Portfolio, dated June 1, 1989, is incorporated herein by reference
to Exhibit 9(i) to Post-Effective Amendment No. 55.
(h) Appointment of Sub-Transfer Agent and Schedule A for Spartan
Pennsylvania Municipal High Yield Portfolio, dated March 1, 1990, is
incorporated herein by reference to Exhibit 9(j) to Post-Effective
Amendment No. 55.
(i) Amended Service agreement between Fidelity Municipal Trust and
Shawmut Bank, N.A., dated June 1, 1989, is incorporated herein by reference
to Exhibit 9(l) to Post-Effective Amendment No. 55.
(j) Appointment of Sub-Servicing Agent and Schedules B and C for Fidelity
Ohio Tax-Free High Yield Portfolio, dated June 1, 1989, is incorporated
herein by reference to Exhibit 9(m) to Post-Effective Amendment No. 55.
(k) Appointment of Sub-Servicing Agent and Schedules B and C for Fidelity
Michigan Tax-Free Portfolio, dated June 1, 1989, is incorporated herein by
reference to Exhibit 9(o) to Post-Effective Amendment No. 55.
(l) Appointment of Sub-Servicing Agent and Schedules B and C for Fidelity
Minnesota Tax-Free Portfolio, dated June 1, 1989, is incorporated herein by
reference to Exhibit 9(q) to Post-Effective Amendment No. 55.
(m) Appointment of Sub-Servicing Agent and Schedules B and C for Spartan
Pennsylvania Municipal High Yield Portfolio, dated March 1, 1990, is
incorporated herein by reference to Exhibit 9(r) to Post-Effective
Amendment No. 55.
10. Not applicable.
11. Consent of Coopers & Lybrand is filed herein as Exhibit 11.
12. Not applicable.
13. Not applicable.
14. Not applicable.
15. (a) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Insured Tax-Free Portfolio is incorporated by reference to Exhibit 15(a) to
Post-Effective Amendment No. 34.
(b) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Ohio Tax-Free High Yield Portfolio is incorporated herein by reference to
Exhibit 15(b) to Post-Effective Amendment No. 34.
(c) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Michigan Tax-Free High Yield Portfolio is incorporated herein by reference
to Exhibit 15(c) to Post-Effective Amendment No. 34.
(d) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Minnesota Tax-Free Portfolio is incorporated herein by reference to Exhibit
15(d) to Post-Effective Amendment No. 34.
(e) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Pennsylvania Tax-Free High Yield Portfolio is incorporated herein by
reference to Exhibit 15(g) to Post-Effective Amendment No. 37.
(f) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Municipal Bond Portfolio is incorporated herein by reference to Exhibit
15(h) to Post-Effective Amendment No. 43.
(g) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Aggressive Tax-Free Portfolio is incorporated herein by reference to
Exhibit 15(j) to Post-Effective Amendment No. 43.
16. (a) A schedule for computation of performance is incorporated herein
by reference to Exhibit 16 to Post-Effective Amendment No. 48.
Item 25. Persons Controlled by or under Common Control with Registrant
The Board of Trustees of the Registrant is substantially the same as the
boards of other funds advised by FMR, each of which has Fidelity Management
& Research Company as its investment adviser. In addition, the officers
of these funds are substantially identical. Nonetheless, Registrant takes
the position that it is not under common control with these other funds
since the power residing in the respective boards and officers arises as
the result of an official position with the respective funds.
Item 26. Number of Holders of Securities
December 31, 1993
Title of Class: Shares of Beneficial Interest
Title of Series: Number of Record Holders

Fidelity Aggressive Tax-Free Portfolio: 33,915

Fidelity Municipal Bond Portfolio: 33,381

Fidelity Insured Tax-Free Portfolio: 16,279

Fidelity Ohio Tax-Free High Yield Portfolio: 14,507

Fidelity Michigan Tax-Free High Yield Portfolio: 18,126

Fidelity Minnesota Tax-Free Portfolio: 11,835

Spartan Pennsylvania Municipal High Yield Portfolio: 7,669

Item 27. Indemnification
Article XI, Section 2 of the Declaration of Trust sets forth the
reasonable and fair means for determining whether indemnification shall be
provided to any past or present Trustee or officer. It states that the
Registrant shall indemnify any present or past Trustee or officer to the
fullest extent permitted by law against liability and all expenses
reasonably incurred by him in connection with any claim, action, suit or
proceeding in which he is involved by virtue of his service as a trustee,
an officer, or both. Additionally, amounts paid or incurred in settlement
of such matters are covered by this indemnification. Indemnification will
not be provided in certain circumstances, however. These include instances
of willful misfeasance, bad faith, gross negligence, and reckless disregard
of the duties involved in the conduct of the particular office involved.
Item 28. Business and Other Connections of Investment Adviser
FIDELITY MANAGEMENT & RESEARCH COMPANY
FMR serves as investment adviser to a number of other investment
companies. The directors and officers of the Adviser have held, during the
past two fiscal years, the following positions of a substantial nature.

<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman of the Executive Committee of FMR; President
and Chief Executive Officer of FMR Corp.; Chairman of
the Board and a Director of FMR, FMR Corp., FMR Texas
Inc. (1989), Fidelity Management & Research (U.K.)
Inc. and Fidelity Management & Research (Far East)
Inc.; President and Trustee of funds advised by FMR;

J. Gary Burkhead President of FMR; Managing Director of FMR Corp.;
President and a Director of FMR Texas Inc. (1989), Fidelity
Management & Research (U.K.) Inc. and Fidelity
Management & Research (Far East) Inc.; Senior Vice
President and Trustee of funds advised by FMR.

Peter S. Lynch Vice Chairman of FMR (1992).

David Breazzano Vice President of FMR (1993) and of a fund advised by
FMR.

Stephan Campbell Vice President of FMR (1993).

Rufus C. Cushman, Jr. Vice President of FMR and of funds advised by FMR;
Corporate Preferred Group Leader.

Will Danoff Vice President of FMR (1993) and of a fund advised by
FMR.

Scott DeSano Vice President of FMR (1993).

Penelope Dobkin Vice President of FMR (1990) and of a fund advised by
FMR.

Larry Domash Vice President of FMR (1993).

George Domolky Vice President of FMR (1993) and of a fund advised by
FMR.

Charles F. Dornbush Senior Vice President of FMR (1991); Chief Financial
Officer of the Fidelity funds; Treasurer of FMR Texas Inc.
(1989), Fidelity Management & Research (U.K.) Inc.,
and Fidelity Management & Research (Far East) Inc.

Robert K. Duby Vice President of FMR.

Margaret L. Eagle Vice President of FMR and of a fund advised by FMR.

Kathryn L. Eklund Vice President of FMR (1991).

Richard B. Fentin Senior Vice President of FMR (1993) and of a fund advised
by FMR.

Daniel R. Frank Vice President of FMR and of funds advised by FMR.

Gary L. French Vice President of FMR (1991) and Treasurer of the funds
advised by FMR (1991). Prior to assuming the position as
Treasurer he was Senior Vice President, Fund Accounting -
Fidelity Accounting & Custody Services Co. (1991)
(Vice President, 1990-1991); and Senior Vice President,
Chief Financial and Operations Officer - Huntington
Advisers, Inc. (1985-1990).

Michael S. Gray Vice President of FMR and of funds advised by FMR.

Barry A. Greenfield Vice President of FMR and of a fund advised by FMR.

William J. Hayes Senior Vice President of FMR (1989); Income/Growth
Group Leader (1990) and International Group Leader
(1990).

Robert Haber Vice President of FMR (1991) and of funds advised by
FMR.

Daniel Harmetz Vice President of FMR (1991) and of a fund advised by
FMR.

Ellen S. Heller Vice President of FMR (1991).

</TABLE>

John Hickling Vice President of FMR (1993) and of funds advised by
FMR.

Robert F. Hill Vice President of FMR (1989); and Director of Technical
Research.

Stephan Jonas Vice President of FMR (1993).

David B. Jones Vice President of FMR (1993).

Steven Kaye Vice President of FMR (1993) and of a fund advised by
FMR.

Frank Knox Vice President of FMR (1993).

Robert A. Lawrence Senior Vice President of FMR (1993); and High Income
Group Leader.

Alan Leifer Vice President of FMR and of a fund advised by FMR.

Harris Leviton Vice President of FMR (1993) and of a fund advised by
FMR.

Bradford E. Lewis Vice President of FMR (1991) and of funds advised by
FMR.

Robert H. Morrison Vice President of FMR and Director of Equity Trading.

David Murphy Vice President of FMR (1991) and of funds advised by
FMR.

Jacques Perold Vice President of FMR (1991).

Brian Posner Vice President of FMR (1993) and of a fund advised by
FMR.

Anne Punzak Vice President of FMR (1990) and of funds advised by
FMR.

Richard A. Spillane Vice President of FMR (1990) and of funds advised by
FMR; and Director of Equity Research (1989).

Robert E. Stansky Senior Vice President of FMR (1993) and of funds advised
by FMR.

Thomas Steffanci Senior Vice President of FMR (1993); and Fixed-Income
Division Head.

Gary L. Swayze Vice President of FMR and of funds advised by FMR; and
Tax-Free Fixed-Income Group Leader.

Donald Taylor Vice President of FMR (1993) and of funds advised by
FMR.

Beth F. Terrana Senior Vice President of FMR (1993) and of funds advised
by FMR.

Joel Tillinghast Vice President of FMR (1993) and of a fund advised by
FMR.

Robert Tucket Vice President of FMR (1993).

George A. Vanderheiden Senior Vice President of FMR; Vice President of funds
advised by FMR; and Growth Group Leader (1990).

Jeffrey Vinik Senior Vice President of FMR (1993) and of a fund advised
by FMR.

Guy E. Wickwire Vice President of FMR and of a fund advised by FMR.

Arthur S. Loring Senior Vice President (1993), Clerk and General Counsel of
FMR; Vice President, Legal of FMR Corp.; and Secretary
of funds advised by FMR.

</TABLE>

Item 29. Principal Underwriters
(a) Fidelity Distributors Corporation (FDC) acts as distributor for most
funds advised by FMR and the following other funds:
CrestFunds, Inc.
The Victory Funds
ARK Funds
(b)

Name and Principal Positions and Offices Positions and Offices

Business Address* With Underwriter With Registrant

Edward C. Johnson 3d Director Trustee and President

Nita B. Kincaid Director None

W. Humphrey Bogart Director None

Kurt A. Lange President and Treasurer None

William L. Adair Senior Vice President None

Thomas W. Littauer Senior Vice President None

Arthur S. Loring Vice President and Clerk Secretary

* 82 Devonshire Street, Boston, MA
(c) Not applicable.
Item 30. Location of Accounts and Records
All accounts, books, and other documents required to be maintained by
Section 31a of the 1940 Act and the Rules promulgated thereunder are
maintained by Fidelity Management & Research Company or Fidelity
Service Co., 82 Devonshire Street, Boston, MA 02109, or the funds'custodian
United Missouri Bank, N.A., 1010 Grand Avenue, Kansas City, MO.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
The Registrant on behalf of Fidelity Aggressive Tax-Free Portfolio,
Fidelity Insured Tax-Free Portfolio, Fidelity Michigan Tax-Free High Yield
Portfolio, Fidelity Minnesota Tax-Free Portfolio, Fidelity Municipal Bond
Portfolio, Fidelity Ohio Tax-Free High Yield Portfolio, and Spartan
Pennsylvania Municipal High Yield Portfolio undertakes, provided the
information required by Item 5A is contained in the annual report, to
furnish each person to whom a prospectus has been delivered, upon their
request and without charge, a copy of the Registrant's latest annual report
to shareholders.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for the effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Post-Effective Amendment No. 64 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Boston, and Commonwealth of Massachusetts, on the 14th day
of February 1994.
FIDELITY MUNICIPAL TRUST
By /s/Edward C. Johnson 3d (dagger)
Edward C. Johnson 3d, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
(Signature) (Title) (Date)

<TABLE>
<CAPTION>
<S> <C> <C>
/s/Edward C. Johnson 3d(dagger) President and Trustee February 14, 1994

Edward C. Johnson 3d (Principal Executive Officer)

</TABLE>

/s/Gary L. French Treasurer February 14, 1994

Gary L. French

/s/J. Gary Burkhead Trustee February 14, 1994

J. Gary Burkhead

/s/Ralph F. Cox * Trustee February 14, 1994

Ralph F. Cox

/s/Phyllis Burke Davis * Trustee February 14, 1994

Phyllis Burke Davis

/s/Richard J. Flynn * Trustee February 14, 1994

Richard J. Flynn

/s/E. Bradley Jones * Trustee February 14, 1994

E. Bradley Jones

/s/Donald J. Kirk * Trustee February 14, 1994

Donald J. Kirk

/s/Peter S. Lynch * Trustee February 14, 1994

Peter S. Lynch

/s/Edward H. Malone * Trustee February 14, 1994

Edward H. Malone

/s/Marvin L. Mann_____* Trustee February 14, 1994

Marvin L. Mann

/s/Gerald C. McDonough* Trustee February 4, 1994

Gerald C. McDonough

/s/Thomas R. Williams * Trustee February 14, 1994

Thomas R. Williams

(dagger) Signatures affixed by J. Gary Burkhead pursuant to a power of
attorney dated October 20, 1993 and filed herewith.
* Signature affixed by Robert C. Hacker pursuant to a power of attorney
dated October 20, 1993 and filed herewith.
POWER OF ATTORNEY
We, the undersigned Directors, Trustees or General Partners, as the case
may be, of the following investment companies:

<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Institutional Trust
Fidelity Advisor Series II Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Magellan Fund
Fidelity Advisor Series IV Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series V Fidelity Money Market Trust
Fidelity Advisor Series VI Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VII Fidelity Municipal Trust
Fidelity Advisor Series VIII Fidelity New York Municipal Trust
Fidelity California Municipal Trust Fidelity Puritan Trust
Fidelity Capital Trust Fidelity School Street Trust
Fidelity Charles Street Trust Fidelity Securities Fund
Fidelity Commonwealth Trust Fidelity Select Portfolios
Fidelity Congress Street Fund Fidelity Sterling Performance Portfolio, L.P.
Fidelity Contrafund Fidelity Summer Street Trust
Fidelity Corporate Trust Fidelity Trend Fund
Fidelity Court Street Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Destiny Portfolios Fidelity U.S. Investments-Government Securities
Fidelity Deutsche Mark Performance Fund, L.P.
Portfolio, L.P. Fidelity Union Street Trust
Fidelity Devonshire Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Exchange Fund Spartan U.S. Treasury Money Market
Fidelity Financial Trust Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Fidelity Government Securities Fund Variable Insurance Products Fund II
Fidelity Hastings Street Trust
Fidelity Income Fund

</TABLE>

plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individuals serve as Board Members (collectively, the "Funds"), hereby
severally constitute and appoint Arthur J. Brown, Arthur C. Delibert,
Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A.
Xupolos, each of them singly, our true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to sign
for us and in our names in the appropriate capacities, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such things in
our names and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof.
WITNESS our hands on this twentieth day of October, 1993.

/s/Edward C. Johnson 3d /s/Peter S. Lynch

Edward C. Johnson 3d Peter S. Lynch

/s/J. Gary Burkhead /s/Edward H. Malone

J. Gary Burkhead Edward H. Malone

/s/Richard J. Flynn /s/Gerald C. McDonough

Richard J. Flynn Gerald C. McDonough

/s/E. Bradley Jones /s/Thomas R. Williams

E. Bradley Jones Thomas R. Williams

/s/Donald J. Kirk

Donald J. Kirk

POWER OF ATTORNEY
I, the undersigned President and Director, Trustee or General Partner, as
the case may be, of the following investment companies:

</TABLE>

plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individual serves as President and Board Member (collectively, the
"Funds"), hereby severally constitute and appoint J. Gary Burkhead, my true
and lawful attorney-in-fact, with full power of substitution, and with full
power to sign for me and in my name in the appropriate capacity, all
Pre-Effective Amendments to any Registration Statements of the Funds, any
and all subsequent Post-Effective Amendments to said Registration
Statements, any Registration Statements on Form N-14, and any supplements
or other instruments in connection therewith, and generally to do all such
things in my name and behalf in connection therewith as said
attorney-in-fact deem necessary or appropriate, to comply with the
provisions of the Securities Act of 1933 and Investment Company Act of
1940, and all related requirements of the Securities and Exchange
Commission. I hereby ratify and confirm all that said attorneys-in-fact or
their substitutes may do or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Edward C. Johnson 3d October 20, 1993

Edward C. Johnson 3d

POWER OF ATTORNEY
I, the undersigned Director, Trustee or General Partner, as the case may
be, of the following investment companies:

<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Magellan Fund
Fidelity Advisor Series III Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series IV Fidelity Money Market Trust
Fidelity Advisor Series VI Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VIII Fidelity New York Municipal Trust
Fidelity California Municipal Trust Fidelity Puritan Trust
Fidelity Capital Trust Fidelity School Street Trust
Fidelity Charles Street Trust Fidelity Select Portfolios
Fidelity Commonwealth Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Congress Street Fund Fidelity Summer Street Trust
Fidelity Contrafund Fidelity Trend Fund
Fidelity Deutsche Mark Performance Fidelity Union Street Trust
Portfolio, L.P. Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Devonshire Trust Fidelity U.S. Investments-Government Securities
Fidelity Financial Trust Fund, L.P.
Fidelity Fixed-Income Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Government Securities Fund Spartan U.S. Treasury Money Market
Fidelity Hastings Street Trust Fund
Fidelity Income Fund Variable Insurance Products Fund
Fidelity Institutional Trust Variable Insurance Products Fund II
Fidelity Investment Trust

</TABLE>

plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individual serves as a Board Member (collectively, the "Funds"), hereby
severally constitute and appoint Arthur J. Brown, Arthur C. Delibert,
Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A.
Xupolos, each of them singly, my true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to sign
for me and in my name in the appropriate capacity, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such things in
my name and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Ralph F. Cox October 20, 1993

Ralph F. Cox

POWER OF ATTORNEY
I, the undersigned Director, Trustee or General Partner, as the case may
be, of the following investment companies:

<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series IV Fidelity School Street Trust
Fidelity Advisor Series VI Fidelity Select Portfolios
Fidelity Advisor Series VIII Fidelity Sterling Performance Portfolio, L.P.
Fidelity Beacon Street Trust Fidelity Trend Fund
Fidelity Capital Trust Fidelity Union Street Trust
Fidelity Commonwealth Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Contrafund Fidelity U.S. Investments-Government Securities
Fidelity Deutsche Mark Performance Fund, L.P.
Portfolio, L.P. Fidelity Yen Performance Portfolio, L.P.
Fidelity Devonshire Trust Spartan U.S. Treasury Money Market
Fidelity Financial Trust Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Fidelity Government Securities Fund Variable Insurance Products Fund II
Fidelity Hastings Street Trust
Fidelity Institutional Trust

</TABLE>

Phyllis Burke Davis

POWER OF ATTORNEY
I, the undersigned Director, Trustee or General Partner, as the case may
be, of the following investment companies:

<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Special Situations Fund
Fidelity Advisor Series IV Fidelity Sterling Performance Portfolio, L.P.
Fidelity Advisor Series VI Fidelity Trend Fund
Fidelity Advisor Series VII Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Advisor Series VIII Fidelity U.S. Investments-Government Securities
Fidelity Contrafund Fund, L.P.
Fidelity Deutsche Mark Performance Fidelity Yen Performance Portfolio, L.P.
Portfolio, L.P. Spartan U.S. Treasury Money Market
Fidelity Fixed-Income Trust Fund
Fidelity Government Securities Fund Variable Insurance Products Fund
Fidelity Hastings Street Trust Variable Insurance Products Fund II
Fidelity Institutional Trust

</TABLE>

Marvin L. Mann

EXHIBIT 24(A)(1)
(2_FIDELITY_LOGOS)FIDELITY

AGGRESSIVE TAX-FREE
PORTFOLIO
ANNUAL REPORT
DECEMBER 31, 1993
CONTENTS

PRESIDENT'S MESSAGE 3 Ned Johnson on minimizing taxes.

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 last six
months.

INVESTMENTS 11 A complete list of the fund's
investments with their market value.

FINANCIAL STATEMENTS 30 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.

NOTES TO FINANCIAL 34 Footnotes to the financial
STATEMENTS statements.

REPORT OF INDEPENDENT 37 The auditor's opinion.
ACCOUNTANTS

THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR
ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS
CORPORATION IS A
BANK, AND FUND SHARES ARE NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED
BY THE
FDIC.
PRESIDENT'S MESSAGE

DEAR SHAREHOLDER:
Once the new year begins, many people start reviewing their finances and
calculating their tax bills. No one wants to pay more taxes than they have
to. But a recent survey of 500 U.S. households, conducted by Fidelity and
Yankelovich Partners, showed that few people have taken steps to reduce
their taxes under the new legislation. Many were not even aware that the
new tax laws were retroactive to January 1993.
Whether or not you're someone whose tax bill will increase as a result of
these changes, it may make sense to consider ways to keep more of what you
earn.
First, if your employer offers a 401(k) or 403(b) retirement savings plan,
consider enrolling. These plans are set up so you can make regular
contributions -
before taxes - to a retirement savings plan. They offer a disciplined
savings strategy, the ability to accumulate earnings tax-deferred, and
immediate tax savings. For example, if you earn $40,000 a year and
contribute 7% of your salary to your 401(k) plan, your annual contribution
is $2,800. That reduces your taxable income to $37,200 and, if you're in
the
28% tax bracket, saves you $784 in federal taxes. In addition, you pay no
taxes on any earnings until withdrawal.
It may be a good idea to contact your benefits office as soon as possible
to find out when you can enroll or increase your contribution. Most
employers allow employees to make changes only a few times each year.
Second, consider an IRA. Many people are eligible to make an IRA
contribution (up to $2,000) that is fully tax deductible. That includes
people who are not covered by company pension plans, or those within
certain income brackets. Even if you don't qualify for a fully deductible
contribution, any IRA earnings will grow tax-deferred until withdrawal.
Third, consider adding to your tax-free investments, either municipal bonds
or municipal bond funds. Often these can provide higher after-tax yields
than comparable taxable investments. For example, if you're in the new 36%
federal income tax bracket and invest $10,000 in a taxable investment
yielding 7%, you'll pay $252 in federal taxes and receive $448 in income.
That same $10,000 invested in a tax-free bond fund yielding 5.5% would
allow you to keep $550 in income.
These are three investment strategies that could help lower your tax bill
in 1994. If you're interested in learning more, please call us at
1-800-544-8888 or visit a Fidelity Investor Center.
Wishing you a prosperous new year,
Edward C. Johnson 3d, Chairman
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. Each figure
includes changes in a fund's share price, plus reinvestment of any
dividends (or income) and capital gains (the profits the fund earns when it
sells bonds that have grown in value). You can also look at the fund's
income.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1993 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND

Aggressive Tax-Free 13.63% 63.20% 142.75%

Lehman Brothers Municipal Bond Index 12.29% 62.86% n/a

Average High Yield Municipal Bond Fund 11.59% 56.89% n/a

Consumer Price Index 2.75% 21.00% 35.00%

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
began on September 13, 1985. For example, if you had invested $1,000 in a
fund that had a 5% return over the past year, you would have $1,050. You
can compare these figures to the performance of the Lehman Brothers
Municipal Bond Index - a broad gauge of the municipal bond market. To
measure how the fund stacked up against its peers, you can look at the
average high yield municipal bond fund, which reflects the performance of
33 high yield municipal bond funds tracked by Lipper Analytical Services.
Both benchmarks include reinvested dividends and capital gains, if any.
Comparing the fund's performance to the consumer price index helps show how
your fund did compared to inflation. (The periods covered by the CPI
numbers are the closest available match to those of the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1993 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND

Aggressive Tax-Free 13.63% 10.29% 11.27%

Lehman Brothers Municipal Bond Index 12.29% 10.25% n/a

Average High Yield Municipal Bond Fund 11.59% 9.38% n/a

Consumer Price Index 2.75% 3.89% 3.66%

AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
$10,000 OVER LIFE OF FUND

Aggressive Tax Free LB Muni Bond
09/30/85 10000.00 10000.00
10/31/85 10293.24 10342.60
11/30/85 10750.22 10713.59
12/31/85 11054.53 10807.76
01/31/86 11517.60 11444.34
02/28/86 11936.31 11898.11
03/31/86 12113.78 11901.91
04/30/86 12110.96 11910.96
05/31/86 11948.51 11717.05
06/30/86 12044.82 11828.83
07/31/86 12106.70 11900.63
08/31/86 12429.80 12433.42
09/30/86 12502.07 12464.63
10/31/86 12772.58 12679.89
11/30/86 13032.26 12931.08
12/31/86 13015.25 12895.39
01/31/87 13394.05 13283.67
02/28/87 13615.37 13349.03
03/31/87 13585.36 13207.53
04/30/87 12941.95 12544.78
05/31/87 12855.34 12482.55
06/30/87 13140.00 12849.04
07/31/87 13284.90 12980.10
08/31/87 13359.92 13009.31
09/30/87 12987.83 12529.65
10/31/87 12804.91 12574.01
11/30/87 13002.23 12902.32
12/31/87 13199.87 13089.53
01/31/88 13715.33 13555.78
02/29/88 13905.03 13699.06
03/31/88 13788.93 13539.47
04/30/88 13820.88 13642.37
05/31/88 13903.10 13602.94
06/30/88 14135.88 13801.95
07/31/88 14256.62 13891.94
08/31/88 14340.43 13904.17
09/30/88 14563.27 14155.83
10/31/88 14814.21 14405.68
11/30/88 14766.30 14273.73
12/31/88 14969.26 14419.75
01/31/89 15147.47 14717.95
02/28/89 15126.54 14550.01
03/31/89 15160.52 14515.24
04/30/89 15475.75 14859.83
05/31/89 15753.20 15168.47
06/30/89 15962.93 15374.46
07/31/89 16104.61 15583.70
08/31/89 16080.58 15431.14
09/30/89 16088.10 15384.85
10/31/89 16102.56 15572.54
11/30/89 16300.96 15845.06
12/31/89 16392.05 15974.99
01/31/90 16376.49 15899.91

02/28/90 16506.45 16041.42
03/31/90 16568.47 16046.23
04/30/90 16464.00 15930.70
05/31/90 16715.18 16277.99
06/30/90 16852.49 16421.23
07/31/90 17141.08 16662.62
08/31/90 16972.14 16421.02
09/30/90 17131.96 16430.87
10/31/90 17247.70 16728.27
11/30/90 17530.51 17064.51
12/31/90 17618.80 17139.59
01/31/91 17702.31 17369.26
02/28/91 17875.98 17520.37
03/31/91 17925.82 17527.38
04/30/91 18161.71 17760.50
05/31/91 18287.18 17918.56
06/30/91 18354.95 17900.65
07/31/91 18646.35 18119.03
08/31/91 18908.46 18358.20
09/30/91 19124.94 18596.86
10/31/91 19274.10 18764.23
11/30/91 19341.31 18816.77
12/31/91 19692.96 19221.33
01/31/92 19762.64 19265.54
02/29/92 19809.61 19271.32
03/31/92 19865.72 19279.03
04/30/92 20052.53 19450.61
05/31/92 20310.89 19680.13
06/30/92 20580.68 20010.76
07/31/92 21201.95 20611.08
08/31/92 20991.65 20409.09
09/30/92 21109.61 20541.75
10/31/92 20863.43 20340.44
11/30/92 21266.33 20704.54
12/31/92 21498.82 20915.72
01/31/93 21822.09 21158.34
02/28/93 22587.62 21924.28
03/31/93 22397.93 21691.88
04/30/93 22629.02 21910.97
05/31/93 22808.39 22033.67
06/30/93 23186.83 22401.63
07/31/93 23254.76 22430.75
08/31/93 23756.21 22897.31
09/30/93 24046.79 23158.34
10/31/93 24095.41 23202.34
11/30/93 23930.39 22998.16
12/31/93 24429.77 23483.42$10,000 OVER LIFE OF FUND:
Let's say you invested $10,000 in Fidelity Aggressive Tax-Free Portfolio on
September 30, 1985, shortly after the fund started. As the chart shows, by
December 31, 1993, the value of your investment would have grown to $24,430
- - a 144.30% increase on your initial investment. For comparison, look at
how the Lehman Brothers Municipal Bond index did over the same period. With
dividends reinvested, the same $10,000 would have grown to $23,483 - a
134.83% increase.

UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, move in the
opposite direction of interest
rates. In turn, the share price,
return, and yield of a fund
that invests in bonds will vary.
That means if you sell your
shares during a market
downturn, you might lose
money. But if you can ride out
the market's ups and downs,
you may have a gain.
(checkmark)
INCOME
YEARS ENDED DECEMBER 31, 1993 1992 1991 1990 1989

Income return 6.80% 7.31% 7.97% 8.00% 8.09%

Capital gain return 3.04% 1.18% 0.56% 0% 0%

Change in share price 3.79% 0.68% 3.24% -0.52% 1.41%

Total return 13.63% 9.17% 11.77% 7.48% 9.50%

Income returns, capital gain returns, and changes in share price are all
part of a bond fund's total return. An income return reflects the dividends
paid by the fund. A capital gain return reflects the amount paid by the
fund to shareholders based on the profits it has from selling bonds that
have grown in value. Both returns assume the dividends or gains are
reinvested. Changes in the fund's share price include changes in the prices
of the bonds owned by the fund.
DIVIDENDS AND YIELD
PERIODS ENDED DECEMBER 31, 1993 PAST 30 PAST 6 PAST 1
DAYS MONTHS YEAR

Dividends per share n/a 39.24(cents) 78.30(cents)

Annualized dividend rate n/a 6.22% 6.34%

Annualized yield 5.63% n/a n/a

Tax-equivalent yield 8.80% n/a n/a

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 $12.52 over
the past six months and $12.35 over the past year, you can compare the
fund's income over these two periods. The 30-day annualized yield is a
standard formula for all funds based on the yields of the bonds in the
fund, averaged over the past 30 days. This figure shows you the yield
characteristics of the fund's investments at the end of the period. It also
helps you compare funds from different companies on an equal basis. The
tax-equivalent yield shows what you would have to earn on a taxable
investment to equal the fund's tax-free yield, if you're in the 36% federal
tax bracket.
FUND TALK: THE MANAGER'S OVERVIEW

MARKET RECAP
Generally, interest rates fell during
the 12 months ended December
31, 1993. As a result, bond prices
rose and most fixed-income
investors - including those in
tax-free bonds - enjoyed
attractive returns. The period
began with worries of rising interest
rates. The economic recovery was
finally taking hold, and the
spending plans of the
president-elect were still unclear.
But the bond market signaled its
approval as President Clinton
promised to reduce the deficit and
fight inflation. The yield on the
benchmark 30-year Treasury bond
declined steadily and reached an
historic low of 5.79% in
mid-October. By year-end, mild
inflation fears, fueled by a
strengthening economy, had
pushed up the yield on the 30-year
bond to 6.35%. Two factors
affected tax-free bonds specifically:
on the positive side, higher federal
taxes - discussed all year and
approved in August - boosted
demand. At the same time, record
new issuance kept supplies high,
which somewhat dampened
prices. Overall during the period,
tax-free bonds performed well
compared to other fixed-income
investments. The Lehman
Brothers Municipal Bond Index -
a broad measure of the tax-free
bond market - rose 12.29%. By
comparison, the Lehman Brothers
Aggregate Bond Index - which
tracks investment-grade taxable
bonds - rose only 9.75%, due in
part to relatively poor performance
by mortgage-backed securities.
An interview with Anne Punzak,
Portfolio Manager of Fidelity Aggressive Tax-Free Portfolio
Q. ANNE, HOW DID THE FUND DO?
A. For the 12 months ended December 31, 1993, the fund had a total return
of 13.63%. That beat the average high yield municipal bond fund, which
returned 11.59% over the same period, according to Lipper Analytical
Services.
Q. WHY DID THE FUND BEAT THE AVERAGE?
A. The fund had a duration - a measure of interest rate sensitivity - that
was longer than many other funds of this type. That meant its price could
rise more as interest rates fell, which is what happened over the past
year. At the end of December the fund's duration stood at eight years.
Mainly, that was due to a large stake - nearly 59.1% on December 31 - in
bonds with maturities of 20 years or more. As interest rates fell, it paid
to invest in bonds with longer maturities. That's because longer-term bonds
appreciated more than shorter-term bonds.
Q. AT THE END OF DECEMBER, THE FUND'S LARGEST SECTOR CONCENTRATION - AT
30.8% OF INVESTMENTS - WAS HEALTH CARE. ARE YOU CONCERNED THAT HEALTH-CARE
REFORM WILL HAVE A NEGATIVE IMPACT ON THESE BONDS?
A. Not particularly. In fact, some hospitals could actually benefit from
health-care reform, such as those in growing suburban areas with strong HMO
relationships and good cost controls. Reform also could spur consolidations
within the sector, which might offer some opportunities. I'm most
interested in smaller, lower-rated hospitals that could benefit from being
taken over by a larger, higher-rated hospital. The acquired hospital's
bonds would assume the higher rating of its acquirer. If the acquired
hospital's bonds were upgraded, they would most likely appreciate in price.
Q. WHAT'S ATTRACTIVE ABOUT ELECTRIC UTILITY BONDS - THE FUND'S SECOND
LARGEST SECTOR CONCENTRATION?
A. These bonds - at 15.9% of investments - typically provide attractive
yields. They also should become scarce once the utilities have refinanced
most of their older, more expensive debt at lower current interest rates.
That's because there were major expansion programs during the '80s, which
means there's little need for future bond issues to fund new plants. Once
the refinancings start to taper off, supply should dry up some and prices
could go higher. I favor electric utilities with high credit ratings and
strong management teams.
Q. YOU HAVE A BIG STAKE IN NON-RATED BONDS - ABOUT 28% OF THE FUND'S
INVESTMENTS. ARE THESE LOWER-QUALITY?
A. A non-rated bond isn't necessarily lower quality or riskier than a
rated one. For example, the issuer of the bond might be in a sector or
industry group that the rating agencies don't follow. Or if the issuer has
a substantial amount of debt outstanding in the taxable market, it may not
consider it necessary to get a rating when coming to market with a small
amount of tax-exempt debt. What makes non-rated bonds attractive is they
often offer higher yields than rated bonds. Their high yields mean they
could do better than lower yielding bonds if interest rates rise and the
recovery speeds up. Plus, if the economy improves it would tend to improve
the credit quality of higher yield bonds, which would be a positive for
prices. What's more, since these bonds offer a high income return, total
return probably wouldn't be as negatively affected as bonds that pay lower
yields. At year end, about 24% of the fund's investments were bonds judged
to be lower than
investment grade by Fidelity analysts.
Q. DO YOU EXPECT INTEREST RATES TO RISE?
A. No, the U.S. economy is healthier than it was a year ago, but inflation
- - which when rising can also cause interest rates to rise - appears to be
in check. Two early inflationary signs - commodity prices and wages -
haven't shown any real evidence of rebounding. To me, that signals that
inflation could hold steady for some time. If we do have a low growth, low
inflation environment it would most likely be positive for bonds.
Q. SO WHAT CAN INVESTORS EXPECT OVER THE NEXT 12 MONTHS?
A. Probably more modest returns than they've enjoyed in 1993. Even so,
tax-free bonds could beat taxable bonds, as higher taxes increase demand
for municipals and supply dwindles.
FUND FACTS
GOAL: to provide high current
income exempt from federal
income tax by investing
mainly in lower-quality
municipal bonds with
maturities of 20 or more
years
START DATE: September 13,
1985
SIZE: as of December 31,
1993, over $952 million
MANAGER: Anne Punzak,
since January 1986;
manager, Fidelity High Yield
Tax-Free Portfolio, since
October 1993; Spartan
Aggressive Municipal Bond
Fund, since April 1993;
Spartan Florida Municipal
Income, since March 1992;
Fidelity Insured Tax-Free
Portfolio, October
1989-September 1993
(checkmark)
ANNE PUNZAK'S INVESTMENT
PHILOSOPHY:
"My strategy can best be
described as value oriented.
That means I look for bonds
that have prospects for
improvement, but their prices
don't yet reflect that potential.
In other words, they're a
bargain compared to their
potential value and to other
similar bonds. With the help of
Fidelity's research staff, I try
to find bonds that are
currently out of favor with
investors. That way, I'm in the
position of already owning the
bond when investor sentiment
starts to improve."
(bullet) So far, the fund's 8.2% stake
in California bonds hasn't been
affected by the recent
earthquake. Since it's difficult
to predict what the impact will
be a year from now, the fund's
California bonds will be closely
monitored for any signs of
problems .
(bullet) At year-end, over 60% of the
fund's investments were
concentrated in three sectors
with 30.8% in health-care
bonds, 15.9% in electric utility
bonds and 14.4% in industrial
revenue bonds.
DISTRIBUTIONS
The Board of Trustees of
Fidelity Aggressive Tax-Free
Portfolio voted to pay on
February 7, 1994, to
shareholders of record at the
opening of business on
February 4, 1994, a
distribution of $.05 derived
from capital gains realized
from sales of portfolio
securities.
INVESTMENT CHANGES

TOP FIVE STATES AS OF DECEMBER 31, 1993
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO

New York 10.8 6.8

California 8.2 5.3

Massachusetts 7.6 7.3

Michigan 7.0 8.0

Texas 5.8 6.7

TOP FIVE SECTORS AS OF DECEMBER 31, 1993
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO

Health Care 30.8 30.6

Electric Revenue 15.9 18.9

Industrial Development 14.4 18.5

Transportation 7.9 8.0

Lease Revenue 6.8 3.5

AVERAGE YEARS TO MATURITY AS OF DECEMBER 31, 1993
6 MONTHS AGO

Years 20.7 20.6

AVERAGE YEARS TO MATURITY SHOWS THE AVERAGE TIME UNTIL THE PRINCIPAL OF THE
BONDS IN THE FUND IS EXPECTED TO BE REPAID, WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF DECEMBER 31, 1993
6 MONTHS AGO

Years 8.0 7.3

DURATION SHOWS HOW MUCH A BOND'S PRICE FLUCTUATES WITH CHANGES IN INTEREST
RATES. IF RATES RISE 1%, FOR EXAMPLE, THE SHARE PRICE OF A FUND WITH A
FIVE-YEAR DURATION WILL FALL 5%.
QUALITY DIVERSIFICATION AS OF DECEMBER 31, 1993
(MOODY'S RATINGS)
Aaa 14.4
Aa, A 21.0
Baa 23.6
Ba or B 9.6
Caa 0.3
Non-rated 28.3
Row: 1, Col: 1, Value: 28.3
Row: 1, Col: 2, Value: 1.3
Row: 1, Col: 3, Value: 8.6
Row: 1, Col: 4, Value: 23.6
Row: 1, Col: 5, Value: 21.0
Row: 1, Col: 6, Value: 14.4
THIS CHART EXCLUDES SHORT-TERM INVESTMENTS. WHERE MOODY'S RATINGS ARE NOT
AVAILABLE, WE HAVE USED S&P RATINGS. NON-RATED SECURITIES CONSIDERED TO
BE BAA OR BETTER QUALITY BY FMR ARE 3.9% OF THE FUND'S TOTAL INVESTMENTS.
INVESTMENTS DECEMBER 31, 1993

Showing Percentage of Total Value of Investment in Securities

MUNICIPAL BONDS - 97.7%
MOODY'S RATINGS (A) PRINCIPAL
(UNAUDITED) AMOUNT VALUE (NOTE 1)
ALABAMA - 1.5%
Cullman Med. Ctr. (Cullman Reg'l. Med. Ctr.)
Series A, 6.50% 2/15/23 Baa $ 5,575,000 $ 5,714,375
Mobile Arpt. Auth. Arpt. Rev. 11.25%
10/1/14 Baa 1,600,000 1,728,000
Selma Spl. Care Facs. Fing. Auth. Hosp. Ref. Rfdg.
(Vaughan Reg'l. Med. Ctr. Proj.):
7.125% 6/1/14 - 4,570,000 4,570,000
9.50% 6/1/14 - 1,390,000 1,680,163
13,692,538
ALASKA - 0.5%
North Slope Borough Rfdg. Unltd. Tax Series G,
8.35% 6/30/98 Baa1 3,000,000 3,472,500
North Slope Borough Gen. Oblig. Rfdg.
Series C, 10.40% 6/30/95 Baa1 615,000 647,288
4,119,788
ARIZONA - 1.9%
Arizona Health Facs. Auth. Hosp. Sys. Rev.
(St. Luke's Hosp. Sys.) Series A,
10.125% 11/1/15 Ba 12,000,000 12,930,000
Sierra Vista Ind. Dev. Auth. Hosp. Rev. Rfdg.
(Sierra Vista Commty. Hosp. Proj.)
8.75% 12/1/16 - 4,000,000 4,450,000
17,380,000
ARKANSAS - 1.2%
Fayetteville Pub. Facs. Board Rev. Rfdg.
(Butterfield Trail Village Proj.) Series A,
9.50% 9/1/14 - 4,700,000 5,123,000
Pope County Poll. Cont. Rev. (Arkansas Pwr. &
Lt. Co. Proj.) 11% 12/1/15 Baa2 5,000,000 5,750,000
10,873,000
CALIFORNIA - 7.9%
California Gen. Oblig.:
4.75% 9/1/12 Aa 1,300,000 1,226,875
4.75% 9/1/23 Aa 9,500,000 8,692,500
California Dept. Wtr. Resources Rev.
(Central Valley Proj.) (Wtr. Sys.):
Series J-1, 7% 12/1/11 Aa 1,000,000 1,203,750
6% 12/1/21 Aa 1,000,000 1,045,000
California Pub. Wrks. Board Lease Rev. Rfdg.
(Dept. Corrections St. Prisons) Series A,
5% 12/1/19, (AMBAC Insured) Aaa 2,500,000 2,415,625
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (A) PRINCIPAL
(UNAUDITED) AMOUNT VALUE (NOTE 1)
CALIFORNIA - CONTINUED
California Pub. Wks. Board Lease Rev.
(California University Proj.) Series A,
5.50% 6/1/14 A1 $ 2,250,000 $ 2,272,500
Del Norte County Rev. Rfdg.
(Department of Corrections)
5.20% 12/1/09 A1 5,750,000 5,735,625
California Statewide Commty. Dev. Corp.
Ctfs. of Prtn. 5.50% 10/1/23 A+ 5,000,000 4,825,000
Central Valley Fin. Auth. Cogeneration Proj.
Rev. (Carson Ice Generation Proj.)
6.10% 7/1/13 BBB- 2,100,000 2,139,375
Culver City Redev. Fing. Auth. Rev. Rfdg. Tax
Allocation 5.50% 11/1/14, (AMBAC Insured) Aaa 3,000,000 3,090,000
Los Angeles Ctr. 5.125% 8/15/13,
(MBIA Insured) Aaa 3,000,000 2,932,500
Los Angeles Regional Arpt. Impt. Corp. Lease Rev.
(Sub-Lease-Western Air Lines-Delta)
11.25% 11/1/25 Baa2 6,000,000 6,892,500
Los Angeles Bldg. Auth. Lease Rev. Rfdg.
(California St. Dept. Gen. Svcs.) Series A,
5.625% 5/1/11 A1 1,400,000 1,436,750
Metro Wtr. Dist. Southern CA Wtrwrks. Rev.
6% 7/1/21 Aa 780,000 808,275
Metropolitan Wtr. Dist. Southern California
Wtrwks.:
Rev. Rfdg. Series A, 5.75% 7/1/21 Aa 2,000,000 2,117,500
RIB 8.028% 10/30/20 (d)(g) Aa 2,000,000 2,027,500
Northern California Pwr. Agcy. Pub. Pwr. Rev. Rfdg.
(Geothermal Proj. #3) Series A,
5.85% 7/1/10 A 2,000,000 2,102,500
Port Oakland Port Rev.:
Rfdg. (Cap. Appreciation) Series F, 0%
11/1/08, (MBIA Insured) Aaa 3,045,000 1,404,506
(Cap. Appreciation) Series F, 0%
11/1/09, (MBIA Insured) Aaa 7,000,000 3,027,500
Rancho Wtr. Dist. Fin. Auth. 4.75% 8/15/21,
(AMBAC Insured) Aaa 2,000,000 1,835,000
Riverside County Ctfs. of Prtn. Rfdg.
(Air Force Village West, Inc.) Series A,
8.125% 6/15/20 A-1+ 4,000,000 4,225,000
Univ. of California Rev. Rfdg. Series C,
5% 9/1/23, (AMBAC Insured) Aaa 7,330,000 6,963,500
Univ. Rev. Rfdg. Multiple Purp. Projs. Series B,
4.75% 9/1/21, (MBIA Insured) Aaa 2,670,000 2,449,725
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (A) PRINCIPAL
(UNAUDITED) AMOUNT VALUE (NOTE 1)
CALIFORNIA - CONTINUED
West & Ctrl . Basin Fin. Auth. Rev. West Basin
Ref. Proj., Series A, 5% 8/1/13,
(AMBAC Insured) Aaa $ 3,000,000 $ 2,913,750
73,782,756
COLORADO - 5.3%
Colorado Health Facs. Auth. Rev.:
(PSL Health Sys. Proj.):
Series A:
7.25% 2/15/16, (FSA Insured) Aaa 1,500,000 1,740,000
6.875% 2/15/23 Baa 4,150,000 4,424,938
Series B, 8.50% 2/15/21 Baa 2,400,000 2,775,000
(Rocky Mountain Adventist):
6.625% 2/1/13 Baa 9,000,000 9,495,000
6.625% 2/1/22 Baa 2,100,000 2,197,125
Denver City & County Arpt. Rev.:
Series 1991 A, 8.75% 11/15/23 (e) Baa1 6,500,000 7,743,125
Series A:
7.50% 11/15/12 Baa1 2,500,000 2,818,750
7.25% 11/15/25 Baa1 3,250,000 3,595,313
Series C, 6.50% 11/15/06 (e) Baa1 4,575,000 4,815,188
Series D:
7.40% 11/15/01 (e) Baa1 3,000,000 3,318,750
7.50% 11/15/02 (e) Baa1 3,090,000 3,460,800
Hyland Hills Metropolitan Park & Recreational
Dist. Spl. Rev. Rfdg. 10% 7/1/06 - 1,900,000 2,094,750
Mesa County Ind. Dev. Rev. (Joy Technologies, Inc.
Proj.) 8.50% 9/15/06 Ba3 1,250,000 1,379,688
49,858,427
CONNECTICUT - 0.2%
Connecticut Dev. Auth. Poll. Cont. Rev.
(United Illuminating Co. Proj.) 9.50% 6/1/16 BBB- 1,650,000 1,850,063
DELAWARE - 0.4%
Wilmington Hosp. Rev. (Osteopathic Hosp.
Assoc. Co.) Series A, 10.20% 10/1/18,
(Pre-Refunded to 10/1/98 @ 102) (f) - 2,900,000 3,693,875
DISTRICT OF COLUMBIA - 1.1%
District of Columbia Gen. Oblig. Rfdg.
Series A, 5.75% 6/1/03 Baa 1,000,000 1,037,500
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (A) PRINCIPAL
(UNAUDITED) AMOUNT VALUE (NOTE 1)
DISTRICT OF COLUMBIA - CONTINUED
District of Columbia Hosp. Rev.:
(Hosp. for Sick Children) Series A,
8.875% 1/1/21 - $ 3,000,000 $ 3,371,250
Rfdg. (Medlantic Healthcare Group - Washington
Hosp. Ctr.) Series A, 7% 8/15/05 Baa1 2,500,000 2,731,250
Washington D.C. Metropolitan Area Trans. Auth.
6% 7/1/08, (FGIC Insured) Aaa 2,500,000 2,753,125
9,893,125
FLORIDA - 1.0%
Hillsborough County Aviation Auth. Rev.
(Spl. Purp. Facs. U.S. Air Proj.) 8.60%
1/15/22 (e) Ba2 800,000 905,000
Jacksonville Health Facs. Auth. Hosp. Rev. Rfdg.
(Methodist Hosp. Proj.):
Series A:
8% 10/1/06 - 2,000,000 1,970,000
8% 10/1/15 - 1,000,000 976,250
Series B
8% 10/1/15 - 210,000 205,013
Lee County Hosp. Board Directors Hosp. Rev. RIB
9.524% 3/26/20, (MBIA Insured) (d)(g) Aaa 1,000,000 1,146,250
West Volusia Hosp. Auth. Hosp. Rev. Series B:
9% 9/1/96 - 405,000 412,088
9.375% 9/1/16 - 3,200,000 3,344,000
8,958,601
GEORGIA - 2.3%
Georgia Muni. Elec. Auth. Pwr. Rev. Rfdg.
Series Z, 5.50% 1/1/20 A1 8,800,000 8,965,000
Georgia Muni. Elec. Auth. Spl. Oblig. Fifth
Crossover Series Proj. 1, 6.50% 1/1/17 A1 8,500,000 9,775,000
Savannah Hosp. Auth. Rev. Rfdg. & Impt.
(Candler Hosp.) 7% 1/1/11 Baa 2,600,000 2,791,750
21,531,750
ILLINOIS - 3.4%
Chicago O'Hare Int'l. Arpt. Spl. Facs. Rev.:
(American Airlines, Inc. Proj.) Series A,
7.875% 11/1/25 (e) Baa2 4,720,000 5,221,500
Rfdg. Series A:
5% 1/1/12 A1 4,000,000 3,880,000
5% 1/1/16 A1 2,500,000 2,368,750
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (A) PRINCIPAL
(UNAUDITED) AMOUNT VALUE (NOTE 1)
ILLINOIS - CONTINUED
Cooke & Will Counties Township High School
Dist.#206 Series A, 0% 12/1/03,
(AMBAC Insured) Aaa $ 2,100,000 $ 1,283,625
Cook County Gen. Oblig. Unltd. Tax 0% 11/1/04,
(AMBAC Insured) Aaa 1,600,000 936,000
Illinois Health Facs. Auth. Rev.:
(GlenOaks Med. Ctr.) Series D:
9.50% 11/15/15, (Pre-Refunded to
11/15/00 @ 102) (f) AAA 2,870,000 3,791,988
9.50% 11/15/15 Baa1 3,880,000 4,738,450
(Hinsdale Hosp.) Series C, 9.50% 11/15/19,
(Pre-Refunded to 11/15/00 @ 102) (f) Baa1 1,270,000 1,625,600
(Rush Presbyterian-St. Luke's) 5.25% 11/15/20,
(MBIA Insured) Aaa 2,730,000 2,624,213
(Trinity Medical Ctr.) 7% 7/1/12 Baa1 2,700,000 2,882,250
Loves Park First Mtg. Rev. (Hoosier Care Proj.)
Series A, 9.75% 8/1/19 - 1,575,000 1,651,781
Metropolitan Pier & Expo Auth. Dedicated
St. Tax Rev. (McCormick Place Expansion Proj.)
Series A, 0% 6/15/08, (FGIC Insured) Aaa 2,000,000 920,000
31,924,157
INDIANA - 1.8%
East Chicago Poll. Cont. Rev. (Inland Steel Co.
Proj. #8) Series B, 10.75% 12/1/12 Ba3 3,000,000 3,303,750
Elkhart County Hosp. Auth. Rev.
(Oaklawn Psychiatric Ctr., Inc. Proj.)
12% 11/1/15 - 7,735,000 7,715,663
Indianapolis Arpt. Fac. Rev. Economic Dev. Rfdg.
(Federal Express Corp. Proj.) 6.85%
4/1/17 (b) Baa3 4,000,000 4,100,000
Wells County Hosp. Auth. Rev. Rfdg.
(Caylor Nickel Med. Ctr., Inc.) 11.75%
4/1/09 AAA 2,000,000 2,075,000
17,194,413
IOWA - 0.3%
Iowa Fin. Auth. Health Care Facs. Rev.
(Mercy Health Initiatives Proj.):
9.85% 7/1/09 - 1,500,000 1,584,375
9.70% 7/1/99 - 1,100,000 1,139,875
2,724,250
KANSAS - 0.2%
Olathe Hosp. Rev. (Olathe Hosp.
Foundation, Inc. Proj.) 10.25% 8/1/16,
(Pre-Refunded to 8/1/1995 @ 102) (f) AAA 1,500,000 1,689,375
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (A) PRINCIPAL
(UNAUDITED) AMOUNT VALUE (NOTE 1)
KENTUCKY - 1.3%
Kenton County Arpt. Board Arpt. Rev.
(Spl. Facs. Delta) Series A, 7.50%
2/1/20 (e) Ba1 $ 4,500,000 $ 4,876,875
Owensboro Elec. Lt. & Pwr. Rev. Series B:
0% 1/1/04, (AMBAC Insured) Aaa 3,925,000 2,404,063
0% 1/1/05, (AMBAC Insured) Aaa 3,675,000 2,117,719
0% 1/1/09, (AMBAC Insured) Aaa 2,000,000 902,500
0% 1/1/10, (AMBAC Insured) Aaa 4,440,000 1,887,000
0% 1/1/13, (AMBAC Insured) Aaa 1,000,000 358,750
12,546,907
LOUISIANA - 4.4%
Lake Charles Hbr. & Term. Dist. Port Facs. Rev. Rfdg.
(Trunkline LNG Co. Proj.) Series 1992,
7.75% 8/15/22 Ba2 12,900,000 14,641,500
Louisiana Pub. Facs. Auth. Ind. Dev. Rev. Rfdg.
(Beverly Enterprises, Inc.) 8.25% 9/1/08 - 1,750,000 1,892,188
New Orleans Gen. Oblig. Rfdg.:
0% 9/1/08, (AMBAC Insured) Aaa 10,000,000 4,587,500
(Cap. Appreciation) 0% 9/1/12,
(AMBAC Insured) Aaa 6,250,000 2,257,813
Ltd. Tax Rfdg. 0% 9/1/15, (AMBAC Insured) Aaa 1,700,000 520,625
Ouachita Parish Hosp. Svc. Dist. #1 Rev.
(Glenwood Reg'l. Med. Ctr.) 7.50% 7/1/21 A- 1,500,000 1,689,375
Port New Orleans Ind. Dev. Rev. Rfdg.
(Continental Grain Co. Proj.) 7.50% 7/1/13 BB- 3,000,000 3,183,750
St. Charles Parish Environmental Impt. Rev.
(Louisiana Pwr & Lt. Proj.) Series B,
5.95% 12/1/23 Baa2 2,000,000 1,992,500
West Feliciana Parish Poll. Cont. Rev.
(Gulf State Util. Co. Proj.):
7.70% 12/1/14 - 6,750,000 7,787,813
9% 5/1/15 - 2,340,000 2,846,025
41,399,089
MARYLAND - 1.4%
Maryland Health & Higher Ed. Facs. Auth.
Rev. Rfdg.:
(Doctors Commty. Hosp.) 5.50% 7/1/24 Baa 5,900,000 5,582,875
(Francis Scott Key Med. Ctr.) 5% 7/1/23,
(FGIC Insured) Aaa 1,750,000 1,664,688
(Frederick Mem. Hosp.) 5.25% 7/1/13,
(FGIC Insured) Aaa 2,300,000 2,320,125
(Howard County Gen. Hosp.) 5.50% 7/1/21 Baa1 3,000,000 2,853,750
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (A) PRINCIPAL
(UNAUDITED) AMOUNT VALUE (NOTE 1)
MARYLAND - CONTINUED
Prince George's County Poll. Cont. Rev. Rfdg.
(Potomac Elec. Pwr. Proj.) 6% 9/1/22 A1 $ 1,000,000 $ 1,057,500
13,478,938
MASSACHUSETTS - 7.6%
Massachusetts Bay Trans. Auth. (Gen. Trans. Sys.):
Rfdg. Series A, 5.50% 3/1/09 A 4,000,000 4,140,000
Series A, 7% 3/1/21 A 1,500,000 1,828,125
Series B, 6.20% 3/1/16 A 3,800,000 4,237,000
Massachusetts Gen. Oblig. (Cap. Appreciation
Consolidated Loan) Series C, 0% 12/1/05 A 3,500,000 1,951,250
Massachusetts Health & Edl. Facs. Auth. Rev.
(1st Mtg.) (Fairview Extended Care)
Series A, 10.25% 1/1/21 - 4,000,000 4,420,000
Massachusetts Ind. Fin. Agcy. Ind. Rev.:
(Terra-Lt., Inc.) 13% 11/1/01 A3 3,500,000 4,256,875
(Union Mission Proj.) 9.55% 9/1/26,
(FHA Guaranteed) (c) Aaa 4,000,000 4,875,000
Massachusetts Ind. Fin. Agcy. Rev.:
Rfdg.:
(Emerson College) 8.90% 1/1/18 - 10,000,000 11,750,000
(Morton Hosp. & Med. Ctr.) Series A,
8.75% 7/1/11 - 4,180,000 5,130,950
(Atlanticare Med. Ctr.) Series A, 10.125%
11/1/14 - 3,600,000 4,180,500
(Cap. Appreciation) (Massachusetts Biomedical):
Series A-1, 0% 8/1/03 - 6,300,000 3,827,250
Series A-2:
0% 8/1/06 4,000,000 2,005,000
0% 8/1/09 - 6,000,000 2,475,000
(Institute Dev. Disabilities) 9.25% 6/1/09 4,560,000 4,463,100
(1st Mortgage Reeds Landing) 7.75% 10/1/00 1,000,000 997,500
8.625% 10/1/23 - 3,500,000 3,495,625
Massachusetts Muni. Wholesale Elec. Co. Pwr.
Supply Sys. Rev. (Reg. Inflos) Series A,
7.72% 7/1/18 (d)(g) Aaa 1,750,000 1,723,750
Massachusetts Wtr. Resources Auth. Gen. Rfdg.
Series C, 5.25% 12/1/15 A 5,000,000 4,875,000
70,631,925
MICHIGAN - 7.0%
Detroit Convention Facs. Rev. Rfdg. Ltd. Tax
(Cobo Hall Expansion Proj.) 5.25% 9/30/07 A 2,000,000 1,977,500
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (A) PRINCIPAL
(UNAUDITED) AMOUNT VALUE (NOTE 1)
MICHIGAN - CONTINUED
Detroit Convention Facs. Rev. Rfdg.
(Cobo Hall Expansion Proj.) 5.25% 9/30/12 A $ 4,000,000 $ 3,885,000
Detroit Hosp. Fin. Auth. Facs. Rev.
(Michigan Healthcare Corp. Proj.)
10% 12/1/20 B 5,985,000 6,673,275
Flint Hosp. Bldg. Auth. Rev. (Hurley Med. Ctr.)
7.80% 7/1/14 Baa1 4,750,000 5,236,875
Highland Park Hosp. Fin. Auth. Hosp. Facs. Rev.:
(Lakeside Commty. Hosp. Proj.) 10% 3/1/20 B 9,395,000 10,123,113
(Michigan Health Care Corp. Proj.) Series A,
9.875% 12/1/19 B 7,350,000 7,809,375
Michigan Hosp. Fin. Auth. Rev. Rfdg.
(Saratoga Commty. Hosp.) 8.75% 6/1/10 - 490,000 540,225
Michigan Muni. Bond Auth. Rev. (Local Gov't.
Loan) Series C-A, 0% 6/15/12,
(FSA Insured) Aaa 2,125,000 767,656
Michigan Strategic Fund Ltd. Oblig. Rev.
(Mercy Svcs. for Aging Proj.) 9.40% 5/15/20 - 11,900,000 13,060,233
Midland County Econ. Dev. Corp. Poll. Cont.
Rev. Rfdg. (Subordinated Ltd. Oblig.)
Series B, 9.50% 7/23/09 (e) - 7,000,000 7,980,000
Waterford Township Econ. Dev. Corp. Rev.:
(Canterbury Health Care) 8% 7/1/08 - 450,000 457,313
Ltd. Tax Oblig. (Canterbury Health Care)
8.375% 7/1/23 - 1,300,000 1,348,750
Wayne Charter County Spl. Arpt. Facs. Rev.
(Republic Airlines, Inc. Proj.) Series C,
10.375% 12/1/15 - 4,960,000 5,375,400
65,234,715
MINNESOTA - 1.5%
Minneapolis & St. Paul Hsg. & Redev. Auth.
Healthcare Sys. Rev. (Healthspan Health Sys. Corp.)
(Health One Sys.) Series A, 4.75% 11/15/18,
(AMBAC Insured) Aaa 4,000,000 3,695,000
Minnesota Energy & Econ. Dev. Auth. Rev.
(Small Bus Dev. Lot 1) Series A,
9.25% 8/1/06 - 695,000 761,025
St. Paul Hsg. & Redev. Auth. Hosp. Rev.
(Healtheast Proj.):
Series A, 9.75% 11/1/17 Baa 2,520,000 2,954,700
Series B, 9.75% 11/1/17 Baa 1,000,000 1,167,500
Series C, 9.75% 11/1/17 Baa 175,000 205,188
St. Paul Port Auth. Ind. Dev. Rev.:
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (A) PRINCIPAL
(UNAUDITED) AMOUNT VALUE (NOTE 1)
MINNESOTA - CONTINUED
(Riverview II Proj.) Series 1983 A, 10% 1/1/13 CCC $ 1,305,000 $
1,239,750
Series 1981-M, 13.50% 11/1/11 CCC 950,000 950,000
Series 1982-G, 12.875% 5/1/12 CCC 875,000 866,250
Southern Minnesota Muni. Pwr. Agcy. Pwr.
Supply Sys. Rev. Series A, 4.75% 1/1/16 A1 2,000,000 1,877,500
13,716,913
MISSISSIPPI - 1.4%
Claiborne County Poll. Cont. Rev. (Middle South
Energy, Inc. Proj.):
Series A, 9.50% 12/1/13 - 1,550,000 1,894,875
Series C, 9.875% 12/1/14 - 6,195,000 7,674,056
Series E, 9.50% 4/1/16 Baa3 2,000,000 2,257,500
Lafayette County Hosp. Rev. (Oxford-Lafayette
County Hosp. Proj.) 11.75% 11/1/04 - 1,295,000 1,416,406
13,242,837
MISSOURI - 1.8%
Boone County Ind. Dev. Auth. Ind. Rev. 1st Mtg.
(Fairview Extended Care) Series A,
10.125% 1/1/11 - 2,410,000 2,641,963
Kansas City Ind. Dev. Auth. Health Facs. Rev.
Rfdg. & Impt. (Menorah Med. Ctr. Proj.)
9.25% 6/1/16 - 6,000,000 6,480,000
Kansas City Ind. Dev. Auth. (Kingswood United
Methodist Manor Proj.) Series 1993,
9% 1 1/15/13 - 3,000,000 2,996,250
St. Louis Land Clearance Redev. Auth. Hsg. Dev. Rev.
(Westminster Place Apts. Proj.) 11% 12/15/15 - 4,395,000 4,702,650
16,820,863
NEBRASKA - 0.4%
Omaha Pub. Pwr. Dist. Elec. Rev. Series C,
5.50% 2/1/14 Aa 4,000,000 4,120,000
NEVADA - 1.8%
Clark County Ind. Dev. Rev. (Southwest Gas Corp.):
Series A:
7.30% 9/1/27 Ba1 1,000,000 1,112,500
6.50% 12/1/33 Ba1 3,000,000 3,037,500
Series B, 7.50% 9/1/32 Ba1 8,050,000 8,955,625
Clark County School Dist. Ltd. Tax Series A,
7% 6/1/10, (MBIA Insured) (c) Aaa 3,300,000 3,960,000
17,065,625
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (A) PRINCIPAL
(UNAUDITED) AMOUNT VALUE (NOTE 1)
NEW HAMPSHIRE - 2.2%
New Hampshire Higher Edl. & Health Facs. Auth. Rev.:
(1st Mtg. River Woods at Exeter):
8% 3/1/00 - $ 3,230,000 $ 3,205,775
9% 3/1/23 - 3,170,000 3,150,188
(Frisbie Mem. Hosp.) 6.50% 10/1/08 Aaa 4,900,000 5,990,250
(Littleton Hosp. Assoc., Inc.):
Series A, 9.50% 5/1/20 - 3,735,000 4,038,469
Series B, 9% 5/1/95 - 500,000 508,750
(Valley Reg'l. Hosp.) 7.35% 4/1/23 - 4,000,000 4,055,000
20,948,432
NEW JERSEY - 3.0%
New Jersey Econ. Dev. Auth. Econ. Dev. Rev.:
Rfdg. (Stolt Term. Proj.) 10.50% 1/15/18 - 3,500,000 4,143,125
(Holt Hauling & Warehouse Sys., Inc.):
Series D, 10.25% 9/15/14 - 6,000,000 6,832,500
Series E, 9.75% 12/15/16 (e) 7,500,000 8,390,625
Series G, 8.40% 12/15/15 - 5,000,000 5,306,250
(Statewide Realty-Vista Hotel Proj.)
11% 12/15/17 - 2,960,000 1,983,200
Union County Utils. Auth. Solid Waste Rev.
7% 6/15/04 (e) A- 1,500,000 1,678,125
28,333,825
NEW MEXICO - 1.7%
Albuquerque Retirement Facs. Rev. Rfdg.
(La Vida Liena Proj.) Series A,
8.85% 2/1/23 - 2,050,000 2,050,000
Farmington Poll. Cont. Rev. Rfdg. (Southern
California Edison) 5.875% 6/1/23,
(MBIA Insured) Aaa 1,000,000 1,046,250
Farmington Poll. Cont. Rev. 6.40% 8/15/23 Ba2 4,000,000 4,100,000
Gallup Poll. Cont. Rev. Rfdg. (Plains Elec.
Generation Unltd. Tax) 6.65% 8/15/17,
(MBIA Insured) Aaa 1,000,000 1,120,000
Grant County Hosp. Facs. Rev. Rfdg.
(Gila Reg'l. Med. Ctr. Proj.) 10% 2/1/12 - 4,085,000 4,488,394
New Mexico Univ. Rev. Rfdg. Series A,
6% 6/1/21 A1 2,840,000 3,127,550
15,932,194
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (A) PRINCIPAL
(UNAUDITED) AMOUNT VALUE (NOTE 1)
NEW YORK - 10.8%
Babylon Ind. Dev. Agcy. Resources Recovery Rev.
(Odgen Martin Sys. Babylon, Inc. Co.)
Series B, 8.50% 1/1/19 Baa1 $ 995,000 $ 1,140,519
Metropolitan Trans. Auth. Svc. Contract
Series O, 5.75% 7/1/13 Baa1 5,000,000 5,118,750
Metropolitan Trans. Auth. Trans. Facs. Rev. Rfdg.
Series 7, 0% 7/1/08 Baa1 6,000,000 2,632,500
Metropolitan Transit Auth. Trans. Facs. Series 7,
0% 7/1/12 Baa1 1,490,000 521,500
New York City Rfdg. Series D, 5.75% 8/15/07 Baa1 3,000,000 3,022,500
New York City Gen. Oblig.:
Series C, 5.375% 10/1/19 Baa1 1,000,000 945,000
Series D, 8.50% 8/1/12 Baa1 195,000 217,425
Series E, 5.625% 8/1/12 Baa1 2,000,000 1,957,500
New York State Dorm. Auth. Rev.:
Rfdg. (State Univ. Edl. Facs.) Series A:
5.50% 5/15/09 Baa1 3,000,000 3,018,750
5.50% 5/15/13 Baa1 10,250,000 10,237,188
5.25% 5/15/15 Baa1 14,750,000 14,252,188
5.50% 5/15/19 Baa1 1,500,000 1,485,000
(City Univ. Sys. Consolidated) Series A,
5.75% 7/1/13 Baa1 6,000,000 6,127,500
(Court Facs. Lease) Series A, 5.25% 5/15/21 Baa1 5,000,000 4,743,750
New York State Local Govt. Assistance Corp. Rdfg.:
(Cap. Appreciation) Series C, 0% 4/1/13 A 5,000,000 1,756,250
Series C:
5.50% 4/1/17 A 4,400,000 4,515,500
5% 4/1/21 A 13,000,000 12,350,000
Series D, 5.10% 4/1/07 A 2,250,000 2,244,375
New York State Series H, 6.143% 6/1/07 (d)(g) Aa 8,000,000 7,910,000
New York State Urban Dev. Corp. Rev.
5.25% 1/1/21 Baa1 5,000,000 4,693,750
Niagara County Ind. Dev. Agcy. Rev.
(Wintergarden Inn Assoc. Proj.)
10% 6/1/06 - 4,210,000 2,357,600
Triborough Bridge & Tunnel Auth. Rev. Rfdg.
(Gen. Purp.) Series Y, 5.50% 1/1/17 Aa 8,735,000 9,117,156
West New York New Jersey Muni. Util. Auth.
Swr. Rev. Rfdg. (Cap. Appreciation)
0% 12/15/11, (FGIC Insured) Aaa 1,600,000 620,000
100,984,701
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (A) PRINCIPAL
(UNAUDITED) AMOUNT VALUE (NOTE 1)
NEW YORK AND NEW JERSEY - 0.4%
New York & New Jersey Port Auth. Spl. Oblig.
Rev. (Continental Airlines Corp./Eastern
Airlines, Inc. Proj.) 9.125% 12/1/15 (e) Ba3 $ 3,000,000 $ 3,517,500
NORTH CAROLINA - 0.3%
North Carolina Eastern Muni. Pwr. Agcy.
Pwr. Sys. Rev. Rfdg. 6% 1/1/18,
(AMBAC Insured) Aaa 2,250,000 2,466,563
OHIO - 0.7%
Fairfield Econ. Dev. Rev. Rfdg.
(Beverly Enterprises Proj.) 8.50% 1/1/03 - 2,000,000 2,185,000
Montgomery County Health Care Facs. Rev.
1st Mtg. (Friendship Village Dayton)
11.75% 11/1/15, (Pre-Refunded to
11/1/95 @ 103) (f) - 1,600,000 1,884,000
Ohio State Bldg. Auth. (Worker's Comp.)
4.75% 4/1/14 A 2,500,000 2,356,250
6,425,250
OKLAHOMA - 1.6%
Grand River Dam Auth. Rev. Rfdg.
5.50% 6/1/10 A 1,000,000 1,030,000
Oklahoma County Ind. Auth. Rev. (Epworth
Village Proj.) Series A, 10.25% 4/1/19 - 3,000,000 3,247,500
Oklahoma Muni. Pwr. Auth. Pwr. Supply Sys.
Rev. Series B, 5.75% 1/1/24, (MBIA Insured) Aaa 4,000,000 4,340,000
Tulsa Muni. Arpt. Rev. (American Airlines Proj.)
4.90%, LOC Fuji Bank, Mitsubishi Bank Ltd.,
Societe Generale, Paris, Sumitomo Bank Ltd.,
Variable Rate Demand Notes Baa2 2,000,000 2,157,500
Tulsa Muni. Arpt. Trust Rev.
7.35% 12/1/11 Baa1 3,600,000 3,973,500
14,748,500
PENNSYLVANIA - 3.9%
Beaver County Ind. Dev. Auth. Poll. Cont. Rev.
(Toledo Edison Co. Beaver Valley):
Series B, 12.25% 9/15/15 Ba1 1,180,000 1,345,200
Series C, 10.75% 11/15/15 Ba1 1,000,000 1,126,250
Berks County Ind. Dev. Auth. Ind. Dev. Rev.
(Beverly Enterprises, Inc.) Series A,
11.50% 5/1/07 - 2,000,000 2,087,500
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (A) PRINCIPAL
(UNAUDITED) AMOUNT VALUE (NOTE 1)
PENNSYLVANIA - CONTINUED
Bucks County Ind. Dev. Auth. Rev. (Best
Products Proj.) 7.375% 8/1/04 - $ 2,800,000 $ 560,000
Chartiers Valley Ind. & Commercial Dev. Auth.
1st Mtg. Rev. Rfdg. (United Methodist Health Ctr.)
Series 1988 A, 9.50% 12/1/15 - 5,000,000 5,337,500
Delaware County Auth. Rev. (First Mtg.
Riddle Village Proj.):
8% 6/1/99 - 3,525,000 3,626,344
9.25% 6/1/22 - 5,050,000 5,397,188
Keystone Oaks School Dist. Series D,
8.78% 9/01/16, (AMBAC Insured) (d) Aaa 2,000,000 2,187,500
Pennsylvania Intergovernmental Coop. Auth.
Spl. Tax Rev. Rfdg. Series A:
5% 6/15/13 Baa 5,400,000 5,136,750
5% 6/15/22, (MBIA Insured) Aaa 2,000,000 1,905,000
Philadelphia Ind. Dev. Auth. Rev. (Stapeley
Germantown Care Commty. Proj.)
9.75% 1/1/12 - 1,750,000 1,745,625
Philadelphia Wtr. & Swr. Rev. (Cap. Appreciation)
14th Series, 0% 10/1/05, (MBIA Insured) Aaa 3,000,000 1,650,000
Philadelphia Wtr. & Wastewtr. Rfdg.,
Series 1993, 5.50% 6/15/07 Baa 3,000,000 3,045,000
Pittsburgh Wtr. & Swr. Auth. 0% 9/1/06,
(FGIC Insured) Aaa 3,000,000 1,590,000
36,739,857
SOUTH CAROLINA - 2.0%
Charleston County Health Facs. Rev. Rfdg.
(1st Mtg. Episcopal Proj.):
Series A, 9.75% 4/1/16 - 3,000,000 3,375,000
Series B, 9.75% 4/1/16 - 2,110,000 2,373,750
(Foster Wheeler) Series A, 9.25% 1/1/10 (e) A 4,500,000 5,276,250
Greenville Hosp. Sys. Hosp. Facs. Rev.
6% 5/1/20 AA- 1,000,000 1,063,750
Richland County Hosp. Facs. Rev. Rfdg. (Baptist
Hosp.) Series B, 0% 8/1/09, (AMBAC Insured) Aaa 1,730,000 754,713
Rock Hill Ind. Rev. (Rock Hill Business Technical
Assoc. Proj.) 11% 10/1/14, LOC
Canadian Imperial Bank of Commerce - 3,000,000 3,007,500
South Carolina Educ. Dev. Auth (South Carolina
Baptist Hosp.) 7.97% 8/1/15,
(AMBAC Insured) Aaa 3,250,000 3,315,000
19,165,963
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (A) PRINCIPAL
(UNAUDITED) AMOUNT VALUE (NOTE 1)
TENNESSEE - 0.8%
Knox County Health, Edl. & Hsg. Hosp. Facs. Rev.
Rfdg. (Sanders Alliance) Series C,
5.25% 1/1/15 Aaa $ 2,250,000 $ 2,224,688
Metropolitan Gov't. Nashville & Davidson County
Health & Ed. Facs. Board Rev. (Vanderbilt Univ.)
Series A, 6% 10/1/16 Aa 2,000,000 2,120,000
Sullivan County Health Edl. & Hsg. Facs. Board
Rev. (Hosp. Holston Valley Health)
5.75% 2/15/13, (MBIA Insured) Aaa 3,000,000 3,101,250
7,445,938
TEXAS - 5.8%
Alliance Arpt. Auth. Spl. Facs. Rev. (American
Airlines, Inc. Proj.):
7.50% 12/1/29 (e) Baa1 1,250,000 1,357,813
7% 12/1/11 (e) Baa1 7,000,000 7,743,750
Austin Util. Sys. Rfdg. 0% 11/15/11,
(AMBAC Insured) Aaa 3,000,000 1,136,250
Brazos River Auth. Poll. Cont. Rev. (Texas Util.
Elec. Co. Proj.) Series A, 8.25% 1/1/19 (e) Baa2 5,620,000 6,463,000
Dallas Fort Worth Int'l. Arpt. Facs. Impt. Corp.
Rev. (American Airlines, Inc.) 7.25%
11/1/30 (e) Baa2 1,000,000 1,080,000
East Texas Health Facs. Dev. Corp. Hosp.
Rev. (Palestine) 7.80% 8/15/18 - 4,150,000 4,181,125
Harris County Cultural & Ed. Facs. Fin. Corp.
(Space Ctr. Houston Proj.) 9.25% 8/15/15 - 4,765,000 5,616,744
Harris County Hsg. Fin. Corp. Single Family
Mtg. Rev. 11.25% 4/15/06 Baa1 315,000 324,844
Houston Hsg. Fin. Corp. Single Family Mtg.
Rev. (Verex Mtg. Assurance, Inc.)
Series 1984 A, 10.875% 2/15/16 Baa 1,580,000 1,635,300
Port Corpus Christi Ind. Dev. Corp. Rev.
(Valero Refining & Marketing Co.) Series A,
10.25% 6/1/17 Baa3 2,000,000 2,390,000
Round Rock Independent School Dist. Rfdg. &
School Bldg. Unltd. Tax 0% 8/15/09,
(MBIA Insured) Aaa 7,430,000 3,194,900
Sabine River Auth. Poll. Cont. Rev.
(Util. Elec. Proj.) Series B, 8.25%
10/1/20 (e) Baa2 1,250,000 1,464,063
Sam Rayburn Muni. Pwr. Agcy. Pwr. Supply Sys.
Rev. Rfdg. Series B, 5.50% 10/1/20 Baa 3,975,000 3,517,875
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (A) PRINCIPAL
(UNAUDITED) AMOUNT VALUE (NOTE 1)
TEXAS - CONTINUED
San Antonio Elec. & Gas Rev. Rfdg. Series B,
0% 2/1/08, (FGIC Insured) Aaa $ 2,500,000 $ 1,184,375
Tarrant County Health Facs. Dev. Corp. Hosp.
Rev. Rfdg. & Impt. (Fort Worth Osteopathic
Hosp.) 6% 5/15/21, (MBIA Insured) Aaa 1,500,000 1,642,500
Tarrant County Health Facs. Dev. Corp. Rev.
(3927 Foundation, Inc. Proj.)
10.25% 9/1/19 - 4,000,000 4,310,000
Tarrant County Hsg. Fin. Corp. Single Family
Mtg. Rev. Series A, 9.50% 5/15/03 Ba 945,000 945,000
Texas Nat'l. Research Lab Commission Fing.
Corp. Lease Rev. (Superconducting
Supercollider Proj.) 6.95% 12/1/12 A 5,400,000 5,555,250
Texas Pub. Fin. Auth. Bldg. Rev. Rfdg.
(Cap. Appreciation) 0% 2/1/09,
(MBIA Insured) Aaa 2,000,000 890,000
54,632,789
UTAH - 0.9%
Intermountain Pwr. Agcy. Pwr. Supply
8.28% 7/1/21 Aa 2,500,000 2,600,000
South Salt Lake City Ind. Rev. (Price Savers
Wholesale Club Proj.) 9% 11/15/13 - 3,650,000 4,001,313
Utah Hsg. Fin. Agcy. (Residential Mtg.)
Series 1983 A, 0% 7/1/16 A+ 15,000,060 1,575,006
8,176,319
VERMONT - 0.2%
Vermont Ind. Dev. Auth. Ind. Dev. Rev.
(Radisson Hotel) Series B-1, 7.75%
11/15/15 - 2,000,000 2,102,500
VIRGINIA - 1.6%
Fairfax County Ind. Dev. Auth. Rev. Rfdg.
(Inova Health Sys. Hosp. Rev.) 5.25%
8/15/19 Aa 5,000,000 4,893,750
Galax Ind. Dev. Auth. 1st Mtg. Med. Facs. Rev.
Rfdg. (Waddell Nursing Home Proj.)
9.50% 8/1/05 - 2,300,000 2,486,875
Peninsula Port Auth. (Riverside Health Sys.)
Series B, 6.625% 7/1/19 Aa 1,000,000 1,093,750
Southeastern Pub. Svc. Auth. Rev. Rfdg. Sr.
Series A, 5.15% 7/1/09, (MBIA Insured) Aaa 4,000,000 4,045,000
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (A) PRINCIPAL
(UNAUDITED) AMOUNT VALUE (NOTE 1)
VIRGINIA - CONTINUED
Virginia Beach Dev. Auth. Hosp. Facs. Rev.
(General Hosp. Proj.):
6% 2/15/09, (AMBAC Insured) Aaa $ 1,000,000 $ 1,083,750
6% 2/15/10, (AMBAC Insured) Aaa 1,220,000 1,319,125
Virginia Hsg. Dev. Auth. Residential Mtg.
(Single Family Mtg.) Series 1983 B,
0% 9/1/14 Aa 1,210,000 152,763
15,075,013
WASHINGTON - 3.8%
Douglas County Pub. Util Dist. #1 Wells Hydroelec.
Rev. Rfdg. 8.75% 9/1/18 A 1,395,000 1,905,919
Washington State Pub. Pwr. Supply Sys.
Nuclear Proj. #1 Rev.:
Series A, 7% 7/1/08 Aa 2,000,000 2,342,500
Series B:
5.60% 7/1/07 Aa 1,880,000 1,948,150
7% 7/1/08 Aa 1,000,000 1,171,250
Washington Pub. Pwr. Supply Sys. Nuclear
Proj. #2 Rev.:
Rfdg. Series C, 7.625% 7/1/10 Aa 2,350,000 2,764,188
Series A, 6.30% 7/1/12 Aa 1,000,000 1,097,500
7.97% 7/1/10, (FGIC Insured) (d)(g) Aa 2,650,000 2,676,500
7.375% 7/1/12 Aa 1,000,000 1,128,750
Washington Pub. Pwr. Supply Sys. Nuclear
Proj. #3 Rev.:
Rfdg. (Cap. Appreciation) Series B,
0% 7/1/08, (MBIA Insured) Aaa 3,000,000 1,376,250
Rfdg. Series C, 0% 7/1/13 Aa 5,035,000 1,667,844
Comp. Int. Rfdg. Series B, 0% 7/1/07,
(MBIA Insured) Aaa 5,000,000 2,456,250
2.95% 6/30/94 Aa 5,000,000 5,000,000
7.65% 7/1/12 (d)(g) Aa 10,000,000 9,637,500
35,172,601
WEST VIRGINIA - 0.4%
West Pkwy. Econ. Dev. & Tourism Auth. Auth. RIB
8.661% 5/16/19, (FGIC Insured) (d)(g) Aaa 3,600,000 3,874,500
TOTAL MUNICIPAL BONDS
(Cost $853,379,369) 913,166,375
MUNICIPAL NOTES (D) - 2.3%
MOODY'S RATINGS (A) PRINCIPAL
(UNAUDITED) AMOUNT VALUE (NOTE 1)
CALIFORNIA - 0.3%
Los Angeles County Ind. Dev. Auth. (Cataic & Jae
Proj.) 3.70%, LOC Union Banc Corp. VRDN (e) A-1 $ 800,000 $ 800,000
Santa Clara County Tax and Rev. Anticipation
Notes Series 1993-1994, 3.25% 7/29/94 MIG 1 2,300,000 2,314,053
3,114,053
FLORIDA - 0.5%
Dade County Ind. Dev. Auth. Ind. Dev. Rev.
(Dolphins Stadium Proj.) Series 1985 B, 3.15%,
LOC Citibank, Marine Midland Bank, VRDN VMIG 1 3,800,000 3,800,000
Martin Co. Ind. Dev. Auth. Rev. Series 1992A,
(Indiantown Cogeneration Proj.) 3.25%, LOC
Credit Suisse, VRDN (e) A-1+ 600,000 600,000
4,400,000
IDAHO - 0.7%
Idaho Tax Anticipation Notes Series 1993,
3% 6/30/94 MIG 1 6,000,000 6,024,300
KANSAS - 0.2%
Olathe Edl. Facs. Rev. (College Assoc. Pooled Ed.
Loan Prog.) Series 1989 A, 3.20%, LOC
Marine Midland Bank, VRDN VMIG 1 2,110,000 2,110,000
NEW JERSEY - 0.1%
New Jersey Econ. Dev. Auth. Rev. (Danic Urban
Renewal Co. Proj.) Series 1985, 3.20%,
LOC Marine Midland Bank, VRDN P-2 800,000 800,000
NEW YORK - 0.0%
Erie County Ind. Dev. Auth. Ind. Dev. Rev.
(The Holling Press, Inc.) Series 1989 F, 3.55%,
LOC Marine Midland Bank, VRDN - 400,000 400,000
WISCONSIN - 0.5%
Wisconsin Gen. Oblig. TRAN Series 1993,
3.25% 6/15/94 MIG 1 5,000,000 5,025,800
TOTAL MUNICIPAL NOTES
(Cost $21,836,678) 21,874,153
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $875,216,047) $ 935,040,528
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
PURCHASED
120 U.S. Treasury Note Futures March 1994 $ 13,558,906 $ 40,156
100 U.S. Treasury Bond Futures March 1994 11,414,713 (35,287)
$ 4,869
THE VALUE OF FUTURES CONTRACTS PURCHASED AS A PERCENTAGE OF TOTAL
INVESTMENT IN SECURITIES - 2.7%
SECURITY TYPE ABBREVIATIONS
TRAN - Tax & Revenue Anticipation
Notes
VRDN - Variable Rate Demand Notes
LEGEND
1. Standard & Poor's Corporation credit ratings are used in the absence
of a rating by Moody's Investors Service, Inc.
2. Security purchased on a delayed delivery basis (see Note 2 of Notes to
Financial Statements).
3. A portion of the security was pledged to cover margin requirements for
futures contracts and delayed delivery purchases. At the period end, the
value of securities pledged amounted to $3,286,875.
4. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
5. Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals (AMT securities).
6. Security collateralized by an amount sufficient to pay interest and
principal.
7. Inverse floating rate security is a security where the coupon is
inversely indexed to a floating interest rate. The price will be more
volatile than the price of a comparable fixed rate security.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 32.8% AAA, AA, A 35.7%
Baa 23.2% BBB 18.9%
Ba 6.7% BB 3.7%
B 2.6% B 1.6%
Caa 0.0% CCC 0.3%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 28.3%.
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
Health Care 30.8%
Electric Revenue 15.9
Industrial Development 14.4
Others (individually less than 10%) 38.9
TOTAL 100.0%
INCOME TAX INFORMATION
At December 31, 1993, the aggregate cost of investment securities for
income tax purposes was $875,339,897. Net unrealized appreciation
aggregated $59,700,631, of which $66,412,313 related to appreciated
investment securities and $6,711,682 related to depreciated investment
securities.
The fund hereby designates $2,372,000 as a capital gain dividend for the
purpose of the dividend paid deduction.

FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
DECEMBER 31, 1993

ASSETS

Investment in securities, at value (cost $875,216,047) $ 935,040,528
(Note 1) - See accompanying schedule

Cash 1,439,860

Receivable for investments sold 17,590,278

Interest receivable 15,885,781

Redemption fees receivable (Note 1) 1,169

Receivable for daily variation on futures contracts 24,375

TOTAL ASSETS 969,981,991

LIABILITIES

Payable for investments purchased $ 11,468,419
Regular delivery

Delayed delivery (Note 2) 4,000,000

Dividends payable 1,684,511

Accrued management fee 364,916

Other payables and accrued expenses 239,064

TOTAL LIABILITIES 17,756,910

NET ASSETS $ 952,225,081

Net Assets consist of (Note 1):

Paid in capital $ 887,819,151

Accumulated undistributed net realized gain (loss) on 4,576,580
investments

Net unrealized appreciation (depreciation) on:

Investment securities 59,824,481

Futures contracts 4,869

NET ASSETS, for 77,216,902 shares outstanding $ 952,225,081

NET ASSET VALUE, offering price and redemption price per $12.33
share ($952,225,081 (divided by) 77,216,902 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1993

INTEREST INCOME $ 62,529,039

EXPENSES

Management fee (Note 4) $ 4,148,966

Transfer agent, accounting and custodian fees and 1,237,493
expenses (Note 4)

Non-interested trustees' compensation 3,000

Registration fees 131,092

Audit 40,965

Legal 80,027

Miscellaneous 37,130

TOTAL EXPENSES 5,678,673

NET INTEREST INCOME 56,850,366

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
(NOTES 1 AND 3)
Net realized gain (loss) on:

Investment securities 29,001,704

Futures contracts 1,468,965 30,470,669

Change in net unrealized appreciation (depreciation) on:

Investment securities 24,956,164

Futures contracts (218,221) 24,737,943

NET GAIN (LOSS) 55,208,612

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM $ 112,058,978
OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1993 1992

INCREASE (DECREASE) IN NET ASSETS

Operations $ 56,850,366 $ 49,873,926
Net interest income

Net realized gain (loss) on investments 30,470,669 10,120,146

Change in net unrealized appreciation (depreciation) 24,737,943 2,856,683
on
investments

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 112,058,978 62,850,755
FROM OPERATIONS

Distributions to shareholders from: (56,850,366) (49,873,926)
Net interest income

From net realized gain (25,449,884) (8,228,413)

TOTAL DISTRIBUTIONS (82,300,250) (58,102,339)

Share transactions 269,831,566 203,288,884
Net proceeds from sales of shares

Reinvestment of distributions from: 40,791,446 35,645,399
Net interest income

Net realized gain 19,640,605 6,316,367

Cost of shares redeemed (169,641,184) (142,251,773)

Redemption fees (Note 1) 161,376 117,685

Net increase (decrease) in net assets resulting from 160,783,809 103,116,562
share
transactions

TOTAL INCREASE (DECREASE) IN NET ASSETS 190,542,537 107,864,978

NET ASSETS

Beginning of period 761,682,544 653,817,566

End of period $ 952,225,081 $ 761,682,544

OTHER INFORMATION
Shares

Sold 21,911,612 17,171,398

Issued in reinvestment of distributions from: 3,299,665 3,002,436
Net interest income

Net realized gain 1,602,438 533,479

Redeemed (13,691,472) (12,040,039)

Net increase (decrease) 13,122,243 8,667,274

</TABLE>

FINANCIAL HIGHLIGHTS

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

1993 1992 1991 1990 1989

SELECTED PER-SHARE DATA

Net asset value, beginning of $ 11.880 $ 11.800 $ 11.430 $ 11.490 $ 11.330
period

Income from Investment .783 .834 .863 .886 .881
Operations
Net interest income

Net realized and unrealized .788 .208 .429 (.060) .160
gain (loss) on investments

Total from investment 1.571 1.042 1.292 .826 1.041
operations

Less Distributions (.783) (.834) (.863) (.886) (.881)
From net interest income

From net realized gain on (.340) (.130) (.060) - -
investments

Total distributions (1.123) (.964) (.923) (.886) (.881)

Redemption fees added to .002 .002 .001 - -
paid in capital

Net asset value, end of $ 12.330 $ 11.880 $ 11.800 $ 11.430 $ 11.490
period

TOTAL RETURN 13.63% 9.17% 11.77% 7.48% 9.50%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period $ 952,225 $ 761,683 $ 653,818 $ 550,848 $ 545,588
(000 omitted)

Ratio of expenses to average .64% .64% .69% .66% .69%
net assets

Ratio of net interest income to 6.37% 7.01% 7.46% 7.79% 7.68%
average net assets

Portfolio turnover rate 54% 43% 30% 46% 46%

</TABLE>

NOTES TO FINANCIAL STATEMENTS
For the period ended December 31, 1993

1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Aggressive Tax-Free Portfolio (the fund) is a fund of Fidelity
Municipal Trust (the trust) and is authorized to issue an unlimited number
of shares. The trust is registered under the Investment Company Act of
1940, as amended (the 1940 Act), as an open-end management investment
company organized as a Massachusetts business trust. The following
summarizes the significant accounting policies of the fund:
SECURITY VALUATION. Securities are valued based upon a computerized matrix
system and/or appraisals by a pricing service, both of which consider
market transactions and dealer-supplied valuations. Short-term securities
maturing within sixty days are valued either at amortized cost or original
cost plus accrued interest, both of which approximate current value.
Securities for which quotations are not readily available through the
pricing service are valued at their fair value as determined in good faith
under consistently applied procedures under the general supervision of the
Board of Trustees.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes information regarding income
taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. 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 regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
losses deferred due to wash sales and futures and options. 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.
REDEMPTION FEES. Shares held in the fund less than 180 days are subject to
a redemption fee equal to 1% 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.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective January
1, 1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of December 31, 1992 have been reclassified to
reflect a decrease in paid in capital of $50,695 and an increase in
accumulated net realized gain on investments of $50,695.
2. OPERATING POLICIES.
DELAYED DELIVERY TRANSACTIONS. The fund may purchase or sell securities on
a when-issued or forward commitment basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of the
underlying securities and the date when the securities will be delivered
and paid for are fixed at the time the transaction is negotiated. The fund
identifies securities as segregated in its custodial records with a value
at least equal to the amount of the purchase commitment.
FUTURES CONTRACTS AND OPTIONS. The fund may invest in futures contracts and
write options. These investments involve, to varying degrees, elements of
market risk and risks in excess of the amount recognized in the Statement
of Assets and Liabilities. The face or contract amounts reflect the extent
of the involvement the fund has in the particular classes of instruments.
Risks may be caused by an imperfect correlation between movements in the
price of the instruments and the price of the underlying securities and
interest rates. Risks also may arise if there is an illiquid secondary
market for the instruments, or due to the inability of counterparties to
perform.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Options traded
on an exchange are valued using the last sale price or, in the absence of a
sale, the last offering price. Options traded over-the-counter are valued
using dealer-supplied valuations.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $594,538,747 and $453,066,125, respectively.
The face value of futures contracts opened and closed amounted to
$369,113,937 and $366,311,258, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, Fidelity Management &
Research Company (FMR) receives a monthly basic fee that is calculated on
the basis of a group fee
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
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 ranging from .14% to .37% and is based on the monthly average net
assets of all the mutual funds advised by FMR. The annual individual fund
fee rate is .30%. For the period, the management fee was equivalent to an
annual rate of .47% of average net assets.
The Board of Trustees approved a new group fee rate schedule with rates
ranging from .1325% to .3700%. Effective November 1, 1993, FMR has
voluntarily agreed to implement this new group fee rate schedule as it
results in the same or a lower management fee.
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service
Plan (the Plan), and in accordance with Rule 12b-1 of the 1940 Act, FMR or
the fund's distributor, Fidelity Distributors Corporation (FDC), an
affiliate of FMR, may use their resources to pay administrative and
promotional expenses related to the sale of the fund's shares. Subject to
the approval of the Board of Trustees, the Plan also authorizes payments
to third parties that assist in the sale of the fund's shares or render
shareholder support services. FMR or FDC has informed the fund that
payments made to third parties under the Plan amounted to $3,107 for the
period.
TRANSFER AGENT AND ACCOUNTING FEES. United Missouri Bank, N.A. (the Bank)
is the custodian and transfer and shareholder servicing agent for the fund.
The Bank has entered into a sub-
contract with Fidelity Service Co. (FSC), an affiliate of FMR, under which
FSC performs the activities associated with the fund's transfer and
shareholder servicing agent and accounting functions. The fund pays
transfer agent fees based on the type, size, number of accounts and number
of transactions made by shareholders. FSC pays for typesetting, printing
and mailing of all shareholder reports, except proxy statements. The
accounting fee is based on the level of average net assets for the month
plus out-of-pocket expenses. For the period, FSC received transfer agent
and accounting fees amounting to $891,729 and $281,712, respectively.
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Fidelity Municipal Trust and the Shareholders of
Fidelity Aggressive Tax-Free Portfolio:
We have audited the accompanying statement of assets and liabilities of
Fidelity Municipal Trust: Fidelity Aggressive Tax-Free Portfolio, including
the schedule of portfolio investments, as of December 31, 1993, and the
related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended
and the financial highlights for each of the five years in the period then
ended. These financial statements and financial highlights are the
responsibility of the fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 1993 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Municipal Trust: Fidelity Aggressive Tax-Free Portfolio as of
December 31, 1993, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the
period then ended , in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND
Boston, Massachusetts
January 28, 1994
TO CALL FIDELITY

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Please have your Customer Number
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you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.

Please locate the address that is closest to you. We'll give your
correspondence immediate attention and send you written confirmation upon
completion of your request. Please send ALL correspondence about retirement
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INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Anne Punzak, Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L Mann *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
United Missouri Bank, N.A.
Kansas City, MO

Corporate Headquarters
82 Devonshire St., Boston, MA 02109
FIDELITY TAX-FREE BOND FUNDS
Aggressive Tax-Free
California Tax-Free High Yield
California Tax-Free Insured
High Yield Tax-Free
Insured Tax-Free
Limited Term Municipals
Massachusetts Tax-Free High Yield
Michigan Tax-Free High Yield
Minnesota Tax-Free
Municipal Bond
New York Tax-Free High Yield
New York Tax-Free Insured
Ohio Tax-Free High Yield
Spartan(Registered trademark) Aggressive Municipal
Spartan California Intermediate Municipal
Spartan California Municipal High Yield
Spartan Connecticut Municipal High Yield
Spartan Florida Municipal Income
Spartan Intermediate Municipal
Spartan Maryland Municipal Income
Spartan Municipal Income
Spartan New Jersey Municipal High Yield
Spartan New York Intermediate Municipal
Spartan New York Municipal High Yield
Spartan Pennsylvania Municipal High Yield
Spartan Short-Intermediate Municipal
THE FIDELITY TELEPHONE CONNECTION
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TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE

EXHIBIT 24(A)(2)
(2_FIDELITY_LOGOS)FIDELITY

AGGRESSIVE TAX-FREE
PORTFOLIO
ANNUAL REPORT
DECEMBER 31, 1993
CONTENTS

PRESIDENT'S MESSAGE 3 Ned Johnson on minimizing taxes.

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 last six
months.

INVESTMENTS 11 A complete list of the fund's
investments with their market value.

FINANCIAL STATEMENTS 31 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.

NOTES 35 Footnotes to the financial
statements.

REPORT OF INDEPENDENT 38 The auditor's opinion.
ACCOUNTANTS

DEAR SHAREHOLDER:
Once the new year begins, many people start reviewing their finances and
calculating their tax bills. No one wants to pay more taxes than they have
to. But a recent survey of 500 U.S. households, conducted by Fidelity and
Yankelovich Partners, showed that few people have taken steps to reduce
their taxes under the new legislation. Many were not even aware that the
new tax laws were retroactive to January 1993.
Whether or not you're someone whose tax bill will increase as a result of
these changes, it may make sense to consider ways to keep more of what you
earn.
First, if your employer offers a 401(k) or 403(b) retirement savings plan,
consider enrolling. These plans are set up so you can make regular
contributions -
before taxes - to a retirement savings plan. They offer a disciplined
savings strategy, the ability to accumulate earnings tax-deferred, and
immediate tax savings. For example, if you earn $40,000 a year and
contribute 7% of your salary to your 401(k) plan, your annual contribution
is $2,800. That reduces your taxable income to $37,200 and, if you're in
the
28% tax bracket, saves you $784 in federal taxes. In addition, you pay no
taxes on any earnings until withdrawal.
It may be a good idea to contact your benefits office as soon as possible
to find out when you can enroll or increase your contribution. Most
employers allow employees to make changes only a few times each year.
Second, consider an IRA. Many people are eligible to make an IRA
contribution (up to $2,000) that is fully tax deductible. That includes
people who are not covered by company pension plans, or those within
certain income brackets. Even if you don't qualify for a fully deductible
contribution, any IRA earnings will grow tax-deferred until withdrawal.
Third, consider adding to your tax-free investments either municipal bonds
or municipal bond funds. Often these can provide higher after-tax yields
than comparable taxable investments. For example, if you're in the new 36%
federal income tax bracket and invest $10,000 in a taxable investment
yielding 7%, you'll pay $252 in federal taxes and receive $448 in income.
That same $10,000 invested in a tax-free bond fund yielding 5.5% would
allow you to keep $550 in income.
These are three investment strategies that could help lower your tax bill
in 1994. If you're interested in learning more, please call us at
1-800-544-8888 or visit a Fidelity Investor Center.
Wishing you a prosperous new year,
Edward C. Johnson 3d, Chairman
PERFORMANCE: THE BOTTOM LINE

Municipal Bond 13.17% 61.60% 179.58%

Lehman Brothers Municipal Bond Index 12.29% 62.86% 188.33%

Average General Municipal Bond Fund 12.35% 58.79% 177.15%

Consumer Price Index 2.75% 21.00% 43.93%

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. For example, if
you had invested $1,000 in a fund that had a 5% return over the past year,
you would have $1,050. You can compare these figures to the performance of
the Lehman Brothers Municipal Bond Index - a broad gauge of the municipal
bond market. To measure how the fund stacked up against its peers, you can
look at the average general municipal bond fund, which reflects the
perform-ance of 173 general municipal bond funds tracked by Lipper
Analytical Services. Both benchmarks include reinvested dividends and
capital gains, if any. Comparing the fund's performance to the consumer
price index helps show how your fund did compared to inflation.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1993 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS

Municipal Bond 13.17% 10.07% 10.83%

Lehman Brothers Municipal Bond Index 12.29% 10.25% 11.17%

Average General Municipal Bond Fund 12.35% 9.68% 10.71%

Consumer Price Index 2.75% 3.89% 3.71%

AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
$10,000 OVER 10 YEARS

Muni Bond LB Muni Bond Index
12/31/83 10000.00 10000.00
01/31/84 10282.82 10364.50
02/29/84 10177.83 10260.13
03/31/84 10207.57 10273.16
04/30/84 10252.48 10288.98
05/31/84 9517.43 9678.02
06/30/84 9823.57 9888.13
07/31/84 10289.91 10400.24
08/31/84 10492.44 10633.51
09/30/84 10430.24 10562.06
10/31/84 10525.29 10694.61
11/30/84 10648.55 10852.04
12/31/84 10901.83 11055.40
01/31/85 11389.68 11693.63
02/28/85 11290.87 11401.99
03/31/85 11355.54 11500.39
04/30/85 11681.97 11921.31
05/31/85 12110.38 12335.09
06/30/85 12257.38 12464.49
07/31/85 12305.44 12488.92
08/31/85 12218.86 12401.75
09/30/85 12046.14 12277.36
$10,000 OVER 10 YEARS: Let's say you invested $10,000 in Fidelity
Municipal Bond Portfolio on December 31, 1983. As the chart shows, by
December 31, 1993, the value of your investment would have grown to $27,958
- - a 179.58% increase on your initial investment. For comparison, look at
how the Lehman Brothers Municipal Bond index did over the same period. With
dividends reinvested, the same $10,000 would have grown to $28,833 - a
188.33% increase.

Income return 5.83% 6.31% 6.81% 6.91% 7.30%

Capital gain return 5.10% 2.26% 0.92% 0.00% 0.00%

Change in share price 2.24% 0.36% 4.18% 0.00% 2.26%

Total return 13.17% 8.93% 11.91% 6.91% 9.56%

Dividends per share n/a 24.37(cents) 48.68(cents)

Annualized dividend rate n/a 2.72% 5.51%

Annualized yield 4.96% n/a n/a

Tax-equivalent yield 7.75% n/a n/a

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 $8.95 over
the past six months and $8.83 over the past year, you can compare the
fund's income over these two periods. The 30-day annualized yield is a
standard formula for all funds based on the yields of the bonds in the
fund, averaged over the past 30 days. This figure shows you the yield
characteristics of the fund's investments at the end of the period. It also
helps you compare funds from different companies on an equal basis. The
tax-equivalent yield shows what you would have to earn on a taxable
investment to equal the fund's tax-free yield, if you're in the 36% federal
tax bracket.
FUND TALK: THE MANAGER'S OVERVIEW

MARKET RECAP
Generally, interest rates fell
during the 12 months ended
December 31, 1993. As a result,
bond prices rose and most
fixed-income investors -
including those in tax-free bonds
- - enjoyed attractive returns. The
period began with worries of
rising interest rates. The
economic recovery was finally
taking hold, and the spending
plans of the president-elect were
still unclear. But the bond market
signaled its approval as
President Clinton promised to
reduce the deficit and fight
inflation. The yield on the
benchmark 30-year Treasury
bond declined steadily and
reached an historic low of 5.79%
in mid-October. By year-end, mild
inflation fears, fueled by a
strengthening economy, had
pushed up the yield on the
30-year bond to 6.35%. Two
factors affected tax-free bonds
specifically: on the positive side,
higher federal taxes - discussed
all year and approved in August
- - boosted demand. At the same
time, record new issuance kept
supplies high, which somewhat
dampened prices. Overall during
the period, tax-free bonds
performed well compared to other
fixed-income investments. The
Lehman Brothers Municipal Bond
Index - a broad measure of the
tax-free bond market - rose
12.29%. By comparison, the
Lehman Brothers Aggregate
Bond Index - which tracks
investment-grade taxable bonds
- - rose only 9.75%, due in part to
relatively poor performance by
mortgagebacked securities.
An interview with Gary Swayze, Portfolio Manager of Fidelity Municipal Bond
Portfolio
Q. GARY, HOW DID THE FUND PERFORM?
A. Total return for the year ended December 31, 1993 was 13.17%. During the
same period, the average general municipal bond fund had a total return of
12.35%, according to Lipper Analytical Services.
Q. WHAT HELPED THE FUND?
A. There were two main factors. First was the fund's coupon barbell
structure. At one end of the barbell were so-called premium bonds, which
provide an above-average yield and also carry the potential for
prerefunding. Prerefunding is a three-step process. The issuer sells a new
bond to take advantage of lower interest rates, invests the proceeds in
short-term government securities, and pays off the premium bond at the
earliest opportunity. The old bonds are worth more after prerefunding
because they're backed by the income from government securities. At the
other end of the barbell were discount bonds - which carry a below-
market coupon - and non-callables, which can't be redeemed prior to
maturity. With these, you give up some income in exchange for greater
volatility. You want volatility as long as interest rates are falling and
bond prices are rising, as was the case during most of 1993. In fact, I
wish I'd emphasized these more volatile bonds even more.
Q. WHAT WAS THE SECOND FACTOR?
A. The fund's sector breakdown. Among those that performed best in 1993
were electric utilities, hospitals, and water and sewer utilities, which
totaled 52.3% of the fund at the end of December. The utilities did well
largely because of prerefunding. Hospital bonds benefited from a stronger
economy, less worry about the fiscal health of the hospital industry, and a
widespread view that supply is likely to diminish in the years ahead. These
factors offset continuing concerns over health-care reform, though hospital
bonds still lagged utilities.
Q. THE FUND'S STAKE IN CALIFORNIA BONDS HAS BEEN STEADILY GROWING. WHY?
A. California's fiscal woes have caused the state's bonds to underperform
the national market. I've taken advantage of that to build a position I
hope will pay off in higher returns for the fund over the next couple of
years. So far we've seen continuing signs of a modest but nonetheless
existent recovery. Interest rates fell across the board in 1993, but less
in California. If California catches up with the national economy in 1994,
that disparity could lessen, possibly causing California bonds to
outperform bonds from other states. I've been looking for opportunities in
California bonds at the bottom of the investment-grade scale - those rated
BBB by Standard & Poor's or Baa by Moody's but I've found little to
date. So far, the recent earthquake hasn't affected the California
municipal bond market, but I'll be monitoring the situation closely for any
signs of problems.
Q. WHAT PERCENTAGE OF THE FUND'S BONDS ARE BBBS?
A. Over 10% at the end of December, and growing. My goal is 15%. I believe
the United States may have entered a prolonged period of modest economic
growth with low inflation. That's usually an attractive scenario for
medium-quality issues. It tends to reduce the uncertainty that normally
surrounds these bonds; and it can encourage income-hungry investors to move
farther down the investment grade quality scale in search of higher
returns.
Q. IS THE FUND LIKELY TO PRODUCE STRONG RETURNS AGAIN IN 1994?
A. It's possible, although bond investors - even more than stock-market
investors - would be overly optimistic in assuming double-digit returns
year after year. Regardless, if you look at the fund's return after taxes
and after inflation, I'm optimistic about the coming year.
Q. ON WHAT GROUNDS?
A. First of all, I think inflation may continue to decline, for several
reasons: the growing preoccupation of consumers with the price of goods and
services; the failure of the economic recovery to generate significant job
growth; the decline in oil prices; and recent reductions in the federal
budget deficit together with slow money supply growth argue for a continued
low inflation outlook for 1994. Inflation is the single most important
factor affecting the performance of bonds. If it stays low, or even
declines, bonds will benefit. Second, oversupply in the municipal market
has made long-term munis look awfully cheap compared to long-term taxable
bonds. The main reason for the oversupply has been the rash of
prerefundings. As prerefundings subside and supply diminishes, the
disparity between municipal interest rates and Treasury interest rates is
likely to widen. And if that happens, we can reasonably expect to see
tax-free bond prices go up more - or at worst, come down less - than
taxable bonds.
FUND FACTS
GOAL: high current income
free of federal income taxes
while preserving capital
START DATE: August 19, 1976
SIZE: as of December 31,
1993, over $1.2 billion
MANAGER: Gary L. Swayze,
since August 1985; manager,
Fidelity Insured Tax-Free
Portfolio, 1986-1989; Fidelity
New York Tax-Free High Yield
Portfolio, 1984-1993; Fidelity
New York Insured Tax-Free
Portfolio, 1989-1992; Spartan
New York Municipal High
Yield Portfolio, 1990-1993
(checkmark)
GARY SWAYZE ON HIS
INVESTMENT STYLE:
"I think there are several ways
to skin the cat. But my approach
is to look first at long-term
strategies. That means trying to
position the fund for an
above-average income stream
with a competitive total return.
Over time, income will most
often contribute the bulk of total
return. Having done that, then I
look for short-term strategies.
For example, I might be willing
to sacrifice some income
temporarily if I see a chance to
capture relative price
performance. But I try not to let
too many short-term strategies
interfere with my main goal:
produce an above-average
income stream that will help
ensure a competitive total
return."
(bullet) The fund's average duration
- - which measures sensitivity
to interest-rate changes -
was 8.8 years at the end of
December. That was longer
than most of the fund's
competitors.
(bullet) The fund invests solely in
investment-grade bonds -
those rated BBB or higher. The
percentage of bonds at the
bottom of the investment-grade
scale (rated BBB) has steadily
increased, from 6.6% six
months ago to 10.1% at the
end of December.
DISTRIBUTION
The Board of Trustees of
Fidelity Municipal Trust voted to
pay on February 7, 1994, to
shareholders of record at the
opening of business on
February 4, 1994, a distribution
of $.01 derived from capital
gains realized from sales of
portfolio securities.
INVESTMENT CHANGES

TOP FIVE STATES AS OF DECEMBER 31, 1993
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO

California 14.0 9.8

Pennsylvania 8.6 7.5

New York 8.5 6.2

Massachusetts 5.8 5.9

Florida 4.4 7.9

TOP FIVE SECTORS AS OF DECEMBER 31, 1993
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO

Electric Revenue 21.5 24.4

Health Care 20.5 21.5

Water & Sewer 10.3 7.4

General Obligation 8.5 6.9

Lease Revenue 8.4 7.2

AVERAGE YEARS TO MATURITY AS OF DECEMBER 31, 1993
6 MONTHS AGO

Years 21.4 19.7

AVERAGE YEARS TO MATURITY SHOWS THE AVERAGE TIME UNTIL THE PRINCIPAL OF THE
BONDS IN THE FUND IS EXPECTED TO BE REPAID, WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF DECEMBER 31, 1993
6 MONTHS AGO

Years 8.8 7.6

DURATION SHOWS HOW MUCH A BOND'S PRICE FLUCTUATES WITH CHANGES IN INTEREST
RATES. IF RATES RISE 1%, FOR EXAMPLE, THE SHARE PRICE OF A FUND WITH A
FIVE-YEAR DURATION WILL FALL 5%.
QUALITY DIVERSIFICATION AS OF DECEMBER 31, 1993
(MOODY'S RATINGS)
Aaa 34.4
Aa, A 51.4
Baa 12.5
Non-rated 0.8
Row: 1, Col: 1, Value: 2.0
Row: 1, Col: 2, Value: 12.5
Row: 1, Col: 3, Value: 51.4
Row: 1, Col: 4, Value: 34.4
THIS CHART EXCLUDES SHORT-TERM INVESTMENTS. WHERE MOODY'S RATINGS ARE NOT
AVAILABLE, WE HAVE USED S&P RATINGS.
INVESTMENTS DECEMBER 31, 1993

Showing Percentage of Total Value of Investment in Securities

MUNICIPAL BONDS - 99.1%
PRINCIPAL
AMOUNT VALUE (NOTE 1)
(000S) (000S)
ALABAMA - 1.1%
Birmingham Gen. Oblig. 8% 10/1/15 $ 7,550 $ 8,616 090887U5
Cullman Med. Park South Med. Clinic Board Rev.
(Cullman Reg. Med. Ctr.) Series A, 6.50% 2/15/13 4,000 4,115 230043AL
East Health Care Auth. Health Care Facs. Rev.
(Tax Anticipation) 5.75% 9/1/13, (MBIA Insured) 1,000 1,034 270416CC
13,765
ARIZONA - 1.0%
Arizona Ctfs. of Partn. Series A, 3% 11/1/94,
(AMBAC Insured) 3,000 3,018 040588QJ
Arizona Health Facs. Auth. Hosp. Sys. Rev. (Phoenix Baptist
Hosp. & Med. Ctr.) 9.75% 9/1/11, (MBIA Insured) 1,000 1,124
040506CU
Arizona Univ. Rev. Rfdg. Series A, 5.50% 7/1/19 1,750 1,765 040663J9
Maricopa County Ind. Dev. Auth. Hosp. Facs. Rev.
(Samaritan Health Svc.) 12% 1/1/08,
(Pre-Refunded to 7/1/97 @ 100) (d) 1,400 1,703 566820FE
Pima County Ind. Dev. Auth. Health Care Corp. Rev.
(Carondelet Health Svc., Inc.) (St. Joseph & St. Mary's Hosp.)
8% 7/1/13, (MBIA Insured) 1,000 1,163 721902AQ
Scottsdale Ind. Dev. Auth. Hosp. Rev. Rfdg. (Scottsdale Mem.
Hosp.) Series 1987 A, 8.50% 9/1/17, (AMBAC Insured) 1,465 1,690
810472AS
University Medical Ctr. Corp. Hosp. Rev. Rfdg. 5% 7/1/21,
(MBIA Insured) 3,000 2,895 914062CY
13,358
CALIFORNIA - 14.0%
California Dept. Wtr. Resources Rev. (Central Valley Wtr. Sys. Proj.):
Series J-1, 7% 12/1/11 2,320 2,793 130663A8
Series J-2, 6% 12/1/20 10,395 10,824 130663D5
Series J-3, 6% 12/1/20 1,500 1,562 130663D6
California Health Facs. Fing. Auth. Rev.:
(Pomona Valley Med. Ctr.) Series A, 7.375% 1/1/14 2,000 2,245 13033H3X
(Unihealth America) Series A, 7.625% 10/1/15,
(AMBAC Insured) 40 46 13033J4P
(Henry Mayo Newhall Hosp.) (Health Facs. Construction
Loan Prog.) Series A, 8% 10/1/18 2,000 2,282 13033HYG
California Gen. Oblig. 4.75% 9/1/23 19,000 17,385 130627BZ
California Pub. Wrks. Board Lease Rev.:
Rfdg. (Dept. Corrections St. Prisons) Series A, 5% 12/1/19,
(AMBAC Insured) 5,000 4,831 13068GPA
(California Univ. Proj.) Series A, 5.50% 6/1/10 2,250 2,306 13068GRE
MUNICIPAL BONDS - CONTINUED
PRINCIPAL
AMOUNT VALUE (NOTE 1)
(000S) (000S)
CALIFORNIA - CONTINUED
California Statewide Commty. Dev. Auth. Rev. Ctfs. of Prtn.:
(Cedars-Sinai Med. Ctr.) 6.50% 8/1/15 $ 4,000 $ 4,345 130909BQ
(United Western Med. Ctrs.) (California Health Facs.
Construction Loan Prog.) 6.75% 12/1/21 3,500 3,802 130907BP
East Bay Muni. Util. Dist. Wtr. Sys. Rev. Rfdg. 6% 6/1/12 1,340 1,439
271014FE
Los Angeles Convention & Exhibition Ctr. Auth. Lease Rev. Rfdg.
Series A, 5.125% 8/15/21, (MBIA Insured) 6,000 5,760 544399AM
Los Angeles County Metropolitan Trans. Auth. Sales Tax Rev.:
Rfdg.:
Series B, 6.50% 7/1/15, (FGIC Insured) 5,000 5,475 545170GQ
Series A, 5% 7/1/21, (FGIC Insured) 7,000 6,650 544712AU
6.25% 7/1/13, (MBIA Insured) 2,000 2,165 545170JE
Los Angeles County San. Dist. Fing. Auth. Rev. (Cap. Proj.)
Series A, 5% 10/1/23 4,500 4,252 545149AS
Los Angeles Hbr. Dept. Rev. 7.60% 10/1/18 1,500 1,746 544552BQ
M-S-R Pub. Pwr. Agcy. Rev. (San Juan Proj.) Series C,
6.875% 7/1/19 2,500 2,650 553751BZ
Metropolitan Wtr. Dist. Southern California Wtrwks.:
Rev. Rfdg. Series A, 5.75% 7/1/21 2,000 2,117 592663MS
RIB 8.028% 10/30/20 (a)(e) 4,200 4,258 592663NR
Northern California Pwr. Agcy. Pub. Pwr. Rev. Rfdg.:
(Geothermal Proj. #3) Series A, 5.85% 7/1/10 1,875 1,971 664843SB
(Hydroelec. Proj. #1) Series A, 5.50% 7/1/23,
(MBIA Insured) 2,000 2,015 664843QA
Oakland Spl. Rfdg. Rev. Series 1988 A, 7.60% 8/1/21,
(FGIC Insured) 3,500 4,021 672323BJ
Orange County Dev. Agcy. Tax Allocation
(Santa Ana Heights Proj.) 6% 9/1/15 2,000 2,000 684246CA
Placer County Wtr. Agcy. Middle Fork Proj. Rev. Series A:
3.75% 7/1/12 7,820 6,647 726022DV
3.75% 1/1/13 1,500 1,228 726022AX
Pleasanton Joint Pwr. Fin. Auth. Series A, 6.20% 9/2/17 3,250 3,347
728816AY
Rancho Wtr. Dist. Fin. Auth. 4.75% 8/15/21,
(AMBAC Insured) 2,000 1,835 752111DC
Sacramento Fing. Auth. Lease Rev. Rfdg. Series A,
5.40% 11/1/20, (AMBAC Insured) 7,000 7,061 785846BN
Sacramento Muni. Util. Dist. Elec. Rev. Series D,
5.25% 11/15/20, (MBIA Insured) 3,000 2,947 7860042H
MUNICIPAL BONDS - CONTINUED
PRINCIPAL
AMOUNT VALUE (NOTE 1)
(000S) (000S)
CALIFORNIA - CONTINUED
San Bernardino County Ctfs. of Prtn. (Equip. Fing.)
(Cap. Facs. Proj.) Series B, 6.25% 8/1/19 $ 4,800 $ 5,022 796815KN
San Buenaventura Wtr. Rev. Rfdg. 4.75% 10/1/20,
(AMBAC Insured) 1,230 1,125 797055DE
San Joaquin County Ctfs. of Prtn. (Cap. Facs. Proj.)
4.70% 11/15/06 (MBIA Insured) 4,000 3,910 798085EM
San Jose Redev. Agcy. Tax Allocation (Merged Area Redev. Proj.):
4.75% 8/1/22, (MBIA Insured) 3,645 3,280 798147KX
4.75% 8/1/24, (MBIA Insured) 7,500 6,872 798147KV
Santa Clara Elec. Rev. Series A, 6.50% 7/1/21,
(MBIA Insured) 1,350 1,482 801444CH
Southern California Pub. Pwr. Auth. Pwr. Proj. Rev.
(San Juan Proj. Unit #3) Series A, 5% 1/1/20,
(MBIA Insured) 2,850 2,725 842475PU
Univ. of California Rev. Rfdg. (Multi-purpose Projs.) Series C:
5.125% 9/1/18, (AMBAC Insured) 12,000 11,655 914113SQ
5% 9/1/23, (AMBAC Insured) 15,835 15,043 914113SS
West & Ctrl. Basin Fin. Auth. Rev. West Basin Ref. Proj.,
Series A, 5% 8/1/13 (AMBAC Insured) 5,000 4,856 95122EAU
177,975
COLORADO - 2.4%
Colorado Health Facs. Auth. Rev.:
(Rocky Mountain Adventist) 6.625% 2/1/13 6,500 6,857 1964732N
(Kaiser Permanente Med. Care. Proj.) Series A,
9.125% 8/1/15 6,000 6,518 196473KG
(Rocky Mountain Adventist) 6.625% 2/1/22 2,100 2,197 1964732M
(PSL Health Sys. Proj.) Series A, 6.875% 2/15/23 4,000 4,265 1964732D
Loveland Wtr. Dist. 8.875% 11/1/05 (Escrowed to Maturity) (d) 2,905
3,831 547201CE
Platte River Pwr. Auth. Pwr. Rev. Rfdg. Series BB,
6.125% 6/1/14 4,000 4,300 727818BK
Pueblo Single Family Mtg. Rev. Series A, 7% 8/1/10 2,395 2,410
744824AW
30,378
CONNECTICUT - 1.1%
Connecticut Gen. Oblig. Unltd. Tax Series C, 3.90% 3/15/95 5,250 5,302
207726V3
Connecticut Hsg. Fin. Auth. (Hsg. Mtg. Fin. Prog.):
Sub-Series B1, 7.55% 11/15/08 3,000 3,263 207745Y5
Series B, 6.70% 11/15/12 5,000 5,294 2077454J
13,859
MUNICIPAL BONDS - CONTINUED
PRINCIPAL
AMOUNT VALUE (NOTE 1)
(000S) (000S)
DISTRICT OF COLUMBIA - 2.3%
District of Columbia Rfdg.:
Series B, 5.10% 6/1/03, (MBIA Insured) $ 4,000 $ 4,085 254760A9
Series A-3, 5.60% 6/1/07 2,300 2,312 254760T4
District of Columbia Gen. Oblig. Rfdg. Series A,
5.75% 6/1/03 3,000 3,112 254760YM
District of Columbia Hosp. Rev.:
Rfdg. (Medlantic Healthcare Group) Series A:
7% 8/15/05 2,500 2,731 254764BY
5.25% 8/15/12, (MBIA Insured) 2,000 1,975 254764EQ
(Georgetown Univ.) Series A, 7.40% 4/1/18 3,065 3,498 254764EQ
(Howard Univ.) Series 1990 A, 7.25% 10/1/20 9,815 11,140 254839EG
28,853
FLORIDA - 4.4%
Broward County Wtr. & Swr. Util. Rev. Rfdg.
5.125% 10/1/15, (AMBAC Insured) 6,000 5,932 115117EK
Charlotte County Util. Rev. Rfdg. 5.25% 10/1/21,
(FGIC Insured) 2,000 1,978 160811BP
Daytona Beach Wtr. & Swr. Rev. (1st Lien) 6.75% 11/15/07
(Escrowed to Maturity) (d) 500 584 240199HN
Florida Board of Ed. Cap. Outlay Rfdg. Unltd. Tax
(Pub. Ed.) Series D, 5.125% 6/1/22 2,750 2,678 341421RC
Florida Division Board Fin. Dept. Gen. Svcs. Rev.
(Dept. of Natural Resources Preservation 2000) Series A,
6.75% 7/1/08, (AMBAC Insured) 1,150 1,304 342812QX
Florida Muni. Pwr. Agcy. Rev. Rfdg. (St. Lucie Proj.)
5.25% 10/1/21, (FGIC Insured) 4,500 4,444 342816JG
Florida Tpk. Auth. Tpk. Rev. Rfdg. Series A, 5% 7/1/16,
(FGIC Insured) 2,500 2,419 343136FH
Jacksonville Excise Tax Rev. Rfdg. 6.25% 10/1/05,
(AMBAC Insured) 2,605 2,905 469383NF
Kissimmee Util. Auth. Elec. Sys. Rev. Rfdg. & Impt.
5.25% 10/1/18, (FGIC Insured) 3,965 3,940 497850DA
Miami Beach Health Facs. Auth. Hosp. Rev. Rfdg.
(Mt. Sinai Med. Ctr. Proj.) 6.125% 11/15/14,
(Cap. Guaranty Insured) 1,890 2,018 593211AP
Orange County Wtr. & Solid Wastewtr. Rev. Rfdg.
6.25% 10/1/17, (AMBAC Insured) 3,500 3,789 684554CQ
Orlando Swr. Rev. 6.25% 4/1/06, (Escrowed to Maturity) (d) 500 561
686492EH
Orlando Util. Commission Wtr. & Elec. Rev. Rfdg.:
Sub-Series D:
5.50% 10/1/20 4,750 4,738 686509TT
MUNICIPAL BONDS - CONTINUED
PRINCIPAL
AMOUNT VALUE (NOTE 1)
(000S) (000S)
FLORIDA - CONTINUED
Orlando Util. Commission Wtr. & Elec. Rev. Rfdg.:
Sub-Series D:
5% 10/1/23 $ 4,250 $ 3,990 686509TV
Sub-Series A, 5.50% 10/1/26 5,000 4,987 686509TZ
Reedy Creek Impt. Dist. Util. Rev. (Cap. Appreciation)
Series 1991-1, 6.25% 10/1/11, (MBIA Insured) 7,000 7,577 75845HCA
Univ. Commty. Hosp. Inc. Hosp. Rev. Rfdg. 7.50% 9/1/11,
(FSA Insured) 2,000 2,330 914199EY
56,174
GEORGIA - 2.7%
Atlanta Arpt. Facs. Rev. 6.30% 1/1/07 2,500 2,534 047793AM
Georgia General Obligation Series 89 A, 8.25% 4/1/95 1,000 1,063
373381SZ
Georgia Muni. Elec. Pwr. Rev.:
Rfdg. Series Z, 5.50% 1/1/20 14,500 14,772 373540X3
Series B, 6.25% 1/1/17 3,000 3,341 373540P7
Spl. Oblig. Fifth Crossover Series Proj. 1, 6.50% 1/1/17 9,400 10,810
625919DB
Series 1985 K, 9% 1/1/20, (AMBAC Insured) 500 536 373540NU
Walker Dade & Catoosa Counties Hosp. Auth. Rev. Rfdg.
(Anticipation Ctfs.) 9.25% 10/1/10, (FGIC Insured)
(Pre-Refunded to 10/1/95 @102) (d) 500 560 931635EB
33,616
HAWAII - 0.1%
Honolulu City & County Ref. & Impt. Series B, 5% 10/1/13 1,750
1,724 438669PV
ILLINOIS - 4.4%
Chicago Gas Supply Rev. (Peoples Gas Lt. & Coke Co. Proj.)
Series C, 7.50% 3/1/15 2,500 2,881 16753LAF
Chicago O'Hare Int'l. Arpt. Spl. Facs. Rev. Rfdg. Series A:
5% 1/1/12 8,000 7,760 167592LP
5% 1/1/16 8,000 7,580 167592LQ
Chicago Pub. Bldg. Commerce Bldg. Rev. Series A,
7.125% 1/1/15, (MBIA Insured) (Escrowed to Maturity) (d) 2,000 2,390
167664RN
Chicago Single Family Mtg. Rev. 7.125% 7/1/09,
(Escrowed to Maturity) (d) 275 276 167685AW
Decatur Gen. Oblig. (Cap. Appreciation):
0% 10/1/08, (AMBAC Insured) 1,455 655 243127JG
0% 10/1/09, (AMBAC Insured) 1,455 620 243127JH
Illinois Dev. Fin. Auth. Poll. Cont. Rev. (Pub. Svc. Co.)
Series 1990 B, 7.60% 9/1/13 1,000 1,146 451888BJ
MUNICIPAL BONDS - CONTINUED
PRINCIPAL
AMOUNT VALUE (NOTE 1)
(000S) (000S)
ILLINOIS - CONTINUED
Illinois Edl. Facs. Auth. Rev. (Loyola Univ.) Series A:
Rfdg. 7.125% 7/1/21, (Pre-Refunded to 7/1/1 @ 102) (d) $ 1,355 $ 1,612
452001EV
(Unrefunded Balance) 7.125% 7/1/21 3,645 4,146 452001EW
Illinois Health Fac. Auth. Rev.:
Rfdg.:
(Rush Presbyterian-St. Luke's Med. Ctr.) 7.40% 10/1/20 5,215 5,652
452008WS
(OSF Healthcare Sys.) 6% 11/15/23 5,000 5,081 45200KA3
(Mercy Hosp. & Med. Ctr.) 9.50% 1/1/15 2,000 2,205 452008UM
(Rush Presbyterian-St. Luke's 5.25% 11/15/20,
(MBIA Insured) 3,000 2,884 45200KN4
Illinois Dedicated Tax Rev. (Civic Ctr.) Series A, 7% 12/15/13,
(AMBAC Insured) 2,500 2,859 452221BN
Joliet Corp. Purp. 6.25% 1/1/11, (MBIA Insured) 2,395 2,527 479754JC
Metropolitan Pier & Exposition Auth. Dedicated State Tax Rev.
(McCormick Place Expansion Proj.) Series A:
0% 6/15/07, (FGIC Insured) 3,000 2,723 592247CN
0% 6/15/08, (FGIC Insured) 4,190 1,927 592247CP
Zion Wtrwks. & Swr. Rev.:
6.40% 5/1/04 150 151 989688BM
6.50% 5/1/05 205 206 989688BN
55,281
INDIANA - 2.2%
Indiana Bond Bank (Spl. Loan Prog.):
Series A, 7.75% 8/1/09 1,750 1,897 454621HC
7.80% 2/1/15 1,000 1,118 454621VV
Indiana Health Facs. Fing. Auth. Hosp. Rev. Rfdg.:
(Methodist Hosp.) Series A, 5.75% 9/1/15 3,750 3,811 454797KJ
(Columbus Reg. Hosp.) 5.50% 8/15/22,
(Capital Guaranty Insured) 5,000 4,962 454797RP
Indiana Trans. Fin. Auth. Hwy. Rev. Series A, 7.25% 6/1/15 1,000 1,228
455141CL
Indianapolis Arpt. Auth. Rev. 9% 7/1/15 1,500 1,706 455254AS
Indianapolis Local Pub. Impt. Bond Bank Series D,
6.75% 2/1/20 1,400 1,521 455280QV
Marion County Convention & Recreational Facs. Auth.
Excise Tax Rev. Rfdg. (Lease Rental ) Series A,
5.375% 6/1/13, (AMBAC Insured) 2,750 2,726 569027CX
Mount Vernon Poll. Cont. Rev. (Gas Works) Series A,
7.25% 3/1/14 7,500 8,503 623485AJ
27,472
MUNICIPAL BONDS - CONTINUED
PRINCIPAL
AMOUNT VALUE (NOTE 1)
(000S) (000S)
IOWA - 0.1%
Cedar Rapids Poll. Cont. Rev. Rfdg. (Iowa Elec. Lt. & Pwr. Co.)
5.50% 11/1/23, (MBIA Insured) $ 1,500 $ 1,500 150560AR
KANSAS - 0.2%
Kansas Dept. Trans. Hwy. Rev. Rfdg. Series A, 5.40% 3/1/09 2,500 2,563
485424CN
KENTUCKY - 1.0%
Jefferson County Poll. Cont. Rev. (Louisville Gas & Elec. Co.)
5.90% 4/15/23 (b) 5,000 5,013 473044BQ
Kentucky Tpk. Auth. Resources Recovery Road Rev.:
Rfdg. Series 1985 A, 6% 7/1/09 1,000 1,010 491557EJ
13.125% 7/1/09, (Pre-Refunded to 1/1/94 @ 102) (d) 45 46 491557EW
13.125% 7/1/09, (Pre-Refunded to 7/1/97 @ 100) (d) 485 631 491557EU
13.125% 7/1/09, (Pre-Refunded to 1/1/98 @ 100) (d) 5 7
491557EV
Louisville & Jefferson Counties Metropolitan Swr. Dist. Rev.
Rfdg. Series B, 5.50% 5/15/23, (MBIA Insured) 6,000 6,097 546587CT
12,804
LOUISIANA - 0.4%
Louisiana Gen. Oblig. Rfdg. Series B, 5.625% 8/1/10,
(MBIA Insured) 3,000 3,146 546415DP
Louisiana Energy & Pwr. Auth. (Pwr. Proj.) 6% 1/1/13,
(FGIC Insured) 1,000 1,041 546462BX
Louisiana Pub. Facs. Auth. Rev. (Tulane Univ.) Series B,
8% 8/15/15 1,000 1,160 546396P4
5,347
MARYLAND - 3.3%
Maryland Health & Higher Ed. Facs. Auth. Rev.:
Rfdg.:
(John Hopkins Health Sys.) Series 1988, 7.50% 7/1/20 8,275 9,465
574215VT
(Mercy Med. Ctr.), 5.50% 7/1/22, (AMBAC Insured) 3,250 3,291
574216AU
(Francis Scott Key Med. Ctr.) 5% 7/1/23, (FGIC Insured) 1,000 951
574216CY
(Doctors Commty. Hosp.) 5.50% 7/1/24 10,400 9,841 574216FR
(Frederick Mem. Hosp.) 5.25% 7/1/13, (FGIC Insured) 2,250 2,270
574216KD
(Good Samaritan Hosp.), 5.75% 7/1/13 2,600 2,717 574216DP
(Howard County Gen. Hosp.) 5.50% 7/1/21 3,000 2,854 574216JR
Prince George's County Hosp. Rev. (Greater Southeast
Healthcare Sys.), 6.375% 1/1/23 2,800 2,894 741710AX
MUNICIPAL BONDS - CONTINUED
PRINCIPAL
AMOUNT VALUE (NOTE 1)
(000S) (000S)
MARYLAND - CONTINUED
Prince George's County Poll. Cont. Rev. Rfdg.
(Potomac Elec. Pwr. Proj.) 6.375% 1/15/23 $ 2,000 $ 2,177 741723AD
Washington Suburban San. Dist. Unltd. Tax:
(Montgomery and Prince George's Counties) 4%1/1/13 2,440 2,660
9401554A
2nd Series 6.40% 1/1/14 2,595 2,861 9401554C
41,981
MASSACHUSETTS - 5.8%
Massachusetts Consolidated Loan Ltd. Tax Series A,
5.20% 11/1/04 3,500 3,653 575826AL
Massachusetts Health & Edl. Facs. Auth. Rev.:
(Newton/Wellesley Hosp.) Issue C, 8% 7/1/18,
(MBIA Insured) 1,210 1,405 575850UT
(Univ. Hosp.) Series C, 7.25% 7/1/19, (MBIA Insured) 3,500 4,012
575850J5
(Blood Institute) Series A, 6.50% 2/1/22 5,000 5,406 575851KH
9.029% 7/1/25, (AMBAC Insured) (a)(e) 5,000 5,575 575851JP
Massachusetts Hsg. Fin. Agcy. (Hsg. Projs.) Series A:
6.30% 10/1/13 4,000 4,180 575852VR
9.125% 12/1/20, (GNMA Coll.) 975 1,060 575854QW
Massachusetts Ind. Fin. Agcy. Rev.:
Rfdg. (Harvard Commty. Health Plan) Series B,
8.125% 10/1/17 5,000 5,675 575914AZ
(Massachusetts Biomedical) Series A-2, 0% 8/1/08 10,000 4,400
575914EE
Massachusetts Muni. Wholesale Elec. Co. Pwr. Supply Sys. Rev.:
Series A:
5% 7/1/05, (AMBAC Insured) 4,100 4,115 575765MQ
6.75% 7/1/08 2,500 2,759 575765JJ
Series B,
6.75% 7/1/08 4,995 5,513 575765JK
6.75% 7/1/17 5,500 5,988 575765JF
Massachusetts Port. Auth. Rev.:
12.25% 7/1/97, (Escrowed to Maturity) (d) 420 475 575895ER
Series B, 9.375% 7/1/15 290 320 575895QQ
Massachusetts Tpk. Auth. Tpk. Rev. Series A, 5% 1/1/20 10,000 9,562
576029AT
Massachusetts Wtr. Resources Auth. Gen. Rfdg. Series C,
5.25% 12/1/15 7,735 7,542 576049FD
Quincy Hosp. Rev. (Quincy City Hosp.) Series A,
7.875% 1/15/16, (FHA Guaranteed) 2,000 2,175 748524AY
73,815
MUNICIPAL BONDS - CONTINUED
PRINCIPAL
AMOUNT VALUE (NOTE 1)
(000S) (000S)
MICHIGAN - 1.9%
Allegan Pub. School Dist. School Bldg. & Site Unltd. Tax
5.875% 5/1/18, (AMBAC Insured) $ 1,955 $ 2,063 017014DC
Grand Rapids Wtr. Supply Sys. Rev. Rfdg. 6.50% 1/1/15,
(FGIC Insured) 1,000 1,089 386316GS
Michigan Comprehensive Trans. Rev. Rfdg. Series II,
7.625% 5/1/11 1,375 1,549 594636KG
Michigan Hosp. Fin. Auth. Rev.:
Rfdg. (Sisters of Mercy Health Corp.) 5.375% 8/15/14,
(MBIA Insured) 3,000 3,022 59465CX2
Series A:
(Detroit Med. Ctr.) 6.25% 8/15/13 1,750 1,837 59465CJ7
(Harper Grace & Huron Valley Hosp.) 10% 10/1/16 10 11 59465CK2
Michigan Hsg. Dev. Auth. Rental Hsg. Rev. Series B,
7.50% 4/1/10 6,000 6,510 59465MAU
Michigan Trunk Line Rev. Series A, 0% 10/1/09,
(AMBAC Insured) 8,010 3,414 594695RU
Michigan Univ. Rev. 6.375% 12/1/24 1,500 1,586 914454V6
Oakland County (Segment I & II Evergreen Farmington Swr.
Disp. Sys.):
5.50% 11/1/07 1,200 1,224 672410YE
5.50% 11/1/08 1,250 1,278 672410YH
Royal Oak Hosp. Fin. Auth. Hosp. Rev. (William Beaumont
Hosp.) Series F, 6.25% 1/1/19 1,000 1,057 780486CB
24,640
MINNESOTA - 2.1%
Brainerd Hosp. Facs. Rev. (Benedictine Health Sys. St. Joseph)
9.625% 10/1/12, (MBIA Insured) 575 647 104895BZ
Coon Rapids Hosp. Auth. Rev. (Health Central Sys. Proj.)
Series B, 9.80% 10/1/00 70 79 216583BJ
Minneapolis & St. Paul Hsg. & Redev. Auth. Healthcare
Sys. Rev. (Healthspan Health Sys. Corp.)(Health One Sys.)
Series A, 4.75% 11/15/18, (AMBAC Insured) 6,000 5,543 603695DF
Minnesota Gen. Oblig. Rfdg. 5% 8/1/02 7,000 7,306 604128LX
Minnesota Hsg. Fin. Agcy.:
Single Family Mtg. Series I, 6.25% 1/1/15 2,000 2,060 60415HWC
Hsg. Dev. Series B, 9.375% 2/1/18 580 612 604155GC
Rochester Health Care Facs. Rev. (Mayo Foundation Med. Ctr.)
RIB Series H, 9.142% 11/15/15 (a)(e) 5,000 5,637 771902CS
Southern Minnesota Muni. Pwr. Agcy. Pwr. Supply Sys. Rev.
Series A, 4.75% 1/1/16 4,500 4,224 843375NK
26,108
MUNICIPAL BONDS - CONTINUED
PRINCIPAL
AMOUNT VALUE (NOTE 1)
(000S) (000S)
MISSISSIPPI - 0.3%
Lowndes County Solid Waste Dist. Poll. Cont. Rev. Rfdg.
(Weyerhauser Co. Proj.) 6.80% 4/1/22 $ 2,000 $ 2,353 54877EAB
Mississippi Home Corp. Single Family Sr. Rev. Rfdg.
Series 1990 A, 9.25% 3/1/12, (FGIC Insured) 1,190 1,279 60535MAC
3,632
MISSOURI - 0.5%
Kansas City Ind. Dev. Auth. Hosp. Rev. (Research Health Svcs.
Sys.) 9.375% 4/15/14, (MBIA Insured) 4,100 4,505 484901AU
Kirkwood Ind. Dev. Auth. Health Care Corp. Rev.
(St. Joseph Hosp.) 7% 7/1/22 2,000 2,145 497606BR
6,650
MONTANA - 0.3%
Forsyth Poll. Cont. Rev. Rfdg. (Montana Power Co.)
Series B, 5.90% 12/1/23 3,500 3,535 346668BR
MULTIPLE STATES - 0.5%
Washington Metro Area Trans. Auth. Gross Rev. Rfdg.
6% 7/1/09, (FGIC Insured) 5,500 6,091 938782BG
NEBRASKA - 1.1%
Lincoln Elec. Sys. Rev. (Pwr. Supply Facs.) Series A,
5.75% 9/1/16 250 258 534272SY
Nebraska Pub. Pwr. Dist. Rev. Rfdg. (Pwr. Supply Sys.)
Series C, 5% 1/1/17 6,500 6,232 639683T3
Omaha Pub. Pwr. Dist. Elec. Sys. Rev. Series 1992 B,
6.20% 2/1/17 7,200 8,055 681793ZJ
14,545
NEVADA - 0.3%
Clark County Passenger Facs. Charge Rev. (Las Vegas
McCarran Int'l. Arpt.) Series A, 6% 7/1/22,
(AMBAC Insured) 3,250 3,404 181006AZ
NEW HAMPSHIRE - 0.1%
New Hampshire Tpk. Sys. Rev. Rfdg. 5.75% 4/1/20 1,500 1,558 644693DC
NEW JERSEY - 2.2%
Middlesex County Poll. Cont. Auth. Rev. Rfdg. (Fing. Poll.)
(Amerada Hess Corp.) 7.875% 6/1/22 (b) 7,750 8,486 596570AE
New Jersey Health Care Facs. Fing. Auth. Rev.
(Cathedral Health) Series A, 7.25% 2/15/21,
(FHA Guaranteed) 2,000 2,238 6457937C
New Jersey Hsg. Fin. Agcy. Spl. Pledge Rev.:
6.75% 11/1/20 705 788 646123AZ
Series 1, 8.25% 11/1/20 600 602 646123BZ
MUNICIPAL BONDS - CONTINUED
PRINCIPAL
AMOUNT VALUE (NOTE 1)
(000S) (000S)
NEW JERSEY - CONTINUED
New Jersey Hwy. Auth. Garden State Parkway Gen. Rev.:
10.25% 1/1/05, (Pre-Refunded to 1/1/95 @ 102) (d) $ 400 $ 436 646088CD
10% 1/1/09, (Pre-Refunded to 1/1/95 @ 102) (d) 750 816 646088CH
New Jersey Tpk. Auth. Tpk. Rev. Rfdg.:
10.375% 1/1/03 (Escrowed to Maturity) (d) 1,690 2,148 646139CF
Series C, 6.50% 1/1/16 5,000 5,869 646139JP
New Jersey Wastewtr. Treatment Rev. Series A, 7.375%
5/15/08, (MBIA Insured) 2,650 3,024 646148ET
North Bergen Township Muni. Util. Auth. Swr. Rev. 7.625%
12/15/19, (FGIC Insured) 1,790 2,076 657654AR
Rutgers State Univ. Rev. Rfdg. Series A, 6.50% 5/1/18 1,000 1,113
783186CA
27,596
NEW MEXICO - 0.6%
Farmington Poll. Cont. Rev. Rfdg. (Southern California Edison)
5.875% 6/1/23, (MBIA Insured) 7,500 7,847 311450CS
NEW YORK - 8.5%
Metropolitan Trans. Auth. Svc. Contract (Trans. Facs.) Series 4:
7.75% 7/1/01 735 853 592597TX
7.75% 7/1/02 1,420 1,638 592597TZ
New York City Muni. Wtr. Fin. Auth. Wtr. & Swr. Sys. Rev.:
Series A, 7% 6/15/09, (FGIC Insured) 2,500 2,822 649706UK
Series 1992 A, 7% 6/15/09 1,500 1,676 649706TA
Series B, 5.50% 6/15/19 10,200 10,136 649706A5
New York State Dorm. Auth. Rev.:
Rfdg. (State Univ. Edl. Facs.):
Series A, 5.50% 5/15/13 7,500 7,491 649834AQ
Series A, 5.25% 5/15/15 7,500 7,247 649834AS
Series B, 5.25% 5/15/19 5,150 4,925 649834NK
(City Univ. Sys. Consolidated):
Series D, 7% 7/1/09 2,000 2,323 649832JF
7.50% 7/1/10 1,000 1,225 649832DG
Series A:
5.75% 7/1/13 6,000 6,128 649834HV
5.75% 7/1/18 5,000 5,088 649834JA
(Court Facs. Lease) Series A, 5.25% 5/15/21 10,000 9,488 649834WQ
6.75% 5/15/18 1,000 1,126 649831R7
MUNICIPAL BONDS - CONTINUED
PRINCIPAL
AMOUNT VALUE (NOTE 1)
(000S) (000S)
NEW YORK - CONTINUED
New York State Energy Research & Dev. Auth. Poll. Cont. Rev.
(Orange & Rockland Util., Inc. Proj.) 10.25% 10/1/14 $ 1,300 $ 1,389
649845AU
New York State Hsg. Fin. Agcy. Rfdg. (State Univ. Construction)
Series A, 8% 5/1/11, (Escrowed to Maturity) (d) 1,450 1,870 649862MH
New York State Local Govt. Assistance Corp. Rfdg.:
(Cap. Appreciation) Series C, 0% 4/1/13 7,000 2,459 649876JL
Series E, 6% 4/1/14 1,700 1,847 649876KX
Series C, 5% 4/1/21 (c) 12,700 12,065 649876JJ
Series C, 5.50% 4/1/17 2,500 2,566 649876JN
New York State Med. Care Facs. Fin. Agcy. Rev.:
Rfdg. (Mental Health Svcs. Facs.) Series A,
8.875% 8/15/07 (c) 5,500 6,497 649881TV
(North Shore Univ. Hosp. Mtg. Proj.) Series A, 7.20%
11/1/20, (MBIA Insured) 2,000 2,307 64988HHD
(Hosp. & Nursing Home) Series B, 8.10% 2/15/22,
(FHA Guaranteed) 900 1,029 649881B7
(Montefiore Med. Ctr.) Series A, 10.25% 2/15/24,
(FHA Guaranteed) (Pre-Refunded to 2/15/94 @ 102.50) (d) 3,750 3,872
649881HS
(Hosp. & Nursing Home) (Richland Hosp.) Series B,
9.125% 2/15/25, (FHA Guaranteed) 945 1,014 649881JZ
New York State Urban Dev. Corp. Rev. 5.25% 1/1/21 3,975 3,732 650033E9
Triborough Bridge & Tunnel Auth. Rev.:
Rfdg. (Gen. Purp.) Series Y, 6.125% 1/1/21 3,000 3,416 896029YU
(Convention Ctr. Proj.) Series E, 7.25% 1/1/10 1,000 1,194 896027CM
107,423
NORTH CAROLINA - 2.3%
Brunswick Unltd. Tax Rfdg. 4.30% 3/1/95, (AMBAC Insured) 2,375 2,408
117061LA
Charlotte Ctfs. of Prtn. Rfdg. Convention Fac. Proj., Series C,
5.25% 12/1/20, (AMBAC Insured) 2,000 1,975 161037CK
Charlotte Mecklenburg Hosp. Auth. Health Care Sys. Rev.
6.25% 1/1/20 3,500 3,745 160853EG
North Carolina Eastern Muni. Pwr. Agcy. Pwr. Sys. Rev. Rfdg.
Series B, 7% 1/1/08 5,000 5,844 658196NW
North Carolina Hsg. Fin. Agcy. Single Family Rev. Series N,
7.40% 3/1/28 2,285 2,411 658200ZF
MUNICIPAL BONDS - CONTINUED
PRINCIPAL
AMOUNT VALUE (NOTE 1)
(000S) (000S)
NORTH CAROLINA - CONTINUED
North Carolina Muni. Pwr. Agcy. #1 (Catawba Elec.) Rev. Rfdg.:
5.75% 1/1/15 $ 5,000 $ 5,044 658203QT
5% 1/1/15 8,250 7,724 658203RZ
29,151
NORTH DAKOTA - 0.2%
Mercer County Poll. Cont. Rev. (Basin Elec. Pwr.) 10.50%
6/30/13, (AMBAC Insured) 500 544 587850BY
North Dakota Univ. Rev. Rfdg. (Hsg. & Auxiliary Facs.)
Series A, 9.25% 4/1/14 2,000 2,173 914726W3
2,717
OHIO - 2.6%
Belmont County Gen. Oblig. (Variable Purpose) 5.15%
12/1/10, (AMBAC Insured) 1,000 1,001 080257DW
Clermont County Hosp. Facs. Rev. (Mercy Health Care System)
9.75% 9/1/13, (AMBAC Insured) 1,000 1,125 185705BM
Columbus Unltd. Tax:
12.375% 2/15/05 1,000 1,644 199489KG
Series 1, 5.25% 9/15/18 3,750 3,755 1994893H
Cuyahoga County Hosp. Rev. (Fairview Gen. Hosp.) 7.375%
8/1/19 2,500 2,775 232265TV
Franklin County Rfdg. Ltd. Tax 5.375% 12/1/21 4,000 4,065 353172F8
Hamilton County Elec. Sys. Mtg. Rev. Rfdg. Series A, 6% 10/15/23,
(FGIC Insured) 3,500 3,723 40727FCU
Hamilton County Health Sys. Rev. (St. Francis-St. George
Franciscan) 9.375% 7/1/15 3,750 4,050 40727JBD
Hamilton County Swr. Sys. Rev. Series A, 5.40% 12/1/08,
(FGIC Insured) 2,000 2,070 407288FV
Ohio State Bldg. Auth. (Workers Comp.) 4.75% 4/1/14 4,500 4,241
6775536N
Ohio Wtr. Dev. Auth. Rev. (Safe Wtr. Rfdg. & Impt.):
9.25% 12/1/12, (AMBAC Insured) (Pre-Refunded to
6/1/95 @ 103) (d) 150 166 6776582X
(Unrefunded Balance) 9.25% 12/1/12, (AMBAC Insured) 95 105 6776582Y
9.375% 12/1/18, (AMBAC Insured) 1,080 1,181 6776582W
Warren Hosp. Rev. Rfdg. (Warren General Hosp. Proj.)
Series B, 7.20% 11/15/09 2,500 2,713 935482CM
32,614
MUNICIPAL BONDS - CONTINUED
PRINCIPAL
AMOUNT VALUE (NOTE 1)
(000S) (000S)
OKLAHOMA - 2.2%
Grand River Dam Auth. Rev. Rfdg.:
5.75% 6/1/06 $ 5,585 $ 6,039 386442PF
5.50% 6/1/10 11,000 11,330 386442PK
Oklahoma Muni. Pwr. Auth. Pwr. Supply Sys. Rev.
(Independent Electrical Auth.):
Series A, 4.75% 1/1/22, (FGIC Insured) 5,000 4,675 67910HFT
Series B, 5.75% 1/1/24, (MBIA Insured) 1,000 1,085 67910HFB
Series A, 4.50% 1/1/28, (FGIC Insured) 3,000 2,663 67910HFU
Oklahoma Tpk. Auth. Tpk. Rev. 1st Senior Series A,
6.125% 1/1/20 2,500 2,675 679111HT
28,467
PENNSYLVANIA - 8.6%
Allegheny County Hosp. Dev. Auth. Rev. Rfdg.:
(MaGee Women's Hosp.) 6% 10/1/13, (FGIC Insured) 3,500 3,688 01728ABA
(Health Ctr. Presbyterian Univ.) Series A, 6% 11/1/12,
(MBIA Insured) 3,500 3,662 01728ACV
Blair County Hosp. Auth. Rev. Rfdg. (Altoona Hosp.) 7.875%
7/1/09, (AMBAC Insured) 2,000 2,302 092840CL
Dauphin County Gen. Auth. Hosp. Rev. Rfdg. (Hapsco Western
Pennsylvania Hosp. Proj.) Series B, 6.25% 7/1/16,
(MBIA Insured) 3,500 3,741 23825HBD
Delaware County Auth. Hosp. Rev. 6% 12/15/20 3,000 3,030 246006KE
Harrisburg Auth. Wtr. Rev. (Complimentary Auction Rate B-3)
8.82% 7/15/15, (FGIC Insured) (a)(e) 3,000 3,322 41473MCB
Montgomery County Higher Ed. & Health Auth. Rev.:
(Bryn Mawr Proj.) 7.375% 12/1/19 11,250 12,502 613604MA
(St. Joseph's Univ.) 6.50% 12/15/22, (Connie Lee Insured) 1,500 1,656
613603FZ
Pennsylvania Ctfs. of Partn. Series 1993 A, 5% 7/1/15,
(AMBAC Insured) 10,000 9,600 709144DG
Pennsylvania Intergovernmental Co-op. Auth. Spl. Tax Rev.:
Rfdg. Series A, 5% 6/15/15 4,000 3,805 708840CH
(City of Philadelphia Funding Prog.) 5.75% 6/15/15 6,000 6,105
708840BN
Pennsylvania Higher Edl. Facs. Auth. College & Univ. Rev.:
Rfdg. (Thomas Jefferson Univ. Hosp.) Series B, 9.25% 7/1/08 4,050 4,516
709170W5
(Temple Univ.):
7.40% 10/1/10 7,050 7,676 7091703K
1st Series, 5.75% 4/1/21, (MBIA Insured) 3,000 3,060 709171SL
Philadelphia Hosp. & Higher Ed. Facs. Hosp. Auth. Rev.:
Rfdg. (Pennsylvania Hosp.) 7.25% 7/1/14 4,000 4,210 717903ED
(Children's Hosp.) 5% 2/15/21 4,350 4,067 717903TA
Philadelphia Parking Auth. Parking Rev. (Arpt.) 7.375%
9/1/18, (AMBAC Insured) 1,750 1,978 717842DJ
MUNICIPAL BONDS - CONTINUED
PRINCIPAL
AMOUNT VALUE (NOTE 1)
(000S) (000S)
PENNSYLVANIA - CONTINUED
Philadelphia Wtr. & Swr. Rev. (Cap. Appreciation) 14th Series,
0% 10/1/06, (MBIA Insured) $ 1,500 $ 774 717890LY
Philadelphia Wtr. & Wastewtr. Rev.:
Rfdg. Series 1993, 5.50% 6/15/06 5,000 5,119 717893AM
8.12% 6/15/12, (FGIC Insured) (a)(e) 5,000 5,206 717893BF
Pittsburgh Special Dist. Gen. Oblig. 6.125% 9/1/17,
(AMBAC Insured) 3,000 3,217 725208S8
Pittsburgh Univ. Higher Ed. (Univ. Cap. Proj.) Series A,
6.125% 6/1/21, (MBIA Insured) (c) 6,850 7,329 914805CL
Pittsburgh Wtr. & Swr. Auth. Wtr. & Swr. Sys. Rev. Rfdg. 6.50%
9/1/14, (FGIC Insured) 2,750 3,169 725304CG
Swarthmore Borough Auth. College Rev.:
7.375% 9/15/18, (Pre-Refunded to 9/15/98 @ 101.50) (d) 1,290 1,496
870000DB
(Unrefunded Balance) 7.375% 9/15/18 710 797 870000DC
6% 9/15/20 2,500 2,628 870000CE
108,655
PUERTO RICO - 0.2%
Puerto Rico Infrastructure Fing. Auth. Spl. Tax Series 1988 A,
7.75% 7/1/08 2,000 2,270 745219AQ
SOUTH CAROLINA - 2.0%
South Carolina Educ. Dev. Auth. (South Carolina Baptist Hosp.)
7.97% 8/1/15, (AMBAC Insured) (a)(e) 6,000 6,120 83703ECB
South Carolina Hsg. Auth. (Homeownership Mtg. Purchase)
Series 1985 B, 9.375% 7/1/16 590 623 837117DG
South Carolina Hsg. Fin. & Dev. Auth. (Homeownership Mtg.
Purchase) Series B, 7.875% 7/1/15 1,750 1,848 837122AG
South Carolina Pub. Svc. Auth. Elec. Rev. & Elec. Sys.
Expansion Rev. Rfdg. Series A, 7.875% 7/1/21,
(Escrowed to Maturity) (d) 9,095 9,925 837140B7
South Carolina Pub. Svc. Auth. Rev. Rfdg. (Independent
Electrical Auth.) Series C, 5.125% 1/1/32 7,500 7,041 837147KR
25,557
SOUTH DAKOTA - 0.3%
South Dakota Bldg. Auth. Ctfs. of Prtn. Series A, 7.50%
12/1/16 4,000 4,370 837558BJ
MUNICIPAL BONDS - CONTINUED
PRINCIPAL
AMOUNT VALUE (NOTE 1)
(000S) (000S)
TENNESSEE - 1.0%
Knox County Health, Edl./ & Hsg. Facs. Auth. Sanders Alliance
Hosp. Facs. Rev. Series C, 7.25% 1/1/10,
(MBIA Insured) (a)(e) $ 2,660 $ 3,235 499523MN
Metropolitan Nashville Arpt. Auth. Arpt. Rev. Series C, 6.60%
7/1/15, (FGIC Insured) 3,000 3,360 592190DX
Sullivan County Health Ed. Hsg. 5.75% 2/15/20,
(MBIA Insured) 1,500 1,543 865292CH
Tennessee Hsg. Dev. Auth. Mtg. Fin. 5.70% 7/1/08 4,000 4,070 880460LD
12,208
TEXAS - 4.4%
Austin Wtr. Swr. & Elec. Rev. Rfdg. 13.50% 11/15/97 3,200 4,216
052478BB
Corpus Christi Hsg. Fin. Corp. Single Family Mtg. Rev.
(Lomas & Nettleton Co.) Series A, 13.375% 6/1/13 115 121 220138BQ
Dallas Fort Worth Reg'l. Arpt. Rev. Rfdg. joint Series A,
7.375% 5/1/12, (FGIC Insured) 1,000 1,185 235037UV
Gulf Coast Wast. Disp. Auth. Rev. (Houston Lt. & Pwr. Co.)
Series A, 6.375% 4/1/12, (MBIA Insured) 6,000 6,593 401905AF
Harris County Cap. Appreciation Rev. Rfdg. (Toll Road
Subordinated Lien) 0% 8/1/06 4,245 2,207 414003TH
Harris County Hosp. Dist. Mtg. Rev. Rfdg. 7.40% 2/15/10,
(AMBAC Insured) 3,000 3,716 414156CK
Harris County Toll Road 7.10% 8/15/17, (FGIC Insured) 2,400 2,736
414003PZ
Houston Wtr. & Swr. Sys. Rev. Rfdg. (Jr. Lien) Series C, 0%
12/1/09, (AMBAC Insured) 3,000 1,279 442436LJ
North Texas Muni. Wtr. Dist. Upper Fork Waste Wtr. Interest
Receipt Contract Rev. 5.50% 6/1/12, (FGIC Insured) 2,300 2,326
662842CT
Sam Rayburn Muni. Pwr. Agcy. Pwr. Supply Sys. Series A,
6.50% 10/1/04 2,565 2,745 795869CW
San Antonio Elec. & Gas Rev. Rfdg. Series B:
0% 2/1/09, (FGIC Insured) 16,500 7,342 7962528E
0% 2/1/10, (FGIC Insured) 10,000 4,188 7962528F
Texas Muni. Pwr. Agcy. Rev. Rfdg. 2.85% 9/1/94,
(MBIA Insured) 2,600 2,600 882555RX
Texas Nat'l. Research Lab. Commission Fing. Corp. Lease Rev.
(Superconducting Super Collider) 7.10% 12/1/21 5,500 5,665 882585AP
Texas Pub. Fin. Auth. Bldg. Rev. Rfdg. (Cap. Appreciation)
Series 1990, 0% 2/1/12, (MBIA Insured) 2,500 931 88275MBS
Trinity River Waste Wtr. Rev. Series A, 3.30% 8/1/94 1,450 1,455
89658HCV
Tyler Health Facs. Dev. Corp. Hosp. Rev. (East Texas Med. Ctr.
Reg'l. Health Sys.) Series B, 6.75% 11/1/25 6,240 6,529 902261CV
55,834
MUNICIPAL BONDS - CONTINUED
PRINCIPAL
AMOUNT VALUE (NOTE 1)
(000S) (000S)
UTAH - 1.3%
Intermountain Pwr. Agcy. Pwr. Supply Rev.:
Unltd. Tax Rfdg. Series H, 6% 7/1/21 (a)(e) $ 520 $ 525 458840MD
8.28% 7/1/21 3,500 3,640 458840Y7
Series A, 6% 7/1/23 3,500 3,605 458840K3
Salt Lake City Hosp. Rev. (Intermountain Health Care Hosp., Inc.):
6.30% 2/15/15 2,375 2,615 795583EQ
Series A, 8.125% 5/15/15 2,975 3,890 795583DX
West Valley City Muni. Bldg. Auth. Lease. Rev. (Muni. Facs.
Proj.) 7.70% 1/15/10, (BIG Insured) 2,000 2,358 95640EAP
16,633
VERMONT - 0.6%
Vermont Hsg. Fin. Agcy. (Single Family) Series 4, 6.40%
11/1/25, (FHA Insured) 6,815 7,130 924195KL
VIRGINIA - 1.0%
Augusta County Ind. Dev. Auth. Hosp. Rev. (Augusta Hosp.
Corp. Proj.) 7% 9/1/21 2,500 2,972 05112MAM
Hampton Museum Rev. 7.50% 1/1/14 1,500 1,672 409567AP
Lynchburg Ind. Dev. Auth. Facs. 1st Mtg. Rev. Rfdg. (Central
Health, Inc.) 8.125% 1/1/16 1,250 1,422 551241CJ
Prince William County Svc. Auth. Wtr. & Swr. Sys. Rev. 6.50%
7/1/21, (FGIC Insured) 1,500 1,725 741765AR
Roanoke County Ind. Dev. Auth. Ind. Dev. Rev. (Dominion
Bankshares Corp. Proj.) 6.75% 8/1/01 750 831 769831AR
Virginia Pub. School Auth. 6.50% 8/1/12 2,000 2,215 9281762U
Virginia Resource Auth. Wtr. & Swr. Sys. Rev. Series B, 8.70%
11/1/11 1,750 1,938 928180BK
12,775
WASHINGTON - 5.6%
Chelan County Pub. Util. Dist. #1 Columbia River Rock's
Hydroelec. Sys. Rev. Series A, 9.75% 6/1/15,
(AMBAC Insured) 250 276 163123HJ
King County Unltd. Tax Series A, 6.75% 12/1/08 5,165 5,927 494748QK
Seattle Muni. Lt. & Pwr. Rev. Series A, 5.75% 8/1/10 3,500 3,605
812642XB
Tacoma Dept. Pub. Util. & Lt. Division Lt. & Pwr. Rev. Rfdg.
9.375% 1/1/15, (Escrowed to Maturity) (d) 4,355 4,878 873482U9
Washington Health Care Facs. Auth. Rev. Rfdg. (Multicare
Med. Ctr. Proj.) 7.875% 8/15/11, (FGIC Insured) 1,500 1,733 939780VA
MUNICIPAL BONDS - CONTINUED
PRINCIPAL
AMOUNT VALUE (NOTE 1)
(000S) (000S)
WASHINGTON - CONTINUED
Washington Pub. Pwr. Supply Sys. Rev.:
Nuclear Proj. #2 Rfdg.:
Series C:
7.625% 7/1/10 $ 4,000 $ 4,705 939828MT
7.375% 7/1/11, (FGIC Insured) (c) 6,100 7,099 939828MR
Series A, 0% 7/1/10, (MBIA Insured) 9,000 3,611 939828PR
Series B, 0% 7/1/06, (MBIA Insured) 5,000 2,619 939830MB
Nuclear Proj. #3 Rfdg.:
Series B:
0% 7/1/07, (MBIA Insured) 3,000 1,474 939830MC
7% 7/1/09 2,070 2,412 939830MV
Nuclear Proj. #2:
Series A:
14.375% 7/1/01 3,405 5,052 939828KC
6.30% 7/1/12 5,000 5,487 939828PT
7.375% 7/1/12 (c) 10,400 11,739 939828LR
Series D, 14.375% 7/1/01, (Escrowed to Maturity) (d) 250 362
939827HA
Nuclear Proj. #3 7.65% 7/1/12 (a)(e) 10,000 9,637 939830PR
70,616
WEST VIRGINIA - 0.8%
West Virginia School Bldg. Auth. Rev. (Cap. Impt.) Series A,
6.75% 7/1/15 3,000 3,270 956540DM
West Virginia State Hosp. Fin. Auth. Hosp. Rev.:
Rfdg. & Impt. (Cabell Hosp. Proj.) 7.875% 1/1/19 2,500 2,778
956622FQ
(Cabell Hosp. Proj.) Series B, 7.70% 1/1/19 4,000 4,415 956622GU
10,463
WISCONSIN - 0.9%
Milwaukee Met. Swr. Dist. Series A, 5.10% 9/1/94 4,500 4,573 602409AY
Wisconsin Health & Ed. Facs. Auth. Rev.:
(St. Luke's Med. Ctr. Proj.) 7.10% 8/15/11, (MBIA Insured) 4,000 4,500
977104G9
(Felician Care, Inc.) Series A, 7% 1/1/15, (AMBAC Insured) 2,000 2,258
977104WK
11,331
WYOMING - 0.2%
Wyoming Farm Loan Board Cap. Facs. Rev. Rfdg. 5.75%
10/1/20 2,500 2,616 983478CJ
TOTAL MUNICIPAL BONDS
(Cost $1,165,393) 1,256,901
MUNICIPAL NOTES (A) - 0.9%
PRINCIPAL
AMOUNT VALUE (NOTE 1)
(000S) (000S)
COLORADO - 0.3%
Colorado State TRAN, 3.25% 6/17/94 $ 4,000 $ 4,022 196729AD
CONNECTICUT - 0.3%
Connecticut Spl. Assessment Unemployment Rev. Series 1993B,
2.95%, LOC Industrial Bank of Japan, Mitsubishi Bank Ltd.,
VRDN 4,000 4,000 207756AR
MARYLAND - 0.1%
Maryland Gen. Oblig. 2.40%, VRDN 1,000 1,000 207756AR
MICHIGAN - 0.2%
Flint Hosp. Bldg. Auth. Rev. (Hurley Med. Ctr.) Series 1985,
3.35%, LOC Comerica Bank, Detroit, VRDN 1,600 1,600 339509BD
UTAH - 0.0%
Utah Board of Regents Student Loan Rev. Series 1988 B, 2.80%,
(AMBAC Insured), BPA Swiss Bank, VRDN 400 400 917546BM
WASHINGTON - 0.0%
Washington Health Care Facs. Auth. Rev. (Fred Huchinson
Cancer Research) Series 1991 A, 4.50%, LOC Morgan
Guaranty, VRDN 100 100 939780A7
TOTAL MUNICIPAL NOTES
(Cost $11,122) 11,122
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,176,515) $ 1,268,023
FUTURES CONTRACTS
AMOUNTS IN THOUSANDS EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
SELL
200 U.S. Treasury Note Contracts March 1994 $ 22,528 $ (3)
THE VALUE OF FUTURES CONTRACTS SOLD AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 1.8%
SECURITY TYPE ABBREVIATIONS
TRAN - Tax and Revenue Anticipation
Notes
VRDN - Variable Rate Demand Notes
LEGEND
1. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
2. Security purchased on a delayed delivery basis (see Note 2 of Notes to
Financial Statements).
3. A portion of the security was pledged to cover margin requirements for
futures contracts and delayed delivery purchases. At the period end, the
value of securities pledged amounted to $37,023,000.
4. Security collateralized by an amount sufficient to pay interest and
principal.
5. Inverse floating rate security is a security where the coupon is
inversely indexed to a floating interest rate. The price will be more
volatile than the price of a comparable fixed rate security.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S S&P
RATINGS RATINGS
Aaa, Aa, A 79.6% AAA, AA, A 85.5%
Baa 12.3% BBB 10.1%
Ba 0.0% BB 0.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 0.8%.
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
Electric Revenue 21.5%
Health Care 20.5
Water & Sewer 10.3
Others (individually less than 10%) 47.7
TOTAL 100.0%
INCOME TAX INFORMATION
At December 31, 1993, the aggregate cost of investment securities for
income tax purposes was $1,176,515,000. Net unrealized appreciation
aggregated $91,508,000, of which $92,399,000 related to appreciated
investment securities and $891,000 related to depreciated investment
securities.
The fund hereby designates $12,300,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) DECEMBER 31, 1993

ASSETS

Investment in securities, at value (cost $1,176,515) $ 1,268,023
(Notes 1 and 2) - See accompanying schedule

Cash 18

Receivable for investments sold

Regular delivery 14,194

Delayed delivery (Note 2) 2,913

Interest receivable 23,119

Receivable for daily variation on futures contracts 13

TOTAL ASSETS 1,308,280

LIABILITIES

Payable for investments purchased $ 15,216
Regular delivery

Delayed delivery (Note 2) 15,180

Payable for fund shares redeemed 34

Dividends payable 15,634

Accrued management fee 385

Other payables and accrued expenses 181

TOTAL LIABILITIES 46,630

NET ASSETS $ 1,261,650

Net Assets consist of:

Paid in capital $ 1,160,284

Accumulated undistributed net realized gain (loss) on 9,861
investments

Net unrealized appreciation (depreciation) on:

Investment securities 91,508

Futures contracts (3)

NET ASSETS, for 145,113 shares outstanding $ 1,261,650

NET ASSET VALUE, offering price and redemption price per $8.69
share ($1,261,650 (divided by) 145,113 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED DECEMBER 31, 1993

INTEREST INCOME $ 76,808

EXPENSES

Management fee (Note 4) $ 4,677

Transfer agent fees (Note 4) 1,404

Non-interested trustees' compensation 3

Registration fees 69

Audit 49

Legal 13

Miscellaneous 18

TOTAL EXPENSES 6,233

NET INTEREST INCOME 70,575

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
(NOTES 1 AND 3)
Net realized gain (loss) on:

Investment securities 65,308

Futures contracts 1,388 66,696

Change in net unrealized appreciation (depreciation) on:

Investment securities 22,433

Futures contracts (86) 22,347

NET GAIN (LOSS) 89,043

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM $ 159,618
OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1993 1992

INCREASE (DECREASE) IN NET ASSETS

Operations $ 70,575 $ 72,007
Net interest income

Net realized gain (loss) on investments 66,696 35,781

Change in net unrealized appreciation (depreciation) 22,347 (5,049)
on investments

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 159,618 102,739
FROM OPERATIONS

Distributions to shareholders: (70,575) (72,007)
From net interest income

From net realized gain (58,286) (24,970)

TOTAL DISTRIBUTIONS (128,861) (96,977)

Share transactions 581,372 514,456
Net proceeds from sales of shares

Reinvestment of distributions from: 46,056 46,338
Net interest income

Net realized gain 42,192 18,113

Cost of shares redeemed (630,380) (555,744)

Net increase (decrease) in net assets resulting from 39,240 23,163
share transactions

TOTAL INCREASE (DECREASE) IN NET ASSETS 69,997 28,925

NET ASSETS

Beginning of period 1,191,653 1,162,728

End of period $ 1,261,650 $ 1,191,653

OTHER INFORMATION
Shares

Sold 66,164 60,367

Issued in reinvestment of distributions from: 5,219 5,448
Net interest income

Net realized gain 4,887 2,144

Redeemed (71,390) (65,059)

Net increase (decrease) 4,880 2,900

</TABLE>

FINANCIAL HIGHLIGHTS

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

1993 1992 1991 1990 1989

SELECTED PER-SHARE DATA

Net asset value, beginning of $ 8.500 $ 8.470 $ 8.130 $ 8.130 $ 7.950
period

Income from Investment .487 .519 .526 .541 .556
Operations
Net interest income

Net realized and unrealized .600 .210 .410 - .180
gain (loss) on
investments

Total from investment 1.087 .729 .936 .541 .736
operations

Less Distributions (.487) (.519) (.526) (.541) (.556)
From net interest income

From net realized gain on (.410) (.180) (.070) - -
investments

Total distributions (.897) (.699) (.596) (.541) (.556)

Net asset value, end of $ 8.690 $ 8.500 $ 8.470 $ 8.130 $ 8.130
period

TOTAL RETURN 13.17% 8.93% 11.91% 6.91% 9.56%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period (in $ 1,262 $ 1,192 $ 1,163 $ 1,070 $ 1,054
millions)

Ratio of expenses to average .49% .49% .50% .50% .50%
net assets

Ratio of net interest income to 5.51% 6.11% 6.35% 6.71% 6.90%
average net assets

Portfolio turnover rate 74% 53% 33% 49% 64%

</TABLE>

NOTES TO FINANCIAL STATEMENTS
For the period ended December 31, 1993

1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Municipal Bond Portfolio (the fund) is a fund of Fidelity
Municipal Trust (the trust) and is authorized to issue an unlimited number
of shares. The trust is registered under the Investment Company Act of
1940, as amended (the 1940 Act), as an open-end management investment
company organized as a Massachusetts business trust. The following
summarizes the significant accounting policies of the fund:
SECURITY VALUATION. Securities are valued based upon a computerized matrix
system and/or appraisals by a pricing service, both of which consider
market transactions and dealer-supplied valuations. Short-term securities
maturing within sixty days are valued either at amortized cost or original
cost plus accrued interest, both of which approximate current value.
Securities for which quotations are not readily available through the
pricing service are valued at their fair value as determined in good faith
under consistently applied procedures under the general supervision of the
Board of Trustees.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes information regarding income
taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
futures and options transactions and losses deferred due to futures and
options. 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.
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.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective January
1, 1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of December 31, 1992 have been reclassified to
reflect a decrease in paid in capital of $74,097,000 and a decrease in
accumulated net realized loss on investments of $74,097,000.
2. OPERATING POLICIES.
FUTURES CONTRACTS AND OPTIONS. The fund may invest in futures contracts and
write options. These investments involve, to varying degrees, elements of
market risk and risks in excess of the amount recognized in the Statement
of Assets and Liabilities. The face or contract amounts reflect the extent
of the involvement the fund has in the particular classes of instruments.
Risks may be caused by an imperfect correlation between movements in the
price of the instruments and the price of the underlying securities and
interest rates. Risks also may arise if there is an illiquid secondary
market for the instruments, or due to the inability of counterparties to
perform.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Options traded
on an exchange are valued using the last sale price or, in the absence of a
sale, the last offering price. Options traded over-the-counter are valued
using dealer-supplied valuations.
DELAYED DELIVERY TRANSACTIONS. The fund may purchase or sell securities on
a when-issued or forward commitment basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of the
underlying securities and the date when the securities will be delivered
and paid for are fixed at the time the transaction is negotiated. The fund
identifies securities as segregated in its custodial records with a value
at least equal to the amount of the purchase commitment.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $921,407,000 and $902,112,000, respectively.
The face value of futures contracts opened and closed amounted to
$565,838,489 and $549,048,039, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, Fidelity Management &
Research Company (FMR) receives a monthly fee that is calculated
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
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 ranging from .1325% to .3700% and is
based on the monthly average net assets of all the mutual funds advised by
FMR. The annual individual fund fee rate is .25%. For the period, the
management fee was equivalent to an annual rate of .37% of average net
assets.
On December 15, 1993 the shareholders of the fund approved a new management
contract which took effect on January 1, 1994. The new management contract
increases the individual fund fee rate from .20% to .25% and revises the
group fee rate schedule for rates ranging from .14% to .37%.
The Board of Trustees approved a new group fee rate schedule with rates
ranging from .1325% to .3700%. Effective November 1, 1993, FMR voluntarily
agreed to implement this new group fee rate schedule as it results in the
same or a lower management fee.
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service
Plan (the Plan), and in accordance with Rule 12b-1 of the 1940 Act, FMR or
the fund's distributor, Fidelity Distributors Corporation (FDC), an
affiliate of FMR, may use their resources to pay administrative and
promotional expenses related to the sale of the fund's shares. Subject to
the approval of the Board of Trustees, the Plan also authorizes payments to
third parties that assist in the sale of the fund's shares or render
shareholder support services. FMR or FDC has informed the fund that
payments made to third parties under the Plan amounted to $2,000 for the
period.
TRANSFER AGENT AND ACCOUNTING FEES. United Missouri Bank, N.A. (the Bank)
is the custodian and transfer and shareholder servicing agent for the fund.
The Bank has entered into a sub-contract with Fidelity Service Co. (FSC),
an affiliate of FMR, under which FSC performs the activities associated
with the fund's transfer and shareholder servicing agent and accounting
functions. The fund pays transfer agent fees based on the type, size,
number of accounts and number of transactions made by shareholders. FSC
pays for typesetting, printing and mailing of all shareholder reports,
except proxy statements. The accounting fee is based on the level of
average net assets for the month plus out-of-pocket expenses. For the
period, FSC received transfer agent and accounting fees amounting to
$915,000 and $358,000, respectively.
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Fidelity Municipal Trust and the Shareholders of
Fidelity Municipal Bond Portfolio:
We have audited the accompanying statement of assets and liabilities of
Fidelity Municipal Trust: Fidelity Municipal Bond Portfolio, including the
schedule of portfolio investments, as of December 31, 1993, and the related
statement of operations for the year then ended, the statement of changes
in net assets for each of the two years in the period then ended and the
financial highlights for each of the five years in the period then ended.
These financial statements and financial highlights are the responsibility
of the fund's management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 1993 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Municipal Trust: Fidelity Municipal Bond Portfolio as of
December 31, 1993, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the
period then ended, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND
Boston, Massachusetts
January 28, 1994
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INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Gary L. Swayze, Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Phyllis Burke Davis *
Ralph F. Cox *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
United Missouri Bank, N.A.
Kansas City, MO

Corporate Headquarters
82 Devonshire St., Boston, MA 02109
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EXHIBIT 24(A)(3)
(2_FIDELITY_LOGOS)FIDELITY

INSURED TAX-FREE
PORTFOLIO
ANNUAL REPORT
DECEMBER 31, 1993
CONTENTS

PRESIDENT'S MESSAGE 3 Ned Johnson on minimizing taxes.

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 last six
months.

INVESTMENTS 11 A complete list of the fund's
investments with their market value.

FINANCIAL STATEMENTS 26 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.

NOTES 30 Footnotes to the financial
statements.

REPORT OF INDEPENDENT 33 The auditor's opinion.
ACCOUNTANTS

Insured Tax-Free 13.85% 60.65% 113.18%

Lehman Brothers Municipal Bond Index 12.29% 62.86% n/a

Average Insured Municipal Bond Fund 11.93% 57.10% n/a

Consumer Price Index 2.75% 21.00% 34.13%

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on November 13, 1985. For example, if you had invested $1,000 in a
fund that had a 5% return over the past year, you would have $1,050. You
can compare these figures to the performance of the Lehman Brothers
Municipal Bond Index - a broad gauge of the municipal bond market which
includes both insured and uninsured bonds. To measure how the fund stacked
up against its peers, you can look at the average insured municipal bond
fund, which reflects the perform- ance of 39 insured municipal bond funds
tracked by Lipper Analytical Services. Both benchmarks include reinvested
dividends and capital gains, if any. Comparing the fund's performance to
the consumer price index helps show how your fund did compared to
inflation. (The periods covered by the CPI numbers are the closest
available match to those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1993 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND

Insured Tax-Free 13.85% 9.94% 9.75%

Lehman Brothers Municipal Bond Index 12.29% 10.25% n/a

Average Insured Municipal Bond Fund 11.93% 9.44% n/a

Consumer Price Index 2.75% 3.89% 3.66%

AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
$10,000 OVER LIFE OF FUND
Insured Tax Free (013) Lehman Bros. Muni Bond Index
11/30/85 10000.00 10000.00
12/31/85 10295.36 10087.90
01/31/86 10885.74 10682.08
02/28/86 11306.78 11105.62
03/31/86 11410.97 11109.18
04/30/86 11321.24 11117.62
05/31/86 11127.05 10936.62
06/30/86 11220.70 11040.96
07/31/86 11219.99 11107.98
08/31/86 11777.10 11605.28
09/30/86 11745.09 11634.41
10/31/86 12006.08 11835.34
11/30/86 12205.07 12069.80
12/31/86 12182.75 12036.48
01/31/87 12482.28 12398.90
02/28/87 12577.71 12459.90
03/31/87 12446.26 12327.83
04/30/87 11631.11 11709.22
05/31/87 11511.52 11651.14
06/30/87 11686.57 11993.22
07/31/87 11795.85 12115.55
08/31/87 11863.24 12142.81
09/30/87 11201.36 11695.10
10/31/87 11429.84 11736.50
11/30/87 11710.99 12042.94
12/31/87 11927.47 12217.69
01/31/88 12503.15 12652.88
02/29/88 12606.82 12786.62
03/31/88 12236.22 12637.66
04/30/88 12306.70 12733.70
05/31/88 12340.72 12696.90
06/30/88 12550.66 12882.66
07/31/88 12620.07 12966.65
08/31/88 12666.36 12978.07
09/30/88 12903.74 13212.97
10/31/88 13239.60 13446.18
11/30/88 13030.50 13323.01
12/31/88 13261.98 13459.30
01/31/89 13470.40 13737.64
02/28/89 13321.11 13580.90
03/31/89 13321.24 13548.44
04/30/89 13683.55 13870.08
05/31/89 13947.50 14158.16
06/30/89 14136.33 14350.43
07/31/89 14251.73 14545.74
08/31/89 14110.93 14403.33
09/30/89 14061.96 14360.12
10/31/89 14214.19 14535.32
11/30/89 14447.03 14789.69
12/31/89 14515.15 14910.96
01/31/90 14420.23 14840.88
02/28/90 14564.00 14972.96
03/31/90 14579.17 14977.46
04/30/90 14388.74 14869.62
05/31/90 14749.81 15193.78
06/30/90 14870.12 15327.48
07/31/90 15099.44 15552.79
08/31/90 14853.20 15327.28
09/30/90 14922.26 15336.48
10/31/90 15142.32 15614.07
11/30/90 15501.27 15927.91
12/31/90 15542.75 15997.99
01/31/91 15764.85 16212.36
02/28/91 15874.01 16353.41
03/31/91 15829.02 16359.95
04/30/91 16009.80 16577.54
05/31/91 16177.76 16725.08
06/30/91 16134.70 16708.36
07/31/91 16364.83 16912.20
08/31/91 16552.61 17135.44
09/30/91 16771.33 17358.20
10/31/91 16918.67 17514.42
11/30/91 16943.74 17563.46
12/31/91 17341.78 17941.08
01/31/92 17353.04 17982.34
02/29/92 17361.26 17987.74
03/31/92 17316.35 17994.93
04/30/92 17463.85 18155.09
05/31/92 17691.94 18369.32
06/30/92 17976.24 18677.92
07/31/92 18539.98 19238.26
08/31/92 18290.38 19049.72
09/30/92 18393.37 19173.55
10/31/92 17969.70 18985.65
11/30/92 18495.19 19325.49
12/31/92 18713.82 19522.61
01/31/93 18949.87 19749.07
02/28/93 19866.98 20463.99
03/31/93 19603.79 20247.07
04/30/93 19820.07 20451.57
05/31/93 19897.60 20566.09
06/30/93 20263.73 20909.55
07/31/93 20256.30 20936.73
08/31/93 20760.06 21372.21
09/30/93 21012.79 21615.86
10/31/93 20986.46 21656.93
11/30/93 20738.53 21466.35
12/31/93 21304.80 21919.29

$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Fidelity
Insured Tax-Free Portfolio on November 30, 1985, shortly after the fund
started. As the chart shows, by December 31, 1993, the value of your
investment would have grown to $21,305 - a 113.05% increase on your initial
investment. For comparison, look at how the Lehman Brothers Municipal Bond
Index did over the same period. With dividends reinvested, the same $10,000
would have grown to $21,919 - a 119.19% increase.

Income return 5.77% 6.13% 6.70% 6.72% 6.94%

Capital gain return 2.53% 1.00% 0% 0% 0%

Change in share price 5.55% 0.78% 4.87% 0.36% 2.51%

Total return 13.85% 7.91% 11.57% 7.08% 9.45%

Dividends per share n/a 32.35(cents) 65.49(cents)

Annualized dividend rate n/a 5.52% 5.32%

Annualized yield 5.32% n/a n/a

Tax-equivalent yield 7.72% n/a n/a

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 $12.49 over
the past six months and $12.30 over the past year, you can compare the
fund's income over these two periods. The 30-day annualized yield is a
standard formula for all funds based on the yields of the bonds in the
fund, averaged over the past 30 days. This figure shows you the yield
characteristics of the fund's investments at the end of the period. It also
helps you compare funds from different companies on an equal basis. The
tax-equivalent yield shows what you would have to earn on a taxable
investment to equal the fund's tax-free yield, if you're in the 36% federal
tax bracket.
FUND TALK: THE MANAGER'S OVERVIEW

MARKET RECAP
Generally, interest rates fell
during the 12 months ended
December 31, 1993. As a result,
bond prices rose and most
fixed-income investors -
including those in tax-free bonds
- - enjoyed attractive returns. The
period began with worries of
rising interest rates. The
economic recovery was finally
taking hold, and the spending
plans of the president-elect were
still unclear. But the bond market
signaled its approval as
President Clinton promised to
reduce the deficit and fight
inflation. The yield on the
benchmark 30-year Treasury
bond declined steadily and
reached an historic low of 5.79%
in mid-October. By year-end, mild
inflation fears, fueled by a
strengthening economy, had
pushed up the yield on the
30-year bond to 6.35%. Two
factors affected tax-free bonds
specifically: on the positive side,
higher federal taxes - discussed
all year and approved in August
- - boosted demand. At the same
time, record new issuance kept
supplies high, which somewhat
dampened prices. Overall during
the period, tax-free bonds
performed well compared to other
fixed-income investments. The
Lehman Brothers Municipal Bond
Index - a broad measure of the
tax-free bond market - rose
12.29%. By comparison, the
Lehman Brothers Aggregate
Bond Index - which tracks
investment-grade taxable bonds
- - rose only 9.75%, due in part to
relatively poor performance by
mortgage-backed securities.
An interview with Guy Wickwire, Portfolio Manager of Fidelity
Insured Tax-Free Portfolio
Q. GUY, HOW HAS THE FUND PERFORMED?
A. It was a good year. The fund gained 13.85% for the year ended December
31, 1993. That beat the average insured municipal bond fund, which
delivered a total return of 11.93% during the period, according to Lipper
Analytical Services.
Q. ALTHOUGH YOU JUST TOOK OVER THE FUND IN OCTOBER, CAN YOU REVIEW ITS
PERFORMANCE OVER THE PAST YEAR?
A. Sure, two factors helped the fund. First, its duration - a measure of
how its price changes with interest rates - was relatively long, ranging
from 8.5 years at the start of 1993 to around 10.4 years by year end. Since
declines in interest rates tend to boost the prices of longer duration
bonds, the fund's strategy amounted to a bet that interest rates would
fall. That's precisely what happened, which significantly helped our
performance.
Q. AND THE SECOND FACTOR?
A. A substantial stake in municipal bonds of Colorado issuers, which
amounted to 8% of the fund's investments at the start of the year. In late
1992, residents of Colorado voted to limit the amount of new municipal
issues. Many municipalities in the state rushed to issue new bonds before
the vote, and the increase in supply pushed prices down. We were able to
buy many of them for the fund at bargain prices. After the vote, the supply
of Colorado issues declined sharply and the bonds' prices rebounded. As
that occurred, we sold some of them at significant profits, trimming the
fund's stake in Colorado to around 5.6% at year-end.
Q. WHAT STATES DID YOU EMPHASIZE DURING THE YEAR?
A. During 1993 California issues increased from 6.3% to 10.2% of
investments, making this the fund's largest state concentration. California
residents pay unusually high income taxes - the state's top bracket is 11%
- - which generally boosts demand for California tax-free bonds and increases
their prices. But the state has been in recession during the past several
years. That raised questions about the ability of issuers to meet their
principal and interest payments. As that happened, demand declined, so we
were able to buy California bonds cheaply. I think that as the California
economy continues to recover, the bonds could deliver significant gains.
The recent Los Angeles earthquake hasn't had any impact on the Calfornia
municipal bond markert so far. Even if there are some negative effects in
the future, the fund's stake in California bonds won't be hurt since
they're insured.
Q. HAVE YOU MADE SIGNIFICANT CHANGES IN THE FUND SINCE TAKING OVER?
A. In general, my strategy has been to continue doing the things that were
working well for the fund, such as maintaining a relatively long duration
and investing in California bonds. However, I did boost the fund's stake in
health-care bonds to 27% by the end of the year.
Q. ARE YOU CONCERNED THAT CLINTON'S PROPOSALS TO REFORM THE HEALTH-CARE
SYSTEM COULD CAUSE THOSE HEALTH-CARE BONDS' PRICES TO DECLINE?
A. No. The bonds are insured, so the impact of health-care reform won't
affect their ability to meet interest and principal payments. Moreover,
they offer very attractive yields.
Q. WHAT MADE ELECTRIC UTILITIES
ATTRACTIVE?
A. In recent years demand for electricity has been flat, so utility
companies haven't issued many new bonds. This year, however, many issuers
replaced their old electric utility bonds with new, lower-rate debt; as a
result, there were a sizable number of new issues selling at attractive
prices. We boosted the fund's stake in those bonds from 14.8% to around
20%. I think that as the supply of new electric utility bonds subsides, the
scarcity of existing bonds will make them more valuable.
Q. WHAT'S YOUR OUTLOOK FOR INTEREST RATES AND THE MUNICIPAL MARKET?
A. Barring a recession, which seems unlikely, it will be tough for interest
rates to decline much further. So it's probably unrealistic for investors
to expect continued double-digit returns in the municipal market. But that
doesn't mean municipal bonds aren't attractive. The new, higher tax rates
will increase demand for tax-free bonds. Moreover, many municipalities have
replaced old bonds with lower-yielding ones. As that surge in refundings
slows, the supply of new municipal issues is likely to decline by as much
as 50%. The combination of increased demand and lower supply should support
solid returns in the municipal market.
FUND FACTS
GOAL: to provide high current
income exempt from federal
income taxes while
preserving capital
START DATE: November 13, 1985
SIZE: as of December 31,
1993, over $448 million
MANAGER: Guy Wickwire,
since October 1993;
manager, Fidelity
Massachusetts Tax-Free
High Yield Portfolio, since
1983; Fidelity High Yield
Tax-Free Portfolio, 1981 -
1993; Fidelity Advisor High
Income Municipal Portfolio,
1987 - 1992
(checkmark)
GUY WICKWIRE ON HIS
INVESTMENT STRATEGY:
"If it becomes clear that the
economy is likely to grow at a
3% annual rate or better
during the first half of the year,
causing interest rates to rise
significantly, I'll reduce the
duration of the fund. But my
feeling is that growth will slow
to less than 3%, and there
seem to be no immediate
inflationary pressures. Until I
see evidence that suggests
my outlook is wrong, the fund
will maintain a relatively long
duration, which allows it to
pick up the extra yield on
longer-term bonds. For
example, insured municipal
bonds that mature in 25 years
recently yielded roughly
5.40%, versus 4.40% for
ten-year bonds."
(bullet) The fund's duration as of
December 31 was 10.4 years.
That means that if interest
rates rose one percentage
point, the fund's share price
would decline around 10.4%.
But if interest rates declined
one percentage point, the
fund's share price would rise
roughly 10.4%.
DISTRIBUTION
The Board of Trustees of
Fidelity Insured Tax-Free
Portfolio voted to pay on
February 7, 1994, to
shareholders of record at the
opening o f business on
February 4, 1994, a
distribution of $.12 derived
from capital gains realized
from sales of portfolio
securities.
INVESTMENT CHANGES

TOP FIVE STATES AS OF DECEMBER 31, 1993
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO

California 10.2 7.2

Illinois 6.7 7.0

Colorado 5.6 6.3

Pennsylvania 5.5 3.3

Texas 5.5 4.8

TOP FIVE SECTORS AS OF DECEMBER 31, 1993
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO

Health Care 27.2 20.3

Electric Revenue 20.5 25.1

General Obligation 9.6 11.1

Water & Sewer 8.9 4.5

Lease Revenue 8.4 5.3

AVERAGE YEARS TO MATURITY AS OF DECEMBER 31, 1993
6 MONTHS AGO

Years 20.49 20.23

AVERAGE YEARS TO MATURITY SHOWS THE AVERAGE TIME UNTIL THE PRINCIPAL OF THE
BONDS IN THE FUND IS EXPECTED TO BE REPAID, WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF DECEMBER 31, 1993
6 MONTHS AGO

Years 10.4 9.2

Aaa 88.8%
Aa, A 10.2
Baa 0.7
Ba or B 0.0
Non-rated 0.3
Row: 1, Col: 1, Value: 1.0
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 1.0
Row: 1, Col: 4, Value: 10.2
Row: 1, Col: 5, Value: 88.8
THIS CHART EXCLUDES SHORT-TERM INVESTMENTS. WHERE MOODY'S RATINGS ARE NOT
AVAILABLE, WE HAVE USED S&P RATINGS.
INVESTMENTS DECEMBER 31, 1993

Showing Percentage of Total Value of Investments

MUNICIPAL BONDS - 100.0%
PRINCIPAL VALUE (NOTE 1)
AMOUNT
ARIZONA - 3.6%
Arizona Univ. Ctfs. of Prtns. Rfdg. West Campus Proj.
5.20% 7/15/08, (MBIA Insured) $ 2,000,000 $ 1,987,500 040660bh
Mesa Rfdg. 5% 7/1/03, (MBIA Insured) 2,000,000 2,040,000 590485LN
Pima County Ind. Dev. Auth. Health Care Corp.
Rev. (Cardondelet Health Care Corp.):
5.25% 7/1/11,(MBIA Insured) 1,000,000 1,005,000 721902CN
(St. Joseph & St. Mary's Hosp.) 8% 7/1/13, (MBIA Insured) 1,875,000
2,179,688 721902AQ
Pima County Ind. Dev. Auth. Ind. Rev. Rfdg. (Lease Oblig.)
(Irvington Proj. Tucson Elec. Pwr. Co.) Series A,
7.25% 7/15/10, (FSA Insured) 8,000,000 9,050,000 721774DA
16,262,188
ARKANSAS - 0.7%
Arkansas Dev. Fin. Auth. Wtr. Rev. Rfdg.
Revolving Loan Fund Series B, 5% 6/1/15,
(MBIA Insured) 1,000,000 970,000 041086FK
North Little Rock Elec. Rev. Rfdg. Series A,
6.50% 7/1/15, (MBIA Insured) 1,000,000 1,190,000 660546DX
Pulaski County Spl. School Dist. Rfdg. 5.25% 2/1/13,
(FSA Insured) 1,000,000 996,250 745400SN
3,156,250
CALIFORNIA - 10.2%
Alameda County Ctfs. of Prtn. Rfdg. (Santa Rita Jail Proj.)
5.375% 6/1/09, (MBIA Insured) 1,000,000 1,011,250 010891KG
Anaheim Ctfs. of Prtn. Rfdg. (Anaheim Mem.
Hosp. Assoc.) 5% 5/15/13, (AMBAC Insured) 3,330,000 3,175,988 032540LL
California Poll. Cont. Fing. Solid Waste Disp. Rev.
(North County Recylcing Ctr.) Series A,
6.75% 7/1/11, LOC Union Bank of Switzerland 1,850,000 2,053,500
130536BQ
California Pub. Wrks. Board Lease Rev.:
Rfdg. (Dept. Corrections St. Prisons) Series A,
5% 12/1/19, (AMBAC Insured) 2,500,000 2,415,625 13068GPA
Unltd. Tax (Secretary of State) Series A, 6.50%
12/1/08, (AMBAC Insured) 1,000,000 1,153,750 13068GKS
(Dept. of Corrections State Prison) Series A, 5.25%
12/105, (AMBAC Insured) 2,000,000 2,090,000
Desert Hosp. Rev. Ctfs. of Prtn. RIB (Desert Hosp. Corp.)
Series 1992, 9.659% 7/28/20,
(Cap. Guaranty Insured) (d)(f) 1,500,000 1,798,125 25041MAZ
East Bay Muni. Util. Dist. Wtr. Sys. Rev. Rfdg. 5%
6/1/14, (MBIA Insured) 1,200,000 1,159,500 271014GG
Fresno Swr. Rev. Series A-1, 5.25% 9/1/19
(AMBAC Insured) 2,500,000 2,471,875 358229CM
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT
CALIFORNIA - CONTINUED
Los Angeles County Cap. Asset Leasing Corp.
Leasehold Rev. 4.05% 12/1/10, (AMBAC Insured) $ 1,500,000 $ 1,586,250
544900CF
Palm Desert Fing. Auth. Tax Allocation RIB
9.905% 4/1/22, (MBIA Insured) (d)(f) 1,500,000 1,764,375 696617BG
Pleasant Hill Jt. Pwrs. Fin. Auth. Lease Rev. Cap.
Impt. Prog. Series A, 5% 12/1/12, (MBIA Insured) 1,490,000 1,435,988
72833EAT
Redding Ca. Redev. Agcy. Tax Alloc. Nts. Rfdg.
Canby Hilltop Cypress D, 5% 9/1/11, (CAPG Insured) 2,000,000 1,932,500
757295CM
Riverside County Trans. Commission Sales Tax Rev.
Series A, 5.75% 6/1/09, (AMBAC Insured) 1,000,000 1,056,250 769125BC
Sacramento City Fing. Auth. Lease Rev. Rfdg. Series A,
5.375% 11/1/14, (AMBAC Insured) 4,000,000 4,040,000 785846BL
Sacramento City Fing. Auth. (Cap. Appreciation)
(Tax Allocation Proj.) Series B, 0% 11/1/07,
(MBIA Insured) 1,810,000 891,425 785849BH
Sacramento Muni. Util. Dist. Elec. Rev. 5.25%
11/15/12, (FGIC Insured) 500,000 499,375 7860042B
San Jose Redev. Agcy. Tax Alloc. Merged Area Redev. Proj.:
6% 8/1/15, (MBIA Insured) 2,000,000 2,187,500 798147LE
5% 8/1/20, (MBIA Insured) 4,000,000 3,830,000 798147KW
Sulphur Springs Unified School Dist. Series A, 0%
9/1/11, (MBIA Insured) 3,000,000 1,155,000 865480FB
Univ. Calif. Ctfs. or Prtn. Rfdg. UCLA Ctr. Chiller,
5.40% 11/1/11 5,000,000 4,968,750 914106NM
West & Ctrl. Basin Fing. Auth. Rev. (West Basin Ref.
Proj.) Series A, 5% 8/1/13, (AMBAC Insured) 4,000,000 3,885,000
95122EAU
46,562,026
COLORADO - 5.6%
Adams County School Dist. #12 Unltd. Tax Rfdg. (Thorton):
6.20% 12/15/09, (FGIC Insured) 1,440,000 1,575,000 005644A2
6.20% 12/15/10, (FGIC Insured) 3,650,000 3,978,500 005644A3
Adams County Single Family Mtg. Rev. Rfdg.
Series A-2, 8.70% 6/1/12, (FSA Insured) 5,000,000 5,631,250 005706JS
Colorado Colleges Board Trustees Auxiliary Facs.
Sys. Rev. (Western College Proj.) Series A,
6.625% 5/1/15, (Connie Lee Insured) 1,000,000 1,103,750 196722AL
Colorado Health Facs. Auth. Rev. (PSL Health Sys. Proj.)
Series A:
7.25% 2/15/16, (FSA Insured) 2,000,000 2,320,000 196473C2
6.25% 2/15/21, (FSA Insured) 4,000,000 4,285,000 196473C4
Colorado Postsecondary Edl. Facs. Auth. Rev.
(Denver Univ.) 6.25% 3/1/18, (Connie Lee Insured) 1,000,000 1,066,250
196547DF
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT
COLORADO - CONTINUED
Colorado Univ. Hosp. Auth. Hosp. Rev. Series A:
6.25% 11/15/12, (AMBAC Insured) $ 1,000,000 $ 1,095,000 914173AL
6.40% 11/15/22, (AMBAC Insured) 1,385,000 1,526,963 914173AM
Jefferson County School Dist. #R-001,
6% 12/15/12, (AMBAC Insured) 1,000,000 1,075,000 472736XB
Jefferson County Single Family Mtg. Rev.
Series 1991 A, 8.875% 10/1/13, (MBIA Insured) 235,000 255,563 472744BW
Thornton City Gen. Oblig. Wtr. Rfdg. (Cap. Appreciation)
Series 1991, 0% 12/1/12, (FGIC Insured) 4,770,000 1,764,900 885273KX
25,677,176
CONNECTICUT - 0.8%
Bridgeport Gen. Oblig. 8.75% 8/15/04, (FGIC Insured) 510,000 666,825
108151PM
Connecticut Health & Edl. Facs. Auth. Rev.
(St. Raphael Hosp.) Series H, 5.25% 7/1/12
(AMBAC Insured) 3,035,000 3,080,525 207742S6
3,747,350
DELAWARE - 0.4%
Delaware Health Facs. Auth. Rev. Rfdg. (Kent Gen.
Hosp. Proj.) 5.25% 7/1/13, (MBIA Insured) 2,000,000 1,957,500 246388GZ
DISTRICT OF COLUMBIA - 1.6%
District of Columbia Series B, 6.30% 6/1/12,
(MBIA Insured) 5,695,000 6,150,600 254760YC
Washington D.C. Metro Area Trans. Auth.
Gross Rev. Rfdg. 5.25% 7/1/14 (FGIC Insured) 1,300,000 1,300,000
938782BH
7,450,600
FLORIDA - 1.3%
Dade County Wtr. & Swr. Sys. Rev. Rfdg.
5% 10/1/13, (FGIC Insured) 2,000,000 1,942,500 233620CJ
Hillsboro County Aviation Auth. Rev. Rfdg.
(Tampa Intl. Arpt.) Series B, 5.60% 10/1/19
(FGIC Insured) 2,000,000 2,050,000 432308LJ
Kissimmee Util. Auth. Elec. Sys. Rev. Rfdg. & Impt.
5.25% 10/1/18, (FGIC Insured) 2,000,000 1,987,500 497850DA
5,980,000
GEORGIA - 3.4%
Dalton-Whitfield Cnty. Hosp. Auth. Rev. Rfdg.
Antic Nts. 5.25% 7/1/13, (MBIA Insured) 1,000,000 996,250 235640FC
Fayette County Wtr. Rev. Rfdg. Series A,
6.20% 10/1/20, (FGIC Insured) 1,915,000 2,075,381 312245FH
Floyd County Hosp. Auth. Rev. Antic Ctfs. Floyd
Med. Ctr. Proj. 5.20% 7/1/11, (FGIC Insured) 1,500,000 1,481,250
343575DX
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT
GEORGIA - CONTINUED
Medical Ctr. Hosp. Auth. Rev. Antic Ctfs. Columbia
Reg. Healthcare Sys. 5% 8/1/18, (MBIA Insured) $ 1,500,000 $ 1,432,500
584521BG
Muni. Elec. Auth. Spl. Oblig.:
Rfdg. Second Crossover Series, 7.80% 1/1/20,
(AMBAC Insured) 1,500,000 1,715,625 625919AY
Fifth Crossover Series Proj. #1, 6.40% 1/1/13,
(AMBAC Insured) 4,550,000 5,204,063 625919DA
Fouth Crossover Series Proj. #1, 6.50% 1/1/20 2,250,000 2,607,188
625919CL
15,512,257
HAWAII - 0.4%
Hawaii County Rfdg. & Impt. Series A,
5.60% 5/1/12, (FGIC Insured) 1,000,000 1,061,250 419722QC
Honolulu City & County Multi-Family Rev.
(Hale Pauahi) Series A, 8.70% 12/1/28,
(FHA Guaranteed) (MBIA Insured) 725,000 750,375 438697AW
1,811,625
IDAHO - 1.2%
Canyon County School Dist. # 139 Class A, 5% 8/1/13 1,290,000 1,246,463
138843EQ
Idaho Health Facs. Auth. Health Care Corp.
Rev. St. Joes Reg. Med. Ctr. 5.25% 7/1/13,
(MBIA Insured) 1,000,000 1,000,000 451293AQ
Idaho Health Facs. Auth. Rev. Rfdg,
(IHC Hosps., Inc.) 8.70% 2/15/21 (d)(f) 2,500,000 3,031,250 451295KE
5,277,713
ILLINOIS - 6.7%
Chicago FGIC Rfdg. Series B, 5.125% 1/1/15
(AMBAC Insured) 2,250,000 2,190,938 1674833X
Chicago Motor Fuel Tax Rev. Rfdg. Series A,
5.375% 1/1/14, (AMBAC Insured) 2,000,000 2,005,000 16756KBF
Chicago O'Hare Int'l. Arpt. Rev. Rfdg.:
Series A, 5% 1/1/12 1,840,000 1,784,800 167592LP
2nd Lien Series C-1, 5.0% 1/1/18, (MBIA Insured) 2,000,000 1,897,500
167592KR
Chicago Single Family Mtg. Rev. (Cap. Appreciation)
Series A, 0% 12/1/16, (FGIC Insured) 53,580,000 6,161,700 167685EF
Chicago Residential Mtg. Rev. Rfdg.
(Cap. Appreciation) Series B, 0% 10/1/09,
(MBIA Insured) 9,000,000 3,116,250 16768RAB
Chicago Wastewtr. Transmission Rev. Rfdg.
5.375% 1/1/13, (FGIC Insured) 2,000,000 2,012,500 167727EP
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT
ILLINOIS - CONTINUED
Illinois Health Facs. Auth. Rev.:
Rfdg. (Sherman Hosp. Proj.) 6.75% 8/1/11,
(MBIA Insured) $ 1,750,000 $ 1,942,500
( 45201HV6Childrens Mem. Hosp.) 6.25% 8/15/13,
(MBIA Insured) 2,000,000 2,200,000 45200KH3
(Rush Presbyterian - St. Luke's) 5.25% 11/15/20
(MBIA Insured) 2,000,000 1,922,500 45200KN4
(Swedish American Hosp.) 5.375% 11/15/13,
(AMBAC Insured) 3,000,000 2,988,750 45200KL7
Metropolitan Pier & Exposition Auth. Dedicated
Tax Rev. (McCormick Place Expansion Proj.)
Series A, 0% 6/15/09, (FGIC Insured) 6,000,000 2,580,000 592247CQ
30,802,438
INDIANA - 2.0%
Indiana Health Facs. Fing. Auth. Hosp. Rev. Rfdg.
(Columbus Gen'l. Hosp.) 7% 8/15/15,
(Cap. Guaranty Insured) 2,000,000 2,387,500 454797SM
Indiana Hsg. Fin. Auth. Single Family Mtg. Rev.
Series 1984 A, 11.25% 1/1/14 685,000 702,125 455052EA
Jasper County Poll. Cont. Rev. Rfdg. (Northern Indiana Pub.
Svc.) 7.10% 7/1/17, (MBIA Insured) 2,000,000 2,310,000 471373AW
Marion County Gen. Oblig. 3.20% 12/30/94 3,600,000 3,613,500 569016HX
9,013,125
KANSAS - 1.5%
Labette County Mtg. Loan Rev. Series A,
6.25% 5/1/12, (GNMA Coll.) 2,065,000 2,250,850 50539EBD
Reno County Mtg. Rev. Rfdg. (Single Family)
Series B, 8.70% 9/1/11 1,045,000 1,142,969 759753BY
Wichita Hosp. Rev. RIB Series II-A, 10.111% 10/1/17,
(MBIA Insured) (d)(f) 3,000,000 3,510,000 967250NS
6,903,819
KENTUCKY - 3.8%
Hardin Hospital Rev. 5.20% 10/1/14 (AMBAC Insured) 1,890,000 1,842,750
411854CZ
Jefferson County Health Facs. Rev. (Jewish Hosp. Healthcare
Svcs., Inc.) 6.55% 5/1/22, (AMBAC Insured) 2,500,000 2,765,625
472902DJ
Jefferson County Hosp. Rev. 9.664% 10/1/08,
(MBIA Insured) (d)(f) 2,000,000 2,400,000 473033CC
Kentucky Dev. Fin. Auth. Hosp. Rev. (St. Luke's
Hosp., Inc.) Series A, 7% 10/1/21, (MBIA Insured) 3,000,000 3,435,000
491265HM
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT
KENTUCKY - CONTINUED
Kentucky Tpk. Auth. Econ. Dev. Rev. Rfdg.:
(Cap. Appreciation) 0% 1/1/04, (FGIC Insured) $ 2,000,000 $ 1,225,000
491552FP
(Revitalization Proj.)
5.50% 7/1/07, (AMBAC Insured) 3,000,000 3,161,250 491552GK
5.50% 7/1/11, (AMBAC Insured) 2,500,000 2,553,125 491552GS
17,382,750
LOUISIANA - 2.3%
Calcasieu Parish Pub. Trust Auth. Mtg. Rev. Rfdg.
Series A, 7.75% 6/1/12 1,645,000 1,723,138
East Baton Rouge Parish Sales & Use Tax Series ST-A
4.80% 2/1/12, (FGIC Insured) 1,000,000 955,000 270848ER
Jefferson Parish Hospital Svc. Dist. #1 Hosp. Rev.
5.25% 1/1/19, (FGIC Insured) 1,500,000 1,445,625 474682DD
Louisiana Gen. Oblig. Rfdg. Series A,
5.625% 8/1/07, (MBIA Insured) 2,500,000 2,656,250 546415DJ
New Orleans Gen. Oblig. Rfdg. (Cap. Appreciation):
0% 9/1/09, (AMBAC Insured) 3,000,000 1,293,750 647634XU
0% 9/1/10, (AMBAC Insured) 1,775,000 721,094 647634XV
0% 9/1/11, (AMBAC Insured) 1,220,000 469,700 647634XW
New Orleans Pub. Impt. Unltd. Tax
7% 9/1/19, (FGIC Insured) 1,000,000 1,155,000 647634A7
10,419,557
MARYLAND - 1.2%
Baltimore Rfdg. Cons. Pub. Impt. Series D,
5.40% 10/15/12, (AMBAC Insured) 2,000,000 2,040,000 059185Q7
Maryland Health & Higher Edl. Facs. Auth. Rev.:
Rfdg. (Francis Scott Key Medical Ctr.)
5% 7/1/13 (FGIC Insured) 1,500,000 1,458,750 574216CW
(Frederick Mem. Hosp.) 5.25% 7/1/13, (FGIC Insured) 2,000,000
2,017,500 574216KD
5,516,250
MASSACHUSETTS - 3.6%
Holyoke Gen. Oblig. Ltd. Tax 8.15% 6/15/06,
(MBIA Insured) 2,205,000 2,786,569 436704YC
Massachusetts Health & Ed. Facs. Auth. Rev.:
Rfdg. (Massachusetts Gen. Hosp.) Series F,
6.25% 7/1/12, (AMBAC Insured) 2,000,000 2,232,500 575851PX
(Blood Institute) Series A, 6.50% 2/1/22 1,300,000 1,405,625 575851KH
(Falmouth Hosp.) Series C, 5.625% 7/1/11,
(MBIA Insured) 1,500,000 1,533,750 575851UT
(Lahey Clinic Med. Ctr.) Series B, 5.625%
7/1/15, (MBIA Insured) 3,050,000 3,095,750 575851XR
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT
MASSACHUSETTS - CONTINUED
Massachusetts Hsg. Fin. Agcy. (Hsg. Proj.)
Series A, 6.15% 10/1/15, (AMBAC Insured) $ 1,270,000 $ 1,309,688
575852VS
Massachusetts Hsg. Fin. Agcy. Multi-Family Hsg.
Rev. Series A, 8.875% 7/1/18, (MBIA Insured) 2,000,000 2,122,500
575854PW
Massachusetts Muni. Wholesale Elec. Co. Pwr.
Supply Sys. Rev. (Reg. Inflos) Series A,
7.72% 7/1/18 (d)(f) 2,000,000 1,970,000 575765MV
16,456,382
MICHIGAN - 2.2%
Central Michigan Univ. Rev. Rfdg.
(Cap. Appreciation) 6% 10/1/13, (MBIA Insured) 1,000,000 1,060,000
154123QQ
Detroit Dis. Aid. 5.20% 5/1/07 (AMBAC Insured) 2,000,000 2,002,500
251093JS
Detroit Wtr. Supply Sys. Rev. Rfdg.
6.50% 7/1/15, (FGIC Insured) 1,000,000 1,158,750 251255TP
Jackson County Hosp. Fin. Auth. Hosp. Rev.
Rfdg. (WA Foote Mem. Hosp.) Series A, 4.75%
6/1/15, (FGIC Insured) 2,000,000 1,842,500 467148BK
Michigan Hosp. Fin. Auth. Rev. Rfdg. (Sisters of
Mercy Health Corp.) 5.375% 8/15/14,
(MBIA Insured) 2,000,000 2,015,000 59465CX2
Wayne Charter County Arpt. Rev. Rfdg. Sub. Lien
Detroit Metro C, 5.25% 12/1/13 (MBIA Insured) 2,000,000 1,987,500
944314DZ
10,066,250
MINNESOTA - 3.2%
Minneapolis & St. Paul Hsg. & Redev. Auth.
Healthcare Sys. Rev. (Healthspan Health Sys. Corp.)
(Health One Sys.) Series A, 4.75% 11/15/18
(AMBAC Insured) 4,000,000 3,695,000 603695DF
Minneapolis Health Care Fac. Rev. Rfdg.
Fairview Hosp. & Healthcare Series A:
5.30%11/15/08, (MBIA Insured) 1,000,000 1,006,250 603908FA
5.25%11/15/19, (MBIA Insured) 1,750,000 1,734,688 603908FC
Northern Muni. Pwr. Agcy. Elec. Sys. Rev. Rfdg.
Series A, 0% 1/1/11, (AMBAC Insured) 3,140,000 1,271,700 665444CB
St. Cloud Hosp. Facs. Auth. Rev. Rfdg.
Benedictine Sisters, Series C:
5.25% 10/1/13, (AMBAC Insured) 2,700,000 2,693,250 789162CD
5.30% 10/1/20, (AMBAC Insured) 2,000,000 1,980,000 789162CE
St. Louis Park Hosp. Facs. Auth. Rev.
(Healthsystem Obligated A) 5.20% 7/1/23,
(AMBAC Insured) 2,500,000 2,437,500 791748CQ
14,818,388
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT
MISSISSIPPI - 0.4%
Mississippi Hosp. Equip. & Facs. Auth. Rev.
(Singing River Hosp. Sys. Proj.), 5.50% 3/1/13 $ 2,000,000 $ 2,020,000
605360HB
MISSOURI - 3.9%
Kansas City Ind. Dev. Auth. Hosp. Rev.
(Research Health Svcs. Sys.) 9.375% 4/15/14,
(MBIA Insured) 900,000 988,875 484901AU
Kansas City School Dist. Bldg. Corp. Inds.
Leasehold Rev. Elementary School Proj., Series D,
5% 2/1/14 (FGIC Insured) 3,875,000 3,739,375 485085ER
Missouri Health & Edl. Facs. Auth Health Facs. Rev.:
(Barnes Jewish/Christian):
Rfdg. 5.15% 5/15/10 500,000 493,750 60635RJD
5.20% 5/15/11 500,000 493,750 60635RJE
5.25% 5/15/12 2,390,000 2,360,125 60635RJF
(SSM Health Care) Series AA, 6.25% 6/1/07,
(MBIA Insured) 1,000,000 1,112,500 60635RCM
Sikest Elec. Rev. Rfdg. 6.25% 6/1/22, (MBIA Insured) 8,000,000
8,650,000 826775DB
17,838,375
MONTANA - 1.3%
Montana Univ. Rev. Rfdg. Higher Ed., Series A,
5.05% 11/15/16, (MBIA Insured) 1,500,000 1,462,500 612136Y4
Silver Bow Wtr. Inc., Wtr. Sys. Rev. (Butte Silver
Bow Proj.) 5.25% 11/1/14, (FGIC Insured) 1,750,000 1,745,625 827429BJ
Univ. of Montana Revs. Rfdg. Higher Edl., Series A,
4.50% 11/15/15, (MBIA Insured) 3,000,000 2,707,500 914505G7
5,915,625
NEVADA - 0.4%
Las Vegas-Clark County Library Dist. Lt. Tax Series A,
6.90% 6/1/11, (FGIC Insured) 1,300,000 1,460,875 517667CF
NEW JERSEY - 0.2%
Warren County Poll. Cont. Fing. Auth. Rev.
(Resource Recovery) 6.55% 12/1/06, (MBIA Insured) 1,000,000 1,141,250
935110CD
NEW MEXICO - 2.6%
Farmington Poll. Cont. Rev. Rfdg. (Southern
California Edison) 5.875% 6/1/23, (MBIA Insured) 2,500,000 2,615,625
311450CS
Farmington Util. Sys. Rev.:
Rfdg. 5.75% 5/15/13, (FGIC Insured) 4,000,000 4,150,000 311457CH
9.625% 5/15/05, (FGIC Insured) 675,000 772,875 311457AV
New Mexico Mtg. Fin. Auth. Series A2, 6.85% 7/1/12 4,000,000 4,300,000
647198VA
11,838,500
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT
NEW YORK - 2.2%
New York State Dorm. Auth. Rev. Rfdg.
(State Univ. Edl. Facs.) Series A, 5.25%
5/15/15, (AMBAC Insured) $ 2,500,000 $ 2,531,250 649834DR
New York State Local Govt. Assistance Corp. Rfdg.
Series C, 5.50% 4/1/17 1,000,000 1,026,250
New York State Med. Care Facs. Fin. Agcy. Rev.
(Hosp. & Nursing Home) Series B, 8.10% 2/15/22,
(FHA Guaranteed) 2,250,000 2,573,438 649881B7
New York State Twy Auth. Gen. Rev., Series B,
5% 1/1/20, (MBIA Insured) 2,000,000 1,932,500 650009EX
New York State Urban Dev. Corp. Rev:.
5.10% 1/1/09, (AMBAC Insured) 1,000,000 992,500 650033C7
5% 1/1/17, (AMBAC Insured) 1,000,000 953,750 650033C9
10,009,688
NORTH CAROLINA - 4.4%
Charlotte Ctfs. of Prtn. Rfdg. Convention Fac. Proj., Series C:
5.25% 12/1/20, (AMBAC Insured) 2,000,000 1,975,000 161037CK
5% 12/1/21(AMBAC Insured) 1,600,000 1,540,000 161037CX
Fayetteville Public Works Commn. Rev. Rfdg.
4.75% 3/1/14, (FGIC Insured) 2,000,000 1,905,000 312805BV
North Carolina Eastern Muni. Pwr. Agcy. Pwr. Sys. Rev. Rfdg.:
6% 1/1/18, (AMBAC Insured) 5,250,000 5,755,313 658196QD
Series B, 5.50% 1/1/21, (FGIC Insured) 2,500,000 2,493,750 658196QG
North Carolina Med. Care Commn. Hosp. Rev.
Rfdg. Wesley Long Comnty. Hosp. 5.25%
11/1/17, (AMBAC Insured) 2,000,000 1,980,000 6582026R
North Carolina Muni. Pwr. Agcy. #1 Catawba Elec.
Rev. Rfdg. 6% 11/1/11, (MBIA Insured) 4,000,000 4,410,000 658203QS
20,059,063
NORTH DAKOTA - 1.1%
Mercer County Poll. Cont. Rev. Rfdg.
(Basin Electric Pwr.) (Antelope Valley Station)
7.20% 6/30/13, (AMBAC Insured) (b) 3,500,000 4,081,875 587850DA
North Dakota Hsg. Fin. Agcy. Single Family Mtg.
Rev. Series C, 8.75% 1/1/19 820,000 879,450 658887KE
4,961,325
OHIO - 0.4%
Cleveland Wtrwks. Rev. (First Mtg.) Series 1992 B,
6.50% 1/1/11, (AMBAC Insured) 1,000,000 1,108,750 186432RK
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT
OHIO - CONTINUED
Ohio Hsg. Fin. Agcy. Single Family Mtg. Rev.:
Series 1985 B, 9% 1/15/09, (FGIC Insured) $ 550,000 $ 572,688 677377GF
Series C, 9.40% 9/15/08, (FGIC Insured) 115,000 122,331 677377HR
1,803,769
OKLAHOMA - 2.2%
Grand River Dam Auth. Rev. Rfdg. 5.75%
6/1/08, (FSA Insured) 4,250,000 4,552,813 386442PH
Oklahoma Muni. Pwr. Auth. Pwr. Supply Sys. Rev.:
Series A, 5% 1/1/15, (FGIC Insured) 1,000,000 982,500
Series B, 5.875% 1/1/15, (MBIA Insured) 2,000,000 2,175,000 67910HEN
67910HFS
Series B, 5.875% 1/1/12, (MBIA Insured) 2,000,000 2,170,000 67910HFA
9,880,313
OREGON - 0.6%
Northern Wasco Cnty. Peoples Util. Dist. or
Hydroelectric Rev. McNary Dam Fishway
5.10%12/1/12 2,250,000 2,230,313 666051AM
Oregon Hsg. Edl. & Cultural Facs. Auth.
Rev. (Lewis & Clark College Proj.) Series A,
7.125% 7/1/20, (MBIA Insured) 500,000 580,625 68608LAK
2,810,938
PENNSYLVANIA - 5.5%
Cambria County Hosp. Dev. Auth. Hosp. Rev.
Rfdg. & Impt. (Conemaugh Valley Hosp.)
Series 1992 B, 6.375% 7/1/18,
(Connie Lee Insured) 2,000,000 2,155,000 132037DZ
Harrisburg Auth. Wtr. Rev. 8.82% 7/15/15,
(FGIC Insured) (d)(f) 3,150,000 3,488,625 41473MCB
Montgomery County Higher Ed. & Health Auth.
Rev. (St. Joseph's Univ.) 6.50% 12/15/22,
(Connie Lee Insured) 3,000,000 3,311,250 613603FZ
Pennsylvania Convention Ctr. Auth. Rev.
Series A, 6.70% 9/1/16, (FGIC Insured) 2,000,000 2,405,000 708681AU
Pennsylvania Convention Ctr. Rev. Series A,
6% 9/1/19, (FGIC Insured) 1,000,000 1,111,250 708681AV
Pennsylvania Hsg. Fin. Agcy. Muni. Forwards
Rfdg. (Multi-Family Section 8) Series C,
8.10% 7/1/13, (FHA Guaranteed) 2,000,000 2,272,500 708791WD
Pennsylvania Intergovernmental Coop. Auth. Spl.
Tax Rev. Rfdg. Series A, 5% 6/15/22,
(MBIA Insured) 7,755,000 7,386,638 708840CJ
Philadelphia Wtr. & Wastewtr. Rev. Rfdg.
5% 6/15/12, (FGIC Insured) 2,000,000 1,937,500 717893BG
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT
PENNSYLVANIA - CONTINUED
Pittsburgh Wtr. & Swr. Auth. Wtr. & Swr. Sys.
Rev. Rfdg., Series A, 5% 9/1/09, (FGIC Insured) $ 1,000,000 $ 987,500
725304DA
Ringold School Dist. Rfdg. 0% 12/15/15,
(MBIA Insured) 1,155,000 347,944 766809GQ
25,403,207
RHODE ISLAND - 1.5%
Rhode Island Convention Ctr. Auth Rev. Rfdg.,
Series B, 5.25% 5/15/15, (MBIA Insured) 3,000,000 2,973,750 212474CB
Rhode Island Depositors Econ. Protection Corp.
Spl. Oblig. Rfdg., Series A, 5.50% 8/1/20,
(FSA Insured) 2,500,000 2,518,750 76218KER
Rhode Island Health & Ed. Bldg. Corp. Rev.
(Higher Ed.) (Johnson & Wales Univ.)
6.25% 4/1/22, (Connie Lee Insured) 1,450,000 1,562,375 762242CC
7,054,875
SOUTH CAROLINA - 2.3%
Lexington County Health Svcs. Dist. Inc.
Hosp. Rev. 7% 10/1/08, (FSA Insured) 3,000,000 3,453,750 529050AL
North Charleston Ctfs. of Prtn.
(Coliseum Cap. Impts. Proj.) 6% 1/1/11, (FGIC Insured) 1,000,000
1,062,500 658556AU
Piedmont Muni. Pwr. Agcy. Elec. Rev. Rfdg.
6.25% 1/1/21, (FGIC Insured) 1,350,000 1,542,375 720175FR
Richland County Hosp. Facs. Rev. (Commty.
Provider Pooled Loan) Series A, 7.125%
7/1/17, (Cap. Guaranty Insured) 1,500,000 1,734,375 763634FE
Rock Hill Util. Sys. Rev. 7% 1/1/20,
(AMBAC Insured) 850,000 988,125 772249EB
South Carolina Pub. Svc. Auth. Rev.
(Santee Cooper) Series D, 6.50% 7/1/14,
(AMBAC Insured) 1,465,000 1,613,331 837147FM
10,394,456
SOUTH DAKOTA - 0.2%
South Dakota Lease Rev. (Trust Cfts.) Series A,
6.625% 9/1/12, (Cap. Guaranty Insured) 1,000,000 1,142,500 83756PCF
TENNESSEE - 2.5%
Knox County Health, Edl. & Hsg. Facs. Auth.
Sanders Alliance Hosp. Facs. Rev.,
Series C, 7.25% 1/1/10, (MBIA Insured) (d)(f) 2,500,000 3,040,625
499523MN
Knox County Health, Edl. & Hsg. Facs. Brd.
Hosp. Facs. Rev. Rfdg. Ft. Sanders Alliance,
Series C, 6.25% 1/1/13, (MBIA Insured) 1,000,000 1,111,250 499523MR
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT
TENNESSEE - CONTINUED
Metro Govt. Nashville & Davidson County
Health & Edl. Facs. Brd. Rev. Adventist Health/Sunbelt:
5% 11/15/13, (CGIS Insured) $ 750,000 $ 709,688 592040U7
5.25% 11/15/23, (CGIC Insured) 1,500,000 1,445,625 592040U8
Metropolitan Gov't. Nashville & Davidson
County Wtr. & Swr. Rev. Rfdg. 0% 1/1/12,
(FGIC Insured) stepped coupon (a)(e) 5,600,000 5,229,000 592098VM
11,536,188
TEXAS - 5.5%
Austin Util. Sys. Rev. Rfdg.:
(Cap. Appreciation) 0% 11/15/10, (AMBAC Insured) 13,500,000 5,450,625
052473R6
0% 11/15/11, (AMBAC Insured) 7,000,000 2,651,250 052473R7
Brazos River Auth. Poll. Ctl. Rev. Rfdg. Coll.
Util. Elec. Co. Proj. A, 5.50% 5/1/22, (AMBAC Insured) 2,000,000
2,000,000 106213CH
Conroe Independent School Dist. Rfdg.
0% 2/1/08, (PSF Guaranteed) 1,000,000 437,500 208417SP
East Texas Criminal Justice Facs. Fing. Corp.
Mtg. Rev. (Rust Cnty. Proj.) Series B,
5.25% 5/1/14, (MBIA Insured) 1,000,000 980,000 27557PAX
Harris County Flood Cont. Dist. Rfdg.
Series B, 0% 10/1/06 2,000,000 930,000 414018J9
Harris County Health Facs. Dev. Corp. Hosp. Rev.
(St. Luke's Episcopal Hosp. Proj.)
6.75% 2/15/21 2,000,000 2,187,500 414152FZ
Houston Wtr. & Swr. Sys. Rev. Exchange
Rfdg. Jr. Lien 9.375% 12/1/13, (FGIC Insured) 30,000 33,938 442436MH
Houston Wtr. & Swr. Sys. Rev. Rfdg. (Sr. Lien)
Series C, 0% 12/1/06, (AMBAC Insured) 6,735,000 3,476,944 442436LA
Matagorda County Navigation Dist.# 1 Rev. Rfdg.
(Houston Lt. & Pwr. Proj.) Series C,
7.125% 7/1/19, (FGIC insured) 1,700,000 1,908,250 57652TAC
North Central Health Facs. Dev. Corp. Hosp. Rev.
Rfdg. (Methodist Hosp. Dallas) Series A,
9.50% 10/1/15, (MBIA Insured) 250,000 280,625 658546BT
Tarrant Cnty. Health Facs. Dev. Corp. Adventist
Health Sys./Sunbelt Inc. 5% 11/15/13,
(CGIC Insured) 1,000,000 950,000 875906FZ
Texas Pub. Fin. Auth. Bldg. Rev. Rfdg.
(Cap. Appreciation) Series 1990, 0% 2/1/10,
(MBIA Insured) 1,250,000 523,438 88275MBP
Texas State Pub. Prop. Fin. Corp. Rev. Rfdg.
Mental Health & Retardation 5.50%
9/1/13, (CGIC Insured) 3,500,000 3,486,875 882758BX
25,296,945
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT
VIRGINIA - 3.1%
Chesapeake Bay Bridge & Tunnel Commission
Dist. Rev. Rfdg. (Gen. Resolution) 5.75%
7/1/25, (MBIA Insured) $ 500,000 $ 510,625 165141AK
Chesapeake Rfdg. 5.50% 12/1/09 1,225,000 1,274,000 165321K7
Fairfax County Swr. Rev. Rfdg. 5.65%
11/15/15, (AMBAC Insured) 1,000,000 1,031,250 303867BU
Roanoke Cnty. Wtr. Sys. Rev. Rfdg.
5.125% 7/1/13, (FGIC Insured) 2,000,000 1,980,000 769839BH
Southeastern Pub. Svc. Auth. Rev. Rfdg. Sr.
Series A, 5.15% 7/1/09, (MBIA Insured) 2,000,000 2,022,500 842056ET
Stafford Cnty. Wtr. & Swr. Rev. Rfdg.
5.25% 6/1/12, (FGIC Insured) 2,000,000 2,000,000 852440AV
Upper Occoguan Swr. Auth. Regl. Swr. Rev. Rfdg.
5% 7/1/21, (FGIC Insured) 2,000,000 1,905,000 916277ED
Virginia Beach Dev. Auth. Hosp. Facs. Rev.
Virginia Beach Gen. Hosp. Proj.
6% 2/15/13, (AMBAC Insured) 1,460,000 1,584,100 927739DG
Virginia Hsg. Dev. Auth. Residential Mtg.
(Single Family Mtg.) Series 1983 B,
0% 9/1/14 1,215,000 153,394 928136FA
Virginia Trans. Board Trans. Contract Rev.
(Route 58 Corridor Dev. Proj.) Series B,
5.50% 5/15/18 1,500,000 1,520,625 928184EG
13,981,494
WASHINGTON - 2.9%
Washington Health Care Facs. Auth. Rev.:
(Empire Health Svcs. Spokane) 5.65% 11/1/05,
(MBIA Insured) 1,000,000 1,061,250 9397802W
(Swedish Hosp. Med. Ctr.) 6.30% 11/15/22,
(AMBAC Insured) 2,000,000 2,147,500 939780Y7
Washington Pub. Pwr. Supply Sys. Rev. Rfdg.:
Nuclear Proj. #1 Series B, 7.25% 7/1/12, (FGIC Insured) 1,500,000
1,717,500 939827LW
Nuclear Proj. #2:
7.97% 7/1/10, (FGIC Insured) (d)(f) 4,000,000 4,040,000 939828RS
Series A, 0% 7/1/11, (MBIA Insured) 2,365,000 889,820 939828PS
Series C, 7.375% 7/1/11, (FGIC Insured) 2,200,000 2,560,250 939828MR
Nuclear Proj. #3 Series B, 7% 7/1/05, (FGIC Insured) 750,000 855,000
939830HF
13,271,320
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT
WISCONSIN - 0.9%
Wisconsin Health & Edl. Facs. Auth. Rev.
(Wheaton Franciscan Svcs., Inc.)
6.10% 8/15/08, (MBIA Insured) $ 2,000,000 $ 2,172,500 97710AFC
Wisconsin St. Health & Edl. Facs. Auth. Rev.
Aurora Healthcare 5.25% 8/15/12, (MBIA Insured) 2,000,000 1,947,500
97710AUJ
4,120,000
WYOMING - 0.2%
Wyoming Farm Loan Board Cap. Facs. Rev. Rfdg.
5.75% 10/1/20 1,000,000 1,046,250 983478CJ
TOTAL INVESTMENTS - 100%
(Cost $428,873,524) $ 457,760,600
LEGEND
1. Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
2. Security purchased on a delayed delivery basis (see Note 2 of Notes to
Financial Statements).
3. Security collateralized by an amount sufficient to pay interest and
principal.
4. Inverse floating rate security is a security where the coupon is
inversely indexed to a floating interest rate. The price will be more
volatile than the price of a comparable fixed rate security.
5. Security pledged to cover for delayed delivery purchases. At the period
end, the value of securities pledged amounted to $5,229,000.
6. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 97.0% AAA, AA, A 97.0%
Baa 0.7% BBB 0.0%
Ba 0.0% BB 0.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 0.3%.
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
Health Care 27.2%
Electric Revenue 20.5%
Others (individually less
than 10%) 52.3%
TOTAL 100.0%
INCOME TAX INFORMATION
At December 31, 1993, the aggregate cost of investment securities for
income tax purposes was $428,873,964. Net unrealized appreciation
aggregated $28,886,636, of which $29,315,230 related to appreciated
investment securities and $428,594 related to depreciated investment
securities.
The fund hereby designates $3,861,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
DECEMBER 31, 1993

ASSETS

Investment in securities, at value (cost $428,873,524) $ 457,760,600
(Notes 1 and 2) - See accompanying schedule

Interest receivable 6,183,440

TOTAL ASSETS 463,944,040

LIABILITIES

Payable to custodian bank $ 85,434

Payable for investments purchased 11,115,252
Regular delivery

Delayed delivery (Note 2) 3,542,280

Dividends payable 532,319

Accrued management fee 154,099

Other payables and accrued expenses 118,223

TOTAL LIABILITIES 15,547,607

NET ASSETS $ 448,396,433

Net Assets consist of:

Paid in capital $ 412,484,548

Accumulated undistributed net realized gain (loss) on 7,024,809
investments

Net unrealized appreciation (depreciation) on investment 28,887,076
securities

NET ASSETS, for 36,248,452 shares outstanding $ 448,396,433

NET ASSET VALUE, offering price and redemption price per $12.37
share ($448,396,433 (divided by) 36,248,452 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1993

INTEREST INCOME $ 25,241,997

EXPENSES

Management fee (Note 4) $ 1,770,056

Transfer agent, accounting and custodian fees and 665,162
expenses (Note 4)

Non-interested trustees' compensation 1,347

Registration fees 89,760

Audit 27,698

Legal 4,393

Reports to shareholders 27,965

Miscellaneous 5,604

TOTAL EXPENSES 2,591,985

NET INTEREST INCOME 22,650,012

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
(NOTES 1 AND 3)
Net realized gain (loss) on:

Investment securities 16,747,306

Futures contracts 597,749 17,345,055

Change in net unrealized appreciation (depreciation) on:

Investment securities 14,450,875

Futures contracts (53,365) 14,397,510

NET GAIN (LOSS) 31,742,565

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM $ 54,392,577
OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

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

1993 1992

INCREASE (DECREASE) IN NET ASSETS

Operations $ 22,650,012 $ 19,849,649
Net interest income

Net realized gain (loss) on investments 17,345,055 6,356,679

Change in net unrealized appreciation (depreciation) 14,397,510 (103,080)
on investments

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 54,392,577 26,103,248
FROM OPERATIONS

Distributions to shareholders from: (22,650,012) (19,849,649)
Net interest income

Net realized gain (9,941,439) (3,403,031)

TOTAL DISTRIBUTIONS (32,591,451) (23,252,680)

Share transactions 322,573,485 279,489,875
Net proceeds from sales of shares

Reinvestment of distributions from: 15,998,959 14,120,077
Net interest income

Net realized gain 7,488,577 2,602,019

Cost of shares redeemed (290,587,864) (231,291,520)

Net increase (decrease) in net assets resulting from 55,473,157 64,920,451
share transactions

TOTAL INCREASE (DECREASE) IN NET ASSETS 77,274,283 67,771,019

NET ASSETS

Beginning of period 371,122,150 303,351,131

End of period $ 448,396,433 $ 371,122,150

OTHER INFORMATION
Shares

Sold 26,281,608 24,143,328

Issued in reinvestment of distributions from: 1,299,523 1,211,579
Net interest income

Net realized gain 610,814 223,349

Redeemed (23,612,917) (19,988,720)

Net increase (decrease) 4,579,028 5,589,536

</TABLE>

FINANCIAL HIGHLIGHTS

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

1993 1992 1991 1990 1989

SELECTED PER-SHARE DATA

Net asset value, $ 11.720 $ 11.630 $ 11.090 $ 11.050 $ 10.780
beginning of period

Income from Investment .655 .689 .702 .713 .717
Operations
Net interest income

Net realized and .930 .200 .540 .040 .270
unrealized gain
(loss)
on investments

Total from investment 1.585 .889 1.242 .753 .987
operations

Less Distributions (.655) (.689) (.702) (.713) (.717)
From net interest
income

From net realized gain (.280) (.110) - - -

on investments

Total distributions (.935) (.799) (.702) (.713) (.717)

Net asset value, end of $ 12.370 $ 11.720 $ 11.630 $ 11.090 $ 11.050
period

TOTAL RETURN 13.85% 7.91% 11.57% 7.08% 9.45%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of $ 448,396 $ 371,122 $ 303,351 $ 198,585 $ 175,301
period (000 omitted)

Ratio of expenses to .61% .63% .65% .67% .70%
average net assets

Ratio of net interest 5.31% 5.91% 6.23% 6.52% 6.57%
income to average net
assets

Portfolio turnover rate 78% 69% 62% 66% 51%

</TABLE>

NOTES TO FINANCIAL STATEMENTS
For the period ended December 31, 1993

1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity Insured Tax-Free Portfolio (the fund) is a fund of Fidelity
Municipal Trust (the trust) and is authorized to issue an unlimited number
of shares. The trust is registered under the Investment Company Act of
1940, as amended (the 1940 Act), as an open-end management investment
company organized as a Massachusetts business trust. The following
summarizes the significant accounting policies of the fund:
SECURITY VALUATION. Securities are valued based upon a computerized matrix
system and/or appraisals by a pricing service, both of which consider
market transactions and dealer-supplied valuations. Short-term securities
maturing within sixty days are valued either at amortized cost or original
cost plus accrued interest, both of which approximate current value.
Securities for which quotations are not readily available through the
pricing service are valued at their fair value as determined in good faith
under consistently applied procedures under the general supervision of the
Board of Trustees.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes information regarding income
taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS.
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 regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
futures 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 reclassification 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.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective January
1, 1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of December 31, 1992 have been reclassified to
reflect a decrease in paid in capital of $120,531, and an increase in
accumulated net realized gain on investments of $120,531.
2. OPERATING POLICIES.
FUTURES CONTRACTS AND OPTIONS. The fund may invest in futures contracts and
write options. These investments involve, to varying degrees, elements of
market risk and risks in excess of the amount recognized in the Statement
of Assets and Liabilities. The face or contract amounts reflect the extent
of the involvement the fund has in the particular classes of instruments.
Risks may be caused by an imperfect correlation between movements in the
price of the instruments and the price of the underlying securities and
interest rates. Risks also may arise if there is an illiquid secondary
market for the instruments, or due to the inability of counterparties to
perform.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Options traded
on an exchange are valued using the last sale price or, in the absence of a
sale, the last offering price. Options traded over-the-counter are valued
using dealer-supplied valuations.
DELAYED DELIVERY TRANSACTIONS. The fund may purchase or sell securities on
a when-issued or forward commitment basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of the
underlying securities and the date when the securities will be delivered
and paid for are fixed at the time the transaction is negotiated. The fund
identifies securities as segregated in its custodial records with a value
at least equal to the amount of the purchase commitment.
3. PURCHASES AND SALES OF
INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $390,848,195 and $321,797,711, respectively.
The face value of futures contracts opened and closed amounted to
$318,757,327 and $329,692,869, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, Fidelity Management &
Research Company (FMR) receives a monthly fee that is calculated
4. FEES AND OTHER
TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
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 ranging from .15% to .37% and is
based on the monthly average net assets of all the mutual funds advised by
FMR. The annual individual fund fee rate is .25%. For the period, the
management fee was equivalent to an annual rate of .42% of average net
assets.
The Board of Trustees approved a new group fee rate schedule with rates
ranging from.1325% to.3700%. Effective November 1, 1993, FMR has
voluntarily agreed to implement this new group fee rate schedule as it
results in the same or a lower management fee.
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service
Plan (the Plan), and in accordance with Rule 12b-1 of the 1940 Act, FMR or
the fund's distributor, Fidelity Distributors Corporation (FDC), an
affiliate of FMR, may use their resources to pay administrative and
promotional expenses related to the sale of the fund's shares. Subject to
the approval of the Board of Trustees, the Plan also authorizes payments to
third parties that assist in the sale of the fund's shares or render
shareholder support services. FMR or FDC has informed the fund that
payments made to third parties under the Plan amounted to $21,127 for the
period.
TRANSFER AGENT AND ACCOUNTING FEES. United Missouri Bank, N.A. (the Bank)
is the custodian and transfer and shareholder servicing agent for the fund.
The Bank has entered into a sub-contract with Fidelity Service Co. (FSC),
an affiliate of FMR, under which FSC performs the activities associated
with the fund's transfer and shareholder servicing agent and accounting
functions. The fund pays transfer agent fees based on the type, size,
number of accounts and number of transactions made by shareholders. FSC
pays for typesetting, printing and mailing of all shareholder reports,
except proxy statements. The accounting fee is based on the level of
average net assets for the month plus out-of-pocket expenses. For the
period, FSC received transfer agent and accounting fees amounting to
$462,702 and $171,146 respectively.
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Fidelity Municipal Trust and the Shareholders of
Fidelity Insured Tax-Free Portfolio:
We have audited the accompanying statement of assets and liabilities of
Fidelity Municipal Trust: Fidelity Insured Tax-Free Portfolio, including
the schedule of portfolio investments, as of December 31,1993, and the
related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended
and the financial highlights for each of the five years in the period then
ended. These financial statements and financial highlights are the
responsibility of the fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 1993 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Municipal Trust: Fidelity Insured TaxFree Portfolio as of
December 31, 1993, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the
period then ended, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND
Boston, Massachusetts
January 28, 1994
TO CALL FIDELITY

For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
851 Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19100 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
811 Wilshire Boulevard
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
1400 Civic Drive
Walnut Creek, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
185 Asylum Street
Hartford, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
2249 Galiano Street
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
4001 Tamiami Trail, North
Naples, FL
32 West Central Boulevard
Orlando, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
2000 66th Street, North
St. Petersburg, FL
GEORGIA
3525 Piedmont Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
215 East Erie Street
Chicago, IL
One North Franklin
Chicago, IL
540 Lake Cook Road
Deerfield, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
LOUISIANA
201 St. Charles Avenue
New Orleans, LA
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
1 West Pennsylvania Ave.
Towson, MD
7401 Wisconsin Avenue
Bethesda, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
21 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
101 Cambridge Street
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
26955 Northwestern Hwy.
Southfield, MI
MINNESOTA
38 South Sixth Street
Minneapolis, MN
MISSOURI
700 West 47th Street
Kansas City, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
60B South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
505 Millburn Avenue
Short Hills, NJ
NEW YORK
1050 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
10 Bank Street
White Plains, NY
NORTH CAROLINA
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
1903 East Ninth Street
Cleveland, OH
28699 Chagrin Boulevard
Woodmere Village, OH
OREGON
121 S.W. Morrison Street
Portland, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
5100 Poplar Avenue
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
7001 Preston Road
Dallas, TX
1155 Dairy Ashford
Houston, TX
1010 Lamar Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
UTAH
175 East 400 South Street
Salt Lake City, UT
VERMONT
199 Main Street
Burlington, VT
VIRGINIA
8300 Boone Boulevard
Vienna, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
1001 Fourth Avenue
Seattle, WA
WASHINGTON, DC
1775 K Street, N.W.
Washington, DC
WISCONSIN
222 East Wisconsin Avenue
Milwaukee, WI

INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
United Missouri Bank, N.A.
Kansas City, MO

Spartan California Municipal High Yield
Spartan Connecticut Municipal High Yield
Spartan Florida Municipal Income
Spartan Intermediate Municipal
Spartan Maryland Municipal Income
Spartan Municipal Income
Spartan New Jersey Municipal High Yield
Spartan New York Municipal High Yield
Spartan Pennsylvania Municipal High Yield
Spartan Short-Intermediate Municipal
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE

EXHIBIT 24(A)(4)
FIDELITY

(Registered trademark)
OHIO
MUNICIPAL
PORTFOLIOS

ANNUAL REPORT
DECEMBER 31, 1993
CONTENTS

CHECK PAGE NUMBERS !!!

<TABLE>
<CAPTION>
<S> <C> <C>
PRESIDENT'S MESSAGE 3 Ned Johnson on minimizing taxes.

FIDELITY OHIO
MUNICIPAL HIGH YIELD PORTFOLIO

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 last six
months
and one year.

INVESTMENTS 11 A complete list of the fund's
investments with their market value.

FINANCIAL STATEMENTS 24 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.

FIDELITY OHIO
MUNICIPAL MONEY MARKET PORTFOLIO

PERFORMANCE 28 How the fund has done over time.

FUND TALK 30 The manager's review of fund
performance, strategy, and outlook.

INVESTMENT CHANGES 32 A summary of major shifts in the
fund's investments over the last six
months
and one year.

INVESTMENTS 33 A complete list of the fund's
investments with their market value.

FINANCIAL STATEMENTS 39 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.

NOTES 43 Footnotes to the financial
statements.

REPORT OF INDEPENDENT 46 The auditor's opinion.
ACCOUNTANTS

</TABLE>

DEAR SHAREHOLDER:
Once the new year begins, many people start reviewing their finances and
calculating their tax bills. No one wants to pay more taxes than they have
to. But a recent survey of 500 U.S. households, conducted by Fidelity and
Yankelovich Partners, showed that few people have taken steps to reduce
their taxes under the new legislation. Many were not even aware that the
new tax laws were retroactive to January 1993.
Whether or not you're someone whose tax bill will increase as a result of
these changes, it may make sense to consider ways to keep more of what you
earn.
First, if your employer offers a 401(k) or 403(b) retirement savings plan,
consider enrolling. These plans are set up so you can make regular
contributions -
before taxes - to a retirement savings plan. They offer a disciplined
savings strategy, the ability to accumulate earnings tax-deferred, and
immediate tax savings. For example, if you earn $40,000 a year and
contribute 7% of your salary to your 401(k) plan, your annual contribution
is $2,800. That reduces your taxable income to $37,200 and, if you're in
the
28% tax bracket, saves you $784 in federal taxes. In addition, you pay no
taxes on any earnings until withdrawal.
It may be a good idea to contact your benefits office as soon as possible
to find out when you can enroll or increase your contribution. Most
employers allow employees to make changes only a few times each year.
Second, consider an IRA. Many people are eligible to make an IRA
contribution (up to $2,000) that is fully tax deductible. That includes
people who are not covered by company pension plans, or those within
certain income brackets. Even if you don't qualify for a fully deductible
contribution, any IRA earnings will grow tax-deferred until withdrawal.
Third, consider adding to your tax-free investments-either municipal bonds
or municipal bond funds. Often these can provide higher after-tax yields
than comparable taxable investments. For example, if you're in the new 36%
federal income tax bracket and invest $10,000 in a taxable investment
yielding 7%, you'll pay $252 in federal taxes and receive $448 in income.
That same $10,000 invested in a tax-free bond fund yielding 5.5% would
allow you to keep $550 in income.
These are three investment strategies that could help lower your tax bill
in 1994. If you're interested in learning more, please call us at
1-800-544-8888 or visit a Fidelity Investor Center.
Wishing you a prosperous new year,
Edward C. Johnson 3d, Chairman
FIDELITY OHIO MUNICIPAL HIGH YIELD PORTFOLIO

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. Each figure
includes changes in a fund's share price, reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells bonds
that have grown in value). You can also look at the fund's income. If
Fidelity had not reimbursed certain fund expenses during the periods shown,
the total returns, dividends and yields would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1993 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND

Ohio Municipal High Yield 12.56% 61.16% 111.35%

Lehman Brothers Municipal Bond Index 12.29% 62.86% n/a

Average Ohio Tax-Exempt
Municipal Bond Fund 12.25% 58.50% n/a

Consumer Price Index 2.75% 21.00% 33.76%

CUMULATIVE TOTAL RETURNS reflect actual performance over a set period - in
this case, one year, five years, or since the fund started on November 15,
1985. For example, if you invested $1,000 in a fund that had a 5% return
over the past year, you would end up with $1,050. You can compare these
figures to the performance of the Lehman Brothers Municipal Bond index - a
broad gauge of the municipal bond market. To measure how the fund stacked
up against its peers, you can look at the average Ohio municipal bond fund,
which reflects the performance of 37 Ohio tax-exempt municipal bond funds
tracked by Lipper Analytical Services. Both benchmarks include reinvested
dividends and capital gains, if any. Comparing the fund's performance to
the consumer price index helps show how your fund did compared to
inflation. (The periods covered by the CPI numbers are the closest
available match to those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1993 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND

Ohio Municipal High Yield 12.56% 10.02% 9.64%

Lehman Brothers Municipal Bond Index 12.29% 10.25% n/a

Average Ohio Tax-Exempt
Municipal Bond Fund 12.25% 9.64% n/a

Consumer Price Index 2.75% 3.89% 3.66%

11/30/85 10000.00 10000.00
12/31/85 10222.80 10087.90
01/31/86 10749.09 10682.08
02/28/86 11073.37 11105.62
03/31/86 11161.00 11109.18
04/30/86 11072.97 11117.62
05/31/86 10944.21 10936.62
06/30/86 11012.12 11040.96
07/31/86 11068.97 11107.98
08/31/86 11526.58 11605.28
09/30/86 11519.26 11634.41
10/31/86 11765.60 11835.34
11/30/86 11978.65 12069.80
12/31/86 11905.20 12036.48
01/31/87 12310.19 12398.90
02/28/87 12431.90 12459.90
03/31/87 12355.81 12327.83
04/30/87 11391.80 11709.22
05/31/87 11282.79 11651.14
06/30/87 11527.96 11993.22
07/31/87 11696.64 12115.55
08/31/87 11708.49 12142.81
09/30/87 11096.64 11695.10
10/31/87 11110.44 11736.50
11/30/87 11411.72 12042.94
12/31/87 11622.03 12217.69
01/31/88 12158.17 12652.88
02/29/88 12320.35 12786.62
03/31/88 12000.79 12637.66
04/30/88 12059.93 12733.70
05/31/88 12143.87 12696.90
06/30/88 12371.68 12882.66
07/31/88 12480.80 12966.65
08/31/88 12506.32 12978.07
09/30/88 12738.78 13212.97
10/31/88 13009.43 13446.18
11/30/88 12911.14 13323.01
12/31/88 13124.55 13459.30
01/31/89 13313.64 13737.64
02/28/89 13201.16 13580.90
03/31/89 13202.43 13548.44
04/30/89 13559.05 13870.08
05/31/89 13853.97 14158.16
06/30/89 14034.67 14350.43
07/31/89 14150.68 14545.74
08/31/89 14004.90 14403.33
09/30/89 13938.64 14360.12
10/31/89 14118.49 14535.32
11/30/89 14322.17 14789.69
12/31/89 14435.12 14910.96
01/31/90 14299.67 14840.88
02/28/90 14461.42 14972.96
03/31/90 14477.87 14977.46
04/30/90 14257.79 14869.62
05/31/90 14627.17 15193.78
06/30/90 14778.15 15327.48
07/31/90 15000.32 15552.79
08/31/90 14764.39 15327.28
09/30/90 14877.17 15336.48
10/31/90 15089.30 15614.07
11/30/90 15443.68 15927.91
12/31/90 15517.64 15997.99
01/31/91 15689.71 16212.36
02/28/91 15788.58 16353.41
03/31/91 15817.52 16359.95
04/30/91 16064.27 16577.54
05/31/91 16195.73 16725.08
06/30/91 16137.44 16708.36
07/31/91 16359.71 16912.20
08/31/91 16523.33 17135.44
09/30/91 16718.81 17358.20
10/31/91 16869.42 17514.42
11/30/91 16898.75 17563.46
12/31/91 17293.79 17941.08
01/31/92 17324.53 17982.34
02/29/92 17335.75 17987.74
03/31/92 17322.95 17994.93
04/30/92 17462.35 18155.09
05/31/92 17698.81 18369.32
06/30/92 18011.01 18677.92
07/31/92 18531.14 19238.26
08/31/92 18324.40 19049.72
09/30/92 18433.24 19173.55
10/31/92 18097.76 18985.65
11/30/92 18579.99 19325.49
12/31/92 18792.03 19522.61
01/31/93 19037.57 19749.07
02/28/93 19715.74 20463.99
03/31/93 19485.45 20247.07
04/30/93 19664.22 20451.57
05/31/93 19763.22 20566.09
06/30/93 20091.93 20909.55
07/31/93 20121.74 20936.73
08/31/93 20590.13 21372.21
09/30/93 20836.47 21615.86
10/31/93 20850.17 21656.93
11/30/93 20672.87 21466.35
12/31/93 21152.11 21919.29
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Fidelity Ohio
Municipal High Yield Portfolio on November 30, 1985, shortly after the fund
started. As the chart shows, by December 31, 1993, the value of your
investment would have grown to $21,152 - a 111.52% increase on your initial
investment. For comparison, look at how the Lehman Brothers Municipal Bond
index did over the same period. With dividends reinvested, the same $10,000
would have grown to $21,919 - a 119.19% increase.

Income return 6.19% 6.63% 7.02% 7.04% 7.23%

Capital gain returns 2.30% 0% 0% 0% 0%
Change in share price 4.07% 2.03% 4.43% .46% 2.76%
Total return 12.56% 8.66% 11.45% 7.50% 9.99%
Income returns, capital gains returns, and changes in share price are all
part of a bond fund's total return. An income return reflects the dividends
paid by the fund. A capital gain return reflects the amount paid by the
fund to shareholders based on the profits it has from selling bonds that
have grown in value. Both returns assume the dividends or gains are
reinvested. Changes in the fund's share price include changes in the prices
of the bonds owned by the fund.
DIVIDENDS AND YIELD
PERIODS ENDED DECEMBER 31, 1993 PAST 30 PAST 6 PAST 1
DAYS MONTHS YEAR

Dividends per share n/a 34.25(cents) 69.29(cents)

Annualized dividend rate n/a 5.60% 5.79%

Annualized yield 4.96% n/a n/a

Tax-equivalent yield 8.38% n/a n/a

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 $12.13 over
the past six months and $11.97 over the past year, you can compare the
fund's income over these two periods. The 30-day annualized yield is a
standard formula for all funds based on the yields of the bonds in the
fund, averaged over the past 30 days. This figure shows you the yield
characteristics of the fund's investments at the end of the period. It also
helps you compare funds from different companies on an equal basis. The
tax-equivalent yield shows what you would have to earn on a taxable
investment to equal the fund's tax-free yield, if you're in the 40.80%
combined federal and state tax bracket.
FIDELITY OHIO MUNICIPAL HIGH YIELD PORTFOLIO

FUND TALK: THE MANAGER'S OVERVIEW

MARKET RECAP
Generally, interest rates fell
during the 12 months ended
December 31, 1993. As a result,
bond prices rose and most
fixed-income investors -
including those in tax-free bonds
- - enjoyed attractive returns.
The period began with worries of
rising interest rates. The
economic recovery was finally
taking hold, and the spending
plans of the president-elect were
still unclear. But the bond market
signaled its approval as
President Clinton promised to
reduce the deficit and fight
inflation. The yield on the
benchmark 30-year Treasury
bond declined steadily and
reached an historic low of 5.79%
in mid-October. By year-end,
mild inflation fears, fueled by a
strengthening economy, had
pushed up the yield on the
30-year bond to 6.35%. Two
factors affected tax-free bonds
specifically: on the positive side,
higher federal taxes -
discussed all year and approved
in August - boosted demand.
At the same time, record new
issuance kept supplies high,
which somewhat dampened
prices. Overall during the period,
tax-free bonds performed well
compared to other fixed-income
investments. The Lehman
Brothers Municipal Bond Index
- - a broad measure of the
tax-free bond market - rose
12.29%. By comparison, the
Lehman Brothers Aggregate
Bond Index - which tracks
investment-grade taxable bonds
- - rose only 9.75%, due in part
to relatively poor performance
by mortgage backed securities.
An interview with Peter Allegrini,
Portfolio Manager of Fidelity
Ohio Tax-Free High Yield Portfolio
Q. PETER, HOW DID THE FUND DO?
A. For the 12 months ended December 31, 1993, it had a total return of
12.56%. That was ahead of the average Ohio tax-free bond fund, which
returned 12.25% over the same period, according to Lipper Analytical
Services.
Q. WHAT EXPLAINS THE DIFFERENCE?
A. The fund had a longer duration than other Ohio funds - meaning it was
more sensitive to interest rate declines. So as interest rates fell over
the past year, it beat funds with shorter durations. In the past, the
fund's duration was shorter than it is now because it still had a
significant investment in premium bonds. These trade to their shorter call
dates, rather than to their stated maturities. They also carry an interest
rate above the current rate for similar bonds; this helped generate the
fund's income. But as interest rates have come down this year, I've
steadily worked to lengthen the fund's duration to eight years on December
31. Over the next six months to a year, I'll probably keep it between eight
and 8 1/2 years because I think long-term rates could continue to stay low.
Q. HOW DID YOU LENGTHEN THE FUND'S DURATION?
A. Mainly by buying non-callable and zero coupon bonds. At the end of the
period the fund had about a 24% stake in non-callable bonds, which can't be
prematurely returned to their issuers. That also means they have a longer
duration because non-callables always trade to their maturity date, rather
than a shorter call date. When interest rates are falling and bond prices
are rising, non-callable bonds tend to do well. Zero coupon bonds - which
made up about 9.5% of the fund's investments at year end - behave in a
similar way.
Q. WHAT'S THE ATTRACTION TO BONDS WITH 15 TO 20 YEAR MATURITIES?
A. During the past year, the slope of the yield curve - or the difference
in yield between bonds with different maturities - was fairly flat. That
meant you weren't rewarded much for taking on the extra risk of buying a
bond with a 30-year maturity. For example, you could pick up about 95% of
the yield of a 30-year bond with a 15-year bond. I just didn't think that a
5% difference in yield justified the added price risk of a 30-year bond. At
the end of December, about 35.7% of the fund was concentrated in
intermediate bonds with maturities of 15 to 20 years.
Q. THE FUND'S SECOND LARGEST SECTOR - AT 20.9% OF INVESTMENTS - IS HEALTH
CARE. ARE YOU CONCERNED THAT THESE BONDS MIGHT BE AFFECTED BY HEALTH-CARE
REFORM?
A. Not really. Unlike other states, pressure to cut costs and be more
competitive isn't really a factor for Ohio hospitals. Ohio has a well-run
hospital system, and doesn't suffer from an excess supply of hospital beds
like other states do. I look for hospitals that are well managed and have
strong relationships with HMOs. Those hospitals are already accustomed to
providing services in a managed care environment and should fare the best
once health-care reform is enacted. Even so, I'll continue to monitor the
health care sector closely going forward.
Q. AFTER ENJOYING SUCH A STRONG YEAR IN 1993, CAN MUNICIPAL BONDS CONTINUE
TO POST SUCH IMPRESSIVE RETURNS?
A. Throughout the past year, municipal bond prices were artificially low,
in part because there was a record supply of bonds issued. But now, many of
the refinancings permitted by law have already taken place; and once those
refinancings taper off, I expect supply to be lower. On the demand side,
investors are just now beginning to calculate their 1993 tax bills. And I
think that once they see how much their taxes have risen, many will find
tax-free municipal bonds a more attractive investment.
Q. SO, ARE YOU OPTIMISTIC ABOUT MUNICIPAL BONDS FOR 1994?
A. I am because I expect interest rates to continue to stay low, despite
some recent jitters in the bond market. Most commodity prices and wages -
two early warning signals for higher inflation - have stabilized with no
real signs of heading up. As long as inflation stays under control, and
economic growth stays at a 2% to 3% level, interest rates and bond yields
could continue at current levels. Even so, it's probably realistic for
investors not to expect the strong returns than we've seen during the past
12 months.

FUND FACTS
GOAL: to provide high current
income exempt from federal
and Ohio state income tax
START DATE: November 15,
1985
SIZE: as of December 31,
1993, over $457 million
MANAGER: Peter Allegrini
since November 1985;
manager, Fidelity Advisor
High Income Municipal Fund,
and Fidelity Michigan
Tax-Free Fund, since
November 1985; Spartan
Connecticut Municipal High
Yield Portfolio, since October
1987; Fidelity Minnesota
Tax-Free Fund, November
1985 - September 1993;
Spartan Pennsylvania
Municipal High Yield Portfolio,
August 1986 - September
1993
(checkmark)

PETER ALLEGRINI'S OUTLOOK ON THE
OHIO ECONOMY:
"Since the recession, Ohio
has started to shed its "rust
belt" image and has built a
more diversified economy
based not only on
manufacturing, but on
retailing, banking, insurance
and other service sectors.
Even the state's
manufacturing base emerged
from the recession with higher
productivity. Retail sales have
been much stronger than the
national average, while
housing starts are in line with
the nation as a whole.
Employment growth has
slowed somewhat over the
past 12 months, but has kept
pace with the U.S. average."
(bullet) Although the fund invests
primarily in long-term,
investment grade (Baa or
above) bonds, up to one-third
of its assets may be in lower
quality bonds. At the end of
December, about 25% of the
fund's assets were in below
investment grade bonds.
These bonds provide a higher
income than higher-rated
bonds.
(bullet) General Obligation bonds
(Gos) - backed by the taxing
power of the issuer - are the
fund's largest industry
concentration. They're
attractive in part because an
abundant supply of Ohio GOs
were available and offered at
attractive prices.
FIDELITY OHIO MUNICIPAL HIGH YIELD PORTFOLIO

INVESTMENT CHANGES

TOP FIVE SECTORS AS OF DECEMBER 31, 1993
% OF FUND'S INVESTMENT % OF FUND'S INVESTMENT
S S
IN THESE SECTORS
6 MONTHS AGO

General Obligation 24 26

Health Care 21 21

Water & Sewer 13 16

Industrial Development 10 13

Lease Revenue 9 5

AVERAGE YEARS TO MATURITY AS OF DECEMBER 31, 1993
6 MONTHS AGO

Years 18.1 19.2

AVERAGE YEARS TO MATURITY SHOWS THE AVERAGE TIME UNTIL THE PRINCIPAL OF THE
BONDS IN THE FUND IS EXPECTED TO BE REPAID, WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF DECEMBER 31, 1993
6 MONTHS AGO

Years 8.0 7.5

DURATION SHOWS HOW MUCH A BOND'S PRICE FLUCTUATES WITH CHANGES IN INTEREST
RATES. IF RATES RISE 1%, FOR EXAMPLE, THE SHARE PRICE OF A FUND WITH A
FIVE-YEAR DURATION WILL FALL 5%.
QUALITY DIVERSIFICATION AS OF DECEMBER 31, 1993
(MOODY'S RATINGS)
Row: 1, Col: 1, Value: 31.0
Row: 1, Col: 2, Value: 27.0
Row: 1, Col: 3, Value: 25.0
Row: 1, Col: 4, Value: 17.0
Aaa 31%
Aa, A 27%
Baa, Ba 25%
Non-rated 17%
THIS CHART EXCLUDES SHORT-TERM INVESTMENTS. WHERE MOODY'S RATINGS ARE NOT
AVAILABLE, WE HAVE USED S&P RATINGS.
FIDELITY OHIO TAX-FREE HIGH YIELD PORTFOLIO

INVESTMENTS/DECEMBER 31, 1993
(Showing Percentage of Total Value of Investments)

MUNICIPAL BONDS - 97.2%
PRINCIPAL VALUE (NOTE 1)
AMOUNT
OHIO - 87.8%
Akron Bath Copley Township Hosp. Dist. Rev. Rfdg.
(Children's Hosp. Med. Ctr.) 5% 11/15/15,
(AMBAC Insured) Aaa $ 4,855,000 $ 4,679,006 009730HN
Akron Metropolitan Hsg. Corp. 1st Lien Rev. Section 8:
(Ellet): 999948RN
7.50% 1/1/14 - 160,000 170,400 999948RN
7.50% 1/1/15 - 170,000 181,475 999948RP
7.50% 1/1/16 - 180,000 192,375 999948RQ
7.50% 1/1/17 - 195,000 208,650 999948RR
7.50% 1/1/18 - 200,000 214,250 999948RS
(Hillwood Village) 010062BL
7.40% 1/1/11 - 130,000 136,500 999948RT
7.40% 1/1/12 - 145,000 152,431 999948RW
7.40% 1/1/13 - 150,000 158,063 999948RX
7.50% 1/1/13 - 55,000 58,506 010062BL
Akron Parking Facs. Ltd. Tax: 0100326N
8.75% 11/1/03 A 160,000 210,200 0100326N
8.75% 11/1/04 A 160,000 212,400 0100326Q
8.75% 11/1/05 A 160,000 214,400 0100326S
Akron Str. Impt. Ltd. Tax Series 1985-1: 0100326P
8.75% 11/1/03 A 200,000 262,750 0100326P
8.75% 11/1/04 A 200,000 265,500 0100326R
8.75% 11/1/05 A 200,000 268,000 0100326T
Alliance Wtrwks. Rev. (Cap. Appreciation) 0%
10/15/06, (FGIC Insured) Aaa 765,000 402,581 018753DG
Barberton Hosp. Facs. Rev. (Barberton Citizens
Hosp. Co. Proj.) 7.25% 1/1/12 A 3,000,000 3,337,500 067207AN
Bedford Hosp. Impt. Rev. Rfdg. (Bedford
Commty. Hosp.) Series 1990, 8.50%
5/15/09 - 895,000 995,687 076372AS
Bedford Wtr. & Swr. Sys. Mtg. Rev.
(AMBAC Insured): 076381BW
7.125% 7/1/13 Aaa 280,000 323,750 076381BW
7.125% 7/1/14 Aaa 300,000 346,875 076381BX
Berea Gen. Oblig. Ltd. Tax Rfdg.: 083581MN
0% 12/1/04 Aa 535,000 310,969 083581MN
5.125% 12/1/13 Aa 1,215,000 1,213,481 083581MV
Berea Wtrwks. Rfdg. 0% 12/1/06 Aa 510,000 260,100 083581MT
Berlin & Milan Local School Dist. 7.45%
12/1/11 A 675,000 798,187 085059BH
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT
OHIO - CONTINUED
Bexley City School Dist.: 088599CJ
0% 12/1/06 Aa $ 440,000 $ 230,450 088599CJ
0% 12/1/07 Aa 540,000 265,275 088599CK
0% 12/1/08 Aa 540,000 250,425 088599CL
Blue Ash Ind. Dev. Rev. Rfdg. (1st. Mtg.)
(Kmart Corp.) Series A, 6.75% 11/1/06 A 515,000 581,306 095245CV
Brunswick Gen. Oblig. Unltd. Tax 7.35%
12/1/10 A 1,000,000 1,143,750 117331KJ
Buckeye Local School Dist. (AMBAC Insured): 118205CN
Rfdg. (Jefferson County) 0% 12/1/07 Aaa 760,000 367,650 118205CQ
(Jefferson County) (Cap. Appreciation)
0% 12/1/06 Aaa 375,000 192,656 118205CN
Butler County Hosp. Facs. Rev. 7.50% 1/1/10 Baa1 1,500,000 1,659,375
123550DP
Cambridge Hosp. Impt. Rev. Rfdg. (Guernsey
Mem. Hosp.) 8% 12/1/11 BBB 1,500,000 1,696,875 132472BJ
Canal Winchester Local School Dist. Unltd. Tax
7.10% 12/1/13, (MBIA Insured) (Pre-Refunded
to 12/01/01 @102) (e) Aaa 1,400,000 1,674,750 137087DN
Canton Gen. Oblig. Ltd. Tax 7.875% 12/1/08
(Pre-Refunded to 12/1/98 @ 103) (e) Baa 1,250,000 1,503,125 138429EJ
Celina Rfdg. Str. Sidewalk & Swr. Impt. Ltd. Tax
7.75% 12/1/08 A1 200,000 226,500 151051AL
Centerville Ind. Dev. Rev. (Kroger Co. Proj.)
8.60% 1/1/94 - 1,480,000 1,480,000 152236CP
Centerville Recreational Facs. 5.85% 12/1/20 A1 1,500,000 1,558,125
152236CP
Chillicothe Wtr. Sys. Rev. Mtg. 7.20% 12/1/14,
(MBIA Insured) Aaa 1,000,000 1,185,000 169214BA
Cincinnati Univ. Gen. Receipts Series II,
7.10% 6/1/10 Aaa 1,000,000 1,162,500 914118JL
Clark County Hosp. Impt. Rev. Rfdg. (Commty.
Hosp.) Series A, 9.375% 4/1/08 A 800,000 889,000 181075CA
Clermont County Swr. Sys. Rev. 7.10% 12/1/21,
(AMBAC Insured) Aaa 1,500,000 1,794,375 185716HK
Cleveland Arpt. Sys. Rev. Series A, 7.25%
1/1/20, (MBIA Insured) Aaa 800,000 914,000 186352BR
Cleveland Gen. Oblig. Rev. Rfdg. 5.30% 9/1/07,
(AMBAC Insured) Aaa 2,000,000 2,092,500 186343JZ
Cleveland Pub. Pwr. Sys. Impt. Rev. (1st Mtg.)
Series 1987, 8.375% 8/1/17, (Pre-Refunded
to 8/1/97 @ 102) (e) Aaa 2,500,000 2,931,250 186398AP
Cleveland Wtrwks. Rev. 1st Mtg. Rfdg.: 186432NY
Series D, 5% 1/1/15, (AMBAC Insured) Aaa 1,000,000 972,500 186432NY
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT
OHIO - CONTINUED
Cleveland Wtrwks. Rev. 1st Mtg. Rfdg.: 186432NY - continued
Series E, 7.875% 1/1/16 (Pre-Refunded
to 1/1/97 @ 102) (e) Aaa $ 1,000,000 $ 1,136,250 186432PW
Series G (MBIA Insured): 186432SE
5.50% 1/1/08 Aaa 3,700,000 3,866,500 186432SE
5.50% 1/1/13 Aaa 4,500,000 4,708,125 186432SF
5.50% 1/1/21 Aaa 24,725,000 25,714,000 186432SG
Columbus Gen. Oblig.: 199489NS
Ltd. Tax 9.50% 4/15/04 Aa1 500,000 692,500 199489NS
Unltd. Tax Series 1, 5.25% 9/15/18 Aa1 2,000,000 2,002,500 1994893H
Columbus Swr. Sys. Impt. Ltd. Tax
9.375% 4/15/07 Aa1 590,000 836,325 199489NZ
Cuyahoga County Cap. Appreciation Unltd.
Tax Rfdg. Series A, (MBIA Insured):
0% 10/1/08 Aaa 4,000,000 1,840,000 2322373L
0% 10/1/09 Aaa 4,200,000 1,821,750 2322373M
0% 10/1/10 Aaa 5,000,000 2,037,500 2322373N
0% 10/1/11 Aaa 2,400,000 927,000 2322373P
0% 1/1/12 Aaa 1,505,000 551,206 2322373Q
0% 1/1/13 Aaa 4,000,000 1,385,000 2322373R
Cuyahoga County Gen. Oblig. Jail Facs.
Unltd. Tax 7% 10/1/13 - 1,250,000 1,482,812 232237U8
Cuyahoga County Health Care Facs. Rev.
(Judson Retirement Commty.) 8.875%
11/15/19 - 2,500,000 2,800,000 232264AL
Cuyahoga County Hosp. Rev.:
(Cleveland Clinic Foundation):
Rfdg.Series A, 8% 12/1/08 Aa 1,000,000 1,130,000 232265PE
Series A, 8% 12/1/15 Aa 2,250,000 2,553,750 232265PF
(Deaconess Hosp.) 9.25% 10/1/09,
(FGIC Insured) Aaa 250,000 278,750 232265JE
(Fairview Gen. Hosp.) 7.375% 8/1/19 A1 1,250,000 1,387,500 232265TV
Cuyahoga County Ltd. Tax: 2322372C
Series B, 5.25% 10/1/12 Aa 7,000,000 7,096,250 2322372C
5.60% 5/15/13 Aa 2,685,000 2,822,606 2322374G
5.65% 5/15/18 Aa 2,295,000 2,444,175 2322374H
Defiance County Econ. Dev. Rev.
(Kroger Co. Proj.) 8% 10/15/15 - 2,325,000 2,635,969 244652AA
Defiance Gen. Oblig. 6.95% 12/1/11 A 340,000 380,375 244703KB
Defiance Spl. Assessments 7% 12/1/11 A 365,000 414,731 244703KN
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT
OHIO - CONTINUED
Dublin City School Dist.: 26371GAW
Rfdg. (Cap. Appreciation) 0% 12/1/07,
(FGIC Insured) Aaa $ 500,000 $ 240,625 26371GAW
Unltd. Tax Rfdg. (Cap. Appreciation)
0% 12/1/04, (AMBAC Insured) Aaa 1,930,000 1,121,812 26371GCB
East Liverpool Hosp. Rev. (East Liverpool City
Hosp.) Series A, 8.125% 10/1/11 Baa 2,430,000 2,782,350 273505BH
Erie County Gen. Oblig. Rfdg. 5% 9/1/16,
(MBIA Insured) Aaa 1,000,000 970,000 295119XL
Euclid County School Dist. Series 1991
7.10% 12/1/11 A 1,500,000 1,725,000 298047CA
Fairfield City School Dist. Unltd. Tax 7.75%
12/1/09, (AMBAC Insured) Aaa 750,000 873,750 304657GR
Fairfield Econ. Dev. Rev. Rfdg. (Beverly Enterprises
Proj.) 8.50% 1/1/03 - 1,060,000 1,158,050 304661AX
Forest Park Ind. Dev. 1st Mtg. Rev. Rfdg.
(Kmart Corp.) Series A, 6.25% 4/1/08 A 700,000 761,250 346193AD
Franklin City School Dist. Unltd. Tax
(Warren County Impt.) 7% 12/1/14 A 1,250,000 1,395,312 354172FF
Franklin County Hosp. Rev. Rfdg. & Impt.
(Riverside United Methodist Hosp.) 7.25%
5/15/20, (MBIA Insured) Aaa 1,750,000 2,008,125 353186TM
Franklin County Rev. (OCLC Online Computer
Library Ctr.) : 353202AL
7.20% 7/15/06 - 1,000,000 1,118,750 353202AX
6% 4/15/09 - 1,500,000 1,531,875 353202BM
9.75% 7/15/09 - 5,000,000 5,400,000 353202AL
6% 4/15/13 - 3,500,000 3,561,250 353202BN
Gahanna Gen. Oblig. Series A, 7% 6/1/12 A1 1,000,000 1,137,500 362676EJ
Gahanna-Jefferson City School Dist.
Series C, 7.30% 12/1/14 A1 1,000,000 1,196,250 362668CF
Gateway Econ. Dev. Corp. (Greater
Cleveland Stadiums) Series 1990,
6.50% 9/15/14 - 10,000,000 9,900,000 367599AM
Granville Village School Dist. Rfdg.
(Cap. Appreciation) (AMBAC Insured):
0% 12/1/06 Aaa 625,000 325,000 388568CV
0% 12/1/07 Aaa 665,000 324,187 388568CW
0% 12/1/08 Aaa 650,000 296,562 388568CX
0% 12/1/09 Aaa 645,000 274,931 388568CY
Green County 1st Mtg. Rev. (Fairview Extended
Care) Series A, 10.125% 1/1/11 - 6,070,000 6,730,112 394645AL
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT
OHIO - CONTINUED
Green County Swr. Sys. Rev. (Cap. Appreciation)
0% 12/1/09, (AMBAC Insured) Aaa $ 775,000 $ 332,281 39465GAR
Hamilton County Health Sys. Rev.: 40727JBN
Rfdg. (Providence Hosp.-Franciscan Sisters
Poor Health Sys.) 6.875% 7/1/15 Baa 5,000,000 5,337,500 40727JBN
(Children's Hosp. Med. Ctr.) Series D,
5% 5/15/13, (FGIC Insured) Aaa 1,500,000 1,466,250 407272B7
(St. Francis-St. George Franciscan)
9.375% 7/1/15 Baa 1,500,000 1,620,000 40727JBD
Hamilton County Swr. Sys. Rev. (FGIC Insured): 407288FY
Rfdg. & Impt. Metro. Swr. Dist. Series A,
5.45% 12/1/09 Aaa 1,000,000 1,045,000 407288FY
Series A, 5.40% 12/1/08 Aaa 3,715,000 3,845,025 407288FV
Hamilton Gas Sys. Rev. Series A (MBIA Insured): 407796AR
5% 10/15/18 Aaa 1,600,000 1,572,000 407796AR
4.75% 10/15/23 Aaa 1,000,000 927,500 407796AS
Hilliard Ind. Dev. Rev. Rfdg. (Kroger Co.) 8.10%
7/1/12 Ba3 3,600,000 4,108,500 431618AF
Hudson Local School Dist. Series A, 7.10%
12/15/13 A1 2,000,000 2,370,000 444096FB
Huron County Gen. Oblig. 7% 12/1/09 A 1,000,000 1,110,000 447537CL
Kettering Gen. Oblig. Unltd. Tax 7.25%
12/1/08 Aa 3,000,000 3,588,750 492674HU
Lake County Ind. Dev. Rev. Rfdg. 1st Mtg.
(Kmart Corp.) Series A, 6.40% 8/1/06 A 1,000,000 1,100,000 509441BC
Lakota Local School Dist.: 512804KN
Rfdg. (Cap. Appreciation)
0% 12/1/00 A1 625,000 460,156 512804KN
0% 12/1/01 A1 590,000 412,262 512804KP
0% 12/1/02 A1 555,000 367,687 512804KQ
0% 12/1/03 A1 260,000 162,825 512804KR
Unltd. Tax 512804GR
Rfdg. (Cap. Appreciation) 0% 12/1/99 A1 445,000 346,544 512804KM
7.90% 12/1/11
(Pre-Refunded to 12/1/98 @ 100) (e) A1 1,000,000 1,176,250 512804GR
Logan Hocking Local School Dist. Rfdg. Series B,
0% 12/1/08, (AMBAC Insured) Aaa 1,065,000 481,913 541008BH
0% 12/1/12, (AMBAC Insured) Aaa 840,000 299,250 541008BM
Lorain County Rev. (1st Mtg. Kendal at Oberlin
Proj.) Series A, 8.625% 2/1/22 - 4,250,000 4,467,812 543613AH
Lorain Gen. Oblig. Ltd. Tax 7.875% 12/1/09 Baa 1,000,000 1,130,000
543689WK
Lorain Swr. Sys. Mtg. Rev. Rfdg. 8.75% 4/1/11 BBB- 2,815,000 3,226,694
543761AN
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT
OHIO - CONTINUED
Lowellville San. Swr. Sys. Rev. (Browning-Ferris
Industries, Inc.) 7.25% 6/1/06 (b) A+ $ 1,600,000 $ 1,710,000 547753AA
Lucas County Convention Ctr. Site Acquisition
Bonds Ltd. Tax:
6.50% 12/1/09 Baa1 340,000 394,400 549305G8
6.50% 12/1/10 Baa1 340,000 396,525 549305G9
6.50% 12/1/11 Baa1 340,000 396,100 549305H2
6.50% 12/1/12 Baa1 340,000 398,225 549305H3
Lucas County Hosp. Rev. Rfdg.:
(Riverside Hosp. Proj.) 7.625% 6/1/15 Baa1 7,485,000 7,934,100 549310JA
(Toledo Hosp.) 5% 11/15/13, (MBIA Insured) Aaa 1,750,000 1,699,687
549310NY
(St. Vincent Med. Ctr.) Series 1993, 5.25%
8/15/14, (MBIA Insured) (d) Aaa 5,000,000 5,112,500 549310QB
Lucas County Ind. Dev. Rev. Rfdg. (Kroger Co.)
8.50% 7/1/11 Ba3 3,600,000 4,153,500 549315GB
Mahoning County Hosp. Facs. Rev. (YHA, Inc. Proj.)
Series A, 7% 10/15/14, (MBIA Insured) Aaa 1,000,000 1,153,750 560060DK
Mahoning County San. Swr. Sys. Rev. 7.50%
2/1/19, (BIG Insured) Aaa 1,000,000 1,161,250 560069AR
Mahoning Valley San. Dist.:
7.85% 12/15/12 - 1,200,000 1,335,000 560126AV
7.85% 12/15/13 - 1,275,000 1,418,437 560126AW
Marion County Health Care Facs. Rev. Rfdg. &
Impt. (United Church Homes, Inc. Proj.)
6.30% 11/15/15 BBB- 1,800,000 1,779,750 569120AR
Marysville Exempt Village School Rfdg.
(Cap. Appreciation):
0% 12/1/05, (AMBAC Insured) Aaa 795,000 434,269 574480DP
0% 12/1/06, (AMBAC Insured) Aaa 750,000 385,312 574480DQ
0% 12/1/07, (AMBAC Insured) Aaa 690,000 332,062 574480DR
Marysville Swr. Sys. Ltd. Tax 7.15% 12/1/11 A 500,000 578,750 574463CF
Marysville Wtr. Sys. Mtg. Rev. 7.05% 12/1/21,
(MBIA Insured) Aaa 1,000,000 1,148,750 574486AQ
Mentor Exempt Village School Dist. Rfdg.
(Cap. Appreciation) (MBIA Insured):
0% 12/1/00 Aaa 755,000 550,206 587227LK
0% 12/1/01 Aaa 795,000 546,563 587227LL
0% 12/1/02 Aaa 845,000 549,250 587227LM
0% 12/1/03 Aaa 840,000 515,550 587227LN
Mentor Gen. Oblig. Ltd. Tax Series 1991,
7.15% 12/1/11 A 500,000 569,375 587210XE
Miami County Hosp. Facs. Rev. (Upper Valley Med.
Ctr.) Project B, 8.25% 5/1/04, (BIG Insured) Aaa 500,000 571,250
593328CQ
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT
OHIO - CONTINUED
Miami Univ. Gen. Receipts (Cap. Appreciation)
0% 12/1/07(FGIC Insured) Aaa $ 500,000 $ 245,000 593791AP
Miamisburg Gen. Oblig. 7.25% 12/1/17
(AMBAC Insured) Aaa 500,000 598,125 593864FT
Middleburg Heights Gen. Oblig. 7.20%
12/1/11 Aa 500,000 588,125 596119EP
Middleburg Heights Hosp. Impt. Rev.
(Southwest Gen. Hosp.) 7.20% 8/15/19 A 2,000,000 2,217,500 596126AL
Montgomery County Swr. Impt. Ltd. Tax
Issue 1, 7.10% 9/1/10 Aa 1,000,000 1,177,500 613477R3
Mount Vernon Hosp. Rev. (Knox Commty. Hosp.)
7.875% 6/1/12 - 7,000,000 7,498,750 623646AM
Muskingum County Rev. (Franciscan Health
Advisory Svcs.) 7.50% 3/1/12 BBB 2,000,000 2,110,000 628082AL
Newark Wtr. (Cap. Appreciation) 0% 12/1/07,
(AMBAC Insured) Aaa 455,000 218,969 650451HL
North Olmsted Gen. Oblig. Unltd. Tax 7.50%
12/1/10 A1 670,000 787,250 661292ML
Ohio Air Quality Dev. Auth. Rev. Rfdg.
(Ohio Pwr. Co. Proj.) Series B, 7.40%
8/1/09 Baa1 3,250,000 3,644,063 677525JK
Ohio Bldg. Auth.:
(Administration Bldg. Fund Proj.) Series A:
5.60% 10/1/06 A1 2,410,000 2,539,538 6775535R
5.60% 10/1/07 A1 3,330,000 3,492,338 6775535S
(Correctional Facs.) Series A, 7.35% 8/1/04 A1 2,000,000 2,302,500
677553XH
(Ohio Ctr. Arts) Series A:
5.25% 10/1/05 A1 1,900,000 1,959,375 67755ABB
5.35% 10/1/06 A1 3,060,000 3,163,275 67755ABD
5.45% 10/1/07 A1 2,000,000 2,070,000 67755ABF
(State Correctional Facs.) Series A, 8%
2/1/07 Aaa 1,000,000 1,173,750 677553UP
(State Facs. Columbus State Bldg. Proj.)
Series A, 7.75% 10/1/08 A1 500,000 578,750 677553TA
(Workers Comp.) 4.75% 4/1/14 A 15,755,000 14,849,088 6775536N
Ohio Coal Rev. Series C, 6.90% 2/1/94 Aa 1,200,000 1,203,000 6775174T
Ohio Econ. Dev. Rev. Rfdg. (Kroger Co. Proj.)
Series 1992, 7.50% 9/1/10 Ba3 2,000,000 2,207,500 677555RF
Ohio Expositions Commission Ctfs. of Prtn.
(Agricenter Facs.):
8% 10/1/95 - 395,000 408,331 677559AG
8.25% 10/1/06 - 1,150,000 1,288,000 677559AX
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT
OHIO - CONTINUED
Ohio Cap. Corp. Multi-Family Hsg. Rev. Rfdg.:
Series A, 7.50% 1/1/24, (FNMA Coll.) AAA $ 1,000,000 $ 1,080,000
677220CG
Series C, 7.375% 7/1/23, (FNMA Coll.) AAA 2,000,000 2,135,000 677220CB
Ohio Gen. Oblig. (Cap. Appreciation
Infrastructure) Series 1989, 0% 9/1/07 Aa 7,225,000 3,666,688 677517T6
Ohio Gen. Oblig. (College Savings Bonds):
0% 8/1/09 Aa 2,290,000 1,016,188 677517Y2
0% 8/1/10 Aa 2,000,000 842,500 677517Y3
Ohio Higher Edl. Facs. Commission Rev.:
(Case Western Reserve Proj.):
Series A, 7.70% 10/1/18 Aa 2,000,000 2,257,500 677560WY
Series B, 6.50% 10/1/20 Aa 1,750,000 2,080,313 67756BAF
(Kenyon College Proj.):
5.30% 12/1/08 A 1,115,000 1,124,756 6775603Z
5.375% 12/1/16 A 1,500,000 1,496,250 6775604A
(Oberlin College Proj.) 9.25% 10/1/15
(Pre-Refunded to 10/1/95 @ 102) AA+ 1,000,000 1,121,250 677560QM
(Univ. Dayton Proj.) 7.25% 12/1/12,
(FGIC Insured) Aaa 1,000,000 1,160,000 677560ZD
Ohio Hsg. Auth. Agcy. Single Family Mtg. Rev.
Series F, 7.60% 9/1/16, (GNMA Coll.) AAA 2,410,000 2,542,550 677377TZ
Ohio Ind. Dev. Rev. Rfdg. (Kroger Co.)
8.65% 6/1/11 Ba3 2,300,000 2,670,875 6775653N
Ohio Liquor Profits Rev. Rfdg. 0% 9/1/00,
(BIG Insured) Aaa 3,720,000 2,762,100 677576BG
Ohio Poll. Cont. Rev. (Standard Oil Co.)
6.75% 12/1/15 A1 3,100,000 3,816,875 677596AH
Ohio Univ. Ctfs. of Prtn. (Stores & Receiving
Bldg. Proj.) 8.125% 6/1/05 - 1,045,000 1,136,438 677630DB
Ohio Wtr. Dev. Auth. Poll. Cont. Facs.
(Buckeye Pwr. Inc. Proj.) 10.875%
11/1/14 A1 250,000 272,500 677660AX
Ohio Wtr. Dev. Auth. Poll. Cont. Rfdg.
(Toledo Edison Co.) Series A, 7.55%
6/1/23 Baa3 7,800,000 8,580,000 677660DP
Ohio Wtr. Dev. Auth. Rev.:
(Pure Wtr.) Series I, 6% 12/1/16,
(AMBAC Insured) Aaa 1,000,000 1,105,000 677658Q4
3.55% 6/1/94, (MBIA Insured) Aaa 1,355,000 1,361,775 677658R8
Ohio Wtr. Dev. Auth. Rev. Rfdg. (Safe Wtr.)
Series A, 5% 12/1/12, (BIG Insured) Aaa 1,880,000 1,868,250 677658ZN
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT
OHIO - CONTINUED
Olentangy Local School Dist. Unltd. Tax (BIG Insured):
7.75% 12/1/07 Aaa $ 500,000 $ 635,000 680616AZ
7.75% 12/1/09 Aaa 100,000 128,250 680616BB
7.75% 12/1/11 Aaa 190,000 246,525 680616AT
Olmsted Falls Local School Dist. Unltd. Tax
7.05% 12/15/11, (FGIC Insured) Aaa 1,000,000 1,161,250 681147DF
Ottawa County Gen. Oblig. Ltd. Tax 7.50%
10/1/14 A1 500,000 578,750 689325EG
Ottawa County San. Swr. Sys. Rev. Rfdg.:
(Cap. Appreciation) (Danbury Proj.)
0% 10/1/06 (AMBAC Insured) Aaa 1,445,000 760,431 689332BC
(Danbury Proj.) 7.375% 10/1/14,
(AMBAC Insured) Aaa 2,200,000 2,612,500 689332AN
Ottawa County Spl. Assessment (Portage
Catawba Isle) 7% 9/1/11, (AMBAC
Insured) Aaa 250,000 285,625 689325FX
Pickerington Local School Dist.:
Rfdg.(Cap. Appreciation) 0% 12/1/12,
(AMBAC Insured) Aaa 2,180,000 776,625 719780FC
Series B, 7.25% 12/1/13, (AMBAC Insured) Aaa 500,000 598,125 719780DU
7% 12/1/13, (AMBAC Insured) Aaa 2,000,000 2,355,000 719780DH
Sandusky County Hosp. Facs. Rev. Rfdg.
(Mem. Hosp. Proj.) 7.75% 12/1/09 BB 5,250,000 5,387,813 800142CE
Solon School Dist. Rfdg. (Cap. Appreciation):
0% 12/1/04, (AMBAC Insured) Aaa 1,020,000 605,625 834341HX
0% 12/1/05, (AMBAC Insured) Aaa 1,440,000 806,400 834341HY
0% 12/1/06, (AMBAC Insured) Aaa 1,370,000 720,963 834341HZ
0% 12/1/07, (AMBAC Insured) Aaa 1,200,000 592,500 834341JA
0% 12/1/08, (AMBAC Insured) Aaa 1,100,000 508,750 834341JB
Springboro Spl. Assessment 6.10% 6/1/23 - 1,350,000 1,393,875 850221FX
Springfield Local School Dist. Gen. Oblig.
Unltd. Tax 7.125% 12/1/12,
(AMBAC Insured) Aaa 1,000,000 1,150,000 851205BG
Stark-Belden Hsg. Dev. Corp. 1st Lien Rev.
Section 8, 7.60% 12/1/09, (FHA
Guaranteed) - 400,000 442,000 855289AB
Stark County Health Care Facs. Rev. (Rose Lane
Hosp. Proj.) 9% 12/1/23 - 6,135,000 6,909,544 854903AE
Stark County Hosp. Rev. (Doctors Hosp. of Stark
County) 6% 4/1/13 Baa 5,840,000 5,788,900 855348FS
Stark County Ind. Dev. Rev. Rfdg. (Kroger Co.)
7.20% 9/1/12 Ba3 3,100,000 3,359,625 855350DX
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT
OHIO - CONTINUED
Stow City School Dist. School Impt. Unltd. Tax
9.125% 12/1/06 A $ 590,000 $ 814,200 862403FB
Student Loan Fund Corp. Student Loan Rev:
Rfdg. Series A, 7.25% 2/1/08(b) A 2,000,000 2,162,500 863869AU
Series B, 8.875% 8/1/08(b) - 5,280,000 5,742,000 863869AV
Summit County Ind. Dev. Rev. Rfdg. (Surnow
Assoc. Proj.) 7.65% 10/1/06 Ba3 1,070,000 1,198,400 866051KY
Sylvania Gen. Oblig. 7.45% 12/1/10 Aa 875,000 1,025,938 871446FD
Tiffin San. Swr. Impt. Gen. Oblig. Ltd. Tax
7.10% 12/1/11 A 1,000,000 1,150,000 886563DG
Toledo Univ. Gen. Receipts 7.125% 6/1/20,
(MBIA Insured) (Pre-Refunded to 6/1/00
@ 102) (e) Aaa 700,000 824,250 915138BH
Trumbull County Hosp. Rev. (Trumbull Mem.
Hosp. Proj.) 9.625% 11/1/12, (FGIC Insured)
(Pre-Refunded to 11/1/95 @ 102) (e) Aaa 50,000 56,500 898138AQ
Union County Gen. Oblig. (Mem. Hosp.)
7.40% 12/1/10 A1 680,000 776,900 906412CC
Warren County: 935154ML
Ltd. Tax 6.65% 12/1/11 Aa 500,000 585,000 935154ML
6.10% 12/1/12 Aa 500,000 555,000 935154NA
Warren Gen. Oblig. Ltd. Tax 8.625% 11/15/13
(Pre-Refunded to11/15/98 @ 102) (e) Baa 1,000,000 1,226,250 935460EW
Warren Hosp. Rev. Rfdg. (Warren Gen.
Hosp. Proj.) Series B, 7.30% 11/15/14 BBB 4,105,000 4,469,319 935482CN
Warren Hsg. Dev. Corp. Rev. (1st Mtg. Rev.)
Section 8:
7.25% 6/1/04 - 200,000 205,000 935485BB
7.25% 6/1/05 - 200,000 205,500 935485BC
7.25% 6/1/06 - 200,000 205,750 935485BD
7.25% 6/1/07 - 200,000 206,000 935485BE
7.25% 6/1/08 - 200,000 206,250 935485BF
Washington County Ind. Dev. Rev. Rfdg.
(Kmart Corp. Proj.) 6.70% 3/15/07 A 1,080,000 1,196,100 938157BT
Wauseon Exempted Village School Dist.
7.25% 12/1/10 A 1,000,000 1,148,750 943436BQ
Westerville Minerva Park & Blendon Joint
Township Hosp. Dist. Rev.
Hosp. Impt. Rfdg.(St. Anns Hosp. Proj.)
9.50% 9/15/12 (AMBAC Insured) Aaa 150,000 166,875 960051AY
Rfdg. Series B, (St. Anns Hosp. Proj.) 7%
9/15/12, (AMBAC Insured) Aaa 2,000,000 2,292,500 960051BY
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT
OHIO - CONTINUED
Whitehall City School Dist. 7.25% 12/1/13
(Pre-Refunded to12/1/99 @ 102) A $ 500,000 $ 592,500 965152FR
Willoughby Gen. Oblig. Road Impt. Ltd.
Tax 7.40% 12/1/11 A 1,200,000 1,525,500 971090PR
Wright Univ. Gen. Receipts 5.15% 5/1/11,
(AMBAC Insured) Aaa 1,000,000 993,750 982354AT
Xenia Hsg. Dev. Corp. Rev. 1st Lien
(Xenia Tower Proj.) Section 8, 7.75%
2/1/10 - 2,095,000 2,163,088 984077AA
Youngstown Ltd. Tax 7.55% 12/1/11 Baa 1,500,000 1,683,750 987643RH
405,901,629
PUERTO RICO - 9.0%
Puerto Rico Commonwealth Aqueduct & Swr.
Auth. Rev. Series A, 7.875% 7/1/17 Baa 750,000 867,188 745160KC
Puerto Rico Commonwealth Gen. Oblig.:
Rfdg. Series 1988, 0% 7/1/07 Baa1 2,760,000 1,376,550 7451435D
Unltd. Tax Series 1991:
0% 7/1/06 Baa1 3,850,000 2,035,688 745144BX
0% 7/1/07 Baa1 3,150,000 1,571,063 745144BY
5% 7/1/21 Baa1 5,000,000 4,750,000 745144KJ
Puerto Rico Commonwealth Hwy. & Trns.
Auth. Rev. Series W, 5.50% 7/1/13 Baa1 15,250,000 15,459,688 745181BZ
Puerto Rico Commonwealth Urban
Renewal & Hsg. Corp. Rfdg. 7.875%
10/1/04 Baa1 2,000,000 2,340,000 745245ES
Puerto Rico Elec. Pwr. Auth. Pwr. Rev. Rfdg.
Series N, 0% 7/1/01, (BIG Insured) Aaa 4,125,000 2,908,125 745268JF
Puerto Rico Infrastructure Fing. Auth. Spl.
Tax Series 1988 A, 7.75% 7/1/08 Baa1 2,500,000 2,837,500 745219AQ
Puerto Rico Pub. Bldg. Auth. Gtd. Pub.
Ed. & Health Facs. Rfdg. Series I, 0%
7/1/04 (FGIC Insured) Aaa 5,620,000 3,400,100 745232GH
Puerto Rico Pub. Bldg. Auth. Rev. Rfdg.
Series L, 5.50% 7/1/21 Baa1 2,000,000 2,037,500 745235GJ
Puerto Rico Tel. Auth. Rev. 5.25% 1/1/04,
(AMBAC Insured) (d) Aaa 2,000,000 2,065,000 745297HX
41,648,402
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT
U.S. VIRGIN ISLANDS - 0.4%
Virgin Islands Pub. Fin. Auth. Rev. Rfdg.
Series A, 7.25% 10/1/18 (Escrowed to
Maturity) (e) - $ 1,500,000 $ 1,687,500 927676CF
TOTAL MUNICIPAL BONDS
(Cost $411,789,092) 449,237,531
MUNICIPAL NOTES (A)- 2.8%

OHIO - 2.8%
Cincinnati Univ. Gen. Receipts BAN
Series S, 3.02% 9/1/94 MIG 1 2,800,000 2,809,688 914118SQ
Dayton Spl. Facs. Rev. Rfdg. (Emery Air Freight
Corp.) Series 1993-E, 3.15%,
LOC Mellon Bank, VRDN VMIG 1 3,000,000 3,000,000 239874AH
Ohio Air Quality Dev. Auth. Dev. Rev.
(JMG Funding Ltd. Partnership) Series 1992 B,
3.40%, LOC Societe Generale, VRDN (b) AA 5,000,000 5,000,000 677525KH
Ohio State Univ. Rev. (Gen. Receipts)
Series 1985 B, 3.25%, LOC Industrial Bank
of Japan, VRDN VMIG 1 1,890,000 1,890,000 677653QG
TOTAL MUNICIPAL NOTES
(Cost $12,693,956) 12,699,688
TOTAL INVESTMENTS - 100%
(Cost $424,483,048) $ 461,937,219

SECURITY TYPE ABBREVIATIONS
BAN - Bond Anticipation Notes
VRDN - Variable Rate Demand Notes
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals (AMT securities).
(c) Standard & Poor's Corporation credit ratings are used in the
absence of a rating by Moody's Investors Service, Inc.
(d) Inverse floating rate security is a security where the coupon is
inversely indexed to a floating interest rate multiplied by a specified
factor. If the floating rate is high enough, the coupon rate may be zero or
be a negative amount that is carried forward to reduce future interest
and/or principal payments. The price may be considerably more volatile than
the price
of a comparable fixed rate security.
(e) Security collateralized by an amount sufficient to pay interest and
principal.
INCOME TAX INFORMATION
At December 31, 1993 the aggregate cost of investment securities for income
tax purposes was $424,483,048. Net unrealized appreciation aggregated
$37,454,171, of which $37,549,423 related to appreciated investment
securities and $95,252 related to depreciated investment securities.
The fund hereby designates $790,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
At December 31, 1993 the fund was required to defer $3,500,000 of losses on
futures contracts.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investments for the period ended is as follows (ratings are unaudited):

MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 53.2% AAA, AA, A 51.0%
Baa 16.8% BBB 9.4%
Ba 3.8% BB 3.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 17.0%.
The distribution of municipal securities by revenue source, as a percentage
of total value of investments, is as follows:

General Obligation 24.4%
Health Care 20.9
Water & Sewer 13.1
Others
(individually less than 10%) 41.6
TOTAL 100.0%
FIDELITY OHIO TAX-FREE HIGH YIELD PORTFOLIO

FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
DECEMBER 31, 1993

ASSETS

Investment in securities, at value (cost $424,483,048) $ 461,937,219
(Notes 1 and 2) - See accompanying schedule

Interest receivable 6,839,063

TOTAL ASSETS 468,776,282

LIABILITIES

Payable to custodian bank $ 47,632

Payable for investments purchased 9,934,306

Payable for fund shares redeemed 220,096

Dividends payable 438,032

Accrued management fee 155,984

Other payables and accrued expenses 108,178

TOTAL LIABILITIES 10,904,228

NET ASSETS $ 457,872,054

Net Assets consist of:

Paid in capital $ 420,133,674

Accumulated undistributed net realized gain (loss) on 284,209
investments

Net unrealized appreciation (depreciation) on 37,454,171
investment securities

NET ASSETS, for 38,092,243 shares outstanding $ 457,872,054

NET ASSET VALUE, offering price and redemption price per $12.02
share ($457,872,054 (divided by) 38,092,243 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1993

INTEREST INCOME $ 27,611,433

EXPENSES

Management fee (Note 4) $ 1,801,750

Transfer agent, accounting and custodian fees and 666,009
expenses (Note 4)

Non-interested trustees' compensation 1,212

Registration fees 21,580

Audit 32,225

Legal 5,033

Miscellaneous 10,572

TOTAL EXPENSES 2,538,381

NET INTEREST INCOME $ 25,073,052

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
(NOTES 1 AND 3)
Net realized gain (loss) on:

Investment securities 13,696,874

Futures contracts (934,372) 12,762,502

Change in net unrealized appreciation (depreciation) on:

Investment securities 12,904,374

Futures contracts (22,808) 12,881,566

NET GAIN (LOSS) 25,644,068

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM $ 50,717,120
OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

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

1993 1992

INCREASE (DECREASE) IN NET ASSETS

Operations $ 25,073,052 $ 22,678,473
Net interest income

Net realized gain (loss) on investments 12,762,502 1,413,229

Change in net unrealized appreciation (depreciation) 12,881,566 5,834,995
on investments

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 50,717,120 29,926,697
FROM
OPERATIONS

Distributions to shareholders from: (25,073,052) (22,678,473)
Net interest income

Net realized gain (9,306,252) -

Share transactions 158,431,961 151,122,417
Net proceeds from sales of shares

Reinvestment of distributions from: 19,461,633 17,572,989
Net interest income

Net realized gain 7,508,556 -

Cost of shares redeemed (128,728,993) (118,849,817)

Net increase (decrease) in net assets resulting from 56,673,157 49,845,589
share transactions

TOTAL INCREASE (DECREASE) IN NET ASSETS 73,010,973 57,093,813

NET ASSETS

Beginning of period 384,861,081 327,767,268

End of period $ 457,872,054 $ 384,861,081

OTHER INFORMATION
Shares

Sold 13,275,725 13,271,507

Issued in reinvestment of distributions from: 1,624,371 1,544,224
Net interest income

Net realized gain 628,331 -

Redeemed (10,764,781) (10,447,598)

Net increase (decrease) 4,763,646 4,368,133

</TABLE>

FINANCIAL HIGHLIGHTS

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

1993 1992 1991 1990 1989

SELECTED PER-SHARE DATA

Net asset value, $ 11.550 $ 11.320 $ 10.840 $ 10.790 $ 10.500
beginning of
period

Income from Investme .693 .718 .719 .726 .725
nt
Operations
Net interest
income

Net realized and .720 .230 .480 .050 .290
unrealized gain
(loss) on
investments

Total from investment 1.413 .948 1.199 .776 1.015
operations

Less Distributions (.693) (.718) (.719) (.726) (.725)
From net interest
income

From net realized (.250) - - - -
gain on
investments

Total distributions (.943) (.718) (.719) (.726) (.725)

Net asset value, $ 12.020 $ 11.550 $ 11.320 $ 10.840 $ 10.790
end of period

TOTAL RETURN 12.56 8.66 11.45 7.50 9.99
% % % % %

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of $ 457,872 $ 384,861 $ 327,767 $ 241,616 $ 200,941
period (000
omitted)

Ratio of expenses to .57 .61 .64 .66 .71
average net assets % % % % %

Ratio of net interest 5.67 6.31 6.53 6.82 6.79
income to average % % % % %
net assets

Portfolio turnover 41 20 11 12 22
rate % % % % %

</TABLE>

FIDELITY OHIO MUNICIPAL MONEY MARKET PORTFOLIO

PERFORMANCE: THE BOTTOM LINE

To measure a money market fund's performance, you can look at either total
return or yield. Total return reflects the change in a fund's share price
over a given period and reinvestment of its dividends (or income). 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 during the periods shown,
the total returns, dividends and yields would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1993 PAST 1 LIFE OF
YEAR FUND

Ohio Municipal Money Market 2.09% 18.65%

Consumer Price Index 2.75% 17.01%

Average Ohio Tax-Free
Money Market Fund 2.08% 17.19

CUMULATIVE TOTAL RETURNS reflect actual performance over a set period - in
this case, one year or since the fund started on August 29, 1989. For
example, if you invested $1,000 in a fund that had a 5% return over the
past year, you would end up with $1,050. Comparing the fund's performance
to the consumer price index (CPI) helps show how your investment did
compared to inflation. To measure how the fund stacked up against its
peers, you can compare its return to the average Ohio tax-free money market
fund's total return. This average currently reflects the performance of 10
Ohio tax-free money market funds tracked by IBC/Donoghue. (The periods
covered by the CPI and IBC/Donoghue numbers are the closest available match
to those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1993 PAST 1 LIFE OF
YEAR FUND

Ohio Municipal Money Market 2.09% 4.01%

Consumer Price Index 2.75% 3.69%

Average Ohio Tax-Free
Money Market Fund 2.08% 3.72%

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

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
12/31/92 3/31/93 6/30/93 9/30/93 12/31/93

Ohio Municipal 3.01% 2.20% 1.88% 2.29% 2.44%
Money Market

Average Ohio Tax-Free 3.01% 2.13% 1.90% 2.25% 2.20%
Money Market Fund

Ohio Municipal Money 5.08% 3.72% 3.18% 3.87% 4.12%
Market Tax-equivalent

Average All Taxable 2.86% 2.66% 2.63% 2.65% 2.72%
Money Market Fund

</TABLE>

Row: 1, Col: 1, Value: 3.01
Row: 1, Col: 2, Value: 3.01
Row: 2, Col: 1, Value: 2.2
Row: 2, Col: 2, Value: 2.13
Row: 3, Col: 1, Value: 1.88
Row: 3, Col: 2, Value: 1.9
Row: 4, Col: 1, Value: 2.29
Row: 4, Col: 2, Value: 2.25
Row: 5, Col: 1, Value: 2.44
Row: 5, Col: 2, Value: 2.2
3% -
2% -
1% -
0%
Ohio Tax-Free
Money Market
Average Ohio
Tax-Free Money
Market Fund
YIELD refers to the income paid by the fund over a given period. Yields for
money market funds are usually for seven-day periods, expressed as annual
percentage rates. A yield that assumes income earned is reinvested or
compounded is called an effective yield. The chart above shows the fund's
current seven-day yield at quarterly intervals over the past year. You can
compare these yields to the average tax-free money market fund. Or you can
look at the fund's tax-equivalent yield, which is based on a combined
effective 1993 federal and Ohio state income tax rate of 40.80%. The
tax-equivalent figures are useful in seeing how the fund stacked up against
the average taxable money market fund as tracked by IBC/Donoghue.
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS 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. And there is no
assurance that a money fund
will maintain a $1 share price.
(checkmark)
FIDELITY OHIO MUNICIPAL MONEY MARKET PORTFOLIO

FUND TALK: THE MANAGER'S OVERVIEW

An interview with Jan Bradburn, Portfolio Manager of Fidelity Ohio
Municipal Money Market Portfolio
Q. JAN, WHAT HAS HAPPENED TO SHORT-TERM INTEREST RATES OVER THE LAST YEAR?
A. The key feature last year was the stability of short-term interest
rates. Both the federal funds rate - what banks charge each other for
overnight loans - and the discount rate - what the Federal Reserve charges
member banks - have been at or near 3% ever since the fall of 1992. While
tax-free interest rates have varied slightly along the way with the impact
of technical factors, the municipal market, too, has been remarkably
stable. Nor was inflation a big issue in the market, despite brief scares
last spring and again in November.
Q. HOW DID YOU MANAGE THE FUND IN THAT KIND OF ENVIRONMENT?
A. Largely with an eye toward factors affecting supply and demand. Summer
is the borrowing season for most states, including Ohio. The increased
supply of new issues drives interest rates up and prices down. Accordingly,
I took the opportunity to extend the fund's average maturity from around 60
days in June out to 80 days or more by the fall. Then as supply dried up
and we began to hear rumblings of inflation, I let the average maturity
roll back down toward a neutral target of 60 days. Finally, as inflation
fears subsided and supply reentered the market, I extended the fund to lock
in higher yields than were previously available. The fund's average
maturity at the end of December was 78 days.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on December 31, 1993 was 2.44%, compared to
3.01% a year ago, when technical factors lifted the yield temporarily. The
latest yield translates into a tax-equivalent yield of 4.12% for investors
in the 40.80% combined effective 1993 federal and state tax bracket. The
fund's total return for the entire year - which assumes reinvestment of
monthly dividends - was 2.09%. The average Ohio tax-free money market fund
had a total return of 2.08%.
Q. WHAT EXPLAINS PERFORMANCE?
A. There were a few factors; a 45.4% stake in issues subject to the
alternative minimum tax, which offer more yield; and a 12% stake in some
simple derivatives, among them. The derivatives I bought combine a
long-term municipal bond with a "put," or an option to sell to a third
party, typically a bank. The end product is an investment that pays a
short-term variable interest rate and can be put on short notice, usually
seven days. It acts much like any other variable rate demand note the fund
might own, with one key difference: the yield is slightly higher, a fact
that has more to do with the added complexity of these instruments than
added investment risk.
Q. WHAT'S AHEAD FOR THE FUND?
A. Assuming the economy continues to improve, the Fed could raise interest
rates, perhaps before the end of the second quarter of calendar 1994.
However, I wouldn't want to get too defensive and give up yield unless the
inflation outlook were to change dramatically. That suggests that a neutral
average maturity might be the best approach in the months ahead - somewhere
between 60 and 70 days.
FUND FACTS
GOAL: tax-free income and
stability by investing in
high-quality short-term Ohio
municipal securities
START DATE: August 29, 1989
SIZE: as of December 31,
1993, over $262 million
MANAGER: Janice Bradburn,
since October 1993; manager,
Fidelity and Spartan
Massachusetts Municipal
Money Market funds, since
January 1992; Fidelity New
York Tax-Free Money Market
Portfolio, since September
1989; and Spartan New
York Municipal Money Market
Portfolio, since February 1990
(checkmark)

WORDS TO KNOW
COMMERCIAL PAPER: A security
issued by a municipality to
finance capital or operating
needs.
FEDERAL FUNDS RATE: The interest
rate banks charge each other
for overnight loans.
MATURITY: The time remaining
before an issuer is scheduled
to repay the principal amount
on a debt security. When the
fund's average maturity -
weighted by dollar amount -
is short, the fund manager is
anticipating a rise in interest
rates. When the average
maturity is long, the manager
is expecting rates to fall.
When the average maturity is
neutral, the manager wants
the flexibility to respond to
rising rates, while still
capturing a portion of the
higher yields available from
issues with longer maturities.
MUNICIPAL NOTE: A security
issued in advance of future
tax or other revenues and
payable from those specific
sources.
TENDER BOND: A variable-rate,
long-term security that gives
the bond holder the option to
redeem the bond at face value
before maturity.
VARIABLE RATE DEMAND NOTE
(VRDN): A tender bond that
can be redeemed on short
notice, typically one or seven
days. VRDNs are useful in
managing the fund's average
maturity and liquidity.
FIDELITY OHIO MUNICIPAL MONEY MARKET PORTFOLIO

INVESTMENT CHANGES

MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
12/31/93 6/30/93 12/31/92

0 - 30 50 62 55

31 - 90 12 10 13

91 - 180 22 18 20

181 - 397 16 10 12

WEIGHTED AVERAGE MATURITY
12/31/93 6/30/93 12/31/92

Ohio Municipal
Money Market 78 days 61 days 61 days

Average Ohio Tax-Free
Money Market Fund* 71 days 64 days 58 days

ASSET ALLOCATION
AS OF 12/31/93 AS OF 6/30/93

Row: 1, Col: 1, Value: 50.0
Row: 1, Col: 2, Value: 9.0
Row: 1, Col: 3, Value: 8.0
Row: 1, Col: 4, Value: 30.0
Row: 1, Col: 5, Value: 3.0
Row: 1, Col: 1, Value: 50.0
Row: 1, Col: 2, Value: 7.0
Row: 1, Col: 3, Value: 8.0
Row: 1, Col: 4, Value: 33.0
Row: 1, Col: 5, Value: 2.0
Variable rate
demand notes
(VRDNs) 49%
Commercial
paper 8%
Tender bonds 10%
Municipal
notes 27%
Other 6%
Variable rate
demand notes
(VRDNs) 50%
Commercial
paper 7%
Tender bonds 8%
Municipal
notes 33%
Other 2%
* SOURCE: IBC/DONOGHUE'S MONEY FUND REPORT(Registered trademark)
FIDELITY OHIO TAX-FREE MONEY MARKET PORTFOLIO

INVESTMENTS/DECEMBER 31, 1993
(Showing Percentage of Total Value of Investments)

MUNICIPAL SECURITIES (A) - 100%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
OHIO - 100.0%
Akron Gen. Oblig. San. Swr. Sys. Impt.
BAN 2.80% 6/15/94 $ 3,000,000 $ 3,004,024 010033GY
Akron Gen. Oblig. Str. Impt. Spl. Assessment BAN
2.93% 12/15/94 1,000,000 1,001,668 010095AB
Bedford Heights Ind. Dev. (Olympic Steel) Series 1989,
3.45%, LOC Nat'l. City Bank, Cleveland, VRDN (b) 1,700,000 1,700,000
076122AB
Centerville School Dist. BAN 2.50% 6/29/94 5,000,000 5,000,000 152239DU
Cincinnati Univ. Gen. Receipts BAN: 914118SM
Series K-1, 2.81% 3/23/94 7,400,000 7,404,161 914118SM
Series N, 2.81% 3/23/94 2,400,000 2,401,350 914118SN
Cleveland-Cuyahoga County Port Auth. Rev. (Rock'n Roll
Hall of Fame & Museum Proj.) 3.35%, LOC Credit
Local De France, VRDN 5,400,000 5,400,000 186103AB
Cleveland Public Pwr. Sys. Rev. BAN, Series 93-B,
3.50% 8/1/94 9,000,000 9,021,322 186398BW
Dayton Spl. Facs. Rev. Rfdg. (Emery Air Freight Corp.)
Series 1993-E, 3.15%LOC Mellon Bank, N.A, VRDN 3,000,000 3,000,000
239874AH
Dublin BAN 3% 3/29/94 4,285,000 4,290,021 263713NQ
Fairfax Ind. Dev. Rev. (Johnson & Hardin Co. Proj.)
Series 1990, 3.40%, LOC Bank of Ohio, VRDN (b) 3,700,000 3,700,000
304040AA
Green Local School Dist. Unlimited Tax Gen. Oblig.
BAN 3.30% 4/14/94 6,000,000 6,010,938 393190DJ
Hamilton County Health Care Facs. Rev. (West Park
Retirement Commty.) Series 1989, 3%, LOC Fifth
Third Bank, VRDN 1,000,000 1,000,000 40727HAV
Hamilton County Ind. Dev. Rev. VRDN (b):
(Visual Management Group Proj.) Series 1989,
3.40% LOC National Bank of Detroit 1,140,000 1,140,000 407274DC
Holmes County Ind. Dev. Rev.
(Poultry Processing, Inc.) Series 1990, 3.50%,
LOC Rabobank Nederland, 500,000 500,000 436370AC
Lorain County Ind. Dev. (French Creek Partners)
Series A, 3.40%, LOC Central Trust, VRDN (b) 1,150,000 1,150,000
543587CP
Marion County Hosp. Impt. Rev. (Pooled Lease Prog.)
LOC Bank One, OT: 569122AY
Series 1991, 2.65% 5/1/94 4,230,000 4,230,000 569122AY
Series 1992, 2.90% 5/1/94 9,700,000 9,700,000 569122AZ
Medina County Ind. Dev. Rev. (North American Roto
Engravers, Inc. Proj.) Series 1988 3.35%,
LOC Bank One, VRDN (b) 1,040,000 1,040,000 584724CP
Montgomery County Ind. Dev. Rev. (Modern Industrial
Plastics, Inc.) Series 1988, 3.375%,
LOC Industrial Bank of Japan, VRDN 2,000,000 2,000,000 613535EY
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
OHIO - CONTINUED
Mt. Vernon City School Dist. BAN 2.50% 6/1/94 $ 3,400,000 $ 3,400,000
623640CM
Muskingum County Ind. Dev. Rev. (Elder-Beerman
Stores Inc.) 2.95%, LOC Pittsburgh Nat'l. Bank, VRDN 700,000 700,000
628078BP
Ohio Air Quality Dev. Auth.:
Multi-Mode Rfdg. (Timken Proj.), 2.75%,
LOC Credit Suisse, VRDN 4,700,000 4,700,000 677525KD
(JMG Funding, LTD Prtn.) LOC Society Generale, VRDN (b): 677525KG
Series 1992 A, 3.15% 6,000,000 6,000,000 677525KG
Series 1992 B, 3.40% 7,300,000 7,300,000 677525KH
Ohio Custodial Receipts Series 1991 A-15, 3.25%
(Liquidity Enhancement Mitsui Bank, Ltd.) (c) 3,600,000 3,600,000
55377EAG
Ohio Higher Edl. Facs. Rev. Series 11-1990A 3.25%,
Partnership Ctfs. (Liquidity Enhancement Banker's
Trust )(c) 4,940,000 4,940,000 67756BDH
Ohio Ind. Dev. Rev. VRDN (b): 677565D7
(Aerolite Extrusion) Series 1991 IA, 3.50%
LOC Nat'l City Bank of Columbus 190,000 190,000 6775654Q
(All Tools, Inc.) Series 1989 IIIA, 3.50%,
LOC Nat'l City Bank of Columbus 105,000 105,000 677565D7
(Anomatic Corp.) Series 1989 I, 3.50%,
LOC Nat'l City Bank of Columbus 295,000 295,000 677565YS
(Arthur Corp.) Series 1989 IIIA, 3.50%,
LOC Nat'l City Bank of Columbus 340,000 340,000 677565D8
(Burnham Corp.): 677565XF
Series 1987 N, 3.50%, LOC Bank One 640,000 640,000 677565XF
Series 1988 II, 3.50%, LOC Central Trust Co. 530,000 530,000 677565YG
(CCE Inc.) Series 1989, 3.50%,
LOC Bank of Ohio 210,000 210,000 677565YQ
(Carpenter/Clapp & Haney Tool Co.)
Series 1987 P, 3.50%, LOC Bank One 435,000 435,000 677565XL
(Cole Tool & Die) Series 1988 H, 3.50%,
LOC Bank One 330,000 330,000 677565XQ
(Corpad Head Co.) Series 1988 II, 3.50%,
LOC Bank of Ohio 675,000 675,000 677565YJ
(Die Matic Inc.) Series O, 3.50%,
LOC Bank One, Columbus 475,000 475,000 677565XG
(Dramex Int'l., Inc.) VRDN (b): 677565XV
Series 1988 I, 3.50%, LOC Bank One 1,000,000 1,000,000 677565XV
Series 1988 II, 3.50%, LOC Bank of Ohio 200,000 200,000 677565YK
(EF Realty) Series A, 3.50%, LOC Nat'l.
City Bank, Cleveland 215,000 215,000 677565RC
(EPIC Technologies Inc.) Series 1988 D,
3.50%, LOC Bank One, Columbus 310,000 310,000 677565XT
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
OHIO - CONTINUED
Ohio Ind. Dev. Rev., VRDN (b): 677565D7 - continued
(Economy Machine & Tool North Inc. Proj.)
Series 1988 II, 3.50%, LOC Nat'l. City Bank, Columbus $ 290,000 $ 290,000
677565YF
(Gary W. James) Series 1986 B,
3.50%, LOC Nat'l City Bank of Columbus 315,000 315,000 677565RF
(HGN Realty/Shalmet Ohio, Inc.) Series 1989 III A,
3.50%, LOC Nat'l City Bank of Columbus 1,840,000 1,840,000 677565E6
(Hydro Tube Corp.) 3.50%,
LOC Nat'l City Bank of Columbus 95,000 95,000 6775654U
(K&S Realty) Series 1989 I, 3.50%,
LOC Nat'l City Bank of Columbus 340,000 340,000 677565YR
(K&S Realty/Starr Fabricating, Inc.) Series 1989 III,
3.50%, LOC Nat'l City Bank of Columbus 255,000 255,000 677565E7
(Kaufmans Bakery) Series K, 3.50%,
LOC Bank One, Columbus 995,000 995,000 677565XH
(Masashi Nagai/Snair Co.) Series H, 3.50%,
LOC Bank One, Columbus 1,410,000 1,410,000 677565YD
(Midwest Acoust-A-Fiber, Inc.) Series 1989 I, 3.50%,
LOC Nat'l City Bank of Columbus 640,000 640,000 677565YP
(Morrow Macke Realty) Series 1988 C, 3.50%,
LOC Bank One 800,000 800,000 677565XS
(Oak Printing) Series 1991, 3.50%,
LOC Nat'l City Bank of Columbus 750,000 750,000 6775654B
(Plasticos Co.) Series 1989 IIIA, 3.50%,
LOC Nat'l City Bank of Columbus 770,000 770,000 677565D9
(Prentke Romich) Series 1989 III, 3.50%,
LOC Nat'l City Bank of Columbus 145,000 145,000 677565E2
(P. Thompson Steel Co.) Series 1988, 3.50%,
LOC Bank One, Columbus 500,000 500,000 677565XR
(Quick Tab) Series 1989 IIIA, 3.50%,
LOC Nat'l City Bank of Columbus 400,000 400,000 677565E5
(SBD Properties Co.) Series 1986 L, 3.50%,
LOC Nat'l. City Bank, Cleveland 215,000 215,000 677565RM
(Samuel and Annie Sherman) Series 1989 III A, 3.50%,
LOC Nat'l City Bank of Columbus 400,000 400,000 677565B5
(Sheffield Steel) Series 1988 B, 3.50%,
LOC Bank One 85,000 85,000 677565XP
(Southwest Fin. Svcs.) Series 1986, 3.50%,
LOC Nat'l. City Bank of Columbus 85,000 85,000 677565RJ
(Standby Screw) Series 1991, 3.50%,
LOC Nat'l City Bank of Columbus 940,000 940,000 6775654S
(Steubenville Area) Series 1988 II, 3.50%,
LOC Bank of Ohio 370,000 370,000 677565YM
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
OHIO - CONTINUED
Ohio Ind. Dev. Rev., VRDN (b): 677565D7 - continued
(Thomas K. Issacs) Series 1990 IB, 3.50%,
LOC Nat'l City Bank of Columbus $ 270,000 $ 270,000 677565P2
(United Steel Svc.) Series 1988 J, 3.50%,
LOC Bank One 790,000 790,000 677565XW
(VRE Inc.) Series F, 3.50%,
LOC Bank One, Columbus 225,000 225,000 677565XU
(Valtronic Technology Inc.) 3.50%,
LOC Bank One, Columbus 85,000 85,000 677565ZL
(Walker-Williams Lumber Co.) Series 1989 IIIA, 3.50%,
LOC Nat'l City Bank of Columbus 1,370,000 1,370,00 677565E40
(Wooster Iron Metal Co.) Series 1988 R, 3.50%,
LOC Bank One 620,000 620,000 677565YC
Ohio Partnership Ctfs. SBPA Merrill Lynch (c) 232265A2:
(Cuyahoga County Hosp. Rev. CSA Health Network)
Series P-15 3.25% 8,000,000 8,000,000 232265A2
(Hamilton County Swr. Bonds) Series PA-15, 3.20% 5,660,000 5,660,000
407288GE
(Ohio Higher Ed. Bonds) Series P13, 3.20% 2,400,000 2,400,000
677597MT
(Ohio Wtr. Dev. Bonds): 6776583H
Series PA-1016A, 3.20% 2,940,000 2,940,000 6776583H
Series PA-1016B 3.20% 3,700,000 3,700,00 6776583M0
Ohio Pub. Facs. Commty. Higher Ed. Facs. Bonds,
Series II-93B, 4.625% 12/1/94 8,000,000 8,130,699 677597NP
Ohio Pub. Facs. Commty. Mental Health Facs. Bonds,
Series II-B/1993 B, 4.25% 6/1/94 2,000,000 2,011,842 677597MW
Ohio State Hwy. Bonds 6.75% 5/15/94 6,000,000 6,087,548 6775174U
Ohio Wtr. Dev. Auth. (Cleveland Elec. Proj.) VT
LOC Citibank: 679997RV
Series 1988A-1, 2.50% 2/22/94 (b) 8,500,000 8,500,000 679997RV
Series 1988A-2 2.50% 2/24/94 1,000,000 1,000,000 679997RT
Ohio Wtr. Dev. Auth. Poll. Cont. Facs. Rev. (Ohio Edison
Co. Proj.) Series 1988 B, 3.125% 9/3/94,
LOC Barclays Bank, OT (b) 8,000,000 8,004,749 677660DH
Ohio Wtr. Dev. Auth. Poll. Cont. Facs. Auth. VT
LOC Citibank, New York: 679997RW
(Cleveland Elec. Proj.) Series 1988A-2, 2.50%
2/22/94 VT (b) 3,000,000 3,000,000 679997RW
(Toledo Edison Co. Proj.) Series 1988A 2.50%
2/22/94 2,000,000 2,000,000 679997RU
Ohio Wtr. Dev. Auth Poll. Cont. Rev. (Dequesne Light Co.
Proj.) VT, LOC Toronto Dominion Bank (b): 679997RS
2.75% 1/27/94 2,000,000 2,000,000 679997RS
2.45% 2/23/94 3,500,000 3,500,000 679997SC
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
OHIO - CONTINUED
Sharonville Ind. Dev. Rev. (Xtec, Inc.) Series 1991, 3.40%,
LOC Fifth Third Bank, VRDN (b) $ 2,000,000 $ 2,000,000 819875CH
Southwestern City School Dist. BAN (Franklin & Pickway
County) 2.75% 5/17/94 9,000,000 9,011,653 840658DK
Stark County BAN: 855345TQ
3.06% 7/13/94 11,375,000 11,388,509 855345TQ
3.02% 10/26/94 1,340,000 1,342,342 855345TR
Stark County Ind. Dev. Rev. (Liquid Cont. Corp. Proj.)
Series 1987, 3.35%, LOC Bank One, VRDN (b) 410,000 410,000 855350DR
Student Loan Fund Corp. Student Loan Rev. VRDN: 863869AD
Series 1983 A, 3.25%, LOC Fuji Bank 1,650,000 1,650,000 863869AD
Series 1988 B-1, 3.40%, LOC Sumitomo Bank (b) 8,275,000 8,275,000
863869AL
Series 1988 B-2, 3.40%, LOC Sumitomo Bank (b) 575,000 575,000 863869AM
Series 1988 B-3, 3.40%, LOC Sumitomo Bank Ltd. (b) 500,000 500,000
863869AN
Series 1990-A2, 3.35%, LOC Natwest (b) 3,800,000 3,800,000 863869AQ
Series 1990-A3, 3.35%, LOC Nat'l. Westminster (b) 4,500,000 4,500,000
863869AR
Summit County Ind. Dev. Rev.: 866051FR
(American Laser Tech Inc. Proj.) 3.65%,
LOC Fuji Bank(b) 3,000,000 3,000,000 866051KE
(Ganzhorn Properties Proj.) 3.35%
LOC Bank One, Akron,VRDN 1,170,000 1,170,000 866051KW
(Keltec Inc. Proj.) Series 1987, 3.35% VRDN (b) 420,000 420,000
866051FR
(Kuchar Proj.); 866051HS
Series 1987, 3.35% VRDN (b) 740,000 740,000 866051FS
3.05% 4/1/94, OT (b) 580,000 580,000 866051HS
(Mannix County Proj.) Series 1987, 3.35%
VRDN (b) 1,740,000 1,740,000 866051FT
(SGS Tool Co. Proj.) 3% 4/1/94 OT (b) 3,250,000 3,250,000 866051HQ
(Spark Tec Int'l. Proj.) Series 1989, 3.10%
5/1/94 OT (b) 485,000 485,000 866051HC
Talawanda City School Dist. BAN 3.20% 4/7/94 4,000,000 4,006,668
874092CL
Toledo-Lucas County Convention & Visitors Bureau
Rev. Rfdg. (Toledo-Lucas County Convention Ctr. Proj.)
Series 1991, 3.25% LOC Marine Midland Bank
VRDN 2,265,000 2,265,00 889239AC0
Trumbull County Ind. Dev. Rev. (McDonald Steel Corp.)
Series 1990, 3.40%, LOC Marine Bank, VRDN (b) 2,300,000 2,300,000
898140CG
University of Cincinnati Gen. Receipt BAN Series S,
3.02% 9/1/94 2,800,000 2,803,989 914118SQ
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
OHIO - CONTINUED
Warren County Ind. Dev. Rev. VRDN: 935159BJ
(Amtex, Inc. Proj.) 3.25%, LOC National Bank of Detroit $ 1,000,000 $
1,000,000 935159BJ
(Johnson & Hardin Enterprise) Series 1990 A, 3.40%,
LOC Central Trust (b) 3,200,000 3,200,000 935159BR
Washington County Ind. Dev. Rev. (Forma Scientific, Inc. Proj.)
3.40%, LOC Bank of Ohio, VRDN (b) 1,000,000 1,000,000 938157BQ

TOTAL MUNICIPAL SECURITIES - 100% $ 262,631,483
Total Cost for Income Tax Purposes $ 262,631,483

SECURITY TYPE ABBREVIATIONS
BAN - Bond Anticipation Notes
CP - Commercial Paper
FRDN - Floating Rate Demand Notes
MT - Mandatory Tender
RAN - Revenue Anticipation Notes
OT - Optional Tender
TAN - Tax Anticipation Notes
TRAN - Tax & Revenue Anticipation Notes
VRDN - Variable Rate Demand Notes
VT - Variable Tender
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals (AMT securities).
5. Provides evidence of ownership in an underlying pool of municipal bonds.
INCOME TAX INFORMATION
At December 31, 1993, the fund had a capital loss carryforward of
approximately $11,200 of which $5,100 and $6,100 will expire on December
31, 1998, and 2000 respectively.
FIDELITY OHIO TAX-FREE MONEY MARKET PORTFOLIO

FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
DECEMBER 31, 1993

ASSETS

Investment in securities, at value (Note 1) - $ 262,631,483
See accompanying schedule

Interest receivable 1,425,484

TOTAL ASSETS 264,056,967

LIABILITIES

Payable to custodian bank $ 1,264,934

Share transactions in process 253,726

Dividends payable 18,766

Accrued management fee 91,399

Other payables and accrued expenses 56,801

TOTAL LIABILITIES 1,685,626

NET ASSETS $ 262,371,341

Net Assets consist of:

Paid in capital $ 262,382,570

Accumulated net realized gain (loss) on investments (11,229)

NET ASSETS, for 262,382,570 shares outstanding $ 262,371,341

NET ASSET VALUE, offering price and redemption price per $1.00
share ($262,371,341 (divided by) 262,382,570 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1993

INTEREST INCOME $ 6,483,818

EXPENSES

Management fee (Note 4) $ 1,015,231

Transfer agent, accounting and custodian fees and 386,857
expenses (Note 4)

Non-interested trustees' compensation 3,063

Registration fees 1,158

Audit 17,894

Legal 3,715

Miscellaneous 5,739

TOTAL EXPENSES 1,433,657

NET INTEREST INCOME 5,050,161

NET REALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 2,115

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 5,052,276

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

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

1993 1992

INCREASE (DECREASE) IN NET ASSETS

Operations $ 5,050,161 $ 7,132,648
Net interest income

Net realized gain (loss) on investments 2,115 (6,068)

Increase (decrease) in net unrealized gain from - (1,769)
accretion of market discount

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 5,052,276 7,124,811
FROM
OPERATIONS

Distributions to shareholders from net interest income (5,050,161) (7,132,648)

Share transactions at net asset value of $1.00 per share 376,255,537 319,616,154
Proceeds from sales of shares

Reinvestment of distributions from: 4,776,146 6,754,471
Net interest income

Cost of shares redeemed (388,910,557) (303,999,410)

Net increase (decrease) in net assets and shares (7,878,874) 22,371,215
resulting
from share transactions

TOTAL INCREASE (DECREASE) IN NET ASSETS (7,876,759) 22,363,378

NET ASSETS

Beginning of period 270,248,100 247,884,722

End of period $ 262,371,341 $ 270,248,100

</TABLE>

FINANCIAL HIGHLIGHTS

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<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED DECEMBER 31, AUGUST 29, 198
9
(COMMENCEME
NT
OF OPERATIONS) T
O
DECEMBER 31,

1993 1992 1991 1990 1989

SELECTED PER-SHARE DATA

Net asset value, 1.000 1.000 1.000 1.000 1.000
beginning of period

Income from Investmen .021 .028 .044 .058 .021
t
Operations
Net interest income

Dividends from net (.021) (.028) (.044) (.058) (.021)
interest income

Net asset value, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
end of period

TOTAL RETURN (dagger) 2.09% 2.81% 4.50% 5.90% 2.15%

RATIOS AND SUPPLEMENTAL DATA

Net assets, $ 262,371 $ 270,248 $ 247,885 $ 213,658 $ 57,748
end of period
(000 omitted)

Ratio of expenses to .59% .58% .47% .23% -
average net assets

Ratio of expenses to .59% .59% .64% .69% 1.14%*
average net assets
before expense
reductions

Ratio of net interest 2.07% 2.78% 4.41% 5.77% 6.37%*
income to average
net assets

</TABLE>

* ANNUALIZED
(dagger) TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
NOTES TO FINANCIAL STATEMENTS
For the period ended December 31, 1993

1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity Ohio Tax-Free High Yield Portfolio (the high yield fund) is a fund
of Fidelity Municipal Trust. Fidelity Ohio Municipal Money Market Portfolio
(the money market fund) is a fund of Fidelity Municipal 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
Municipal Trust and Fidelity Municipal 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 following summarizes the significant accounting policies of the
money market fund and the high yield fund:
SECURITY VALUATION.
HIGH YIELD 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. Short-term securities
maturing within sixty days are valued either at amortized cost or original
cost plus accrued interest, both of which approximate current value.
Securities for which quotations are not readily available through the
pricing service are valued at their fair value as determined in good faith
under consistently applied procedures under the general supervision of the
Board of Trustees.
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 all of its taxable income for the fiscal
year. The schedules of investments include information regarding income
taxes under the caption "Income Tax Information."
EXPENSES. Most expenses of each trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. 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 regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
losses deferred due to wash sales and futures and options transactions.
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.
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective January
1,1993, the funds adopted
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
Statement of Position 93-2: Determination, Disclosure, and Financial
Statement Presentation of Income, Capital Gain, and Return of Capital
Distributions by Investment Companies. As a result, the funds changed the
classification of distributions to shareholders to better disclose the
differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly, amounts
as of December 31, 1992 have been restated/reclassified as follows:
HIGH YIELD FUND. Paid in capital and accumulated net realized loss on
investments increased by $63,423.
MONEY MARKET FUND. No adjustments were necessary.
2. OPERATING POLICIES.
FUTURES CONTRACTS AND OPTIONS. The high yield fund may invest in futures
contracts and write options. These investments involve, to varying degrees,
elements of market risk and risks in excess of the amount recognized in the
Statement of Assets and Liabilities. The face or contract amounts reflect
the extent of the involvement the high yield fund has in the particular
classes of instruments. Risks may be caused by an imperfect correlation
between movements in the price of the instruments and the price of the
underlying securities and interest rates. Risks also may arise if there is
an illiquid secondary market for the instruments, or due to the inability
of counterparties to perform.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Options traded
on an exchange are valued using the last sale price or, in the absence of a
sale, the last offering price. Options traded over-the-counter are valued
using dealer-supplied valuations.
3. PURCHASES AND SALES OF
INVESTMENTS.
HIGH YIELD. Purchases and sales of securities, other than short-term
securities, aggregated $217,347,308 and $171,404,354 respectively.
The market value of futures contracts opened and closed amounted to
$238,156,510 and $243,366,517 respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, Fidelity Management
& Research Company (FMR) receives a monthly basic 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 each fund. The group fee rate
is the weighted average of a series of rates ranging from .15% to .37% and
is based on the monthly average net assets of all the mutual funds advised
by FMR. The annual individual fund fee rate is .25%. For the period, the
management fees were equivalent to annual rates of .41% and .42%,
respectively of average net assets for the high yield and money market
funds, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES -
CONTINUED
The Board of Trustees approved a new group fee rate schedule with rates
ranging from .1325% to .37%. Effective November 1,1993, FMR has voluntarily
agreed to implement this new group fee rate schedule as it results in the
same or a lower management fee.
On December 15, 1993, the shareholders of the high yield fund voted to
approve a proposal to amend the management contract. The new management fee
will reflect the new group fee rate schedule.
SUB-ADVISER FEE. As the money market fund's investment sub-adviser, FMR
Texas Inc., a wholly owned subsidiary of FMR, receives a fee from FMR of
50% of the management fee payable to FMR. The fee is paid prior to any
voluntary expense reimbursements which may be in effect, and after reducing
the fee for any payments by FMR pursuant to the fund's Distribution and
Service Plan.
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service
Plans (the Plans), and in accordance with Rule 12b-1 of the 1940 Act, FMR
or the funds' distributor, Fidelity Distributors Corporation (FDC), an
affiliate of FMR, may use their resources to pay administrative and
promotional expenses related to the sale of each fund's shares. Subject to
the approval of each Board of Trustees, the Plans also authorize payments
to third parties that assist in the sale of each fund's shares or render
shareholder support services. FMR or FDC has informed the funds that
payments made to third parties under the Plans amounted to $2,753 and
$101,895 for the high yield and money market funds, respectively, for the
period.
TRANSFER AGENT AND ACCOUNTING FEES. United Missouri Bank, N.A. (the Bank)
is the custodian and transfer and shareholder servicing agent for the
funds. The Bank has entered into a sub-contract with Fidelity Service Co.
(FSC), an affiliate of FMR, under which FSC performs the activities
associated with the funds' transfer and shareholder servicing agent and
accounting functions. The funds pay transfer agent fees based on the type,
size, number of accounts and number of transactions made by shareholders.
FSC pays for typesetting, printing and mailing of all shareholder reports,
except proxy statements. The accounting fee is based on the level of
average net assets for the month plus out-of-pocket expenses. For the
period, FSC received transfer agent and accounting fees amounting to
$452,121 and $174,640 for the high yield fund and $305,272 and $53,555 for
the money market fund, respectively.
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Fidelity Municipal Trust
and Fidelity Municipal Trust II and the
Shareholders of Fidelity Ohio Tax-Free
High Yield Portfolio and Fidelity Ohio
Municipal Money Market Portfolio:
We have audited the accompanying statements of assets and liabilities of
Fidelity Ohio Tax-Free High Yield Portfolio, a portfolio of the Fidelity
Municipal Trust , and Fidelity Ohio Municipal Money Market Portfolio, a
portfolio of the Fidelity Municipal Trust II including the schedules of
portfolio investments, as of December 31, 1993, and the related statements
of operations for the year then ended, the statements of changes in net
assets for each of the two years in the period then ended and the financial
highlights for each of the five years in the period then ended for the
Fidelity Ohio Tax-Free High Yield Portfolio, and the financial highlights
for each of the four years in the period then ended and for the period from
August 29, 1989 (commencement of operations) to December 31, 1989 for the
Fidelity Ohio Municipal Money Market Portfolio. These financial statements
and financial highlights are the responsibility of the Funds' management.
Our responsibility is to express an opinion on these financial statements
and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 1993 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Ohio Tax-Free High Yield Portfolio and Fidelity Ohio Municipal
Money Market Portfolio as of December 31, 1993, the results of their
operations for the year then ended, the changes in their net assets for
each of the two years then ended, and the financial highlights for each of
the five years in the period then ended for the Fidelity Ohio Tax-Free High
Yield Portfolio and for each of the four years in the period then ended and
for the period from August 29, 1989 (commencement of operations) to
December 31, 1989 for the Fidelity Ohio Municipal Money Market Portfolio,
in conformity with generally accepted accounting principles.
COOPERS & LYBRAND
Boston, Massachusetts
January 28, 1994
TO CALL FIDELITY

Fidelity Management & Research
Company
Boston, MA
SUB-ADVISER
FMR Texas Inc.
Irving, TX
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Peter J. Allegrini, Vice President
HIGH YIELD FUND
Thomas D. Maher, Assistant
Vice President - MONEY MARKET FUND
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Marvin L. Mann*
Edward H. Malone*
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
United Missouri Bank, N.A.
Kansas City, MO
and
Fidelity Service Co.
Boston, MA
CUSTODIAN
United Missouri Bank, N.A.
Kansas City, MO
THE FIDELITY
TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE

EXHIBIT 24(A)(5)
FIDELITY

(Registered trademark)
MICHIGAN
MUNICIPAL
PORTFOLIOS

ANNUAL REPORT
DECEMBER 31, 1993
CONTENTS

CHECK PAGE NUMBERS !!!

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<CAPTION>
<S> <C> <C>
PRESIDENT'S MESSAGE 3 Ned Johnson on minimizing taxes.

FIDELITY MICHIGAN TAX-FREE
HIGH YIELD PORTFOLIO

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 last six
months
and one year.

INVESTMENTS 11 A complete list of the fund's
investments with their market value.

FINANCIAL STATEMENTS 22 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.

FIDELITY MICHIGAN MUNICIPAL
MONEY MARKET PORTFOLIO

PERFORMANCE 26 How the fund has done over time.

FUND TALK 28 The manager's review of fund
performance, strategy, and outlook.

INVESTMENT CHANGES 30 A summary of major shifts in the
fund's investments over the last six
months
and one year.

INVESTMENTS 31 A complete list of the fund's
investments with their market value.

FINANCIAL STATEMENTS 35 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.

NOTES 39 Footnotes to the financial
statements.

REPORT OF INDEPENDENT 42 The auditor's opinion.
ACCOUNTANTS

</TABLE>

DEAR SHAREHOLDER:
Once the new year begins, many people start reviewing their finances and
calculating their tax bills. No one wants to pay more taxes than they have
to. But a recent survey of 500 U.S. households, conducted by Fidelity and
Yankelovich Partners, showed that few people have taken steps to reduce
their taxes under the new legislation. Many were not even aware that the
new tax laws were retroactive to January 1993.
Whether or not you're someone whose tax bill will increase as a result of
these changes, it may make sense to consider ways to keep more of what you
earn.
First, if your employer offers a 401(k) or 403(b) retirement savings plan,
consider enrolling. These plans are set up so you can make regular
contributions -
before taxes - to a retirement savings plan. They offer a disciplined
savings strategy, the ability to accumulate earnings tax-deferred, and
immediate tax savings. For example, if you earn $40,000 a year and
contribute 7% of your salary to your 401(k) plan, your annual contribution
is $2,800. That reduces your taxable income to $37,200 and, if you're in
the
28% tax bracket, saves you $784 in federal taxes. In addition, you pay no
taxes on any earnings until withdrawal.
It may be a good idea to contact your benefits office as soon as possible
to find out when you can enroll or increase your contribution. Most
employers allow employees to make changes only a few times each year.
Second, consider an IRA. Many people are eligible to make an IRA
contribution (up to $2,000) that is fully tax deductible. That includes
people who are not covered by company pension plans, or those within
certain income brackets. Even if you don't qualify for a fully deductible
contribution, any IRA earnings will grow tax-deferred until withdrawal.
Third, consider adding to your tax-free investments - either municipal
bonds or municipal bond funds. Often these can provide higher after-tax
yields than comparable taxable investments. For example, if you're in the
new 36% federal income tax bracket and invest $10,000 in a taxable
investment yielding 7%, you'll pay $252 in federal taxes and receive $448
in income. That same $10,000 invested in a tax-free bond fund yielding 5.5%
would allow you to keep $550 in income.
These are three investment strategies that could help lower your tax bill
in 1994. If you're interested in learning more, please call us at
1-800-544-8888 or visit a Fidelity Investor Center.
Wishing you a prosperous new year,
Edward C. Johnson 3d, Chairman
FIDELITY MICHIGAN TAX-FREE HIGH YIELD PORTFOLIO

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. Each figure
includes changes in a fund's share price, reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells bonds
that have grown in value). You can also look at the fund's income. If
Fidelity had not reimbursed certain fund expenses during the periods shown,
the total returns, dividends and yields would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1993 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND

Michigan Tax-Free High Yield 13.83% 61.89% 119.40%

Lehman Brothers Municipal Bond Index 12.29% 62.86% n/a

Average Michigan Tax-Exempt
Municipal Bond Fund 12.40% 59.32% n/a

Consumer Price Index (CPI) 2.75% 21.00% 34.13%

CUMULATIVE TOTAL RETURNS reflect actual performance over a set period - in
this case, one year, five years, or since the fund started on November 12,
1985. For example, if you invested $1,000 in a fund that had a 5% return
over the past year, you would end up with $1,050. You can compare these
figures to the performance of the Lehman Brothers Municipal Bond index - a
broad gauge of the municipal bond market. To measure how the fund stacked
up against its peers, you can look at the average Michigan tax-exempt
municipal bond fund, which reflects the performance of 24 Michigan
tax-exempt municipal bond funds tracked by Lipper Analytical Services. Both
benchmarks include reinvested dividends and capital gains, if any.
Comparing the fund's performance to the CPI helps show how your fund did
compared to inflation. (Figures for the CPI are as of the month end closest
to the fund's start.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1993 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND

Michigan Tax-Free High Yield 13.83% 10.11% 10.13%

Lehman Brothers Municipal Bond Index 12.29% 10.25% n/a

Average Michigan Tax-Exempt
Municipal Bond Fund 12.40% 9.76% n/a

Consumer Price Index 2.75% 3.89% 3.66%

11/30/85 10000.00 10000.00
12/31/85 10228.04 10087.90
01/31/86 10687.19 10682.08
02/28/86 11127.76 11105.62
03/31/86 11215.73 11109.18
04/30/86 11211.16 11117.62
05/31/86 11014.05 10936.62
06/30/86 11104.96 11040.96
07/31/86 11192.51 11107.98
08/31/86 11728.63 11605.28
09/30/86 11744.86 11634.41
10/31/86 11980.10 11835.34
11/30/86 12202.92 12069.80
12/31/86 12174.63 12036.48
01/31/87 12524.17 12398.90
02/28/87 12647.80 12459.90
03/31/87 12511.95 12327.83
04/30/87 11594.89 11709.22
05/31/87 11456.19 11651.14
06/30/87 11689.71 11993.22
07/31/87 11879.96 12115.55
08/31/87 11906.65 12142.81
09/30/87 11314.43 11695.10
10/31/87 11388.40 11736.50
11/30/87 11631.88 12042.94
12/31/87 11832.70 12217.69
01/31/88 12356.20 12652.88
02/29/88 12509.85 12786.62
03/31/88 12221.63 12637.66
04/30/88 12272.39 12733.70
05/31/88 12347.33 12696.90
06/30/88 12576.27 12882.66
07/31/88 12686.04 12966.65
08/31/88 12749.39 12978.07
09/30/88 12970.04 13212.97
10/31/88 13241.11 13446.18
11/30/88 13134.04 13323.01
12/31/88 13372.66 13459.30
01/31/89 13563.89 13737.64
02/28/89 13481.08 13580.90
03/31/89 13486.10 13548.44
04/30/89 13881.01 13870.08
05/31/89 14164.98 14158.16
06/30/89 14347.57 14350.43
07/31/89 14479.62 14545.74
08/31/89 14366.23 14403.33
09/30/89 14332.92 14360.12
10/31/89 14477.63 14535.32
11/30/89 14678.29 14789.69
12/31/89 14738.67 14910.96
01/31/90 14647.76 14840.88
02/28/90 14772.60 14972.96
03/31/90 14766.57 14977.46
04/30/90 14511.72 14869.62
05/31/90 14855.92 15193.78
06/30/90 14983.11 15327.48
07/31/90 15193.41 15552.79
08/31/90 14963.53 15327.28
09/30/90 15038.11 15336.48
10/31/90 15180.59 15614.07
11/30/90 15477.85 15927.91
12/31/90 15497.50 15997.99
01/31/91 15644.75 16212.36
02/28/91 15761.71 16353.41
03/31/91 15792.95 16359.95
04/30/91 16055.17 16577.54
05/31/91 16128.95 16725.08
06/30/91 16105.12 16708.36
07/31/91 16359.20 16912.20
08/31/91 16555.78 17135.44
09/30/91 16737.51 17358.20
10/31/91 16919.67 17514.42
11/30/91 16981.94 17563.46
12/31/91 17362.94 17941.08
01/31/92 17425.81 17982.34
02/29/92 17454.90 17987.74
03/31/92 17474.70 17994.93
04/30/92 17629.58 18155.09
05/31/92 17820.61 18369.32
06/30/92 18133.46 18677.92
07/31/92 18795.51 19238.26
08/31/92 18530.13 19049.72
09/30/92 18655.94 19173.55
10/31/92 18340.70 18985.65
11/30/92 18789.33 19325.49
12/31/92 19018.73 19522.61
01/31/93 19297.47 19749.07
02/28/93 20073.13 20463.99
03/31/93 19844.03 20247.07
04/30/93 20055.87 20451.57
05/31/93 20189.52 20566.09
06/30/93 20536.19 20909.55
07/31/93 20521.04 20936.73
08/31/93 21007.44 21372.21
09/30/93 21273.22 21615.86
10/31/93 21305.56 21656.93
11/30/93 21166.56 21466.35
12/31/93 21649.22 21919.29

$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Fidelity
Michigan Tax-Free High Yield Portfolio on November 30, 1985, shortly after
the fund started. As the chart shows, by December 31, 1993, the value of
your investment would have grown to $21,649 - a 116.49% increase on your
initial investment. For comparison, look at how the Lehman Brothers
Municipal Bond index did over the same period. With dividends reinvested,
the same $10,000 would have grown to $21,919 - a 119.19% increase.

Income return 6.28% 6.72% 7.26% 7.04% 7.34%

Capital gain return 2.17% 0.19% 0.00% 0.00% 0.00%
Change in share price 5.38% 2.63% 4.78% -1.89% 2.87%
Total return 13.83% 9.54% 12.04% 5.15% 10.21%
Income return, capital gain return, and change in share price are all part
of a bond fund's total return. An income return reflects the dividends paid
by the fund. A capital gain return reflects the amount paid by the fund to
shareholders based on the profits it has from selling bonds that have grown
in value. Both returns assume the dividends or gains are reinvested.
Changes in the fund's share price include changes in the prices of the
bonds owned by the fund.
DIVIDENDS AND YIELD
PERIODS ENDED DECEMBER 31, 1993 PAST 30 PAST 6 PAST 1
DAYS MONTHS YEAR

Dividends per share n/a 35.46(cents) 70.91(cents)

Annualized dividend rate n/a 5.66% 5.79%

Annualized yield 5.09% n/a n/a

Tax-equivalent yield 8.34% n/a n/a

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 $12.42 over
the past six months and $12.24 over the past year, you can compare the
fund's income over these two periods. The 30-day annualized yield is a
standard formula for all funds based on the yields of the bonds in the
fund, averaged over the past 30 days. This figure shows you the yield
characteristics of the fund's investments at the end of the period. It also
helps you compare funds from different companies on an equal basis. The
tax-equivalent yield shows what you would have to earn on a taxable
investment to equal the fund's tax-free yield, if you're in the 38.94%
combined federal and state tax bracket.
FIDELITY MICHIGAN TAX-FREE HIGH YIELD PORTFOLIO

FUND TALK: THE MANAGER'S OVERVIEW

MARKET RECAP
Generally, interest rates fell
during the 12 months ended
December 31, 1993. As a result,
bond prices rose and most
fixed-income investors -
including those in tax-free bonds
- - enjoyed attractive returns.
The period began with worries of
rising interest rates. The
economic recovery was finally
taking hold, and the spending
plans of the president-elect were
still unclear. But the bond market
signaled its approval as
President Clinton promised to
reduce the deficit and fight
inflation. The yield on the
benchmark 30-year Treasury
bond declined steadily and
reached an historic low of 5.79%
in mid-October. By year-end,
mild inflation fears, fueled by a
strengthening economy, had
pushed up the yield on the
30-year bond to 6.35%. Two
factors affected tax-free bonds
specifically: on the positive side,
higher federal taxes -
discussed all year and approved
in August - boosted demand.
At the same time, record new
issuance kept supplies high,
which somewhat dampened
prices. Overall during the period,
tax-free bonds performed well
compared to other fixed-income
investments. The Lehman
Brothers Municipal Bond Index
- - a broad measure of the
tax-free bond market - rose
12.29%. By comparison, the
Lehman Brothers Aggregate
Bond Index - which tracks
investment-grade taxable bonds
- - rose only 9.75%, due in part
to relatively poor performance
by mortgage backed securities.
An interview with Peter Allegrini,
Portfolio Manager of Fidelity
Michigan Tax-Free High Yield Portfolio
Q. PETER, HOW DID THE FUND DO?
A. For the 12 months ended December 31, 1993, it had a total return of
13.83%. That beat the average Michigan tax-free bond fund, which returned
12.40% over the same period, according to Lipper Analytical Services.
Q. HOW DID THE FUND BEAT THE AVERAGE?
A. By having a longer duration than other Michigan funds - meaning it was
more sensitive to interest rate declines. So as interest rates fell over
the past year, its share price rose more than funds with shorter durations.
I extended the fund's duration mainly by buying non-callable and zero
coupon bonds. At the end of the period the fund had about a 10% stake in
non-callable bonds, which can't be prematurely returned to their issuers.
That also means they have a longer duration because non-callables always
trade to their maturity date, rather than a shorter call date. When
interest rates are falling and bond prices are rising, non-callable bonds
tend to do well. Zero coupon bonds - which made up about 11% of the fund's
investments at year end - behave in a similar way. On December 31, the
fund's duration stood at 8.5 years, up from 7.8 a year earlier.
Q. TO EXTEND THE FUND'S DURATION WHY DIDN'T YOU JUST BUY BONDS WITH LONGER
MATURITIES?
A. During the past year, the slope of the yield curve - or the difference
in yield between different maturities - was fairly flat. That meant you
weren't rewarded much for taking on the extra risk of buying a bond with a
30-year maturity. For example, you could pick up about 95% of the yield of
a 30-year bond with a 15-year bond. I just didn't think that a 5%
difference in yield justified the added price risk of a 30-year bond. So,
at the end of December, about 40% of the fund was concentrated in bonds
with maturities of ten to 20 years.
Q. THE FUND'S LARGEST SECTOR CONCENTRATION - AT 26.8% OF INVESTMENTS - IS
HEALTH CARE. ARE YOU CONCERNED THAT THESE BONDS MIGHT BE AFFECTED BY
HEALTH-CARE REFORM?
A. Not really. That's because I've tried to invest in bonds that will do
well under reform. A good example is Michigan Healthcare Corporation -
which is the fund's largest holding at 4% of the total investments. Its
bonds are rated B, which is lower than investment grade, so they provide an
attractive amount of income - about 9.5%.What I like about Michigan
Healthcare is that it has a niche. The group runs mental health-care
facilities across the state. Those facilities provide treatment to
drug-dependent adolescents and young adults, one of the only organizations
in the state to do so. What's more, the organization is well managed and
has an arrangement with the state to provide services. That said, I'll
continue to carefully monitor these bonds going forward.
Q. HOW DO YOU THINK MICHIGAN'S ECONOMY WILL FARE OVER THE NEXT 12 MONTHS?
A. I'm optimistic. Improved profits in the automobile industry are a good
sign. And now that the North American Free Trade Agreement has been
approved, Michigan's heavy manufacturing base will have more of a
competitive advantage. This, combined with the recent strength in the auto
industry, should contribute to a strong economy. While it's been at a
slower pace than some other "rust belt" states, Michigan has diversified
and includes more service-oriented businesses in the financial services,
technology and other sectors. These should provide real growth
opportunities for the state's economy.
Q. AFTER ENJOYING SUCH A STRONG YEAR IN 1993, CAN MUNICIPAL BONDS CONTINUE
TO POST SUCH IMPRESSIVE RETURNS?
A. Throughout the past year, municipal bond prices were artificially low,
in part because there was a record supply of bonds issued. But now, many of
the refinancings permitted by law have already taken place; and once those
refinancings taper off, I expect supply to be lower. On the demand side,
investors are just now beginning to calculate their 1993 tax bills. And I
think that once they see how much their taxes have risen, many will find
tax-free bonds a more attractive investment.
Q. SO, ARE YOU OPTIMISTIC ABOUT MUNICIPAL BONDS FOR 1994?
A. I am because I expect interest rates to continue to stay low, despite
some recent jitters in the bond market. Most commodity prices and wages -
two early warning signals for higher inflation - have stabilized with no
real signs of heading up. As long as inflation stays under control, and
economic growth stays at a 2% to 3% level, interest rates and bond yields
could continue at current levels. Even so, it's probably realistic for
investors to expect more modest returns than we've seen during the past 12
months.

FUND FACTS
GOAL: to provide high current
income exempt from federal
and Michigan state income
tax
START DATE: November 12,
1985
SIZE: as of December 31,
1993, over $563 million
MANAGER: Peter Allegrini,
since November 1985;
manager, Fidelity Advisor High
Income Municipal Portfolio,
since February 1992; Fidelity
Ohio Tax-Free Portfolio, since
November 1985; Spartan
Connecticut Municipal High
Yield Portfolio, since October
1987; Fidelity Minnesota
Tax-Free Portfolio, November
1985 - September 1993;
Spartan Pennsylvania
Municipal High Yield Portfolio,
August 1986 - September
1993
(checkmark)

PETER ALLEGRINI'S INVESTMENT
STRATEGY:
"I try to find the best value for
the money, across a variety of
credit qualities. I manage the
fund for total return, not just
high yield. The best way to
achieve a consistently high rate
of return is to keep the fund
invested for a substantial
amount of income and to take
advantage of changes in
interest rates, which
sometimes create inefficient
prices. In October, for
example, many investors sold
bonds because they feared a
surge in inflation. That created
an opportunity to buy some
attractive bonds at cheaper
prices."
(bullet) Although the fund invests
primarily in long-term,
investment grade (Baa or
above) bonds, up to one-third
of its assets may be in lower
quality bonds. At the end of
December, about 8% of the
fund's assets were Ba or
B-rated. These bonds can
provide higher income than
higher-rated bonds. Another
10% were non-rated bonds.
Non-rated doesn't necessarily
mean low-rated - it just
means that S&P or
Moody's haven't assigned a
rating.
(bullet) After health-care bonds,
local general obligation bonds
(GOs) - which are backed by
the taxing power of the issuer
- - were the fund's second
largest industry concentration
at year end. They were
attractive because throughout
most of 1993, GOs were in
abundant supply and were
offered at attractive prices.
FIDELITY MICHIGAN TAX-FREE HIGH YIELD PORTFOLIO

INVESTMENT CHANGES

TOP FIVE SECTORS AS OF DECEMBER 31, 1993
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE SECTORS
6 MONTHS AGO

Health Care 27 25

General Obligation 14 16

Electric Revenue 12 15

Industrial Development 8 9

Transportation 7 2

AVERAGE YEARS TO MATURITY AS OF DECEMBER 31, 1993
6 MONTHS AGO

Years 20.0 20.5

AVERAGE YEARS TO MATURITY SHOWS THE AVERAGE TIME UNTIL THE PRINCIPAL OF THE
BONDS IN THE FUND IS EXPECTED TO BE REPAID, WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF DECEMBER 31, 1993
6 MONTHS AGO

Years 8.5 7.6

DURATION SHOWS HOW MUCH A BOND'S PRICE FLUCTUATES WITH CHANGES IN INTEREST
RATES. IF RATES RISE 1%, FOR EXAMPLE, THE SHARE PRICE OF A FUND WITH A
FIVE-YEAR DURATION WILL FALL 5%.
QUALITY DIVERSIFICATION AS OF DECEMBER 31, 1993
(MOODY'S RATINGS)
Aaa 37%
Aa, A 30%
Baa 15%
Ba, B 8%
Non-rated 10%
Row: 1, Col: 1, Value: 37.0
Row: 1, Col: 2, Value: 30.0
Row: 1, Col: 3, Value: 15.0
Row: 1, Col: 4, Value: 8.0
Row: 1, Col: 5, Value: 10.0
THIS CHART EXCLUDES SHORT-TERM INVESTMENTS. WHERE MOODY'S RATINGS ARE NOT
AVAILABLE, WE HAVE USED S&P RATINGS.
FIDELITY MICHIGAN TAX-FREE HIGH YIELD PORTFOLIO

INVESTMENTS/DECEMBER 31, 1993
(Showing Percentage of Total Value of Investments)

MUNICIPAL BONDS - 98.0%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
MICHIGAN - 88.6%
Ann Arbor School Dist. Pub. Schools Ultd. Tax
(Cap. Appreciation) 0% 5/1/05 Aa $ 1,500,000 $ 845,625 035519NA
Bay City Gen. Oblig. (Cap. Appreciation)
0% 6/1/07, (AMBAC Insured) Aaa 1,595,000 787,531 072077JV
Brighton Area School Dist. (Livingston County)
Series II, 0% 5/1/15, (AMBAC Insured) Aaa 12,950,000 4,079,250 109367NU
Brighton Area School Dist.. Unltd. Tax:
Rfdg Series II, 0% 5/1/13, (AMBAC Insured) Aaa 10,050,000 3,567,750
109367NS
Series I, 0% 5/1/05, (AMBAC Insured) Aaa 3,320,000 1,888,250 109367KY
Brighton Livingston County Wtr. Supply Sys.
Ltd. Tax:
5.25% 11/1/08 A 200,000 199,000 109349EU
5.25% 11/1/09 A 200,000 198,250 109349EV
Central Michigan Univ. Rev. Rfdg. (Cap.
Appreciation) 6% 10/1/13, (MBIA Insured) Aaa 465,000 492,900 154123QQ
Chippewa Valley Schools Rfdg. Unltd. Tax,
5% 5/1/21, (FGIC Insured) Aaa 3,000,000 2,857,500 170016NU
Comstock Pub. Schools (Cap. Appreciation) 0%
5/1/05, (Cap. Guaranty Insured) Aaa 1,300,000 739,375 205723DT
Detroit City School Dist. 7.15% 5/1/11,
(AMBAC Insured) Aaa 2,000,000 2,370,000 251129SN
Detroit Convention Facs. Rev. Rfdg.
(Cobo Hall Expansion Proj.):
5.25% 9/30/07 A 3,000,000 2,966,250 251131BE
5.25% 9/30/12 A 13,500,000 13,111,875 251131BF
Detroit Econ. Dev. Corp. Ltd. Oblig. Rev.
(Michigan Health Care Corp. Proj.)
9.10% 12/1/09 - 3,905,000 4,100,250 251141AF
Detroit Gen. Oblig.:
6.35% 4/1/14 Ba1 3,500,000 3,552,500 251093KD
(Distributable State Aid):
5.25% 5/1/08, (AMBAC Insured) Aaa 2,500,000 2,503,125 251093JT
5.25% 5/1/09, (AMBAC Insured) Aaa 4,000,000 3,990,000 251093JU
7.20% 5/1/09, (AMBAC Insured)
(Pre-Refunded to 5/1/99 @ 102) (e) Aaa 2,500,000 2,825,000 251093GA
Detroit Hosp. Fin. Auth. Facs. Rev. (Michigan
Healthcare Corp. Proj.) 10% 12/1/20 B 14,655,000 16,340,325 251145AA
Detroit Swr. Disp. Rev. 8.379% 7/1/23,
(FGIC Insured) (d) Aaa 9,000,000 9,506,250 251237PH
Detroit Wtr. Supply Sys. Rev. Rfdg. 6.50%
7/1/15, (FGIC Insured) Aaa 15,000,000 17,381,250 251255TP
Eastern Michigan Univ. Rev. Rfdg. 6.375%
6/1/14, (AMBAC Insured) Aaa 2,000,000 2,197,500 276731RQ
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
MICHIGAN - CONTINUED
Flint Hosp. Bldg. Auth. Rev. (Hurley Med. Ctr.):
Rfdg. 9.50% 7/1/06 Baa1 $ 5,670,000 $ 6,194,475 339511AQ
6.50% 7/1/20 Baa1 5,570,000 5,799,763 339511CC
Forest Hills Pub. Schools Gen. Oblig. Unltd.
Tax 7.375% 5/1/15 (Pre-Refunded
to 5/1/00 @ 101) (e) Aa 2,000,000 2,357,500 345748NJ
Grand Haven Elec. Rev. Rfdg. 5.25% 7/1/16,
(MBIA Insured) Aaa 8,000,000 7,870,000 385550CW
Grand Rapids Bldg. Auth. Ltd. Tax 10% 4/1/01,
(Pre-Refunded to 4/1/94 @ 102) (e) A1 345,000 357,938 386244DS
Grand Rapids San. Swr. Sys. Rev. Impt. & Rfdg.
7% 1/1/16 A1 1,000,000 1,112,500 386289BA
Grand Rapids Wtr. Supply Sys. Rev. 7.25%
1/1/20, (FGIC Insured) (Pre-Refunded to
1/1/00 @ 102) (e) Aaa 3,000,000 3,525,000 386316FS
Grand Valley Univ. Rev. 7.875% 10/1/08 A 1,000,000 1,143,750 386545AP
Greater Detroit Resource Recovery Auth. Rev.
Series G, 9.25% 12/13/08 BBB- 3,000,000 3,273,750 391689AG
Gull Lake Commty. School Dist. (Cap.
Appreciation) 0% 5/1/13, (FGIC Insured) Aaa 3,000,000 1,072,500
402748BW
Harbor Springs Pub. School Bldg. Unltd. Tax:
0% 5/1/11, (AMBAC Insured) Aaa 1,280,000 510,400 411558ED
0% 5/1/12, (AMBAC Insured) Aaa 1,390,000 524,725 411558EE
0% 5/1/13, (AMBAC Insured) Aaa 1,455,000 520,163 411558EF
Haslett Pub. School Dist. Unltd. Tax 7.50%
5/1/20 (Pre-Refunded to 5/1/00 @ 101) (e) A1 1,500,000 1,779,375
418308HY
Howell Pub. Schools Unltd. Tax
Rfdg. (Cap. Appreciation):
0% 5/1/10, (AMBAC Insured) Aaa 1,130,000 474,600 443114HQ
0% 5/1/11, (AMBAC Insured) Aaa 1,800,000 717,750 443114HR
0% 5/1/12, (AMBAC Insured) Aaa 2,755,000 1,002,131 443114HS
0% 5/1/13, (AMBAC Insured) Aaa 2,120,000 752,600 443114HT
0% 5/1/14, (AMBAC Insured) Aaa 3,000,000 1,008,750 443114HU
0% 5/1/15, (AMBAC Insured) Aaa 4,370,000 1,392,938 443114HV
0% 5/1/16, (AMBAC Insured) Aaa 3,695,000 1,117,738 443114HW
(Cap. Appreciation) 0% 5/1/06,
(FGIC Insured) Aaa 985,000 530,669 443114GN
Series 1991, 7% 5/1/20 (Pre-Refunded
to 5/1/01 @ 102) (e) A1 3,000,000 3,536,250 443114GU
Huron Valley School Dist. Gen. Oblig. Unltd. Tax
7.10% 5/1/08 (Pre-Refunded to
5/1/01 @ 102) (e) A1 2,500,000 2,962,500 447726EH
Huron Valley School Dist. Rfdg. Unltd. Tax
(Cap. Appreciation) 0% 5/1/11,
(FGIC Insured) Aaa 5,830,000 2,339,288 447726GN
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
MICHIGAN - CONTINUED
Imlay City Commty. School Dist. Rfdg.
(Cap. Appreciation) 0% 5/1/06,
(FGIC Insured) Aaa $ 1,375,000 $ 740,781 452488DT
Kalamazoo City School Dist. Unltd. Tax
(School Bldg. & Site) 0% 5/1/07 Aa 1,195,000 598,994 483224DZ
Kalkaska Pub. Schools Unltd. Tax 0%
5/1/21, (AMBAC Insured) Aaa 980,000 226,625 483427DV
Kent County Refuse Disp. Sys. Ltd. Tax Rfdg.
8.40% 11/1/10 A1 2,000,000 2,282,500 490311AP
Kent Hosp. Fin. Auth. Rev. Rfdg. (Butterworth
Hospital) Series A, 7.25% 1/15/13 A1 5,685,000 6,878,850 490574GX
Kentwood Pub. School Kent County School
Bldg. & Site Rfdg. 6.40% 5/1/15 Aa 2,500,000 2,712,500 491746LR
Lansing Bldg. Auth. Rev. (Deferred Interest):
0% 6/1/10, (AMBAC Insured) Aaa 2,500,000 1,018,750 516393DE
0% 6/1/12, (FGIC Insured) Aaa 3,000,000 1,087,500 516393DG
Lowell Area School Dist. Unltd. Tax
(Cap. Appreciation):
Rfdg.:
0% 5/1/15, (FGIC Insured) Aaa 6,380,000 2,009,700 547694GJ
0% 5/1/16, FGIC Insured) Aaa 2,000,000 610,000 547694GK
0% 5/1/17, (FGIC Insured) Aaa 7,435,000 2,100,388 547694GL
0% 5/1/15, (FGIC Insured), (Pre-Refunded
to 5/1/05 @ 49) (e) Aaa 8,775,000 2,435,063 547694GA
Marquette City Hosp. Fin. Auth. Rev. Rfdg.
(Marquette Gen. Hosp.) Series C:
7.50% 4/1/07 A 1,000,000 1,115,000 571502BT
7.50% 4/1/19 A 1,190,000 1,322,388 571502BU
Menominee Area Pub. School Dist.
(Cap. Appreciation) 0% 5/1/05 A1 640,000 363,200 586889BN
Michigan Bldg. Auth. Rev.:
(Cap. Appreciation):
(Chippewa Correctional) Series I, 0%
10/1/00 A 2,275,000 1,706,250 594613C5
(Detroit Regional) Series I:
0% 10/1/99 A 2,000,000 1,577,500 594613C4
0% 10/1/01 A 1,000,000 712,500 594613C8
0% 10/1/02 A 2,000,000 1,352,500 594613D2
0% 10/1/04 A 8,120,000 4,922,750 594613D6
Series II:
6.75% 10/1/07, (AMBAC Insured) Aaa 2,100,000 2,375,625 594613Y6
6.75% 10/1/11 A 1,000,000 1,117,500 5946133N
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
MICHIGAN - CONTINUED
Michigan Comprehensive Trans. Rev. Rfdg.
Series II, 7.625% 5/1/11 A1 $ 2,145,000 $ 2,415,806 594636KG
Michigan Hosp. Fin. Auth. Rev.:
Rfdg.:
(Bay Med. Ctr.) Series A, 8.25% 7/1/12 Baa1 3,000,000 3,435,000
59465CSP
(Brighton Hosp.) Series A, 8.625%
10/1/18 - 1,550,000 1,631,375 59465CHH
(Detroit Macomb Hosp. Corp.) Series A:
7.40% 6/1/13 B 12,185,000 12,200,231 59465CCV
7% 6/1/15 B 1,345,000 1,284,475 59465CCW
(Detroit Med. Ctr.) Series B, 5.50%
8/15/23 A 5,000,000 4,787,500 59465CZ4
(Gratiot Commty. Hosp.) Series A,
8.75% 10/1/07 B 4,400,000 4,543,000 59465CKT
(McLaren Obligated Group) Series A:
5.375% 10/15/13 A 3,000,000 2,898,750 59465CT6
4.50% 10/15/21 A 8,475,000 7,129,594 59465CT7
(Port Huron Hosp.) Series A:
7.50% 7/1/05 Baa 1,000,000 1,051,250 59465CCE
7.625% 7/1/15 Baa 2,250,000 2,418,750 59465CCF
(Saratoga Commty. Hosp.) 8.75% 6/1/10 - 1,880,000 2,072,700 59465CB6
(Sisters of Mercy Health Corp.)
5.375% 8/15/14 (MBIA Insured) Aaa 9,950,000 10,024,625 59465CX2
(Daughters of Charity) (Providence Hosp.):
10% 11/1/15 Aa 1,090,000 1,230,338 5946483B
7% 11/1/21 Aa 1,000,000 1,128,750 59465CVJ
(Garden City Hosp.) 8.50% 9/1/17 Ba 2,000,000 2,227,500 59465CTS
(Harper Grace & Huron Valley Hosp.)
Series A, 10% 10/1/16 A 10,000 11,150 59465CK2
(Sisters Mercy Health Corp.) 7.50% 2/15/18 A 1,000,000 1,205,000
59465CTT
Michigan Hsg. Dev. Auth. Ltd. Oblig. Rev.
(Parkway Meadows Proj.) 6.85% 10/15/18,
(FSA Insured) Aaa 2,000,000 2,145,000 59465JFJ
Michigan Hsg. Dev. Auth. Rental Hsg. Rev.:
Series A, 6.60% 4/1/12 A+ 2,000,000 2,130,000 59465MCQ
Series B, 7.55% 4/1/23 A+ 4,750,000 5,141,875 59465MAW
Michigan Hsg. Dev. Auth. Single Family Mtg. Rev.
Series A:
7.70% 12/1/16 AA 3,005,000 3,196,569 594653EK
6.875% 6/1/23 AA 2,535,000 2,750,475 594653PN
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
MICHIGAN - CONTINUED
Michigan Muni. Bond Auth. Rev. (Local Gov't.
Loan Prog.):
Rfdg.:
(Cap. Appreciation) Series A, 0% 12/1/07,
(FGIC Insured) Aaa $ 1,000,000 $ 483,750 594553ED
Series A:
0% 12/1/04, (FGIC Insured) Aaa 2,000,000 1,167,500 594553DZ
0% 12/1/05, (FGIC Insured) Aaa 1,855,000 1,017,931 594553EA
0% 12/1/06, (FGIC Insured) Aaa 5,000,000 2,581,250 594553EB
4.75% 12/1/09, (FGIC Insured) Aaa 6,000,000 5,790,000 594553EC
(Marquette Bldg.) Series D, 6.75% 5/1/21,
(AMBAC Insured) Aaa 2,475,000 2,784,375 594553LM
(Wayne County Proj.) Series A, 7%
12/1/09, (FGIC Insured) Aaa 5,750,000 6,511,875 5945528Q
Group 9, 8.75% 11/1/17 A 500,000 573,750 594552UK
Group 14, 7.70% 11/1/10, (AMBAC
Insured) Aaa 455,000 520,975 594552M2
Group 19, 7.50% 11/1/09, (AMBAC
Insured) Aaa 1,000,000 1,150,000 594552W5
Series C, 7.25% 5/1/20, (MBIA Insured) Aaa 500,000 581,250 5945528D
Michigan Pub. Pwr. Agcy. Rev. Rfdg.
(Belle River Proj.):
Series A, 5.25% 1/1/18 A1 6,375,000 6,223,594 594570EH
Series B, 5% 1/1/19 A1 15,500,000 14,705,625 594570FD
Michigan South Central Pwr. Agcy. Pwr. Supply
Sys. Rev. Rfdg.:
Series 1991, 6.75% 11/1/10 A 2,000,000 2,207,500 594689BR
5.90% 11/1/06, (MBIA Insured) Aaa 3,000,000 3,273,750 594689CD
5% 11/1/09, (AMBAC Insured) Aaa 1,675,000 1,654,063 594689BD
Michigan Strategic Fund Ltd. Oblig. Rev.:
Rfdg.:
(Detroit Edison Co.):
7% 7/15/08, (MBIA Insured) Aaa 2,000,000 2,350,000 594692C4
6.50% 2/15/16, (FGIC Insured) Aaa 2,000,000 2,200,000 594692Z5
7% 5/1/21, (AMBAC Insured) Aaa 8,500,000 10,710,000 594692C7
6.95% 9/1/21, (FGIC Insured) Aaa 1,000,000 1,132,500 594692S8
(Environmental Research Institute) 6.25%
8/15/06 A- 2,660,000 2,849,525 5946924Z
(Environmental Research Michigan Proj.)
8.125% 10/1/14 - 9,000,000 10,327,500 594692SZ
(Ford Co. Proj.) Series A, 7.10% 2/1/06 A2 4,000,000 4,770,000
594692B9
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
MICHIGAN - CONTINUED
Michigan Strategic Fund Ltd. Oblig. Rev.: - continued
Rfdg.: - continued
(Kmart Corp. Proj.):
(Bad Axe) 6.70% 4/15/07 A $ 1,010,000 $ 1,128,675 594692Z4
(Eaton Twp.) 6.25% 9/1/06 A 1,200,000 1,294,500 5946924K
(Ironwood) 6.80% 6/15/07 A 555,000 622,294 594692Y6
(Roseville) 6.25% 10/1/06 A 2,100,000 2,262,750 5946924L
(Environmental Research Institute) 6.375%
8/15/12 A- 2,000,000 2,122,500 5946925B
(Gladwin Pines Nursing Home Proj.)
(Midland Hosp. Ctr.) 8.75% 1/1/08 A- 1,640,000 1,867,550 594692JV
(Mercy Svcs. for Aging Proj.) 9.40% 5/15/20 - 8,925,000 9,795,187
594692XT
(Michigan Health Care Corp. Proj.)
9.10% 12/1/14 - 1,860,000 1,953,000 594692TL
Michigan Univ. Hosp. Rev. Series 1990, 7%
12/1/21 Aa 1,000,000 1,177,500 914454V7
Midland County Econ. Dev. Corp. Poll. Cont.
Rev. Rfdg. (Subordinated Ltd. Oblig.)
Series B, 9.50% 7/23/09 (b) - 13,200,000 15,048,000 597901AD
Midland Wtr. Supply Sys. Rev. Rfdg.
7.20% 4/1/10 A 1,350,000 1,515,375 597596CK
Monroe County Econ. Dev. Corp. Ltd. Oblig.
Rev. Rfdg. (Detroit Edison Co.) Series AA,
6.95% 9/1/22, (FGIC Insured) Aaa 1,000,000 1,240,000 610647BL
Monroe County Poll. Cont. Rev. (Detroit Edison
Co. Proj.):
Series 1, 6.875% 9/1/22,
(MBIA Insured) (b) Aaa 3,000,000 3,348,750 610655DF
Series I-B, 6.55% 9/1/24,
(MBIA Insured) (b) Aaa 4,000,000 4,380,000 610655DH
Okemos Pub. School Dist. Rfdg. (Cap. Appreciation)
0% 5/1/12, (MBIA Insured) Aaa 1,000,000 378,750 678467GS
Plymouth-Canton Commty. School Dist. Unltd.
Tax Series C, 6.50% 5/1/16, (FGIC Insured) A1 2,000,000 2,187,500
729429EN
Pontiac Gen. Bldg. Auth. Rev. 6.875% 4/1/06,
(AMBAC Insured) Aaa 2,000,000 2,252,500 732545CK
Pontiac Hosp. Fin. Auth. Rev. (North Oakland
Med. Ctr. Obligated Group) 6% 8/1/18 Baa 5,000,000 4,918,750 732557AJ
Pontiac Stadium Bldg. Auth. Rev. 6.60% 3/1/03 Baa 1,145,000 1,169,331
732616BB
Port Huron Area School Dist. Unltd. Tax
(Cap. Appreciation) (School Bldg. & Site)
0% 5/1/08 A1 1,975,000 930,719 734353GL
Reed City Area Pub. Schools (Cap. Appreciation)
0% 5/1/12, (AMBAC Insured) Aaa 1,190,000 450,712 758165DB
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
MICHIGAN - CONTINUED
Rockford Pub. School Dist. Unltd. Tax Gen. Oblig.
Rfdg. 7.375% 5/1/19 (Pre-Refunded
to 5/1/00 @101) (e) A1 $ 2,000,000 $ 2,357,500 773318HC
Romulus Township School Dist. (Cap. Appreciation):
Series I, 0% 5/1/06, (FSA Insured) Aaa 3,610,000 1,944,887 776219GA
0% 5/1/20, (FGIC Insured) Aaa 1,390,000 333,600 776219JL
Royal Oak City School Dist. Unltd. Tax 0% 5/1/05,
(AMBAC Insured) Aaa 3,000,000 1,717,500 780427GP
Royal Oak Hosp. Fin. Auth. Hosp. Rev.
(William Beaumont Hosp.):
Series C, 7.375% 1/1/20 Aa 4,070,000 4,731,375 780486BC
Series D, 6.75% 1/1/20 Aa 2,750,000 2,994,062 780486BM
Royal Oak Hosp. Fin. Auth. (Beaumont
Properties, Inc.) Series E, 6.625% 1/1/19 Aa 2,000,000 2,172,500
780490AK
Saginaw Hosp. Fin. Auth. Hosp. Rev.:
Rfdg. (Saginaw Gen. Hosp.) 7.625%
10/1/19 A- 7,000,000 7,813,750 786744DE
(St. Lukes Hosp.) Series C, 6.75% 7/1/17,
(MBIA Insured) Aaa 2,000,000 2,235,000 786744FH
Sault Ste Marie (Cap. Appreciation) 0% 9/1/05,
(AMBAC Insured) Aaa 520,000 291,200 804413EC
St. Clair Shores Econ. Dev. Corp. Ltd. Oblig. Rev.
(Bon Secours Health Sys.) Series B, 7.50%
9/1/15 A1 2,200,000 2,477,750 788866BT
Tawas City Hosp. Fin. Auth. Hosp. Rev.
(St. Joseph Hosp. Proj.) Series A, 8.50%
3/15/12 - 2,515,000 2,672,187 876721AA
Three Rivers Area Hosp. Auth.:
Series A, 11% 11/1/08 - 300,000 321,750 885667AX
Series A, 11% 11/1/09 - 300,000 321,750 885667AY
University of Michigan Rev. Rfdg.
(Parking Sys.) Series A, 5% 6/15/15 Aa 1,000,000 971,250 9144546F
Vicksburg Commty. Schools 7% 5/1/07,
(MBIA Insured) (Pre-Refunded to 5/1/01
@ 102) (e) Aaa 2,250,000 2,652,187 925717DG
Waterford Township Econ. Dev. Corp. Rev.
Ltd. Tax Oblig. (Canterbury Health Care):
8% 7/1/08 - 550,000 558,937 941458AT
8.375% 7/1/23 - 1,300,000 1,348,750 941458AU
Wayne Charter County Arpt. Rev. (Subordinated
Lien) (Detroit Metropolitan Arpt.):
Rfdg. 5.25% 12/1/13 (MBIA Insured) Aaa 2,000,000 1,987,500 944314DZ
Series A, 6.75% 12/1/19, (MBIA Insured) Aaa 6,125,000 7,166,250
944314BG
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
MICHIGAN - CONTINUED
Wayne Charter County Arpt. Rev. (Subordinated
Lien) (Detroit Metropolitan Arpt.): - continued
Series B, 6.875% 12/1/11,
(MBIA Insured) (b) Aaa $ 1,500,000 $ 1,706,250 944314BX
Series B, 5.50% 12/1/21,
(MBIA Insured) Aaa 2,000,000 1,995,000 944314DH
Series B, 6.75% 12/1/21,
(MBIA Insured) (b) Aaa 3,300,000 3,729,000 944314BY
Wayne Charter County Spl. Arpt. Facs. Rev.
(Republic Airlines, Inc. Proj.) Series C,
10.375% 12/1/15 - 4,475,000 4,849,781 944315AA
Wayne County Arpt. Rev. (Subordinated Lien)
Series B, 7% 12/1/10, (AMBAC Insured) Aaa 1,500,000 1,771,875 944522PN
Wayne County Bldg. Auth. Ltd. Tax Series A,
8% 3/1/17 Baa 2,250,000 2,598,750 944488LM
West Ottawa Pub. School Dist. Unltd. Tax Gen.
Oblig. (Cap. Appreciation) 0% 5/1/06,
(MBIA Insured) Aaa 4,110,000 2,214,262 955023FF
Western Michigan Univ. Inverse Floating Rate
Notes 5.75% 7/15/17, (FGIC Insured) (d) Aaa 2,500,000 2,540,625
958638MB
Western Michigan Univ. Rev.:
Series A, 5% 7/15/21, (FGIC Insured) Aaa 3,600,000 3,469,500 958638LZ
Series B, 6.75% 7/15/11,
(AMBAC Insured) Aaa 3,000,000 3,378,750 958638KK
Western Townships Utils. Auth. Swr. Disp. Sys.:
Rfdg. 6.50% 1/1/10, (Cap. Guaranty
Insured) Aaa 1,000,000 1,085,000 959767BE
Ltd. Tax 8.20% 1/1/18 BBB+ 2,500,000 2,818,750 959767AK
Williamston Gen. Oblig. Rfdg. 6.90% 11/1/17,
(AMBAC Insured) Aaa 1,000,000 1,136,250 970276DL
Wyandotte Tax Increment Fin. Auth. Ltd. Tax
(Central Dev. Area Proj.):
7.75% 6/1/05 (Pre-Refunded to
6/1/99 @ 101) (e) BBB 500,000 566,875 982793BL
7.875% 6/1/08 (Pre-Refunded to
6/1/99 @ 101) (e) BBB 500,000 568,125 982793BQ
491,812,920
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
PUERTO RICO - 8.5%
Puerto Rico Commonwealth Aqueduct & Swr.
Auth. Rev. Series A, 7.875% 7/1/17 Baa $ 1,300,000 $ 1,503,125 745160KC
Puerto Rico Commonwealth Gen. Oblig. Rfdg.
Unltd. Tax 5% 7/1/21 Baa1 5,000,000 4,750,000 745144KJ
Puerto Rico Commonwealth Hsg. Banking & Fin.
Agcy. Single Family Rfdg.:
5.125% 12/1/04 Baa 3,450,000 3,445,687 745269CL
5.125% 12/1/05 Baa 1,890,000 1,878,187 745269CN
Puerto Rico Commonwealth Hwy. Auth. Hwy.
Rev. Rfdg. Series Q, 7.75% 7/1/16
(Pre-Refunded to 7/1/00 @ 102) (e) Baa1 500,000 608,750 745194QW
Puerto Rico Commonwealth Hwy. & Trans. Auth.
Hwy. Rev.:
Rfdg.:
Series W, 5.50% 7/1/13 Baa1 13,000,000 13,178,750 745181BZ
Series X, 5.50% 7/1/15 Baa1 4,000,000 4,060,000 745181FD
Series W, 5.50% 7/1/15 Baa1 3,000,000 3,045,000 745181CB
Puerto Rico Commonwealth Urban Renewal & Hsg.
Corp. Rfdg. 7.875% 10/1/04 Baa1 2,800,000 3,276,000 745245ES
Puerto Rico Elec. Pwr. Auth. Pwr. Rev. Resources
Auth. Pwr. Rev.:
Rfdg. Series M, 8% 7/1/08 Baa1 1,000,000 1,165,000 745268GZ
Series P, 7% 7/1/21 Baa1 1,750,000 1,977,500 745268LL
Series R, 6.25% 7/1/17 Baa1 3,000,000 3,206,250 745268ND
Puerto Rico Ind. Med. & Envir. Poll. Cont. Facs.
Fing. Auth. Rev. (Upjohn Co. Proj. Ltd.)
Series A, 7.50% 12/1/23 Aa3 2,100,000 2,428,125 745271CX
Puerto Rico Pub. Bldgs. Auth. Rev. Series K,
6.875% 7/1/21 (Pre-Refunded to
7/1/02 @ 101.50) (e) AAA 2,325,000 2,760,937 745235FW
47,283,311
U.S. VIRGIN ISLANDS - 0.3%
Virgin Islands Pub. Fin. Auth. Rev. Rfdg.
Series A, 7.25% 10/1/18 (Escrowed to
Maturity) (e) - 1,500,000 1,687,500 927676CF

GUAM - 0.6%
Guam Pwr. Auth. Rev. Series A, 5.25%
10/1/13 BBB 3,500,000 3,351,250 400653BF

TOTAL MUNICIPAL BONDS
(Cost $493,491,100) 544,134,981
MUNICIPAL NOTES (A) - 2.0%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
MICHIGAN - 2.0%
Flint Hosp. Bldg. Auth. Rev. (Hurley Med. Ctr.)
Series 1985, 3.35%, LOC Comerica Bank,
Detroit, VRDN VMIG 1 $ 1,400,000 $ 1,400,000 339509BD
Grand Rapids Ind. Dev. Rev. (Rowe Int'l. Inc.)
3.55%, LOC Marine Midland Bank, VRDN - 2,300,000 2,300,000 386251AY
Michigan Strategic Fund Poll. Cont. Rev. Rfdg.
(Consumers Pwr. Co. Proj.) Series 1988 A,
4.25%, LOC Union Bank of Switzerland,
VRDN P-1 3,600,000 3,600,000 594693AJ
Michigan Univ. Regents Michigan Hosp. Rev.
Series 1992 A, 4.50%, VRDN VMIG 1 4,000,000 4,000,000 914454Z8
TOTAL MUNICIPAL NOTES
(Cost $11,300,000) 11,300,000
TOTAL INVESTMENTS - 100%
(Cost $504,791,100) $ 555,434,981

SECURITY TYPE ABBREVIATIONS
VRDN - Variable Rate Demand Notes
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals (AMT securities).
(c) Standard & Poor's Corporation credit ratings are used in the
absence of a rating by Moody's Investors Service, Inc.
(d) Inverse floating rate security is a security where the coupon is
inversely indexed to a floating interest rate multiplied by a specified
factor. If the floating rate is high enough, the coupon rate may be zero or
be a negative amount that is carried forward to reduce future interest
and/or principal payments. The price may be considerably more volatile than
the price of a comparable fixed rate security.
(e) Security collateralized by an amount sufficient to pay interest and
principal.
INCOME TAX INFORMATION
At December 31, 1993, the aggregate cost of investment securities for
income tax purposes was $504,791,100. Net unrealized appreciation
(depreciation) aggregated $50,643,881, of which $50,901,842 related to
appreciated investment securities and $257,961 related to depreciated
investment securities.
The fund hereby designates $881,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investments for the period ended is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 56.3% AAA, AA, A 68.9%
Baa 13.0% BBB 7.0%
Ba 1.0% BB 0.0%
B 3.8% B 5.4%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 10.4%.
The distribution of municipal securities by revenue source, as a percentage
of total value of investments, is as follows:
Health Care 26.8%
General Obligation 14.5
Electric Revenue 11.6
Others
(individually less than 10%) 47.1
TOTAL 100.0%
FIDELITY MICHIGAN TAX-FREE HIGH YIELD PORTFOLIO

FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
DECEMBER 31, 1993

1.ASSETS 2. 3.

4.Investment in securities, at value (cost $504,791,100) 5. $ 555,434,981
(Notes 1 and 2) - See accompanying schedule

6.Cash 7. 100,542

8.Receivable for investments sold 9. 2,461,095

10.Interest receivable 11. 8,373,467

12. 13.TOTAL ASSETS 14. 566,370,085

15.LIABILITIES 16. 17.

18.Dividends payable $ 2,553,711 19.

20.Accrued management fee 191,394 21.

22.Other payables and accrued expenses 132,613 23.

24. 25.TOTAL LIABILITIES 26. 2,877,718

27.28.NET ASSETS 29. $ 563,492,367

30.Net Assets consist of: 31. 32.

33.Paid in capital 34. $ 513,693,861

35.Accumulated undistributed net realized gain (loss) on 36. (845,375)
investments

37.Net unrealized appreciation (depreciation) on 38. 50,643,881
investment securities

39.40.NET ASSETS, for 45,672,886 shares outstanding 41. $ 563,492,367

42.43.NET ASSET VALUE, offering price and redemption 44. $12.34
price per share ($563,492,367 (divided by) 45,672,886 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1993

45.46.INTEREST INCOME 47. $ 33,712,037

48.EXPENSES 49. 50.

51.Management fee (Note 4) $ 2,196,049 52.

53.Transfer agent, accounting and custodian fees 822,362 54.
and expenses (Note 4)

55.Non-interested trustees' compensation 1,569 56.

57.Registration fees 16,265 58.

59.Audit 31,847 60.

61.Legal 8,124 62.

63.Miscellaneous 31,263 64.

65. 66.TOTAL EXPENSES 67. 3,107,479

68.69.NET INTEREST INCOME 70. 30,604,558

71.REALIZED AND UNREALIZED GAIN (LOSS) ON 73. 74.
INVESTMENTS
(NOTES 1 AND 3)
72.Net realized gain (loss) on:

75. Investment securities 13,885,333 76.

77. Futures contracts (1,012,951) 12,872,382

78.Change in net unrealized appreciation (depreciation) 79. 80.
on:

81. Investment securities 24,001,675 82.

83. Futures contracts (60,723) 23,940,952

84.85.NET GAIN (LOSS) 86. 36,813,334

87.88.NET INCREASE (DECREASE) IN NET ASSETS 89. $ 67,417,892
RESULTING FROM OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

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

1993 1992

90.INCREASE (DECREASE) IN NET ASSETS

91.Operations $ 30,604,558 $ 26,672,483
Net interest income

92. Net realized gain (loss) on investments 12,872,382 2,051,934

93. Change in net unrealized appreciation (depreciation) 23,940,952 9,454,729
on investments

94. 95.NET INCREASE (DECREASE) IN NET ASSETS 67,417,892 38,179,146
RESULTING FROM
OPERATIONS

96.Distributions to shareholders from: (30,604,558) (26,672,483)
Net interest income

97. Net realized gain (10,681,220) (779,296)

98.Share transactions 223,810,116 183,778,511
Net proceeds from sales of shares

99. Reinvestment of distributions from: 23,680,481 20,376,627
Net interest income

100. 8,673,183 624,639
Net realized gain

101. Cost of shares redeemed (182,619,793) (130,866,137)

102. 73,543,987 73,913,640
Net increase (decrease) in net assets resulting from
share transactions

103. 99,676,101 84,641,007
104.TOTAL INCREASE (DECREASE) IN NET ASSETS

105.NET ASSETS 106. 107.

108. Beginning of period 463,816,266 379,175,259

109. End of period $ 563,492,367 $ 463,816,266

110.OTHER INFORMATION 112. 113.
111.Shares

114. Sold 18,029,885 15,942,738

115. Issued in reinvestment of distributions from: 1,932,855 1,766,537
Net interest income

116. 706,861 53,617
Net realized gain

117. Redeemed (14,614,309) (11,371,376)

118. Net increase (decrease) 6,055,292 6,391,516

</TABLE>

FINANCIAL HIGHLIGHTS

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

120. 1993 1992 1991 1990 1989

121.SELECTED PER-SHARE DATA

122.Net asset value, $ 11.710 $ 11.410 $ 10.890 $ 11.100 $ 10.790
beginning of period

123.Income from Invest .709 .733 .745 .758 .759
ment
Operations
Net interest income

124. Net realized and .870 .320 .520 (.210) .310
unrealized gain (loss)

on investments

125. Total from investme 1.579 1.053 1.265 .548 1.069
nt
operations

126.Less Distributions (.709) (.733) (.745) (.758) (.759)
From net interest
income

127. From net realized g (.240) (.020) - - -
ain
on investments

128. Total distributions (.949) (.753) (.745) (.758) (.759)

129.Net asset value, $ 12.340 $ 11.710 $ 11.410 $ 10.890 $ 11.100
end of period

130.TOTAL RETURN 13.83% 9.54% 12.04% 5.15% 10.21%

131.RATIOS AND SUPPLEMENTAL DATA

132.Net assets, end of p $ 563,492 $ 463,816 $ 379,175 $ 279,429 $ 234,350
eriod
(000 omitted)

133.Ratio of expenses to .59% .61% .62% .64% .69%

average net assets

134.Ratio of net interest i 5.79% 6.36% 6.73% 6.98% 6.92%
ncome
to average net assets

135.Portfolio turnover rat 33% 15% 12% 18% 19%
e

</TABLE>

FIDELITY MICHIGAN MUNICIPAL MONEY MARKET PORTFOLIO

PERFORMANCE: THE BOTTOM LINE

Michigan Municipal Money Market 1.98% 15.57%

Consumer Price Index 2.75% 15.62%

Average All Tax-Free Money Market Fund 1.97% 14.63%

CUMULATIVE TOTAL RETURNS reflect actual performance over a set period - in
this case, one year or since the fund started on January 12, 1990. For
example, if you invested $1,000 in a fund that had a 5% return over the
past year, you would end up with $1,050. Comparing the fund's performance
to the consumer price index (CPI) helps show how your investment did
compared to inflation. To measure how the fund stacked up against its
peers, you can compare its return to the average all tax-free money market
fund's total return. This average currently reflects the performance of 338
all tax-free money market funds tracked by IBC/Donoghue. (The periods
covered by the CPI and IBC/Donoghue numbers are the closest available match
to those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1993 PAST 1 LIFE OF
YEAR FUND

Michigan Municipal Money Market 1.98% 3.71%

Consumer Price Index 2.75% 3.69%

Average All Tax-Free Money Market Fund 1.97% 3.52%

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

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
12/31/92 3/31/93 6/30/93 9/30/93 12/31/93

Michigan Municipal 2.95% 2.05% 1.74% 2.27% 2.31%
Money Market

Average All Tax-Free 2.71% 2.00% 1.83% 2.20% 2.16%
Money Market Fund

Michigan Tax-Free Money 4.83% 3.36% 2.85% 3.72% 3.78%
Market Tax-equivalent

Average All Taxable 2.86% 2.66% 2.63% 2.65% 2.72%
Money Market Fund

</TABLE>

Row: 1, Col: 1, Value: 2.95
Row: 1, Col: 2, Value: 2.71
Row: 2, Col: 1, Value: 2.05
Row: 2, Col: 2, Value: 2.0
Row: 3, Col: 1, Value: 1.74
Row: 3, Col: 2, Value: 1.83
Row: 4, Col: 1, Value: 2.27
Row: 4, Col: 2, Value: 2.2
Row: 5, Col: 1, Value: 2.31
Row: 5, Col: 2, Value: 2.16
3% -
2% -
1% -
0%
Michigan Municipal
Money Market
Average All
Tax-Free Money
Market Fund
YIELD refers to the income paid by the fund over a given period. Yields for
money market funds are usually for seven-day periods, expressed as annual
percentage rates. A yield that assumes income earned is reinvested or
compounded is called an effective yield. The chart above shows the fund's
current seven-day yield at quarterly intervals over the past year. You can
compare these yields to the average all tax-free money market fund. Or you
can look at the fund's tax-equivalent yield, which is based on a combined
effective 1993 federal and Michigan state income tax rate of 38.94%. The
tax-equivalent figures are useful in seeing how the fund stacked up against
the average taxable money market fund as tracked by IBC/Donoghue.
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS 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. And there is no
assurance that a money fund
will maintain a $1 share price.
(checkmark)
FIDELITY MICHIGAN MUNICIPAL MONEY MARKET PORTFOLIO

FUND TALK: THE MANAGER'S OVERVIEW

An interview with Scott Orr, Portfolio
Manager of Fidelity Michigan
Municipal Money Market Portfolio
Q. SCOTT, CAN YOU BRING US UP TO DATE WITH THE SHORT-TERM SIDE OF THE
MARKET AS OF THE END OF DECEMBER?
A. Over the past year, the market has been uneventful. The Federal Reserve
has kept the federal funds rate at 3% since September 1992, which in turn
has kept short-term interest rates low. Fears of inflation bounced rates up
slightly last May and again in late October. But neither episode caused me
to significantly change the way I managed the fund. Over the last six
months, supply and demand factors had a bigger influence on how I
positioned the fund.
Q. CAN YOU EXPLAIN?
A. Sure. Issuance of municipal debt in Michigan - especially by school
districts - is seasonal. The fund's average maturity was pretty short over
the summer, in the 50-60 day range. That was because of the low supply of
longer maturity fixed-rate notes, not because I thought interest rates were
going up. Supply increased in the fall as school districts issued debt.
Rates on longer-maturity issues were particularly attractive. The fund's
average maturity increased to 83 days by the end of October. Later in the
year, supply dropped off and the fund's average maturity shortened as a
result.
Q. LAST SUMMER, MICHIGAN ABOLISHED PROPERTY TAXES THAT PAY FOR SCHOOLS IN
AN EFFORT TO REFORM EDUCATION FUNDING. HAS THIS AFFECTED THE FUND'S
INVESTMENT IN SCHOOL DISTRICTS?
A. Not yet. The move doesn't take effect until July 1, 1994. Recently, the
governor and the legislature agreed on a new package of other tax increases
to replace the more than $6 billion lost in property tax funding. But
voters still have a say on a portion of the package. Obviously, investors
in school district debt are very concerned. Because of that concern, I've
limited the fund's school debt - about 7.4% of the fund on December 31 - to
those investments that mature before July. I'm holding off on buying any
more until I'm sure Michigan schools will receive proper funding.
Q. HOW DID THE FUND PERFORM?
A. Total return for the 12 months ended December 31, 1993 was 1.98%,
compared to 1.97% for the average all tax-free money market fund tracked by
IBC/Donoghue. The fund's seven-day yield on December 31 was 2.31%, compared
to 1.74% at the end of June. The latest yield translates into a
tax-equivalent yield of 3.78% for investors in the 38.94% combined
effective 1993 federal and state tax bracket.
Q. WHAT INFLUENCED PERFORMANCE?
A. One relatively new investing strategy that helped performance was the
use of simple derivatives. They combine a long-term municipal bond with a
"put," or an option to sell to a third party, typically a bank. The end
product is an investment that pays a short-term variable interest rate and
can be put on short notice, usually seven days. It acts much like any other
variable rate demand note, with one key difference: the yield is slightly
higher, a fact that has more to do with the added complexity of these
instruments than added risk. Derivatives made up 9.5% of the fund at the
end of December.
Q. HOW DO YOU SEE THE NEXT SIX MONTHS SHAPING UP?
A. The economy is continuing to show signs of strength. I wouldn't be
surprised if, sometime in the next few months, the Fed decides there's a
real threat of rising inflation and moves to tighten the money supply by
raising the federal funds rate. As the likelihood of tightening increases,
I might position the fund to take advantage of rising rates by shortening
its average maturity.

FUND FACTS
GOAL: tax-free income and
stability by investing in
high-quality, short-term,
Michigan municipal securities
START DATE: January 12, 1990
SIZE: as of December 31,
1993, over $175 million
MANAGER: Scott Orr, since
January 1992; manager,
Fidelity Connecticut Municipal
Money Market and Spartan
Connecticut Money Market
funds, since October 1993;
Fidelity New Jersey Tax-Free
Money Market and Spartan
New Jersey Money Market
funds, since
January 1992
(checkmark)

WORDS TO KNOW
COMMERCIAL PAPER: A security
issued by a municipality to
finance capital or operating
needs.
FEDERAL FUNDS RATE: The interest
rate banks charge each other
for overnight loans.
MATURITY: The time remaining
before an issuer is scheduled
to repay the principal amount
on a debt security. When the
fund's average maturity -
weighted by dollar amount -
is short, the fund manager is
anticipating a rise in interest
rates. When the average
maturity is long, the manager
is expecting rates to fall.
When the average maturity is
neutral, the manager wants
the flexibility to respond to
rising rates, while still
capturing a portion of the
higher yields available from
issues with longer maturities.
MUNICIPAL NOTE: A security
issued in advance of future
tax or other revenues and
payable from those specific
sources.
TENDER BOND: A variable-rate,
long-term security that gives
the bond holder the option to
redeem the bond at face
value before maturity.
VARIABLE RATE DEMAND NOTE
(VRDN): A tender bond that
can be redeemed on short
notice, typically one or seven
days. VRDNs are useful in
managing the fund's average
maturity and liquidity.
FIDELITY MICHIGAN MUNICIPAL MONEY MARKET PORTFOLIO

INVESTMENT CHANGES

MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
12/31/93 6/30/93 12/31/92

0 - 30 59 68 58

31 - 90 9 8 11

91 - 180 20 9 25

181 - 397 12 15 6

WEIGHTED AVERAGE MATURITY
12/31/93 6/30/93 12/31/92

Michigan Municipal
Money Market Portfolio 57 days 62 days 49 days

Average All Tax-Free
Money Market Fund* 62 days 55 days 59 days

ASSET ALLOCATION
AS OF 12/31/93 AS OF 6/30/93

Row: 1, Col: 1, Value: 51.0
Row: 1, Col: 2, Value: 16.0
Row: 1, Col: 3, Value: 4.0
Row: 1, Col: 4, Value: 19.0
Row: 1, Col: 5, Value: 10.0
Row: 1, Col: 1, Value: 57.0
Row: 1, Col: 2, Value: 17.0
Row: 1, Col: 3, Value: 4.0
Row: 1, Col: 4, Value: 15.0
Row: 1, Col: 5, Value: 7.0
Variable rate
demand notes
(VRDNs) 51%
Commercial
paper 16%
Tender bonds 4%
Municipal
notes 19%
Other 10%
Variable rate
demand notes
(VRDNs) 57%
Commercial
paper 17%
Tender bonds 4%
Municipal
notes 15%
Other 7%
* SOURCE: IBC/DONOGHUE'S MONEY FUND REPORT(Registered trademark)
FIDELITY MICHIGAN MUNICIPAL MONEY MARKET PORTFOLIO

INVESTMENTS/DECEMBER 31, 1993
(Showing Percentage of Total Value of Investments)

MUNICIPAL SECURITIES (A) - 100%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
MICHIGAN - 91.1%
Bruce Township Hosp. Fin. Auth. Sisters of Charity Health Care
Sys. Rev. (St. Joseph Hosp. Ctr. Proj.) 2.65% 5/1/94,
(MBIA Insured) SBPA Morgan Guaranty, OT $ 2,225,000 $ 2,225,000 116721AA
Detroit Convention Facs. Rev. (Cobo Hall
Expansion Proj.) 9% 9/30/94 2,885,000 3,100,230 251131AQ
Detroit Gen. Oblig. Ltd. Tax Notes Series 1993, 3% 7/1/94,
LOC Comerica Bank 4,500,000 4,506,556 251093JA
Flint Econ. Dev. Corp. Ltd. Oblig. Rev. (Genessee Co.
Real Estate Proj.), 3.25%, LOC National Bank of
Detroit, VRDN (b) 1,300,000 1,300,000 339448AA
Grand Rapids Ind. Dev. Rev. (Rowe Int'l.) 3.55%,
LOC Marine Midland Bank, VRDN 3,000,000 3,000,000 386251AY
Kalamazoo Econ. Dev. Corp. Rev. Rfdg. (La Quinta Motor
Inns) Series 1991, 3.35%, LOC NationsBank, VRDN 2,340,000 2,340,000
483228BF
Livonia Econ. Dev. Corp. (Ajluni Proj.), 3%,
LOC National Bank of Detroit, VRDN (b) 2,400,000 2,400,000 539213AH
Michigan Bldg. Auth. Rev.:
(Univ. of Michigan Flint Classroom/Lab Bldg.)
Series 1987 I, 5.20% 3/1/94, (BIG Insured) 750,000 753,088 594613SH
Partnership Ctfs. Series PA-33, 3.25%,
(Liquidity Enhancement Merrill Lynch) (c) 8,860,000 8,860,000 5946137N
Michigan Custodial Receipts Series 1991 A-26, 3.30%,
(Liquidity Enhancement Sakura Bank, Ltd.),
LOC Sumitomo Bank (c) 1,750,000 1,750,000 55377EAU
Michigan Higher Ed. Facs. Auth. Rev. 3.40%, (MBIA
Insured), VRDN 200,000 200,000 594519AY
Michigan Higher Ed. Student Loan Auth. Rev.: (b)
Rfdg., Series XII-B, 3.30%, (AMBAC Insured)
SBPA Mitsubishi Bank, VRDN (b) 7,900,000 7,900,000 594520CA
Series XII-D, 3.30%, (AMBAC Insured)
SBPA Fuji Bank, VRDN (b) 5,000,000 5,000,000 594520CR
Michigan Hosp. Fin. Auth. Hosp. Equip. Loan Prog.
Series A, 2.90%, LOC First of America Bank, VRDN 9,000,000 9,000,000
59465CX9
Michigan Hosp. Fin. Auth. Hosp. Rev. Rfdg. (Sisters of Mercy
Health Corp.) Series 1993 P, 2.95% 8/15/94 3,430,000 3,430,000 59465CV3
Michigan Hosp. Fin. Auth. Rev. Bonds
(Detroit-Macomb Hosp. Corp.) 11.25% 6/1/94 5,640,000 5,948,239 594648G8
Michigan Hsg. Dev. Auth. Multi-Family Hsg. Rev.
Series 1988 A, VT: (b)
2.55% 1/25/94, LOC Sanwa Bank 2,150,000 2,150,000 598995CM
2.60% 2/11/94, LOC Sanwa Bank 1,550,000 1,550,000 598995CL
2.65% 2/17/94, LOC Sanwa Bank 2,700,000 2,700,000 598995CE
2.65% 2/24/94, LOC Sanwa Bank 1,000,000 1,000,000 598995CK
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
MICHIGAN - CONTINUED
Michigan Muni. Bond Auth. Rev. TAN:
Series 1993 B-16, 3% 5/5/94, LOC Comerica Bank $ 300,000 $ 300,167
594553R8
Series 1993 B-18, 3% 5/5/94, LOC Comerica Bank 700,000 700,390
594553S2
Michigan Pub. Pwr. Agcy. Rfdg. Rev. ( Belle River Proj.)
Series A, 2.75% 1/1/94 1,000,000 1,000,000 595996GH
Michigan Strategic Fund (Dow Chemical Proj.), VT:
Series 1987, 2.35% 2/10/94 1,500,000 1,500,000 594991KP
Series 1988: (b)
2.70% 1/13/94 2,490,000 2,490,000 594991KN
2.65% 2/16/94 7,900,000 7,900,000 594991KK
Michigan Strategic Fund Econ. Dev. Rev. (Yamaha Musical
Prod., Inc. Proj.) Series 1988, 3.60%,
LOC Dai-Ichi Kangyo Bank, VRDN (b) 5,900,000 5,900,000 59469HAA
Michigan Strategic Fund Ltd. Oblig. Rev., VRDN: (b)
(Alpha Tech Corp. Proj.) Series 1987, 3.35%,
LOC Bank of Tokyo 6,000,000 6,000,000 5946929A
(Donnelly Corp. Proj.) Series 1990 A, 3.25%,
LOC Bank of Tokyo 3,500,000 3,500,000 594692XH
(Hi Tech Mold & Engineering) Series 1991, 3.25%,
LOC Nat'l. Bank of Detroit 1,800,000 1,800,000 594692S9
(Michigan Sugar Co. - Carrollton) 3.25%,
LOC Trust Company Bank of Georgia 6,000,000 6,000,000 5946924F
(Ultimate Hydroforming Inc. Proj.), 3.25%,
LOC Nat'l Bank of Detroit 1,400,000 1,400,000 594692YX
Michigan Strategic Fund Solid Waste Disp. Rev.: (b)
(Grayling Gen. Station Proj.) Series 1990, 3.40%,
LOC Barclays Bank, VRDN 2,400,000 2,400,000 59469WAE
(S. D. Warren Co. Proj.), VT:
Series 1987 A, 2.25% 1/12/94,
LOC Sumitomo Bank 1,000,000 1,000,000 595996GH
Series 1987 B, 2.65% 1/14/94,
LOC Sumitomo Bank 2,250,000 2,250,000 595996GF
Series 1987 C, 2.25% 1/12/94,
LOC Sumitomo Bank 1,200,000 1,200,000 595996GG
Series 1987 C, 2.65% 1/18/94,
LOC Sumitomo Bank 2,000,000 2,000,000 595996GE
Series 1987 C, 2.65% 1/19/94,
LOC Sumitomo Bank 2,000,000 2,000,000 595996GD
Michigan Univ. Regents Mich. Hosp. Rev Series 1992 A,
4.50%, VRDN 700,000 700,000 914454Z8
Monroe County Econ. Dev. Corp. Rev. Rfdg.
(Detroit Edison Proj.) Series 1992 CC, 4.40%,
LOC Barclays Bank, VRDN 1,000,000 1,000,000 610647BM
Monroe Pub. School Dist. TAN 2.90% 4/1/94 11,000,000 11,004,761
611118CW
Northville School Dist. TAN 2.85% 4/5/94 2,700,000 2,701,356 667230MS
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
MICHIGAN - CONTINUED
Rochester Hills Econ. Dev. Corp. Ltd. Oblig. Rev.
(Cardell Corp.) 3.50%, LOC Comerica Bank,
VRDN (b) $ 300,000 $ 300,000 771381AC
Royal Oak City School Dist. Limited Tax TAN 2.75%
4/1/94 7,000,000 7,000,000 780427HV
Saline Econ. Dev. Corp. Rev. (Associated Springs Proj.)
Series 1988, 3.50%, LOC Fuji Bank, VRDN (b) 5,000,000 5,000,000
795208AA
Southfield Econ. Dev. Corp. Rev. (Radnor/Southfield Ltd.
Partner) Series 1985, 3.275%, LOC Bankers Trust,
VRDN 4,000,000 4,000,000 8442069A
Sterling Heights Econ. Dev. Corp. Ltd. Oblig. Rev.
(Cherrywood Ctr. Assoc. Proj.) 3.50%,
LOC Comerica Bank, VRDN (b) 5,300,000 5,300,000 859330AA
St. Clair County Econ. Dev. Corp. Poll. Cont. Rev. Partnership
Ctfs. (Detroit Edison Proj.), 3.20%,
(Liquidity Enhancement Merrill Lynch) (c) 6,200,000 6,200,000 788684AD
Troy School Dist. Rfdg. Rev. Series 1993 A, 2.65% 5/1/94,
(AMBAC Insured) 1,000,000 1,000,000 897404KR
162,659,787
PUERTO RICO - 8.9 %
Puerto Rico Commonwealth TRAN Series A, 3% 7/29/94 11,300,000 11,317,26
745144VX2
Puerto Rico Hsg. Fin. Corp. Single Family Mtg. Rev.,
Portfolio Two, Series F, 4.60% 4/15/94, MT 4,500,000 4,524,502 74527TDA
15,841,764

TOTAL INVESTMENTS - 100% $ 178,501,551

Total Cost for Income Tax Purposes $ 178,501,551

LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals (AMT securities).
Provides evidence of ownership in an underlying pool of municipal bonds.

INCOME TAX INFORMATION
At December 31, 1993, the fund had a capital loss carryforward of
approximately $13,600 of which $1,600, $1,700, and $10,300 will expire on
December 31, 1998, 1999, and 2001, respectively.
FIDELITY MICHIGAN MUNICIPAL MONEY MARKET PORTFOLIO

FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
DECEMBER 31, 1993

136.ASSETS 137. 138.

139.Investment in securities, at value (Note 1) - 140. $ 178,501,551
See accompanying schedule

141.Cash 142. 530,926

143.Interest receivable 144. 986,295

145. 146.TOTAL ASSETS 147. 180,018,772

148.LIABILITIES 149. 150.

151.Payable for investments purchased $ 4,710,090 152.

153.Dividends payable 12,797 154.

155.Accrued management fee 59,270 156.

157.Other payables and accrued expenses 46,564 158.

159. 160.TOTAL LIABILITIES 161. 4,828,721

162.163.NET ASSETS 164. $ 175,190,051

165.Net Assets consist of: 166. 167.

168.Paid in capital 169. $ 175,203,622

170.Accumulated net realized gain (loss) on 171. (13,571)
investments

172.173.NET ASSETS, for 175,203,622 shares 174. $ 175,190,051
outstanding

175.176.NET ASSET VALUE, offering price and 177. $1.00
redemption price per share ($175,190,051 (divided by)
175,203,622 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1993

178.179.INTEREST INCOME 180. $ 4,160,443

181.EXPENSES 182. 183.

184.Management fee (Note 4) $ 670,133 185.

186.Transfer agent, accounting and custodian fees and 303,537 187.
expenses (Note 4)

188.Non-interested trustees' compensation 2,210 189.

190.Registration fees 1,324 191.

192.Audit 16,493 193.

194.Legal 4,284 195.

196.Miscellaneous 2,034 197.

198. Total expenses before reductions 1,000,015 199.

200. Expense reductions (Note 5) (3,437) 996,578

201.202.NET INTEREST INCOME 203. 3,163,865

204.205.NET REALIZED GAIN (LOSS) ON INVESTMENTS 206. (10,242)
(NOTE 1)

207.208.NET INCREASE IN NET ASSETS RESULTING FROM 209. $ 3,153,623
OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

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

1993 1992

210.INCREASE (DECREASE) IN NET ASSETS

211.Operations $ 3,163,865 $ 4,489,746
Net interest income

212. Net realized gain (loss) on investments (10,242) 1,582

213. 3,153,623 4,491,328
214.NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM
OPERATIONS

215.Dividends to shareholders from net interest income (3,163,865) (4,489,746)

216.Share transactions at net asset value of $1.00 per 305,331,423 256,205,217
share
Proceeds from sales of shares

217. Reinvestment of dividends from net interest 2,958,037 4,160,244
income

218. Cost of shares redeemed (293,906,431) (274,699,600)

219. 14,383,029 (14,334,139)
Net increase (decrease) in net assets and shares
resulting from share transactions

220. 14,372,787 (14,332,557)
221.TOTAL INCREASE (DECREASE) IN NET ASSETS

222.NET ASSETS 223. 224.

225. Beginning of period 160,817,264 175,149,821

226. End of period $ 175,190,051 $ 160,817,264

</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
227. YEARS ENDED DECEMBER 31, JANUARY 12, 199
0
(COMMENCEMEN
T
OF OPERATIONS) TO
DECEMBER 31,

228. 1993 1992 1991 1990

229.SELECTED PER-SHARE DAT
A

230.Net asset value, $ 1.000 $ 1.000 $ 1.000 $ 1.000
beginning of period

231.Income from Investment .020 .026 .044 .055
Operations
Net interest income

232. Dividends from net inter (.020) (.026) (.044) (.055)
est
income

233.Net asset value, $ 1.000 $ 1.000 $ 1.000 $ 1.000
end of period

234.TOTAL RETURN (dagger) 1.98% 2.66% 4.46% 5.66%

235.RATIOS AND SUPPLEMENTAL DATA

236.Net assets, end of period $ 175,190 $ 160,817 $ 175,150 $ 169,397

(000 omitted)

237.Ratio of expenses to ave .62% .49% .21% .22%*
rage
net assets (dagger)(dagger)

238.Ratio of expenses to ave .62% .61% .65% .77%*
rage
net assets before expense
reductions (dagger)(dagger)

239.Ratio of net interest inco 1.96% 2.64% 4.38% 5.78%*
me to
average net assets

</TABLE>

* ANNUALIZED
(dagger) TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
(dagger)(dagger) SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS
for the period ended December 31, 1993

1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity Michigan Tax-Free High Yield Portfolio (the high yield fund) is a
fund of Fidelity Municipal Trust. Fidelity Michigan Municipal Money Market
Portfolio (the money market fund) is a fund of Fidelity Municipal 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 Municipal Trust and Fidelity Municipal 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 following summarizes the significant accounting policies of the
money market fund and the high yield fund:
SECURITY VALUATION.
HIGH YIELD 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. Short-term securities
maturing within sixty days are valued either at amortized cost or original
cost plus accrued interest, both of which approximate current value.
Securities for which quotations are not readily available through the
pricing service are valued at their fair value as determined in good faith
under consistently applied procedures under the general supervision of the
Board of Trustees.
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 all of its taxable income for the fiscal
year. The schedules of investments include information regarding income
taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned. For the
money market fund, accretion of market discount represents unrealized gain
until realized at the time of a security disposition or maturity.
EXPENSES. Most expenses of each trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between 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 regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
losses deferred due to wash sales and futures and options transactions.
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.
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective January
1, 1993, the funds adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the funds changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of December 31, 1992 have been restated as follows:
HIGH YIELD FUND. Paid in capital and accumulated net realized loss on
investments decreased by $24,652.
MONEY MARKET FUND. No adjustments were necessary.
2. OPERATING POLICIES.
FUTURES CONTRACTS AND OPTIONS. The high yield fund may invest in futures
contracts and write options. These investments involve, to varying degrees,
elements of market risk and risks in excess of the amount recognized in the
Statement of Assets and Liabilities. The face or contract amounts reflect
the extent of the involvement the high yield fund has in the particular
classes of instruments. Risks may be caused by an imperfect correlation
between movements in the price of the instruments and the price of the
underlying securities and interest rates. Risks also may arise if there is
an illiquid secondary market for the instruments, or due to the inability
of counterparties to perform.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Options traded
on an exchange are valued using the last sale price or, in the absence of a
sale, the last offering price. Options traded over-the-counter are valued
using dealer-supplied valuations.
3. PURCHASES AND SALES OF
INVESTMENTS.
HIGH YIELD FUND. Purchases and sales of securities, other than short-term
securities, aggregated $229,775,566 and $164,852,618, respectively. The
market value of futures contracts opened and closed amounted to
$370,705,237 and $378,537,201, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, Fidelity Management
& Research Company (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 each fund. The group fee rate is the weighted
average of a series of rates ranging from .15% to .37% and is based on the
monthly average net assets of all the mutual funds advised by FMR. The
annual individual fund fee rate is .25%. For the period, the management
fees were equivalent to annualized rates of .42% of average net assets for
both the high yield and money market funds.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
The Board of Trustees approved a new group fee rate schedule with rates
ranging from .1325% to .37%. Effective November 1, 1993, FMR has
voluntarily agreed to implement this new group fee rate schedule as it
results in the same or a lower management fee.
On December 15, 1993, the shareholders of the high yield fund voted to
approve a proposal to amend the management contract. The new management fee
will reflect the new group fee rate schedule.
SUB-ADVISER FEE. As the money market fund's investment sub-adviser, FMR
Texas Inc., a wholly owned subsidiary of FMR, receives a fee from FMR of
50% of the management fee payable to FMR. The fee is paid prior to any
voluntary expense reimbursements which may be in effect, and after reducing
the fee for any payments by FMR pursuant to the fund's Distribution and
Service Plan.
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service
Plans (the Plans), and in accordance with Rule 12b-1 of the Act, FMR or the
funds' distributor, Fidelity Distributors Corporation (FDC), an affiliate
of FMR, may use their resources to pay administrative and promotional
expenses related to the sale of each fund's shares. Subject to the approval
of each Board of Trustees, the Plans also authorize payments to third
parties that assist in the sale of each fund's shares or render shareholder
support services. FMR or FDC has informed the funds that payments made to
third parties under the Plans amounted to $28,862 and $20,701 for the high
yield and the money market funds, respectively, for the period.
TRANSFER AGENT AND ACCOUNTING FEES. United Missouri Bank, N.A. (the Bank)
is the custodian and transfer and shareholder servicing agent for the
funds. The Bank has entered into sub-contracts with Fidelity Service Co.
(FSC), an affiliate of FMR, under which FSC performs the activities
associated with the funds' transfer and shareholder servicing agent and
accounting functions. The funds pay transfer agent fees based on the type,
size, number of accounts and number of transactions made by shareholders.
FSC pays for typesetting, printing and mailing of all shareholder reports,
except proxy statements. The accounting fee is based on the level of
average net assets for the month plus out-of-pocket expenses. For the
period, FSC received transfer agent and accounting fees amounting to
$578,539 and $230,745 for the high yield fund and $254,135 and $33,742 for
the money market fund, respectively.
Shareholders participating in the Fidelity Ultra Service Account Program
(the Program) pay a $5.00 monthly fee to Fidelity Brokerage Services, Inc.
(FBSI), an affiliate of FMR, for performing services associated with the
Program. For the period, fees paid to FBSI by shareholders participating in
the Program amounted to $5,940.
5. EXPENSE REDUCTIONS.
FMR has voluntarily agreed to reimburse the money market fund for total
operating expenses (excluding interest, taxes, brokerage commissions and
extraordinary expenses) above an annual rate of .60% of average net assets
from January 1, 1993 through January 31, 1993. For the period the
reimbursement amounted to $3,437.
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Fidelity Municipal Trust and Fidelity Municipal Trust II
and the Shareholders of Fidelity Michigan Tax-Free High Yield
Portfolio and Fidelity Michigan
Municipal Money Market Portfolio:
We have audited the accompanying statements of assets and liabilities of
Fidelity Michigan Tax-Free High Yield Portfolio, a portfolio of Fidelity
Municipal Trust, and Fidelity Michigan Municipal Money Market Portfolio, a
portfolio of Fidelity Municipal Trust II including the schedules of
portfolio investments, as of December 31, 1993, and the related statements
of operations for the year then ended, the statements of changes in net
assets for each of the two years in the period then ended, and the
financial highlights for each of the five years in the period then ended
for the Fidelity Michigan Tax-Free High Yield Portfolio, and the financial
highlights for each of the three years in the period then ended and for the
period January 12, 1990 (commencement of operations) to December 31, 1990
for the Fidelity Michigan Municipal Money Market Portfolio. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 1993 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Michigan Tax-Free High Yield Portfolio and Fidelity Michigan
Municipal Money Market Portfolio as of December 31, 1993, the results of
their operations for the year then ended, the changes in their net assets
for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended for the
Fidelity Michigan Tax-Free High Yield Portfolio, and the financial
highlights for each of the three years in the period then ended and for the
period January 12, 1990 (commencement of operations) to December 31, 1990
for the Fidelity Michigan Municipal Money Market Portfolio, in conformity
with generally accepted accounting principles.
COOPERS & LYBRAND
Boston, Massachusetts
January 28, 1994
TO CALL FIDELITY

Fidelity Management & Research
Company
Boston, MA
SUB-ADVISER
FMR Texas Inc.
Irving, TX
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Peter J. Allegrini, Vice President
HIGH YIELD FUND
Thomas D. Maher, Assistant
Vice President - MONEY MARKET FUND
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
Marvin L. Mann*
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
United Missouri Bank, N.A.
Kansas City, MO
and
Fidelity Service Co.
Boston, MA
CUSTODIAN
United Missouri Bank, N.A.
Kansas City, MO
THE FIDELITY
TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
TDD Service 1-800-544-0111
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE

EXHIBIT 24(A)(6)
FIDELITY

(Registered trademark)
MINNESOTA
TAX-FREE
PORTFOLIO

ANNUAL REPORT
DECEMBER 31, 1993
CONTENTS

CHECK PAGE NUMBERS !!!

PRESIDENT'S MESSAGE 3 Ned Johnson on minimizing taxes.

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 last six
months
and one year.

INVESTMENTS 11 A complete list of the fund's
investments with their market value.

FINANCIAL STATEMENTS 19 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.

NOTES 23 Footnotes to the financial
statements.

REPORT OF INDEPENDENT 26 The auditor's opinion.
ACCOUNTANTS

DEAR SHAREHOLDER:
Once the new year begins, many people start reviewing their finances and
calculating their tax bills. No one wants to pay more taxes than they have
to. But a recent survey of 500 U.S. households, conducted by Fidelity and
Yankelovich Partners, showed that few people have taken steps to reduce
their taxes under the new legislation. Many were not even aware that the
new tax laws were retroactive to January 1993.
Whether or not you're someone whose tax bill will increase as a result of
these changes, it may make sense to consider ways to keep more of what you
earn.
First, if your employer offers a 401(k) or 403(b) retirement savings plan,
consider enrolling. These plans are set up so you can make regular
contributions -
before taxes - to a retirement savings plan. They offer a disciplined
savings strategy, the ability to accumulate earnings tax-deferred, and
immediate tax savings. For example, if you earn $40,000 a year and
contribute 7% of your salary to your 401(k) plan, your annual contribution
is $2,800. That reduces your taxable income to $37,200 and, if you're in
the
28% tax bracket, saves you $784 in federal taxes. In addition, you pay no
taxes on any earnings until withdrawal.
It may be a good idea to contact your benefits office as soon as possible
to find out when you can enroll or increase your contribution. Most
employers allow employees to make changes only a few times each year.
Second, consider an IRA. Many people are eligible to make an IRA
contribution (up to $2,000) that is fully tax deductible. That includes
people who are not covered by company pension plans, or those within
certain income brackets. Even if you don't qualify for a fully deductible
contribution, any IRA earnings will grow tax-deferred until withdrawal.
Third, consider adding to your tax-free investments - either municipal
bonds or municipal bond funds. Often these can provide higher after-tax
yields than comparable taxable investments. For example, if you're in the
new 36% federal income tax bracket and invest $10,000 in a taxable
investment yielding 7%, you'll pay $252 in federal taxes and receive $448
in income. That same $10,000 invested in a tax-free bond fund yielding 5.5%
would allow you to keep $550 in income.
These are three investment strategies that could help lower your tax bill
in 1994. If you're interested in learning more, please call us at
1-800-544-8888 or visit a Fidelity Investor Center.
Wishing you a prosperous new year,
Edward C. Johnson 3d, Chairman
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. Each figure
includes changes in a fund's share price, reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells bonds
that have grown in value). You can also look at the fund's income. If
Fidelity had not reimbursed certain fund expenses during the periods shown,
the total returns, dividends and yields would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1993 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND

Minnesota Tax Free 12.42% 53.76% 98.10%

Lehman Brothers Municipal Bond Index 12.29% 62.86% n/a

Average Minnesota Tax-exempt
Municipal Bond Fund 11.76% 55.31% n/a

Consumer Price Index 2.75% 21.00% 33.76%

CUMULATIVE TOTAL RETURNS reflect actual performance over a set period - in
this case, one year, five years or since the fund started on November 21,
1985. For example, if you invested $1,000 in a fund that had a 5% return
over the past year, you would end up with $1,050. You can compare these
figures to the performance of the Lehman Brothers Municipal Bond index - a
broad gauge of the municipal bond market. To measure how the fund stacked
up against its peers, you can look at the average Minnesota tax-exempt
fund, which reflects the performance of 26 Minnesota bond funds tracked by
Lipper Analytical Services. Both benchmarks include reinvested dividends
and capital gains, if any. Comparing the fund's performance to the consumer
price index helps show how your fund did compared to inflation. (The period
covered by CPI numbers are the closest available to those covered by the
fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1993 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND

Minnesota Tax Free 12.42% 8.99% 8.79%

Lehman Brothers Municipal Bond Index 12.29% 10.25% n/a

Average Minnesota Tax-exempt
Municipal Bond Fund 11.76% 9.20% n/a

Consumer Price Index 2.75% 3.89% 3.66%

11/30/85 10000.00 10000.00
12/31/85 10135.31 10087.90
01/31/86 10595.82 10682.08
02/28/86 10969.26 11105.62
03/31/86 11078.08 11109.18
04/30/86 10981.04 11117.62
05/31/86 10810.83 10936.62
06/30/86 10880.08 11040.96
07/31/86 10965.67 11107.98
08/31/86 11428.87 11605.28
09/30/86 11433.00 11634.41
10/31/86 11734.15 11835.34
11/30/86 11893.81 12069.80
12/31/86 11862.07 12036.48
01/31/87 12110.24 12398.90
02/28/87 12273.22 12459.90
03/31/87 12164.46 12327.83
04/30/87 11162.90 11709.22
05/31/87 11041.26 11651.14
06/30/87 11273.78 11993.22
07/31/87 11449.74 12115.55
08/31/87 11505.32 12142.81
09/30/87 10803.01 11695.10
10/31/87 10927.92 11736.50
11/30/87 11190.18 12042.94
12/31/87 11407.87 12217.69
01/31/88 11893.94 12652.88
02/29/88 12053.86 12786.62
03/31/88 11758.56 12637.66
04/30/88 11828.78 12733.70
05/31/88 11934.90 12696.90
06/30/88 12112.46 12882.66
07/31/88 12171.11 12966.65
08/31/88 12193.84 12978.07
09/30/88 12412.08 13212.97
10/31/88 12695.60 13446.18
11/30/88 12610.15 13323.01
12/31/88 12846.45 13459.30
01/31/89 13021.61 13737.64
02/28/89 12934.78 13580.90
03/31/89 12948.76 13548.44
04/30/89 13279.03 13870.08
05/31/89 13457.37 14158.16
06/30/89 13609.87 14350.43
07/31/89 13711.70 14545.74
08/31/89 13618.38 14403.33
09/30/89 13553.26 14360.12
10/31/89 13744.65 14535.32
11/30/89 13939.72 14789.69
12/31/89 14033.02 14910.96
01/31/90 13936.01 14840.88
02/28/90 14094.12 14972.96
03/31/90 14108.44 14977.46
04/30/90 13927.54 14869.62
05/31/90 14211.07 15193.78
06/30/90 14345.59 15327.48
07/31/90 14591.07 15552.79
08/31/90 14352.96 15327.28
09/30/90 14477.05 15336.48
10/31/90 14656.23 15614.07
11/30/90 14977.46 15927.91
12/31/90 15046.14 15997.99
01/31/91 15172.93 16212.36
02/28/91 15272.21 16353.41
03/31/91 15298.18 16359.95
04/30/91 15483.15 16577.54
05/31/91 15638.53 16725.08
06/30/91 15575.96 16708.36
07/31/91 15778.31 16912.20
08/31/91 15936.69 17135.44
09/30/91 16051.32 17358.20
10/31/91 16106.26 17514.42
11/30/91 16071.58 17563.46
12/31/91 16324.85 17941.08
01/31/92 16396.23 17982.34
02/29/92 16464.72 17987.74
03/31/92 16490.85 17994.93
04/30/92 16607.42 18155.09
05/31/92 16789.84 18369.32
06/30/92 17016.36 18677.92
07/31/92 17435.03 19238.26
08/31/92 17256.55 19049.72
09/30/92 17297.40 19173.55
10/31/92 16974.36 18985.65
11/30/92 17366.89 19325.49
12/31/92 17569.95 19522.61
01/31/93 17837.90 19749.07
02/28/93 18388.52 20463.99
03/31/93 18216.91 20247.07
04/30/93 18387.73 20451.57
05/31/93 18512.97 20566.09
06/30/93 18815.79 20909.55
07/31/93 18839.48 20936.73
08/31/93 19233.58 21372.21
09/30/93 19508.67 21615.86
10/31/93 19533.46 21656.93
11/30/93 19369.54 21466.35
12/31/93 19752.48 21919.29
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Fidelity
Minnesota Tax Free Portfolio on November 30, 1985, shortly after the fund
started. As the chart shows, by December 31, 1993, the value of your
investment would have grown to $19,752 - a 97.52% increase on your initial
investment. For comparison, look at how the Lehman Brothers Municipal Bond
index did over the same period. With dividends reinvested, the same $10,000
would have grown to $21,919 - a 119.19% increase.

Income return 6.25% 6.51% 6.79% 6.93% 7.20%

Change in share price 6.17% 1.12% 1.71% 0.29% 2.04%
Total return 12.42% 7.63% 8.50% 7.22% 9.24%
Income returns and changes in share price are both part of a bond fund's
total return. An income return reflects the dividends paid by the fund,
assuming they are reinvested. Changes in the fund's share price include
changes in the prices of the bonds owned by the fund.
DIVIDENDS AND YIELD
PERIODS ENDED DECEMBER 31, 1993 PAST 30 PAST 6 PAST 1
DAYS MONTHS YEAR

Dividends per share n/a 32.56(cents) 64.68(cents)

Annualized dividend rate n/a 5.65% 5.74%

Annualized yield 5.08% n/a n/a

Tax-equivalent yield 8.67% n/a n/a

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 $11.43 over
the past six months and $11.27 over the past year, you can compare the
fund's income over these two periods. The 30-day annualized yield is a
standard formula for all funds based on the yields of the bonds in the
fund, averaged over the past 30 days. This figure shows you the yield
characteristics of the fund's investments at the end of the period. It also
helps you compare funds from different companies on an equal basis. The
tax-equivalent yield shows what you would have to earn on a taxable
investment to equal the fund's tax-free yield, if you're in the 41.44%
combined federal and state tax bracket.
FUND TALK: THE MANAGER'S OVERVIEW

MARKET RECAP
Generally, interest rates fell
during the 12 months ended
December 31, 1993. As a result,
bond prices rose and most
fixed-income investors -
including those in tax-free bonds
- - enjoyed attractive returns.
The period began with worries of
rising interest rates. The
economic recovery was finally
taking hold, and the spending
plans of the president-elect were
still unclear. But the bond market
signaled its approval as
President Clinton promised to
reduce the deficit and fight
inflation. The yield on the
benchmark 30-year Treasury
bond declined steadily and
reached an historic low of 5.79%
in mid-October. By year-end,
mild inflation fears, fueled by a
strengthening economy, had
pushed up the yield on the
30-year bond to 6.35%. Two
factors affected tax-free bonds
specifically: on the positive side,
higher federal taxes -
discussed all year and approved
in August - boosted demand.
At the same time, record new
issuance kept supplies high,
which somewhat dampened
prices. Overall during the period,
tax-free bonds performed well
compared to other fixed-income
investments. The Lehman
Brothers Municipal Bond Index
- - a broad measure of the
tax-free bond market - rose
12.29%. By comparison, the
Lehman Brothers Aggregate
Bond Index - which tracks
investment-grade taxable bonds
- - rose only 9.75%, due in part
to relatively poor performance
by mortgage backed securities.
An interview with Steven Harvey,
Portfolio Manager of Fidelity
Minnesota Tax-Free Portfolio
Q. STEVE, HOW DID THE FUND DO?
A. For the 12 months ended December 31, 1993, the fund had a total return
of 12.42%. That beat the average Minnesota tax-free bond fund, which
returned 11.76% over the same period, according to Lipper Analytical
Services. The difference can be attributed mostly to a longer-than-average
duration - a measure of how much a bond's price fluctuates with changes in
interest rates.
Q. WHAT CHANGES HAVE YOU MADE IN SINCE TAKING OVER THE FUND OCTOBER?
A. For much of the year, the fund was invested in a fair amount of callable
bonds - or bonds that can be redeemed before their scheduled maturities.
When interest rates fall - as they have over the past year - some callable
bonds tend not to do well because they trade to their shorter call dates.
That's because usually, at the first available opportunity, an issuer will
call away the bond and refinance the debt at current lower rates. Callable
bonds trade like shorter-term bonds and aren't as sensitive - meaning they
don't rise as much - as longer term bonds when interest rates fall. So, to
lengthen the fund's duration, I sold some callable bonds. At the end of the
period, the fund's duration was 8.1 years, up from 6.8 years at the end of
June.
Q. WHAT REPLACED THEM?
A. Discount bonds, which trade at less than face value because they carry
an interest rate below the current rate for similar bonds. Discount bonds
tend to rise more than premium bonds as interest rates fall.
Q. AT THE END OF THE YEAR, THE FUND'S LARGEST SECTOR CONCENTRATION - AT
33.8% OF INVESTMENTS - WAS HEALTH CARE. ARE YOU CONCERNED THAT THESE BONDS
MIGHT
BE AFFECTED BY HEALTH-CARE REFORM?
A. Not too much, because Minnesota embraced health-care reform long before
it was talked about on a national level. Health-care costs are controlled
in part by reducing hospital stays, increasing outpatient procedures and
generally moving from in-patient to out-patient status. That in effect
reduces the number of beds occupied in the hospital system. At one point
several years ago, the Twin Cities had less than half of all available
hospital beds occupied, and so many hospitals merged and pulled beds out of
the system. The Twin Cities was also one of the first areas in the country
to have a large concentration of HMOs. Because of the presence of managed
care, and the heightened awareness among Minnesota employers who made a
concerted effort to manage costs, the state generally has managed to keep
health-care costs down.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Housing bonds - which were 12%
of the fund's investments at year-end - didn't perform as well as other
sectors. That's because they had seen rapid prepayments in principal due to
the sharp drop in mortgage rates.
Q. HOW DO YOU THINK THE STATE'S ECONOMY WILL FARE OVER THE NEXT 12 MONTHS?
A. Better than the national average. Minnesota, even through the recession,
showed continued job growth which exceeded the nation as a whole. I pay
close attention to employment statistics because more jobs lead to more
spending in the state. There has also been an extremely healthy retail
sales trend. And the state has a history of conservative fiscal management.
In my view, those factors add up to a mostly positive environment for
Minnesota's economy.
Q. AFTER ENJOYING SUCH A STRONG YEAR IN 1993, CAN MUNICIPAL BONDS CONTINUE
TO POST SUCH IMPRESSIVE RETURNS?
A. Throughout the past year, municipal bond prices were artificially low,
in part because there was a record supply of bonds issued. But now, many of
the refinancings permitted by law have already taken place; and once those
refinancings taper off I expect supply to be lower in 1994. On the demand
side, investors are just now beginning to calculate their tax bills for
1993. And I think that once they've recognized their taxes have risen, many
will find tax-free municipal bonds a more attractive investment.
Q. SO WHAT DO YOU THINK INVESTORS CAN
EXPECT FOR 1994?
A. Probably more modest returns than they've enjoyed over the past year.
It's unlikely that the huge drop in interest rates that occurred in 1993
will repeat itself in 1994. What's probably more likely is that the range
of interest rates will be relatively tight. In that kind of market, good
investment returns come from selecting the right sector and doing careful
research to identify bonds with the potential to improve their credit
ratings.

FUND FACTS
GOAL: to provide high current
income exempt from federal
and Minnesota state income
tax
START DATE: November 21,
1985
SIZE: as of December 31,
1993, over $342 million
NEW MANAGER: Steven
Harvey since October 1993;
manager, Spartan
Pennsylvania High Yield
Portfolio, since October 1993;
Spartan Maryland Municipal
Income Portfolio, since April
1993
(checkmark)

STEVE HARVEY'S OUTLOOK
ON INTEREST RATES:
"Despite some retreat in bond
prices in the last quarter of
1993 caused by
stronger-than-expected
economic news, I believe that
interest rates won't rise or fall
much over the next 12
months.
And even though there was
strong economic growth over
the last quarter, that hasn't
translated into higher inflation.
While some commodity prices
have started to rise
somewhat, oil prices are flat.
As long as oil - an important
part of our economy - stays
low, I don't worry too much
about inflation rising. There's
also continued evidence that
labor prices are under control,
with major corporations still
announcing plans to lay off
workers. To me that signals
that rates could remain low for
at least the first half of 1994."
(bullet) Electric utility bonds - at
14.8% of investments - are
the fund's second largest
industry concentration.
They're attractive, in part,
because the supply of these
bonds could start to dwindle
and so prices could
appreciate.
(bullet) On December 31, the
fund's duration was 8.1 years,
up from 6.8 years six months
earlier. That means if interest
rates rose one percentage
point, the fund's share price
- - $11.52 on December 31 -
would fall about 8.1% to
roughly $10.59.
INVESTMENT CHANGES

TOP FIVE SECTORS AS OF DECEMBER 31, 1993
% OF FUND'S % OF FUND'S INVESTMENT
INVESTMENTS S
IN THESE SECTORS
6 MONTHS AGO

Health Care 34 33

Electric Utilities 15 15

Housing 12 12

General Obligation 10 7

Industrial Development 7 9

AVERAGE YEARS TO MATURITY AS OF DECEMBER 31, 1993
6 MONTHS AGO

Years 21.6 21.4

AVERAGE YEARS TO MATURITY SHOWS THE AVERAGE TIME UNTIL THE PRINCIPAL OF THE
BONDS IN THE FUND IS EXPECTED TO BE REPAID, WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF DECEMBER 31, 1993
6 MONTHS AGO

Years 8.1 6.8

DURATION SHOWS HOW MUCH A BOND'S PRICE FLUCTUATES WITH CHANGES IN INTEREST
RATES. IF RATES RISE 1%, FOR EXAMPLE, THE SHARE PRICE OF A FUND WITH A
FIVE-YEAR DURATION WILL FALL 5%.
QUALITY DIVERSIFICATION AS OF DECEMBER 31, 1993
(MOODY'S RATINGS)
Aaa 28%
Aa, A 52%
Baa 12%
Caa 3%
Non-rated 5%
Row: 1, Col: 1, Value: 28.0
Row: 1, Col: 2, Value: 52.0
Row: 1, Col: 3, Value: 12.0
Row: 1, Col: 4, Value: 3.0
Row: 1, Col: 5, Value: 5.0
THIS CHART EXCLUDES SHORT-TERM INVESTMENTS. WHERE MOODY'S RATINGS ARE NOT
AVAILABLE, WE HAVE USED S&P RATINGS.
INVESTMENTS DECEMBER 31, 1993

Showing Percentage of Total Value of Investments

MUNICIPAL BONDS - 97.7%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
MINNESOTA - 92.8%
Albany Health Care Facs. Rev. Rfdg.
(Mother Mercy Nursing Home) 8.75%
12/1/19 - $ 1,100,000 $ 1,156,375 012387AR
Anoka County Resources Recovery Rev.
(Northern States Pwr. Co.) 7.15% 12/1/08 Aa3 1,500,000 1,710,000
036272AS
Anoka County Solid Waste Disp. Rev. (Nat'l.
Rural Util.) Series A, 6.95% 12/1/08 (b) Aa3 1,000,000 1,120,000
036277AM
Apple Valley Ind. Dev. Rev. Rfdg.
(Kmart Corp. Proj.) 6.50% 10/1/08 A 800,000 892,000 037891AP
Bass Brook Poll. Cont. Rev. Rfdg.
(Minnesota Pwr. & Lt. Co.) 6% 7/1/22 A2 14,700,000 15,343,125
070129AG
Bemidji Hosp. Facs. Rev. (1st Mtg.)
(North Country Health) Series A, 7% 9/1/21 A 1,000,000 1,101,250
081393BB
Brainerd Health Care Facs. Rev.
(Benedictine Health St. Joseph Proj.): 104894AL
Series D, 5.875% 2/15/12 (MBIA
Insured) Aaa 1,500,000 1,584,375 104894CB
8.375% 2/15/20
(Pre-Refunded to 2/15/00 @102) (e) Baa 2,000,000 2,470,000 104894AL
Breckenridge Hosp. Facs. Rev.
(Franciscan Sisters Healthcare-B2) 9.375%
9/1/17 A- 445,000 513,975 106502AP
Chicago City Health Facs. Rev. (Point Pleasant
Height Proj.) 9.25% 7/1/15 - 3,700,000 3,889,625 170060AQ
Coon Rapids Hosp. Rev. (Health Ctr. Sys. Proj.)
Series B, 9% 10/1/14 A 2,000,000 2,195,000 216583BK
Dakota County Hsg. & Redev. Auth. Interest for
South St. Paul Rev. (Single Family Mtg.) : 234102BR
Rfdg. Series A, 8.10 9/1/12, (GNMA
Coll.) AAA 480,000 514,200 234102CW
(Burnsville & Inver.) 9.375% 5/1/18,
(FGIC Insured) Aaa 15,000 16,144 234102BR
Duluth Econ. Dev. Auth. Hosp. Facs. Rev. Rfdg.
(St. Lukes Hosp. of Duluth) Series B, 6.40%
5/1/18 (Connie Lee Insured) AAA 3,000,000 3,292,500 26444FBC
Duluth Swr. Util. Rev. 8.60% 2/1/03 A 270,000 283,837 264435L9
Eagan Wtr. Gen. Oblig. Unltd. Tax
Series A, 7.30% 12/1/10 Aa 820,000 954,275 2694073V
East Grand Forks Poll. Cont. Rev. Rfdg.
(American Crystal Sugar Co.) Series A,
7.75% 4/1/18 BBB+ 1,000,000 1,138,750 272450AH
Eden Prairie Multi-Family Hsg. Rev. (Preserve
Place Apts.) 8% 7/1/28, (FHA Guaranteed) AAA 1,000,000 1,047,500
279540EJ
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
MINNESOTA - CONTINUED
Hennepin County Lease Rev. Ctfs. of Prtn.: 425523AW
6.65% 5/15/08 Aa $ 500,000 $ 547,500 425523AW
6.80% 5/15/17 Aa 5,000,000 5,525,000 425523BQ
Minneapolis Commty. Dev. Agcy. Supported
Dev. Rev. Ltd. Tax (Common Board Fund)
Series 1991-5A, 7.40% 12/1/21 BBB+ 1,250,000 1,381,250 603919KW
Minneapolis Commty. Dev. Agcy. Tax Increment
Rev. (MBIA Insured):
0% 9/1/07 Aaa 2,860,000 1,430,000 603924AQ
0% 9/1/08 Aaa 4,600,000 2,150,500 603924AS
Minneapolis Convention Ctr. Sales Tax Rev.
(Chamber Bdlg.-Skyway Proj.) 9.75%
2/1/06 (g) - 689,000 344,500 603750OA
Minneapolis Gen. Oblig.: 60374AJX
Rfdg. Series B:
5.10% 9/1/08 Aaa 2,000,000 2,030,000 60374AJX
5.20% 3/1/13 Aaa 2,000,000 2,002,500 60374AKL
Cap. Appreciation Series A:
0% 12/1/11 Aaa 2,830,000 1,110,775 60374AGQ
0% 12/1/12 Aaa 2,000,000 740,000 60374AGU
Minneapolis Gen. Oblig. Conv. Ctr. Facs.
Series 1990, 5.35% 4/1/11 Aaa 5,000,000 5,125,000 60374ADS
Minneapolis Health Care Facs. Rev.
(Baptist Residence Proj.) 8.70% 11/1/09 - 1,885,000 2,160,681 603908BZ
Minneapolis Hosp. Rev.: 603745MK
Rfdg. (Fairview Hosp. & Healthcare) 6.50%
1/1/11, (MBIA Insured) Aaa 1,500,000 1,663,125 603745MK
(Childrens Med. Ctr. Proj.)Series C, 7%
12/1/20 A 2,500,000 2,796,875 603745LR
(Lifespan, Inc.): 603745JC
Rfdg. (Abbott Northwestern Hosp., Inc.)
Series 1988 A, 7.875% 12/1/14 A1 1,200,000 1,396,500 603745JS
(Abbott Northwestern Hosp., Inc.) 7%
12/1/14 A1 2,000,000 2,225,000 603745KX
Series B:
9.125% 12/1/14 A1 1,150,000 1,390,062 603745JC
8.125% 8/1/17 A 3,000,000 3,431,250 603745KH
Minneapolis Spl. School Dist. #1 Ctfs. of Prtn.
7.375% 2/1/15 A1 1,000,000 1,100,000 603792BF
Minneapolis Tax Increment Rev. 9.25% 3/1/94
(MBIA Insured) Escrowed to Maturity (e) Aaa 1,000,000 1,012,130
603795AH
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
MINNESOTA - CONTINUED
Minneapolis & St. Paul Hsg. Fin. Board Rev.
(Single Family Phase IX) 7.25% 8/1/21(b) AAA $ 2,500,000 $ 2,725,000
603797MQ
Minneapolis & St. Paul Hsg. & Redev. Auth.
Health Care Sys. Rev.: 603695BM
(Health One Obligated Group) Series A,
7.40% 8/15/11, (MBIA Insured) Aaa 2,750,000 3,210,625 603695BM
(Healthspan Health Sys. Corp.) (Health One
Sys.) Series A, 4.75% 11/15/18
(AMBAC Insured) Aaa 25,610,000 23,657,237 603695DF
Minneapolis & St. Paul Metropolitan Arpts.
Commission Unltd. Tax Series 7, 7.80%
1/1/15 (b) Aaa 3,000,000 3,438,750 603823VZ
Minnesota Agric. & Econ. Dev. Board Rev. (Small Bus.
Dev. Prog. Lot 1) Series B, 8.375% 8/1/10 (b) - 1,000,000 1,076,250
604920JX
Minnesota Energy & Econ. Dev. Auth. Rev.
(Small Bus. Dev. Lot 1 2D) 10% 8/1/06 - 75,000 83,437 604017FD
Minnesota Higher Ed. Facs. Auth.: 604151LX
(MacAlester College) Series 3-J, 6.40%
3/1/22 AA- 1,675,000 1,800,625 604151LX
(Northwestern College) Series 2-X: 604151DZ
8.25% 10/1/00 - 750,000 835,313 604151DZ
8.50% 10/1/05 - 1,750,000 1,929,375 604151EE
(St. Mary's College) Series 3-Q, 6.15%
10/1/23 Baa 1,965,000 2,053,425 604151QT
(St. Thomas Univ.): 604151FQ
Series 3 C, 6.25% 9/1/16 A1 2,310,000 2,457,262 604151FQ
Series 3-R1, 5.60% 10/1/15 A1 1,000,000 1,025,000 604151SE
Series 3-R2, 5.6-% 9/1/14 A1 1,275,000 1,306,875 604151SD
Minnesota Hsg. Fin. Agcy.: 6041542Y
(Single Family Mtg.) 6041542Y
Series A (b): 60415HFZ
6.95% 7/1/16 Aa 1,000,000 1,096,250 60415HTP
7.45% 7/1/22 AA+ 2,945,000 3,184,281 60415HMT
7.95% 7/1/22 Aa 3,390,000 3,618,825 60415HFZ
8% 7/1/29 Aa 940,000 1,001,100 60415HBT
Series B, 7.25% 7/1/16 Aa 1,780,000 1,840,075 604154H3
Series D: 6041542Y
7.35% 7/1/16 Aa 2,770,000 2,932,738 60415HED
8.80% 7/1/16 Aa 1,250,000 1,320,312 6041542Y
Series E:
8% 2/1/17 Aa 1,125,000 1,226,250 60415HAZ
6.85% 1/1/24 (b) Aa 1,000,000 1,081,250 60415HUZ
Series H, 6.50% 1/1/26 (b) Aa 2,800,000 2,954,000 60415HWD
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
MINNESOTA - CONTINUED
Minnesota Hsg. Fin. Agcy.: 6041542Y - continued
(State Assisted Home Impt. Prog.) 60415HLE
Series A:
6.95% 2/1/14 A1 $ 1,000,000 $ 1,081,250 60415HPP
6.95% 8/1/17 A1 1,000,000 1,075,000 60415HSH
Series E, 7.50% 8/1/07(b) A1 1,395,000 1,476,956 60415HLE
Minnesota Hsg. Fin. Agcy. Hsg. Rev.
Series A, 7.05% 8/1/27 A1 1,250,000 1,334,375 60415HSJ
Minnesota Pub. Facs. Auth. Wtr. Poll. Cont. Rev.: 604114AR
Series A: 604114AR
7% 3/1/09 AA+ 1,000,000 1,132,500 604114AR
7.10% 3/1/12 AA+ 3,100,000 3,568,875 604114BD
6.95% 3/1/13 AA+ 4,500,000 5,191,875 604114BW
Series B, 6.70% 3/1/13 AA+ 5,350,000 6,092,312 604114CN
Minnesota Rfdg. Variable Purp. Series A,
6.50%, 8/1/97 Aa 3,000,000 3,266,250 604128AS
Minnetonka Multi-Family Hsg. Rev.
(Cedar Hills East Proj.) 7.50% 12/1/27,
(FHA Guaranteed) AA 600,000 691,500 604218DK
Montevideo Independent Sch. Dist. #129
Unltd. Tax 4.90% 2/1/15 A1 1,000,000 952,500 612714BG
Northern Minnesota Muni. Pwr. Agcy. Elec.
Sys. Rev.:
Rfdg. Series A:
0% 1/1/10, (AMBAC Insured) Aaa 2,405,000 1,034,150 665444CA
7.25% 1/1/16 A 2,630,000 2,942,313 665444CC
5% 1/1/21 A 500,000 478,125 665444CJ
Rfdg. Series B: 665444DQ
5.50% 1/1/18, (AMBAC Insured) Aaa 5,000,000 5,100,000 665444DQ
Series C, 6.125% 1/1/20,
(AMBAC Insured) Aaa 1,250,000 1,356,250 665444DS
Northfield College Facs. Rev. (St. Olaf
College Proj.): 666182BJ
6.30% 10/1/12 A1 1,085,000 1,194,856 666182BJ
6.40% 10/1/21 A1 1,100,000 1,215,500 666182BK
Red Wing Independent School Dist. 256 Unltd.
Tax Series A, 5.53% 2/1/08 Aa 565,000 588,306 757130GP
Redwood Falls Independent Sch. Dist. Rfdg.
5.125% 1/1/15, (AMBAC Insured) Baa1 1,700,000 1,676,625 758046FF
Robbinsdale Hosp. Rev. Rfdg. (North Mem.
Med. Ctr. Proj.) Series A, 5.55% 5/15/19,
(AMBAC Insured) Aaa 4,000,000 4,075,000 770251CM
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
MINNESOTA - CONTINUED
Rochester Health Care Facs. Rev.
(Mayo Foundation/Mayo Med. Ctr.):
Series 1992 D, 6.25% 11/15/21 AA+ $ 2,000,000 $ 2,167,500 771902CC
Series H (d):
9.142% 11/15/15 AA+ 2,000,000 2,255,000 771902CS
5% 11/15/19 AA+ 10,000,000 9,025,000 771902CX
Series I:
5.90% 11/15/10 AA+ 2,250,000 2,460,938 771902CM
5.75% 11/15/21 AA+ 8,750,000 9,089,063 771902CY
St. Cloud Hosp. Facs. Rev. Rfdg.
(St. Cloud Hosp.) Series C, 6.75% 7/1/15,
(AMBAC Insured) Aaa 1,325,000 1,492,281 789162BH
St. Louis County Jail Rev. Series A, 4.75%
12/1/08, (AMBAC Insured) Aaa 1,420,000 1,356,100 791230GG
St. Louis Park Hosp. Facs. Auth. Rev.
(Healthsystem Obligated A) 5.20% 7/1/23,
(AMBAC Insured) Aaa 3,500,000 3,412,500 791748CQ
St. Louis Park Mtg. Rev. (Park Ridge Apt.
Proj.) 9.375% 9/20/20, (GNMA Coll.) AAA 1,200,000 1,260,000 791767AX
St. Paul Hsg. & Redev. Auth. Commercial
Dev. Rev. Rfdg. (Beverly Enterprises) 7.75%
11/1/02 - 1,900,000 1,983,125 792886FH
St. Paul Hsg. & Redev. Auth. Health Care
Facs. Rev. (Childrens Hosp.) 7% 12/1/19 A 3,000,000 3,303,750 792905AV
St. Paul Hsg. & Redev. Auth. Hosp. Rev.
(Healtheast Proj.): 792888DZ
Series A:
6.625% 11/1/17 Baa 5,000,000 5,131,250 792888HF
9.75% 11/1/17 Baa 2,405,000 2,819,863 792888FL
Series B:
9.625% 11/1/08 Baa 2,500,000 2,909,375 792888DZ
9.75% 11/1/17 Baa 3,000,000 3,502,500 792888FM
St. Paul Hsg. & Redev. Auth. Rev. (Rent Hsg.)
8% 2/1/21, (FNMA Mtg. Backed) (b) AAA 3,095,000 3,222,669 792893CZ
St. Paul Hsg. & Redev. Auth. Tax Increment Rev.
(Downtown & 7th Place Redev. Proj.)
(AMBAC Insured):
Series A, 0% 9/1/04 Aaa 1,000,000 527,500 792904BF
Series B, 0% 9/1/08 Aaa 2,500,000 975,000 792904BK
St. Paul Port Auth. Hsg. & Redev. Multi-Family
Hsg. Rev.:
Series C, 7% 9/1/22 CCC 2,800,000 1,914,500 793043BW
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
MINNESOTA - CONTINUED
St. Paul Port Auth. Hsg. & Redev. Multi-Family
Hsg. Rev.: - continued
Series 1985 J:
9.50% 12/1/11 CCC $ 500,000 $ 460,000 793043AN
9.50% 12/1/14 CCC 2,000,000 1,832,500 793043AQ
St. Paul Port Auth. Ind. Dev. Rev.:
Rfdg. Series H, 8.50% 9/1/11 CCC 1,750,000 1,470,000 793059TE
(Riverview II Proj.) Series 1983 A,
10% 1/1/13 CCC 960,000 912,000 793059MG
Series A:
7.80% 12/1/08 CCC 1,110,000 900,488 793059TZ
8% 12/1/13 CCC 1,030,000 816,275 793059TY
Series Q, 9.375% 12/1/15 CCC 650,000 593,938 793059RT
Series 1981-M, 13.50% 11/1/11 CCC 940,000 940,000 793059GS
Series 1982-G, 12.875% 5/1/12 CCC 875,000 866,250 793059GV
St. Paul Swr. Rev. Series A, 8% 12/1/08 A 2,500,000 2,881,250 793071AQ
Seaway Port Auth. Duluth Ind. Dev. Dock &
Wharf Rev. Rfdg. (Cargill, Inc. Proj.)
Series B, 6.80% 5/1/12 (f) Aa3 2,750,000 3,114,375 812802AC
Southern Minnesota Muni. Pwr. Agcy. Pwr.
Supply Sys. Rev.:
Rfdg. Series A, 5.75% 1/1/18 A1 6,000,000 6,240,000 843375MM
Series A, 4.75% 1/1/16 A1 15,500,000 14,550,625 843375NK
Series B, 5% 1/1/13 A1 5,100,000 4,966,125 843375QC
8.397% 2/1/18, (MBIA Insured) (d) Aaa 4,000,000 4,265,000 843375NW
Stillwater Independent School Dist. #834 Unltd.
Tax 6.75% 2/1/08, (FGIC Insured) Aaa 1,500,000 1,653,750 860758KC
Virginia Independent School Dist. #706 Unltd. Tax
Series A:
5% 4/1/11, (AMBAC Insured) Aaa 630,000 630,788 927889BS
5% 4/1/13, (AMBAC Insured) Aaa 1,180,000 1,168,200 927889BU
Washington County Hsg. & Redev. Jail Facs. Rev.
7% 2/1/12, (MBIA Insured) Aaa 2,000,000 2,312,500 93779MAW
Western Minnesota Muni. Pwr. Agcy. Pwr.
Supply Rev.:
Rfdg. Series A:
6.875% 1/1/07 A 800,000 871,000 958697DW
7% 1/1/13 A 5,400,000 5,879,250 958697DX
Series A, 6.375% 1/1/16,
(Escrowed to Maturity) (e) Aaa 2,000,000 2,260,000 958697AW
White Bear Lake First Mtg. Nursing Home Rev.
Series 1992. 8.25% 11/1/12 - 3,000,000 3,127,500 963430BM
311,684,080
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
PUERTO RICO - 4.9 %
Puerto Rico Commonwealth Gen. Oblig. Rfdg.
5% 7/1/21 Baa1 $ 5,000,000 $ 4,750,000 745144KJ
Puerto Rico Commonwealth Hwy. & Trans.:
Rfdg. Series X, 5.50% 7/1/13 Baa1 10,000,000 10,137,500 745181CA
Series W, 5.50% 7/1/15 Baa1 1,000,000 1,015,000 745181CB
Series X, 5.50% 7/1/15 Baa1 530,000 537,950 745181FD
16,440,450

TOTAL MUNICIPAL BONDS
(Cost $307,329,499) 328,124,530
MUNICIPAL NOTES (A) - 2.3%

MINNESOTA - 2.3%
Fridley Ind. Dev. Auth. Rev. (Longview Fibre Co.
Proj.) Series 1988, 3.20%, LOC Algemene
Bank, VRDN - 240,000 240,000 358380BH
Minnesota Gen. Oblig. 1.85% VRDN - 3,000,000 3,000,000 358380BH
Minnesota Higher Ed. Coordinating Board Rev.
(Supplemental Student Loan Prog.) Series 1984,
3.125%, LOC Mitsubishi Bank Ltd., VRDN - 4,632,000 4,632,000 604147BW

TOTAL MUNICIPAL NOTES
(Cost $7,872,000) 7,872,000

TOTAL INVESTMENTS - 100%
(Cost $315,201,499) $ 335,996,530

SECURITY TYPE ABBREVIATIONS
VRDN - Variable Rate Demand Notes
LEGEND
(f) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(f) Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals (AMT securities).
(f) Standard & Poor's Corporation credit ratings are used in the
absence of a rating by Moody's Investors Service, Inc.
(f) Inverse floating rate security is a security where the coupon is
inversely indexed to a floating interest rate multiplied by a specified
factor. If the floating rate is high enough, the coupon rate may be zero or
be a negative amount that is carried forward to reduce future interest
and/or principal payments. The price may be considerably more volatile than
the price of a comparable fixed rate security.
(f) Security collateralized by an amount sufficient to pay interest and
principal.
(f) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $3,114,375 or 0.9% of net
assets.
(f) Non-income producing - issuer filed for protection under the Federal
Bankruptcy Code or is in default of interest payment.

INCOME TAX INFORMATION
At December 31, 1993, the aggregate cost of investment securities for
income tax purposes was $315,210,464. Net unrealized appreciation
aggregated $20,786,066, of which $23,132,267 related to appreciated
investment securities and $2,346,201 related to depreciated investment
securities.

The fund hereby designates $539,000 as a capital gain dividend for the
purpose of the dividend paid deduction.

At December 31, 1993, the fund was required to defer $703,000 of losses on
futures contracts.

OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investments for the period ended is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 59.6% AAA, AA, A 79.0%
Baa 11.0% BBB 7.0%
Ba 0.0% BB 0.0%
B 0.0% B 0.0%
Caa 0.0% CCC 3.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 5.0%.
The distribution of municipal securities by revenue source, as a percentage
of total value of investments, is as follows:
Health Care 33.8%
Electric Utilities 14.8
Housing 12.1
Others
(individually less than 10%) 39.3
TOTAL 100.0%

FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
DECEMBER 31, 1993

6.ASSETS 7. 8.

9.Investment in securities, at value (cost $315,201,499) 10. $ 335,996,530
(Notes 1 and 2) - See accompanying schedule

11.Cash 12. 51,763

13.Receivable for investments sold 14. 24,000

15.Interest receivable 16. 6,723,334

17. 18.TOTAL ASSETS 19. 342,795,627

20.LIABILITIES 21. 22.

23.Payable for fund shares redeemed $ 118,523 24.

25.Dividends payable 258,926 26.

27.Accrued management fee 117,036 28.

29.Other payables and accrued expenses 104,766 30.

31. 32.TOTAL LIABILITIES 33. 599,251

34.35.NET ASSETS 36. $ 342,196,376

37.Net Assets consist of: 38. 39.

40.Paid in capital 41. $ 320,490,651

42.Accumulated undistributed net realized gain (loss) on 43. 910,694
investments

44.Net unrealized appreciation (depreciation) on 45. 20,795,031
investment securities

46.47.NET ASSETS, for 29,694,991 shares outstanding 48. $ 342,196,376

49.50.NET ASSET VALUE, offering price and redemption 51. $11.52
price per share ($342,196,376 (divided by) 29,694,991 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1993

52.INTEREST INCOME 53. $ 20,304,651

54.EXPENSES 55. 56.

57.Management fee (Note 4) $ 1,328,626 58.

59.Transfer agent, accounting and custodian fees and 563,591 60.
expenses (Note 4)

61.Non-interested trustees' compensation 1,013 62.

63.Registration fees 3,713 64.

65.Audit 29,711 66.

67.Legal 9,826 68.

69.Miscellaneous 23,262 70.

71. 72.TOTAL EXPENSES 73. 1,959,742

74.75.NET INTEREST INCOME 76. 18,344,909

77.REALIZED AND UNREALIZED GAIN (LOSS) ON 79. 80.
INVESTMENTS
(NOTES 1 AND 3)
78.Net realized gain (loss) on:

81. Investment securities 9,223,634 82.

83. Futures contracts (541,541) 8,682,093

84.Change in net unrealized appreciation (depreciation) 85. 86.
on:

87. Investment securities 10,079,409 88.

89. Futures contracts (48,740) 10,030,669

90.91.NET GAIN (LOSS) 92. 18,712,762

93.94.NET INCREASE (DECREASE) IN NET ASSETS 95. $ 37,057,671
RESULTING FROM OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

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

1993 1992

96.INCREASE (DECREASE) IN NET ASSETS

97.Operations $ 18,344,909 $ 15,933,145
Net interest income

98. Net realized gain (loss) on investments 8,682,093 356,132

99. Change in net unrealized appreciation (depreciation) 10,030,669 2,441,452
on investments

100. 37,057,671 18,730,729
101.NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM
OPERATIONS

102.Distributions to shareholders from net interest (18,344,909) (15,933,145)
income

103.Share transactions 128,301,957 136,820,248
Net proceeds from sales of shares

104. Reinvestment of distributions from net interest 14,954,530 12,863,065
income

105. Cost of shares redeemed (100,553,675) (93,487,625)

106. 42,702,812 56,195,688
Net increase (decrease) in net assets resulting from
share transactions

107. 61,415,574 58,993,272
108.TOTAL INCREASE (DECREASE) IN NET ASSETS

109.NET ASSETS 110. 111.

112. Beginning of period 280,780,802 221,787,530

113. End of period $ 342,196,376 $ 280,780,802

114.OTHER INFORMATION 116. 117.
115.Shares

118. Sold 11,442,704 12,691,895

119. Issued in reinvestment of distributions from net 1,324,247 1,192,892
interest income

120. Redeemed (8,949,771) (8,681,009)

121. Net increase (decrease) 3,817,180 5,203,778

</TABLE>

FINANCIAL HIGHLIGHTS

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

123. 1993 1992 1991 1990 1989

124.SELECTED PER-SHARE DATA

125.Net asset value, $ 10.850 $ 10.730 $ 10.550 $ 10.520 $ 10.310
beginning of
period

126.Income from Inves .647 .674 .690 .699 .711
tment Operations
Net interest
income

127. Net realized and .670 .120 .180 .030 .210
unrealized gain
(loss) on
investments

128. Total from invest 1.317 .794 .870 .729 .921
ment
operations

129. Dividends from (.647) (.674) (.690) (.699) (.711)
net
interest income

130.Net asset value, $ 11.520 $ 10.850 $ 10.730 $ 10.550 $ 10.520
end of period

131.TOTAL RETURN 12.42% 7.63% 8.50% 7.22% 9.24%

132.RATIOS AND SUPPLEMENTAL DATA

133.Net assets, end of $ 342,196 $ 280,781 $ 221,788 $ 167,127 $ 131,172

period (000
omitted)

134.Ratio of expenses .61% .67% .72% .76% .80%
to
average net
assets

135.Ratio of net 5.73% 6.25% 6.47% 6.72% 6.84%
interest income to
average
net assets

136.Portfolio turnover 37% 12% 14% 29% 25%
rate

</TABLE>

NOTES TO FINANCIAL STATEMENTS
For the period ended December 31, 1993

1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity Minnesota Tax-Free Portfolio (the fund) is a fund of Fidelity
Municipal Trust(the trust) and is authorized to issue an unlimited number
of shares. The trust is registered under the Investment Company Act of
1940, as amended (the 1940 Act), as an open-end management investment
company organized as a Massachusetts business trust. The following
summarizes the significant accounting policies of the fund:
SECURITY VALUATION. Securities are valued based upon a computerized matrix
system and/or appraisals by a pricing service, both of which consider
market transactions and dealer-supplied valuations. Short-term securities
maturing within sixty days are valued either at amortized cost or original
cost plus accrued interest, both of which approximate current value.
Securities (including restricted securities) for which quotations are not
readily available through the pricing service are valued at their fair
value as determined in good faith under consistently applied procedures
under the general supervision of the Board of Trustees.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes information regarding income
taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. 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 regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
losses deferred due to wash sales and futures and options transactions.
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.
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective January
1, 1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
tax regulations. Accordingly, amounts as of December 31, 1992 have been
reclassified to reflect a decrease in paid in capital and accumulated net
realized loss on investments of $96,311.
2. OPERATING POLICIES.
FUTURES CONTRACTS AND OPTIONS. The fund may invest in futures contracts and
write options. These investments involve, to varying degrees, elements of
market risk and risks in excess of the amount recognized in the Statement
of Assets and Liabilities. The face or contract amounts reflect the extent
of the involvement the fund has in the particular classes of instruments.
Risks may be caused by an imperfect correlation between movements in the
price of the instruments and the price of the underlying securities and
interest rates. Risks also may arise if there is an illiquid secondary
market for the instruments, or due to the inability of counterparties to
perform.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Options traded
on an exchange are valued using the last sale price or, in the absence of a
sale, the last offering price. Options traded over-the-counter are valued
using dealer-supplied valuations.
3. PURCHASES AND SALES OF
INVESTMENTS.
Purchases and sales of securities,
other than short-term securities, aggregated $156,454,844 and $112,949,602,
respectively.
The market value of futures contracts opened and closed amounted to
$151,918,822 and $161,952,895,
respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
basic 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 ranging from
.15% to .37% and is based on the monthly average net assets of all the
mutual funds advised by FMR. The annual individual fund fee rate is .25%.
For the period, the management fee was equivalent to an annual rate of .42%
of average net assets.
The Board of Trustees approved a new group fee rate schedule with rates
ranging from .1325% to .37%. Effective November 30, 1993, FMR has
voluntarily agreed to implement this new group fee rate schedule as it
results in the same or a lower management fee.
On December 15, 1993, the shareholders of the fund voted to approve a
proposal to amend the management contract. The new management fee will
reflect the new group fee rate schedule.
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service
Plan (the Plan), and in accordance with Rule 12b-1 of the 1940 Act, FMR or
the fund's distributor, Fidelity Distributors Corporation (FDC), an
affiliate of FMR, may use their
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES -
CONTINUED
DISTRIBUTION AND SERVICE PLAN -
CONTINUED
resources to pay administrative and promotional expenses related to the
sale of the fund's shares. Subject to the approval of the Board of
Trustees, the Plan also authorizes payments to third parties that assist in
the sale of the fund's shares or render shareholder support services. FMR
or FDC has informed the fund that payments made to third parties under the
Plan amounted to $36,021 for the period.
TRANSFER AGENT AND ACCOUNTING FEES. United Missouri Bank, N.A. (the Bank)
is the custodian and transfer and shareholder servicing agent for the fund.
The Bank has entered into a sub-contract with Fidelity Service Co. (FSC),
an affiliate of FMR, under which FSC performs the activities associated
with the fund's transfer and shareholder servicing agent and accounting
functions. The fund pays transfer agent fees based on the type, size,
number of accounts and number of transactions made by shareholders. FSC
pays for typesetting, printing and mailing of all shareholder reports,
except proxy statements. The accounting fee is based on the level of
average net assets for the month plus out-of-pocket expenses. For the
period, FSC received transfer agent and accounting fees amounting to
$415,918 and $126,835, respectively.
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Fidelity Municipal
Trust and the Shareholders of Fidelity
Minnesota Tax-Free Portfolio:
We have audited the accompanying statement of assets and liabilities of
Fidelity Minnesota Tax-Free Portfolio, a portfolio of Fidelity Municipal
Trust, including the schedule of portfolio investments, as of December
31,1993, and the related statement of operations for the year then ended,
the statement of changes in net assets for each of the two years in the
period then ended and the financial highlights for each of the five years
in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 1993 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Minnesota Tax-Free Portfolio as of December 31, 1993, the
results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the
financial highlights for each of the five years in the period then ended,
in conformity with generally accepted accounting principles.
COOPERS & LYBRAND
Boston, Massachusetts
January 28, 1994
TO CALL FIDELITY

(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND
QUOTES*
1-800-544-8544
Just make a selection from this record-ed menu:
PRESS
For quotes on funds you own.
1.
For an individual fund quote.
2.
For the ten most frequently
requested Fidelity fund quotes.
3.
For quotes on Fidelity Select
Portfolios.(Registered trademark)
4.
To change your Personal
Identification Number (PIN).
5.
To speak with a Fidelity
representative.
6.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND
ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
ed menu:
PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
dividends).
2.
To change your Personal
Identification Number (PIN).
3.
To speak with a Fidelity
representative.
4.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL
VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS
MEANS THAT
YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO
ASSURANCE THAT
MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN
INVESTMENT IN
A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF
DIVIDENDS
AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES. FOR MORE
INFORMATION ON ANY
FIDELITY FUND INCLUDING MANAGEMENT FEES AND CHARGES, CALL 1-800-544-8888
FOR A FREE
PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Peter J. Allegrini, Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Marvin L. Mann*
Edward H. Malone*
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
United Missouri Bank, N.A.
Kansas City, MO
and
Fidelity Service Co.
Boston, MA
CUSTODIAN
United Missouri Bank, N.A.
Kansas City, MO

Corporate Headquarters
82 Devonshire St., Boston, MA 02109
FIDELITY TAX-FREE BOND FUNDS
Aggressive Tax-Free
California Tax-Free High Yield
California Tax-Free Insured
High Yield Tax-Free
Insured Tax-Free
Limited Term Municipals
Massachusetts Tax-Free High Yield
Michigan Tax-Free High Yield
Minnesota Tax-Free
Municipal Bond
New York Tax-Free High Yield
New York Tax-Free Insured
Ohio Tax-Free High Yield
Spartan(Registered trademark) Aggressive Tax-Free
Spartan California Intermediate Municipal
Spartan California Municipal High Yield
Spartan Connecticut Municipal High Yield
Spartan Florida Municipal Income
Spartan Intermediate Municipal
Spartan Maryland Municipal Income
Spartan Municipal Income
Spartan New Jersey Municipal High Yield
Spartan New York Intermediate Municipal
Spartan New York Municipal High Yield
Spartan Pennsylvania Municipal High Yield
Spartan Short-Intermediate Municipal
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
TDD Service 1-800-544-0111
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE

EXHIBIT 24(A)(7)
SPARTAN(Registered trademark)

(Registered trademark)
PENNSYLVANIA
MUNICIPAL
PORTFOLIOS

ANNUAL REPORT
DECEMBER 31, 1993
CONTENTS

<TABLE>
<CAPTION>
<S> <C> <C>
PRESIDENT'S MESSAGE 3 Ned Johnson on minimizing taxes.

SPARTAN PENNSYLVANIA
MUNICIPAL HIGH YIELD PORTFOLIO

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 last six
months
and one year.

INVESTMENTS 11 A complete list of the fund's
investments with their market value.

FINANCIAL STATEMENTS 20 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.

SPARTAN PENNSYLVANIA
MUNICIPAL MONEY MARKET PORTFOLIO

PERFORMANCE 24 How the fund has done over time.

FUND TALK 26 The manager's review of fund
performance, strategy, and outlook.

INVESTMENT CHANGES 28 A summary of major shifts in the
fund's investments over the last six
months
and one year.

INVESTMENTS 29 A complete list of the fund's
investments with their market value.

FINANCIAL STATEMENTS 34 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.

NOTES 38 Footnotes to the financial
statements.

REPORT OF INDEPENDENT 41 The auditor's opinion.
ACCOUNTANTS

</TABLE>

DEAR SHAREHOLDER:
Once the new year begins, many people start reviewing their finances and
calculating their tax bills. No one wants to pay more taxes than they have
to. But a recent survey of 500 U.S. households, conducted by Fidelity and
Yankelovich Partners, showed that few people have taken steps to reduce
their taxes under the new legislation. Many were not even aware that the
new tax laws were retroactive to January 1993.
Whether or not you're someone whose tax bill will increase as a result of
these changes, it may make sense to consider ways to keep more of what you
earn.
First, if your employer offers a 401(k) or 403(b) retirement savings plan,
consider enrolling. These plans are set up so you can make regular
contributions -
before taxes - to a retirement savings plan. They offer a disciplined
savings strategy, the ability to accumulate earnings tax-deferred, and
immediate tax savings. For example, if you earn $40,000 a year and
contribute 7% of your salary to your 401(k) plan, your annual contribution
is $2,800. That reduces your taxable income to $37,200 and, if you're in
the
28% tax bracket, saves you $784 in federal taxes. In addition, you pay no
taxes on any earnings until withdrawal.
It may be a good idea to contact your benefits office as soon as possible
to find out when you can enroll or increase your contribution. Most
employers allow employees to make changes only a few times each year.
Second, consider an IRA. Many people are eligible to make an IRA
contribution (up to $2,000) that is fully tax deductible. That includes
people who are not covered by company pension plans, or those within
certain income brackets. Even if you don't qualify for a fully deductible
contribution, any IRA earnings will grow tax-deferred until withdrawal.
Third, consider adding to your tax-free investments-either municipal bonds
or municipal bond funds. Often these can provide higher after-tax yields
than comparable taxable investments. For example, if you're in the new 36%
federal income tax bracket and invest $10,000 in a taxable investment
yielding 7%, you'll pay $252 in federal taxes and receive $448 in income.
That same $10,000 invested in a tax-free bond fund yielding 5.5% would
allow you to keep $550 in income.
These are three investment strategies that could help lower your tax bill
in 1994. If you're interested in learning more, please call us at
1-800-544-8888 or visit a Fidelity Investor Center.
Wishing you a prosperous new year,
Edward C. Johnson 3d, Chairman
SPARTAN PENNSYLVANIA MUNICIPAL HIGH YIELD PORTFOLIO

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. Each figure
includes changes in a fund's share price, reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells bonds
that have grown in value), and the effect of the $5 account closeout fee.
You can also look at the fund's income. If Fidelity had not reimbursed
certain fund expenses during the periods shown, the total returns,
dividends and yields would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1993 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND

Spartan Pennsylvania
Municipal High Yield 13.17% 63.51% 87.03%

Lehman Brothers Municipal Bond Index 12.29% 62.86% n/a

Average Pennsylvania Tax-Exempt
Municipal Bond Fund 12.54% 59.80% n/a

Consumer Price Index 2.75% 21.00% 33.15%

CUMULATIVE TOTAL RETURNS reflect actual performance over a set period - in
this case, one year, five years, or since the fund started on August 6,
1986. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, you would end up with $1,050. You can compare
these figures to the performance of the Lehman Brothers Municipal Bond
index - a broad gauge of the municipal bond market. To measure how the fund
stacked up against its peers, you can look at the average Pennsylvania
tax-exempt municipal bond fund, which reflects the performance of 49
Pennsylvania tax-exempt municipal bond funds tracked by Lipper Analytical
Services. Both benchmarks include reinvested dividends and capital gains,
if any. Comparing the fund's performance to the consumer price index helps
show how your fund did compared to inflation. (The period covered by CPI
numbers are the closest available match to those covered by the fund).
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1993 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND

Spartan Pennsylvania
Municipal High Yield 13.17% 10.33% 8.82%

Lehman Brothers Municipal Bond Index 12.29% 10.25% n/a

Average Pennsylvania Tax-Exempt
Municipal Bond Fund 12.54% 9.82% n/a

Consumer Price Index 2.75% 3.89% 3.93%

08/31/86 10000.00 10000.00
09/30/86 10054.67 10025.10
10/31/86 10247.94 10198.23
11/30/86 10389.98 10400.26
12/31/86 10329.58 10371.56
01/31/87 10619.06 10683.84
02/28/87 10726.54 10736.41
03/31/87 10633.81 10622.60
04/30/87 9635.80 10089.56
05/31/87 9511.25 10039.52
06/30/87 9731.51 10334.28
07/31/87 9912.36 10439.69
08/31/87 9930.00 10463.17
09/30/87 9312.07 10077.40
10/31/87 9290.87 10113.07
11/30/87 9561.05 10377.12
12/31/87 9737.58 10527.70
01/31/88 10226.62 10902.69
02/29/88 10395.52 11017.93
03/31/88 10077.29 10889.57
04/30/88 10138.64 10972.34
05/31/88 10210.17 10940.63
06/30/88 10412.66 11100.69
07/31/88 10481.85 11173.06
08/31/88 10499.01 11182.90
09/30/88 10728.60 11385.31
10/31/88 11039.46 11586.26
11/30/88 10943.15 11480.13
12/31/88 11121.72 11597.57
01/31/89 11278.34 11837.41
02/28/89 11181.44 11702.34
03/31/89 11178.65 11674.37
04/30/89 11467.63 11951.52
05/31/89 11675.62 12199.76
06/30/89 11859.07 12365.43
07/31/89 11973.29 12533.72
08/31/89 11860.42 12411.02
09/30/89 11821.57 12373.78
10/31/89 11984.64 12524.74
11/30/89 12126.31 12743.93
12/31/89 12212.13 12848.43
01/31/90 12144.67 12788.04
02/28/90 12252.25 12901.85
03/31/90 12254.25 12905.72
04/30/90 12074.26 12812.80
05/31/90 12375.67 13092.12
06/30/90 12488.21 13207.33
07/31/90 12651.30 13401.48
08/31/90 12468.04 13207.16
09/30/90 12531.04 13215.08
10/31/90 12711.90 13454.28
11/30/90 12984.66 13724.71
12/31/90 13091.24 13785.09
01/31/91 13261.52 13969.82

02/28/91 13338.07 14091.35
03/31/91 13367.31 14096.99
04/30/91 13577.20 14284.48
05/31/91 13739.13 14411.61
06/30/91 13670.81 14397.20
07/31/91 13874.86 14572.85
08/31/91 14065.38 14765.21
09/30/91 14228.89 14957.15
10/31/91 14351.80 15091.77
11/30/91 14390.39 15134.03
12/31/91 14726.72 15459.41
01/31/92 14766.44 15494.96
02/29/92 14774.39 15499.61
03/31/92 14773.29 15505.81
04/30/92 14928.17 15643.81
05/31/92 15114.54 15828.41
06/30/92 15358.30 16094.33
07/31/92 15841.46 16577.16
08/31/92 15676.38 16414.70
09/30/92 15760.31 16521.40
10/31/92 15518.08 16359.49
11/30/92 15887.95 16652.32
12/31/92 16068.88 16822.18
01/31/93 16280.58 17017.31
02/28/93 16918.93 17633.34
03/31/93 16726.16 17446.43
04/30/93 16889.04 17622.64
05/31/93 16992.34 17721.32
06/30/93 17280.04 18017.27
07/31/93 17258.87 18040.69
08/31/93 17691.98 18415.94
09/30/93 17952.08 18625.88
10/31/93 17961.08 18661.27
11/30/93 17807.68 18497.05
12/31/93 18186.79 18887.34
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Spartan
Pennsylvania Municipal High Yield Portfolio on August 31, 1986, shortly
after the fund started. As the chart shows, by December 31, 1993, the value
of your investment would have grown to $18,187 - a 81.87% increase on your
initial investment. This assumes you still own the fund on December 31, and
therefore does not include the effect of the $5 account closeout fee. For
comparison, look at how the Lehman Brothers Municipal Bond index did over
the same period. With dividends reinvested, the same $10,000 would have
grown to $18,887 - a 88.87% increase.

Income return 6.68% 7.00% 7.53% 7.40% 7.32%

Capital gain returns 1.40% 0.00% 0.00% 0.00% 0.00%
Change in share price 5.09% 2.11% 4.95% -0.21% 2.47%
Total return 13.17% 9.11% 12.48% 7.19% 9.79%
Income returns, capital gain returns, and changes in share price are all
part of a bond fund's total return. An income return reflects the dividends
paid by the fund. A capital gain return reflects the amount paid by the
fund to shareholders based on the profits it has from selling bonds that
have grown in value. Both returns assume the dividends or gains are
reinvested. Changes in the fund's share price include changes in the prices
of the bonds owned by the fund. Change in share price and total return
figures include the effect of the
$5 account closeout fee.
DIVIDENDS AND YIELD
PERIODS ENDED DECEMBER 31, 1993 PAST 30 PAST 6 PAST 1
DAYS MONTHS YEAR

Dividends per share n/a 33.03(cents) 67.92(cents)

Annualized dividend rate n/a 5.87% 6.17%

Annualized yield 5.46% n/a n/a

Tax-equivalent yield 8.78% n/a n/a

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 $11.16 over
the past six months and $11.01 over the past year, you can compare the
fund's income over these two periods. The 30-day annualized yield is a
standard formula for all funds based on the yields of the bonds in the
fund, averaged over the past 30 days. This figure shows you the yield
characteristics of the fund's investments at the end of the period. It also
helps you compare funds from different companies on an equal basis. The
tax-equivalent yield shows what you would have to earn on a taxable
investment to equal the fund's tax-free yield, if you're in the 37.79%
combined federal and state income tax bracket.
SPARTAN PENNSYLVANIA MUNICIPAL HIGH YIELD PORTFOLIO

FUND TALK: THE MANAGER'S OVERVIEW

MARKET RECAP
Generally, interest rates fell
during the 12 months ended
December 31, 1993. As a result,
bond prices rose and most
fixed-income investors -
including those in tax-free bonds
- - enjoyed attractive returns.
The period began with worries of
rising interest rates. The
economic recovery was finally
taking hold, and the spending
plans of the president-elect were
still unclear. But the bond market
signaled its approval as
President Clinton promised to
reduce the deficit and fight
inflation. The yield on the
benchmark 30-year Treasury
bond declined steadily and
reached an historic low of 5.79%
in mid-October. By year-end,
mild inflation fears, fueled by a
strengthening economy, had
pushed up the yield on the
30-year bond to 6.35%. Two
factors affected tax-free bonds
specifically: on the positive side,
higher federal taxes -
discussed all year and approved
in August - boosted demand.
At the same time, record new
issuance kept supplies high,
which somewhat dampened
prices. Overall during the period,
tax-free bonds performed well
compared to other fixed-income
investments. The Lehman
Brothers Municipal Bond Index
- - a broad measure of the
tax-free bond market - rose
12.29%. By comparison, the
Lehman Brothers Aggregate
Bond Index - which tracks
investment-grade taxable bonds
- - rose only 9.75%, due in part
to relatively poor performance
by mortgage backed securities.
An interview with Steven Harvey,
Portfolio Manager of Spartan
Pennsylvania Municipal High Yield
Portfolio
Q. STEVE, HOW DID THE FUND DO?
A. For the 12 months ended December 31, 1993, the fund had a total return
of 13.17%. That beat the average Pennsylvania tax-free bond fund, which
returned 12.54% over the same period, according to Lipper Analytical
Services. The difference can be attributed to the fund's above average
income and a longer-than-average duration - which measures how much a
bond's price moves with changes in interest rates. When interest rates are
falling - as they have over the past year - funds with longer average
durations tend
to do well.
Q. IS THAT WHY YOU LENGTHENED THE DURATION TO 7.9 YEARS BY DECEMBER 31,
1993 COMPARED TO 7.4 YEARS A YEAR EARLIER?
A. Exactly. I did that by buying non-callable bonds. These bonds can't be
redeemed before the scheduled maturities, and so have longer average
durations.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Housing bonds - which were 4.9% of the fund's investments at year-end -
didn't perform as well as other sectors. That's because they had seen rapid
prepayments in principal due to the sharp drop in mortgage rates.
Q. WHAT OTHER CHANGES HAVE YOU MADE SINCE TAKING OVER THE FUND IN OCTOBER?
A. I've built up a 7.7% stake in Pennsylvania Intergovernmental Cooperation
Authority (PICA) bonds. PICA was established to bail out the City of
Philadelphia and the bonds are attractive in part because of their limited
supply. If the need to bail out Philadelphia decreases - which seems to be
the case - with improvements in the city's fiscal health, PICA bonds'
credit rating - now Baa - could be upgraded. If they are upgraded, they'd
probably become more attractive to investors and that could translate into
higher prices.
Q. WHY ARE YOU SO CONFIDENT THAT PHILADELPHIA WILL GET BACK ON THE RIGHT
TRACK?
A. Because of what has happened so far. Initially, when the city ran into
problems, I was optimistic that they could be solved and that Philadelphia
wouldn't go bankrupt. That's why when many bondholders overreacted and sold
the city's bonds, I saw it as an opportunity to buy at cheap prices. My
optimism turned out to be justified when Standard & Poor's recently
upgraded Philadelphia municipals. A lot of the programs put into place by
the city's new administration and the cooperation between it and the unions
and city council have translated into an improved fiscal climate. In
addition to the PICA bonds, about 2.6% of the fund is invested in bonds
issued by the Philadelphia Municipal Authority.
Q. THE FUND'S LARGEST SECTOR CONCENTRATION - AT 23.7% OF INVESTMENTS - IS
HEALTH CARE. ARE YOU CONCERNED THAT THESE BONDS MIGHT BE AFFECTED BY
HEALTH-CARE REFORM?
A. The potential impact of health-care reform is a situation I'm monitoring
very carefully. In Philadelphia, for example, there has been some
consolidation of health-care providers. But I think that there are still
many hospital beds that are going empty. I've invested in hospitals that I
think could thrive under health-care reform. I like hospitals with a core
downtown location that provide specialized services, are connected to a
network of suburban hospitals, and have strong HMO relationships. Hospitals
that already know how to deal with HMOs and tailor their costs to suit them
are the ones I think will do well in the future.
Q. HOW DO YOU THINK THE STATE'S ECONOMY WILL FARE OVER THE NEXT 12 MONTHS?
A. I believe that Pennsylvania's economy will perform more or less in step
with the nation's economy. Recent statistics indicate, for example, that
the state's employment growth is on par with the national average. I don't
see any evidence that Pennsylvania's economy will rebound faster than the
national average. One bright spot is that state's newly diversified
economy. In the past several years, Pennsylvania has become less reliant on
heavy industry and more on high technology and medical service businesses.
This shift will make the state's economy a little less sensitive to
downturns in the economy.
Q. SO WHAT CAN INVESTORS EXPECT FOR 1994?
A. Probably more modest returns than they've enjoyed in 1993. It's unlikely
that the huge drop in interest rates that occurred in 1993 will repeat
itself in 1994. What's probably more likely is that the range of interest
rates will be relatively tight. In that kind of market, good investment
returns usually come from selecting the right sector and doing careful
research to identify those bonds which have the strongest potential for
improved credit ratings.

FUND FACTS
GOAL: to provide high current
income exempt from federal
and Pennsylvania state
income taxes
START DATE: August 6, 1986
SIZE: as of December 31,
1993, over $306 million
NEW MANAGER: Steven
Harvey, since October 1993;
manager, Fidelity Minnesota
Tax-Free Portfolio, since
October 1993; Spartan
Maryland Municipal Income
Portfolio, since April 1993
(checkmark)

STEVE HARVEY'S OUTLOOK
ON INTEREST RATES:
"Despite some decline in
bond prices in the last quarter
of 1993 - caused by
stronger-than-expected
economic news - I believe
that interest rates won't rise or
fall much over the next 12
months. And even though
economic growth was strong
over the last quarter of 1993,
it hasn't yet translated into
higher inflation. While some
commodity prices have
started to rise slightly, oil
prices are flat. As long as oil
- - an important part of the
country's economy - stays
low, I don't worry too much
about inflation rising. There's
also continued evidence that
wages are under control,
since major corporations are
still announcing plans to lay
off workers. To me that
signals that rates could
remain low for at least the first
half of 1994."
(bullet) On December 31, 1993, the
fund's duration was 7.9 years.
7.7 years six months earlier.
That means if interest rates
rose one percentage point,
the fund's share price -
$11.13 on December 31 -
would fall about 7.9% to
roughly $10.25.
(bullet) After health care, water and
sewer bonds were the fund's
second largest sector at
12.4%
of investments.
SPARTAN PENNSYLVANIA MUNICIPAL HIGH YIELD PORTFOLIO

INVESTMENT CHANGES

TOP FIVE SECTORS AS OF DECEMBER 31, 1993
% OF FUND'S % OF FUND'S INVESTMENT
INVESTMENTS S
IN THESE SECTORS
6 MONTHS AGO

Health Care 23.7 21.5

Water & Sewer 12.4 8.3

General Obligation 11.7 13.2

Other 9.0 8.8

Special Tax 8.1 0.4

AVERAGE YEARS TO MATURITY AS OF DECEMBER 31, 1993
6 MONTHS AGO

Years 19.6 21.0

AVERAGE YEARS TO MATURITY SHOWS THE AVERAGE TIME UNTIL THE PRINCIPAL OF THE
BONDS IN THE FUND IS EXPECTED TO BE REPAID, WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF DECEMBER 31, 1993
6 MONTHS AGO

Years 7.9 7.7

DURATION SHOWS HOW MUCH A BOND'S PRICE FLUCTUATES WITH CHANGES IN INTEREST
RATES. IF RATES RISE 1%, FOR EXAMPLE, THE SHARE PRICE OF A FUND WITH A
FIVE-YEAR DURATION WILL FALL 5%.
QUALITY DIVERSIFICATION AS OF DECEMBER 31, 1993
(MOODY'S RATINGS)
Aaa 29.8%
Aa, A 14.3%
Baa 32.0%
Ba, -B 5.3%
Non-rated 18.6%
Row: 1, Col: 1, Value: 29.8
Row: 1, Col: 2, Value: 14.3
Row: 1, Col: 3, Value: 32.0
Row: 1, Col: 4, Value: 5.3
Row: 1, Col: 5, Value: 18.6
THIS CHART EXCLUDES SHORT-TERM INVESTMENTS. WHERE MOODY'S RATINGS ARE NOT
AVAILABLE, WE HAVE USED S&P RATINGS.
SPARTAN PENNSYLVANIA MUNICIPAL HIGH YIELD PORTFOLIO

INVESTMENTS/DECEMBER 31, 1993
(Showing Percentage of Total Value of Investments)

MUNICIPAL BONDS - 96.3%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (D) AMOUNT (NOTE 1)
PENNSYLVANIA - 89.1%
Aliquippa Unltd. Tax Gen. Oblig. 8.25%
9/15/01 - $ 1,440,000 $ 1,553,400 016302CC
Allegheny County Arpt. Rev. (Greater Pittsburgh
Int'l. Arpt.) 7% 1/1/18, (MBIA Insured) (c) Aaa 1,000,000 1,100,000
017286BF
Allegheny County Higher Ed. Bldg. Auth. Rev.
Rfdg. (La Roche College) 7.625% 12/1/06 - 1,000,000 1,053,750 01729EAZ
Allegheny County Hosp. Dev. Auth. Health
Facs. Rev. (Allegheny Valley School)
8.50% 2/1/15 Baa 3,000,000 3,386,250 0172894S
Allegheny County Hosp. Dev. Auth. Rev.:
Rfdg. (South Side Hosp.) Series A, 8.75%
6/1/10 BBB 3,750,000 4,050,000 017289G2
(Allegheny Valley Hosp.) 7.75% 8/1/20 A- 1,000,000 1,132,500 0172895C
(Health & Ed. Rehabilitation Institute) 7%
6/01/22 BBB 1,500,000 1,582,500 01728ABL
Allegheny County Ind. Dev. Auth. Rev.
(YMCA Pittsburgh Proj.) Series 1990,
8.75% 3/1/10 - 2,790,000 3,082,950 017292NR
Allegheny County Residential Fin. Auth. Mtg. Rev.:
Series H, 8% 6/1/17 (GNMA Coll.) Aaa 250,000 261,875 017350PL
Series 1990, 7.95% 6/1/23, (GNMA
Coll.) (c) Aaa 1,835,000 1,945,100 017350RH
Allegheny County San. Auth. Swr. Rev.:
Series B, 7.50% 12/1/16, (FGIC Insured) Aaa 750,000 870,000 017357HQ
0% 12/1/12, (FGIC Insured) Aaa 2,260,000 796,650 017357JE
Beaver County Ind. Dev. Auth. Poll. Cont. Rev.:
Series A:
(Ohio Edison Co.) (Beaver Valley)
10.50% 10/1/15 Baa2 275,000 311,438 074876CY
(Toledo Edison Co.) (Beaver Valley)
13.25% 11/15/14 Ba1 1,000,000 1,098,750 074876CD
Beaver County Ind. Dev. Auth. Rev. 6% 2/15/07 Ba3 1,700,000 1,697,875
07487FAA
Berks County 2nd Series:
0% 5/15/11, (FGIC Insured) Aaa 3,310,000 1,282,625 084509EZ
0% 5/15/12, (FGIC Insured) Aaa 3,395,000 1,243,419 084509FA
Berks County Ind. Dev. Auth. Ind. Dev. Rev.
(Beverly Enterprises, Inc.) Series A, 11.50%
5/1/07 - 540,000 563,625 084517AG
Bucks County Wtr. & Swr. Auth. Rev. (Neshaminy
Interceptor Swr. Sys.) Series A, 0% 12/ 1/14,
(FGIC Insured) Aaa 4,400,000 1,375,000 118673L2
Butler County Ind. Dev. Auth. 1st Mtg. Rev. Rfdg.
(Sherwood Oaks Proj.) (Lifetime Care Commty.)
Series A, 8.75% 6/1/16 A- 675,000 769,500 123594AN
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (D) AMOUNT (NOTE 1)
PENNSYLVANIA - CONTINUED
Chartiers Valley Ind. & Commercial Dev. Auth.
1st Mtg. Rev. Rfdg. (United Methodist Health
Ctr.) Series A, 9.50% 12/1/15 - $ 3,500,000 $ 3,736,250 161385BS
Chester County Hosp. Auth. Rev. (Paoli Mem.
Hosp.) 7.625% 10/1/13 A 2,000,000 2,152,500 165580HL
Clarion County Hosp. Auth. Hosp. Rev.:
Rfdg. (Clarion Hosp. Proj.) 8.10% 7/1/12 BBB- 6,000,000 6,562,500
180901AM
(Clarion Hosp. Proj.):
8.50% 7/1/13 BBB- 2,945,000 3,346,256 180901AN
8.50% 7/1/21 BBB- 1,665,000 1,891,856 180901AP
Commodore Perry School Dist. Series 1991,
7.10% 2/1/16, (MBIA Insured) Aaa 1,000,000 1,127,500 202665AZ
Dauphin County Gen. Auth. Rev. (Downington
Muni. Pooled Prog.) Series A, 7.75% 1/1/06,
(MBIA Insured) Aaa 750,000 840,000 238259MV
Dauphin County Ida Wtr. Dev. Rev. (Dauphin
Consolidated Wtr. Supply) Series A, 6.90%
6/01/24 (c) A2 1,000,000 1,201,250 23826KAB
Delaware County Auth. Hosp. Rev. (Crozer-Chester
Med Ctr.):
6% 12/15/09 A 1,000,000 1,018,750 246006KC
6% 12/15/20 A 1,000,000 1,010,000 246006KE
Delaware County Auth. Rev. (First Mtg. Riddle
Village Proj.):
Series 1992, 8.75% 6/1/10 - 2,870,000 2,988,388 245913BG
9.25% 6/1/22 - 1,800,000 1,923,750 245913BF
Delaware County Ind. Dev. Auth. Rev. Rfdg.
(Resources Recovery Proj.) Series A, 8.10%
12/1/13, LOC Swiss Bank Aa3 1,400,000 1,541,750 246018CB
Doylestown Hosp. Auth. Hosp. Rev. (Doylestown
Pinerun Retirement Commty.) Series 1993 A
7.20% 7/1/23 - 3,200,000 3,276,000 261333BZ
Dubois Hosp. Auth. Hosp. Rev. Rfdg. (Dubois
Reg'l. Med. Ctr. Proj.) Series A, 8.75%
7/1/11 BBB+ 2,100,000 2,333,625 263804AQ
Erie County Hosp. Auth. Rev. Rfdg. (Hamot
Health Sys., Inc.) 7.10% 2/15/10,
(AMBAC Insured) Aaa 1,000,000 1,142,500 295200MR
Erie County Ind. Dev. Auth. Rev. Rfdg. (Beverly
Enterprises Proj.) 6.875% 10/1/02 - 550,000 559,625 295206HS
Fairview Township Auth. Swr. Rev. 7% 11/1/20,
(AMBAC Insured) Aaa 500,000 562,500 306005AZ
Gettysburg Muni. Auth. College Rev. (Gettysburg
College Proj.) 6.60% 2/15/12 A 2,990,000 3,259,100 374311BH
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (D) AMOUNT (NOTE 1)
PENNSYLVANIA - CONTINUED
Grove City Area Hosp. Auth. Hosp. Rev. Rfdg.
(United Commty. Hosp.) 8.125% 7/1/12 BBB- $ 450,000 $ 475,313 399545AM
Harrisburg Auth. Lease Rev. 6.25% 6/1/10,
(Cap. Guaranty Insured) Aaa 1,000,000 1,095,000 41473CAM
Harrisburg Auth. Wtr. Rev. (Complimentary
Auction Rate B-3) 8.82% 7/15/15,
(FGIC Insured) (f) Aaa 3,000,000 3,322,500 41473MCB
Harrisburg Redev. Auth. Rev. (Cap. Impt.)
Series A, 7.875% 11/2/16, (FGIC Insured) Aaa 500,000 560,625 414763AD
Indiana County Hosp. Auth. (Indiana Hosp. Proj.)
Series A, 7.125% 7/1/23 Baa1 1,500,000 1,606,875 454690CF
Jenks Township Muni. Auth. Rev. (Abraxas
Group, Inc.) 8% 4/1/18 - 6,605,000 6,671,050 476134AD
Keystone Oaks School Dist. Series D, 8.78%
9/01/16, (AMBAC Insured) (f) Aaa 2,950,000 3,226,563 493534CL
Lackawanna County Multi-Purp. Stadium Auth.
Stadium Rev. 8.625% 8/15/07 (Pre-Refunded to
8/15/98 @103) (b) Baa 2,000,000 2,395,000 505502AR
Lancaster County Solid Waste Resources
Recovery Mgmt. Auth. Sys. Rev. (Landfill)
7.875% 12/15/09 A1 900,000 1,019,250 514057BB
Lancaster County Unltd. Tax Gen. Oblig.
(Cap. Appreciation) 0% 7/1/06,
(FGIC Insured) Aaa 2,645,000 1,395,238 514040HP
Lancaster Ind. Dev. Auth. 1st Mtg. Rev.
(Lancaster Nursing Ctr.) Series A, 8.75%
12/1/12 - 1,405,000 1,408,513 514343BK
Lebanon County Redev. Auth. Rev. 1st Mtg.
(Cornwall Manor) Series A, 8.625% 6/1/16 - 2,570,000 2,740,263 522461AN
Lehigh County Gen. Purp. Auth. Rev.:
(Hosp. Healtheast, Inc.) Series B, 9% 7/1/15 A1 1,000,000 1,187,500
524805GX
(St. Luke's Hosp. Bethlehem Proj.) 3%
11/15/94, (AMBAC Insured) Aaa 1,380,000 1,385,175 524805VB
(Wiley House):
8.75% 11/1/14 - 4,000,000 4,315,000 524805MK
9.50% 11/1/16 - 3,000,000 3,397,500 524805QM
Lehigh County Ind. Dev. Rev. Rfdg. (Stanley-
Vidmar, Inc. Proj.) 6.30% 7/1/10 A2 1,000,000 1,092,500 524807AU
Lower Moreland Township Auth. Swr. Rev.:
Series A:
0% 8/1/13, (FGIC Insured) Aaa 825,000 277,406 548338DG
0% 8/1/14, (FGIC Insured) Aaa 850,000 269,875 548338DJ
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (D) AMOUNT (NOTE 1)
PENNSYLVANIA - CONTINUED
Lower Providence Township Swr. Auth. Swr.
Rev. 6.75% 5/1/22 A1 $ 1,350,000 $ 1,483,313 548508BJ
Lower Salford Township Swr. Auth. Swr. Rev.
7.375% 12/15/20, (FSA Insured) Aaa 1,000,000 1,133,750 548593CT
McCandless Ind. Dev. Auth. Rev.
(Kroger Co.) 7.375% 10/15/07 Ba3 2,190,000 2,414,475 579402AA
McKeesport Area School Dist. Rfdg. Series C,
5% 4/1/13 A 1,000,000 966,250 581408GJ
Mechanicsburg Area School Dist. Unltd. Tax 0%
9/1/04, (FGIC Insured) Aaa 910,000 535,763 583726DY
Montgomery County Health Facs. Ind. Dev. Auth.
Rev. (ECRI Proj.) Series 1993 6.85% 6/1/13 - 2,165,000 2,202,888
613607AD
Montgomery County Higher Ed. & Health Auth.
Hosp. Rev. (United Hosp. Proj.):
(St. Christopher) 8.50% 11/1/17 Ba1 1,000,000 1,072,500 613604GF
Series A:
8.375% 11/1/11 Ba1 3,140,000 3,418,675 613604KF
10% 11/1/05 Ba1 675,000 716,344 613604KW
Moon Trans. Auth. Hwy. Impt. Rev. 9.50%
2/1/16 BBB+ 1,000,000 1,072,500 615538AJ
New Garden Township Swr. Auth. Swr. Rev. 7%
3/1/15, (Cap. Guaranty Insured) Aaa 1,000,000 1,121,250 644422AN
Northumberland County Auth. Commonwealth
Lease Rev. 0% 10/15/10, (MBIA Insured) Aaa 1,000,000 407,500 667067AN
Pennsylvania Convention Ctr. Auth. Rev. Series A:
6.70% 9/1/16, (FGIC Insured) Aaa 3,000,000 3,607,500 708681AU
6% 9/1/19, (FGIC Insured) Aaa 8,225,000 9,140,031 708681AV
Pennsylvania Higher Ed. Assistant Agcy. Student
Loan Rev.: (c)
Series A, 7.05% 10/1/16, (AMBAC
Insured) Aaa 1,500,000 1,689,375 709163AD
9.172% 3/1/22 (AMBAC Insured) (f) Aaa 2,000,000 2,120,000 709163AY
10.535% 9/3/26 (AMBAC Insured) (f) Aaa 1,000,000 1,153,750 709163AT
Pennsylvania Higher Edl. Facs. Auth. College &
Univ. Rev. (College Optometry) 9% 2/1/08 - 1,240,000 1,319,050 709171FM
Pennsylvania Higher Ed. Facs. Auth. Rev.:
Rfdg. (Duquesne Univ. Proj.) Series A, 6.75%
4/1/20, (MBIA Insured) Aaa 1,300,000 1,441,375 709171QD
(Pennsylvania Med. College Proj.) Series A,
8.375% 3/1/11 Baa1 900,000 1,030,500 709174BM
Pennsylvania Hsg. Fin. Agcy. Muni. Forwards Rfdg.
(Multi-Family Section 8) Series C, 8.10% 7/1/13,
(FHA Guaranteed) Aa 2,000,000 2,272,500 708791WD
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (D) AMOUNT (NOTE 1)
PENNSYLVANIA - CONTINUED
Pennsylvania Hsg. Fin. Agcy. Rfdg. (Residential
Dev.-Section 8.), Series A, 7.60% 7/1/13 A1 $ 1,000,000 $ 1,085,000
708791ZN
Pennsylvania Hsg. Fin. Agcy. Single Family Mtg.:
Series N, 8.25% 4/1/14 Aa 500,000 528,125 708791DZ
Series V, 7.80% 4/1/16 Aa 500,000 534,375 708791KP
Series X, 8.15% 4/1/24 (c) Aa 2,925,000 3,180,938 708791TS
Series 28, 7.65% 10/1/23 (c) Aa 1,670,000 1,809,863 708791UW
Series 1990-27, 8.15% 10/1/21(c) Aa 990,000 1,092,713 708791TA
Pennsylvania Ind. Dev. Auth. Econ. Dev. Rev.
Series A, 7% 1/1/11 A 1,750,000 1,927,188 709193GD
Pennsylvania Intergovernmental Coop. Auth.
Spl. Tax Rev.:
Rfdg. Series A, 5% 6/15/15 Baa 7,500,000 7,134,375 708840CH
(City of Philadelphia Funding Prog.) 5.75%
6/15/15 Baa 16,000,000 16,280,000 708840BN
Philadelphia Gas Wks. Rev. Rfdg. Fourteenth:
Series A:
6.375% 7/1/14 Baa1 2,000,000 2,127,500 717823NX
6.375% 7/1/26 Baa1 2,250,000 2,385,000 717823QH
Philadelphia Hosp. & Higher Ed. Facs. Auth.
Hosp. Rev.:
(Albert Einstein Med. Ctr.) 7.625% 4/1/11 A 1,000,000 1,105,000
717903HY
(Graduate Health Sys.):
Series A, 6.25% 7/1/18 Baa1 3,000,000 3,033,750 717825CQ
Philadelphia Ind. Dev. Auth. Rev. (Refrigerated
Enterprises Proj.) 9.05% 12/1/19 (c) (e) - 7,000,000 7,481,250 717818NN
Philadelphia Ind. Impt. Auth. Rev. Rfdg. (Encore
Nursing Ctr. Stenton Proj.) (Beverly Enterprises,
Inc.) 7.50% 11/1/02 - 1,100,000 1,100,000 717821AA
7.25% 7/1/18 Baa1 5,225,000 5,682,188 717903LH
Philadelphia Muni. Auth. Rev.
(Muni. Svcs. Bldg. Lease):
0% 3/15/11, (Cap. Guaranty Insured) Aaa 1,000,000 387,500 717904CQ
0% 3/15/14, (Cap. Guaranty Insured) Aaa 7,360,000 2,410,400 717904CT
0% 3/15/15, (Cap. Guaranty Insured) Aaa 6,500,000 1,998,750 717904CM
Lease Rev. Series D 6.25% 7/15/13 Ba 3,000,000 3,037,500 717904GC
Philadelphia Redev. Auth. Hsg. Rev. Sub-Series 3,
8.125% 8/1/26, (GNMA Coll.) AAA 45,000 53,438 717865BP
Philadelphia Wtr. & Swr. Rev. (Cap. Appreciation)
14th Series:
0% 10/1/05, (MBIA Insured) Aaa 3,300,000 1,815,000 717890LX
0% 10/1/06, (MBIA Insured) Aaa 1,450,000 748,563 717890LY
0% 10/1/08, (MBIA Insured) Aaa 5,300,000 2,418,125 717890MB
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (D) AMOUNT (NOTE 1)
PENNSYLVANIA - CONTINUED
Philadelphia Wtr. & Wastewtr. Rev.:
Rfdg. 5% 6/15/12, (FGIC Insured) Aaa $ 1,845,000 $ 1,787,344 717893BG
8.12% 6/15/12, (FGIC Insured) (f) Aaa 3,000,000 3,123,750 717893BF
Philadelphia Wtr. & Wastewtr. Rfdg. Rev.,
Series 1993, 5.50% 6/15/07 Baa 7,000,000 7,105,000 717893AN
Pittsburgh Gen. Oblig. Series A, 5.50% 9/1/14,
(AMBAC Insured) Aaa 1,750,000 1,830,938 725208V6
Pittsburgh School Dist. Series B:
0% 8/1/07, (AMBAC Insured) Aaa 2,610,000 1,285,425 725276WZ
0% 8/1/08, (AMBAC Insured) Aaa 2,000,000 927,500 725276XA
Pittsburgh Urban Redev. Auth. Mtg. Rev.
Series A, 7.625% 10/1/17 A1 995,000 1,037,288 725299LF
Pittsburgh Wtr. & Swr. Sys. Rev. Rfdg.
Series A, 6.50% 9/1/13, (FGIC Insured) Aaa 6,000,000 6,982,500 725304DC
Pottstown Borough Auth. Swr. Rev.:
7.60% 11/1/18, (Cap. Guaranty Insured) Aaa 500,000 571,875 738289AR
0% 11/1/10, (FGIC Insured) Aaa 1,600,000 642,000 738289BU
0% 11/1/14 (FGIC) insured Aaa 1,760,000 556,600 738289CC
Rochester Area School Dist. Gen. Oblig.:
0% 5/1/13, (AMBAC Insured) Aaa 655,000 230,069 771738DE
0% 5/1/14, (AMBAC Insured) Aaa 655,000 217,788 771738DF
0% 5/1/15, (AMBAC Insured) Aaa 655,000 204,688 771738DG
0% 5/1/16, (AMBAC Insured) Aaa 655,000 193,225 771738DH
Schuylkill County Ind. Dev. Auth. Rev. (1st Mtg.
Valley Health Concerns) Series A, 8.75%
3/1/12 - 1,500,000 1,556,250 808390CK
Schuylkill County Redev. Auth. Lease Rev.
Series A, 7.125% 6/1/13, (FGIC Insured) Aaa 1,000,000 1,188,750
808412AP
Scranton Parking Auth. Parking Rev. 8.125%
9/15/14, LOC Northeastern Bank A+ 500,000 571,250 810802AY
State Pub. School Bldg. Auth. School Rev. Rfdg.
(Shenandoah Valley School Dist. Proj.) 7.375%
9/15/10, (AMBAC Insured) Aaa 1,000,000 1,141,250 857321GM
Stroud Township Swr. Auth. Swr. Rev.:
0% 11/15/06, (Cap. Guaranty Insured) Aaa 510,000 265,200 863450BF
0% 11/15/07, (Cap. Guaranty Insured) Aaa 510,000 248,625 863450BG
0% 11/15/08, (Cap. Guaranty Insured) Aaa 510,000 232,688 863450BH
0% 11/15/09, (Cap. Guaranty Insured) Aaa 510,000 215,475 863450BJ
Swarthmore Borough Auth. (Swarthmore
College) 7.375% 9/15/18 AA 175,000 196,438 870000DC
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (D) AMOUNT (NOTE 1)
PENNSYLVANIA - CONTINUED
Upper Gwyned Towamencin Muni. Auth. Swr. Rev.:
0% 4/15/11, (MBIA Insured) Aaa $ 500,000 $ 192,500 915812EN
0% 10/15/11, (MBIA Insured) Aaa 490,000 183,750 915812EP
Warren County Ind. Dev. Auth. Specialized Dev.
Rev. Rfdg. (Beverly Enterprises, Inc.):
8.75% 11/1/06 - 125,000 143,125 935186BB
9%, 11/1/12 - 535,000 620,600 935186BC
Washington County Ind. Dev. Auth. Ind. Dev.
Rev. Rfdg. (Kroger Co.) 7.50% 5/1/99 Ba3 1,000,000 1,090,000 938597AM
West Goshen Swr. Auth. Swr. Rev. 7.10%
9/1/13 A1 1,000,000 1,127,500 952870DG
Westmoreland County Gen Oblig. 0% 8/1/16,
(AMBAC Insured) Aaa 3,545,000 1,050,206 960895GQ
Westmoreland County Ind. Dev. Auth. Rev. Rfdg.:
(Citizens Gen. Hosp. Proj.) Series A, 8.25%
7/1/13 A 750,000 830,625 961008KL
(Commonwealth Dev. 1st Mtg. K mart Corp.)
Series A, 6.80% 5/1/07 - 765,000 861,581 961008KW
(Kroger Co.) 7.25% 9/1/99 Ba3 1,000,000 1,107,500 961008KZ
Westmoreland County Muni. Auth. Svc. Rev.
Series K, 0% 7/1/13, (FGIC Insured) Aaa 3,500,000 1,194,375 961017BT
Wilkins Area Ind. Dev. Auth. Rev. (1st Mtg.)
(Fairview Extended Care) Series A, 10.25%
1/1/21 - 2,500,000 2,740,625 968422AA
Wilson Area School Dist. (Cap. Appreciation):
0% 5/15/09, (AMBAC Insured) Aaa 3,275,000 1,436,906 972352DP
0% 5/15/10, (AMBAC Insured) Aaa 3,280,000 1,353,000 972352DQ
0% 5/15/11, (AMBAC Insured) Aaa 3,500,000 1,369,375 972352DR
Wyoming Ind. Dev. Auth. Poll. Ref. (Proctor &
Gamble Paper Proj.) 5.55% 5/1/10 Aa2 5,000,000 5,131,250 983283AD
York City Swr. Auth. Swr. Rev. Unltd. Tax:
0% 12/1/12, (MBIA Insured) Aaa 3,235,000 1,160,556 986863DL
0% 12/1/15, (MBIA Insured) Aaa 1,000,000 298,740 986863DS
271,352,413
PUERTO RICO - 6.2%
Puerto Rico Commonwealth Gen. Oblig. Unltd. Tax
5% 7/1/21 Baa1 5,000,000 4,750,000 745144KJ
Puerto Rico Commonwealth Hwy. & Trans. Auth.
Rev. Series W, 5.50% 7/1/13 Baa1 9,000,000 9,123,750 745181BZ
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (D) AMOUNT (NOTE 1)
PUERTO RICO - CONTINUED
Puerto Rico Commonwealth Urban Renewal & Hsg.
Corp. Rfdg. 7.875% 10/1/04 Baa1 $ 1,000,000 $ 1,170,000 745245ES
Puerto Rico Elec. Pwr. Auth. Pwr. Rev. Series O,
7.125% 7/1/14 Baa1 1,000,000 1,111,250 745268JU
Puerto Rico Ind. Med. & Envir. Poll. Cont. Facs.
Fing. Auth. Rev. (Baxter Travenol Laboratories)
Series A, 8% 9/1/12 A3 500,000 588,750 745271CH
Puerto Rico Infrastructure Fing. Auth. Spl. Tax
Series 1988 A, 7.75% 7/1/08 Baa1 1,000,000 1,135,000 745219AQ
Puerto Rico Tel. Auth. Rev. 5.25% 1/1/04,
(AMBAC Insured)(f) Aaa 1,000,000 1,032,500 745297HX
18,911,250
GUAM - 1.0%
Guam Arpt. Auth. Rev. Series A, 6.60%
10/1/10 (c) - 1,750,000 1,898,750 400648BK
Guam Pwr. Auth. Rev. Series A, 5.25%
10/1/13 - 1,000,000 957,500 400653BF
2,856,250
TOTAL MUNICIPAL BONDS
(Cost $268,313,386) 293,119,913
MUNICIPAL NOTES (A) - 3.7%
PENNSYLVANIA - 3.7%
Pennsylvania State Higher Ed. Assistance Agcy.
(Student Loan) Series 1988 A, 3.05%,
LOC Fuji Bank, VRDN, (c) VMIG 1 850,000 850,000 709163AF
Quakertown Hosp. Auth. Hosp. Rev. (HPS Group
Pooled Fing. Prog.) Series 1985 A, 3.20%,
LOC First Nat'l. Bank of Chicago, VRDN VMIG 1 2,000,000 2,000,000
747523AP
Schuylkill County Ind. Dev. Auth. Resources
Recovery Rev. (Westwood Energy Prop.)
Series 1985, 3.80%, LOC Fuji Bank, VRDN P-1 8,500,000 8,500,000
80839TAA
TOTAL MUNICIPAL NOTES
(Cost $11,350,000) 11,350,000
TOTAL INVESTMENTS - 100%
(Cost $279,663,386) $ 304,469,913

SECURITY TYPE ABBREVIATIONS
VRDN - Variable Rate Demand Notes
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) Security collateralized by an amount sufficient to pay interest and
principal.
(c) Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals (AMT securities).
(d) Standard & Poor's Corporation credit ratings are used in the
absence of a rating by Moody's Investors Service, Inc.
(e) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $7,481,250 or 2.4% of net
assets.
(f) Inverse floating rate security (inverse floater) is a security where
the coupon is inversely indexed to a floating interest rate multiplied by a
specified factor. If the floating rate is high enough, the coupon rate may
be zero or be a negative amount that is carried forward to reduce future
interest and/or principal payments. The price of an inverse floater may be
considerably more volatile than the price
of a comparable fixed rate security.

OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investments for the period ended is as follows (ratings are unaudited):

MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 39.1% AAA, AA, A 54.5%
Baa 22.9% BBB 15.4%
Ba 5.14% BB 0%
B 0% B 1.0%
Caa 0% CCC 0%
Ca, C 0% CC, C 0%
D 0%
The percentage not rated by either S&P or Moody's amounted to 17.9%.
The distribution of municipal securities by revenue source, as a percentage
of total value of investments, is as follows:
Health Care 23.7%
Water & Sewer 12.4%
General Obligation 11.7%
Others (individually
less than 10%) 52.2%
TOTAL 100.0%

INCOME TAX INFORMATION
At December 31, 1993 the aggregate cost of investment securities for income
tax purposes was $279,663,386. Net unrealized appreciation aggregated
$24,806,527, of which $24,849,959 related to appreciated investment
securities and $43,432 related to depreciated investment securities.
The fund hereby designates $321,300 as a capital gain dividend for the
purpose of the dividend paid deduction.
SPARTAN PENNSYLVANIA MUNICIPAL HIGH YIELD PORTFOLIO

FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
DECEMBER 31, 1993

IASSETS 1. 2.

3.Investment in securities, at value (cost $279,663,386) 4. $ 304,469,913
(Notes 1 and 2) - See accompanying schedule

5.Cash 6. 105,200

7.investment receivable 8. 4,534,437

9. 10.TOTAL ASSETS 11. 309,109,550

ILIABILITIES 12. 13.

14.Payable for investments purchased $ 1,709,917 15.

16.Dividends payable 1,012,046 17.

18.Accrued management fee 141,823 19.

20. 21.TOTAL LIABILITIES 22. 2,863,786

23.INET ASSETS 24. $ 306,245,764

25.Net Assets consist of: 26. 27.

28.Paid in capital 29. $ 280,286,885

30.Accumulated undistributed net realized gain (loss) 31. 1,152,352
on investments

32.Net unrealized appreciation (depreciation) on 33. 24,806,527
investment securities

34.INET ASSETS, for 27,519,545 shares outstanding 35. $ 306,245,764

36.INET ASSET VALUE, offering price and redemption 37. $11.13
price per share ($306,245,764 (divided by) 27,519,545 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1993

INVESTMENT INCOME 38. $ 18,930,371

IEXPENSES 39. 40.

41.Management fee (Note 4) $ 1,555,647 42.

43.Non-investmented trustees' compensation 1,831 44.

45. 46.TOTAL EXPENSES 47. 1,557,478

48.49.NET INVESTMENT INCOME 50. 17,372,893

IREALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 52. 53.

(NOTES 1 AND 3)
51.Net realized gain (loss) on:

54. Investment securities 9,281,154 55.

56. Futures contracts (1,218,148) 8,063,006

57.Change in net unrealized appreciation (depreciation) 58. 8,951,844
on investment securities

59.60.NET GAIN (LOSS) 61. 17,014,850

62.63.NET INCREASE (DECREASE) IN NET ASSETS 64. $ 34,387,743
RESULTING FROM OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

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

1993 1992

IINCREASE (DECREASE) IN NET ASSETS

65.Operations $ 17,372,893 $ 14,561,945
Net investment income

66. Net realized gain (loss) on investments 8,063,006 (173,218)

67. Change in net unrealized appreciation (depreciation) 8,951,844 4,713,141
on investments

68. 69.NET INCREASE (DECREASE) IN NET ASSETS 34,387,743 19,101,868
RESULTING
FROM OPERATIONS

70.Distributions to shareholders from: (17,372,893) (14,561,945)
Net investment income

71. Net realized gain (3,786,608) -

72.Share transactions 84,285,725 68,361,043
Net proceeds from sales of shares

73. Reinvestment of distributions from: 13,600,803 11,548,920
Net investment income

74. Net realized gain 3,074,032 -

75. Cost of shares redeemed (50,344,647) (41,601,096)

76. Redemption fees (Notes 1 and 3) 26,131 28,179

77. Net increase (decrease) in net assets resulting 50,642,044 38,337,046
from
share transactions

78. 79.TOTAL INCREASE (DECREASE) IN NET ASSETS 63,870,286 42,876,969

INET ASSETS 80. 81.

82. Beginning of period 242,375,478 199,498,509

83. End of period $ 306,245,764 $ 242,375,478

IOTHER INFORMATION 85. 86.
84.Shares

87. Sold 7,686,940 6,527,797

88. Issued in reinvestment of distributions from: 1,234,432 1,106,058
Net investment income

89. Net realized gain 277,439 -

90. Redeemed (4,571,521) (3,978,942)

91. Net increase (decrease) 4,627,290 3,654,913

</TABLE>

FINANCIAL HIGHLIGHTS

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

93. 1993 1992 1991 1990 1989

94.SELECTED PER-SHARE DATA

95.Net asset value, $ 10.590 $ 10.370 $ 9.880 $ 9.900 $ 9.660
beginning of period

96.Income from Investment .679 .693 .701 .701 .676

Operations
Net investment
income

97. Net realized and .679 .219 .489 (.020) .240
unrealized gain (loss)
on investments

98. Total from investment 1.358 .912 1.190 .681 .916
operations

99.Less Distributions (.679) (.693) (.701) (.701) (.676)
From net investment
income

100. From net realized gai (.140) - - - -
n
on investments

101. Total distributions (.819) (.693) (.701) (.701) (.676)

102.Redemption fees adde .001 .001 .001 - -
d to
paid in capital

103.Net asset value, $ 11.130 $ 10.590 $ 10.370 $ 9.880 $ 9.900
end of period

104.TOTAL RETURN 13.18% 9.11% 12.49% 7.20%(dagger) 9.80%(dagger)

105.RATIOS AND SUPPLEMENTAL DATA

106.Net assets, end of peri $ 306,246 $ 242,375 $ 199,499 $ 142,906 $ 104,202
od
(000 omitted)

107.Ratio of expenses to a .55% .55% .55% .60% .78%
verage
net assets

108.Ratio of expenses to a .55% .55% .55% .66%
verage .82%
net assets before expens
e
reductions

109.Ratio of net investment 6.13% 6.65% 6.96% 7.22% 6.90%

income to average net
assets

110.Portfolio turnover rate 38% 8% 6% 8% 23%

</TABLE>

(dagger) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
SPARTAN PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO

PERFORMANCE: THE BOTTOM LINE

To measure a money market fund's performance, you can look at either total
return or yield. Total return reflects the change in a fund's share price
over a given period, reinvestment of its dividends (or income), and the
effect of the fund's $5 account closeout fee. 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. Both the fund's
returns and yields would have been lower if Fidelity hadn't reimbursed
certain fund expenses.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1993 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND

Spartan Pennsylvania
Municipal Money Market 2.21% 24.02% 37.89%

Consumer Price Index 2.75% 21.00% 33.15%

Average All Tax-Free
Money Market Fund 1.97% 21.67% 35.21%

CUMULATIVE TOTAL RETURNS reflect actual performance over a set period - in
this case, one year, five years or since the fund started on August 6,
1986. For example, if you invested $1,000 in a fund that had a 5% return
over the past year, you would have $1,050. Comparing the fund's performance
to the consumer price index (CPI) helps show how your investment did
compared to inflation. To measure how the fund stacked up against its
peers, you can compare its return to the average all tax-free money market
fund's total return. This average currently reflects the performance of 338
tax-free money market funds tracked by IBC/Donoghue. (The periods covered
by the CPI and IBC/Donoghue numbers are the closest available match to
those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1993 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND

Spartan Pennsylvania
Municipal Money Market 2.21% 4.40% 4.43%

Consumer Price Index 2.75% 3.89% 3.93%

Average All Tax-Free
Money Market Fund 1.97% 4.00% 4.16%

AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had achieved that return
by performing at a constant rate each year.
YIELDS
12/31/92 3/31/93 6/30/93 9/30/93 12/31/93

Spartan Pennsylvania 3.07% 2.29% 2.01% 2.52% 2.49%
Municipal Money Market

Average All Tax-Free 2.71% 2.00% 1.83% 2.20% 2.16%
Money Market Fund

Spartan Pennsylvania 4.58% 3.68% 3.23% 4.05% 4.00%
Municipal Money Market -
Tax-equivalent

Average All Taxable 2.86% 2.66% 2.63% 2.65% 2.72%
Money Market Fund

Row: 1, Col: 1, Value: 3.07
Row: 1, Col: 2, Value: 2.72
Row: 2, Col: 1, Value: 2.29
Row: 2, Col: 2, Value: 2.0
Row: 3, Col: 1, Value: 2.01
Row: 3, Col: 2, Value: 1.83
Row: 4, Col: 1, Value: 2.52
Row: 4, Col: 2, Value: 2.2
Row: 5, Col: 1, Value: 2.49
Row: 5, Col: 2, Value: 2.16
Spartan
Pennsylvania
Municipal Money
Market
Average All Tax-Fre
e
Money Market Fund
3% -
2% -
1% -
0%
YIELD refers to the income paid by the fund over a given period. Yields for
money market funds are usually for seven-day periods, expressed as annual
percentage rates. A yield that assumes income earned is reinvested or
compounded is called an effective yield. The chart above shows the fund's
current seven-day yield at quarterly intervals over the past year. You can
compare these yields to the average all tax-free money market fund. Or you
can look at the fund's tax-equivalent yield, which is based on a combined
effective 1993 federal and state income tax rate of 37.79%. The
tax-equivalent figures are useful in seeing how the fund stacked up against
the average taxable money market fund as tracked by IBC/Donoghue.
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS 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 PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO

FUND TALK: THE MANAGER'S OVERVIEW

An interview with Deborah Watson,
Portfolio Manager of Spartan
Pennsylvania Municipal Money
Market Portfolio
Q. DEB, CAN YOU DESCRIBE THE ENVIRONMENT YOU'VE BEEN OPERATING IN FOR THE
LAST YEAR?
A. Sure. In terms of interest rates, there's not much to report. Tax-free
short-term rates took their cue from the federal funds rate, which held
steady at or near 3% all year. We encountered renewed inflation fears last
May, and again in late October. But both episodes were temporary, and so
did not significantly influence the way I managed the fund. In the absence
of major interest-rate swings, technical factors had a more noticeable
effect on my decision-making.
Q. IN WHAT WAY?
A. Like most states, Pennsylvania does the bulk of its borrowing in
mid-summer. The annual increase in supply generally presents a good buying
opportunity, and I anticipated that by gradually lowering the fund's
average maturity into the 40-day range by the beginning of June. Then, as
supply entered the market and interest rates remained stable, I bought
longer-term issues and extended the fund's average maturity again - to 80
days by the end of October. But supply was scarce, and by the end of the
fund's fiscal year in December, the average maturity had rolled back down
to 52 days.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on December 31, 1993 was 2.49%, compared to
3.07% at the end of last year, when technical factors bumped up the yield
temporarily. The latest tax-equivalent yield for investors in the 37.79%
combined federal and state income-tax bracket was 4.00%. Total return
during the year-long period was 2.21%. That beat the total return of the
average all tax-free money market fund tracked by IBC/Donoghue, which was
1.97%.
Q. WHY DID THE FUND DO SO MUCH BETTER THAN ITS PEERS?
A. There were several factors: successful interest-rate forecasting; a
51.6% stake in issues subject to the alternative minimum tax, which offer
more yield; and a 11.9% stake in some simple derivatives. The derivatives I
bought combine a long-term municipal bond with a "put," or an option to
sell to a third party, typically a bank. The end product is an investment
that pays a short-term variable interest rate and can be put on short
notice, usually seven days. It acts much like any other variable rate
demand note the fund might own, with one key difference: the yield is
slightly higher, a fact that has more to do with the added complexity of
these instruments than added investment risk.
Q. WHAT'S AHEAD FOR THE FUND?
A. As the economic conditions in Pennsylvania have been improving over the
past year, the pool of investment opportunities that meet our investment
standards has been expanding, which bodes well for the future. Overall, the
short-term tax-free market could be somewhat volatile in the months ahead.
I would expect the economy to continue showing sporadic signs of
improvement, leading to growing expectations that the Fed may move to
increase rates, perhaps before the end of the first quarter of calendar
1994. I've been taking a more defensive approach, and will probably
maintain an average maturity somewhere between 40 and 55 days.

FUND FACTS
GOAL: tax-free income and
stability by investing in
high-quality,
short-term Pennsylvania
municipal securities
START DATE: August 6, 1986
SIZE: as of December 31,
1993, over $240 million
MANAGER: Deborah Watson,
since 1989; manager, Spartan
Florida Municipal Money
Market Portfolio, since 1992;
Spartan California Municipal
Money Market Portfolios, since
1989; Fidelity California
Tax-Free Money Market Fund,
since 1988
(checkmark)

WORDS TO KNOW
COMMERCIAL PAPER: A security
issued by a municipality to
finance capital or operating
needs.
FEDERAL FUNDS RATE: The interest
rate banks charge each other
for overnight loans.
MATURITY: The time remaining
before an issuer is scheduled
to repay the principal amount
on a debt security. When the
fund's average maturity -
weighted by dollar amount -
is short, the fund manager is
anticipating a rise in interest
rates. When the average
maturity is long, the manager is
expecting rates to fall. When
the average maturity is neutral,
the manager wants the
flexibility to respond to rising
rates, while still capturing a
portion of the higher yields
available from issues with
longer maturities.
MUNICIPAL NOTE: A security
issued in advance of future tax
or other revenues and payable
from those specific sources.
TENDER BOND: A variable-rate,
long-term security that gives
the bond holder the option to
redeem the bond at face value
before maturity.
VARIABLE RATE DEMAND NOTE
(VRDN): A tender bond that can
be redeemed on short notice,
typically one or seven days.
VRDNs are useful in managing
the fund's average maturity
and liquidity.
SPARTAN PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO

INVESTMENT CHANGES

MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
12/31/93 6/30/93 12/31/92

0 - 30 66.3 79.5 61.6

31 - 90 9.1 3.3 15.3

91 - 180 14.0 2.6 13.2

181 - 397 10.6 14.6 9.9

WEIGHTED AVERAGE MATURITY
12/31/93 6/30/93 12/31/92

Spartan Pennsylvania
Municipal Money Market 52 days 61 days 55 days

Average All Tax-Free
Money Market Fund* 62 days 55 days 59 days

ASSET ALLOCATION
AS OF 12/31/93 AS OF 6/30/93

Row: 1, Col: 1, Value: 62.3
Row: 1, Col: 2, Value: 11.4
Row: 1, Col: 3, Value: 9.800000000000001
Row: 1, Col: 4, Value: 15.1
Row: 1, Col: 5, Value: 2.0
Row: 1, Col: 1, Value: 60.0
Row: 1, Col: 2, Value: 18.2
Row: 1, Col: 3, Value: 10.4
Row: 1, Col: 4, Value: 4.6
Row: 1, Col: 5, Value: 6.8
Variable rate
demand notes
(VRDNs) 62.3%
Commercial
paper 11.4%
Tender bonds 9.8%
Municipal
notes 15.1%
Other 1.4%
Variable rate
demand notes
(VRDNs) 60.0%
Commercial
paper 18.2%
Tender bonds 10.4%
Municipal
notes 4.6%
Other 6.8%
* SOURCE: IBC/DONOGHUE'S MONEY FUND REPORT(Registered trademark)
SPARTAN PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO

INVESTMENTS/DECEMBER 31, 1993
(Showing Percentage of Total Value of Investments)

MUNICIPAL SECURITIES (A) - 100%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
PENNSYLVANIA - 100.0%
Allegheny County Hosp. Dev. Auth. Rev. Hlth. Ctr.
(Presbyterian Univ. Hosp.) Series1990 B, 3.05%,
(MBIA Insured), VRDN $ 500,000 $ 500,000 0172894U
Allegheny County Hosp. Dev. Auth. Rev. (St. Margaret
Mem. Hosp.) Series 1992 A, 3.35%,
LOC Mellon Bank, VRDN 9,700,000 9,700,000 0172897L
Allegheny County Port Auth. RAN 2.90% 8/1/94,
LOC Pittsburgh Nat'l Bank 5,000,000 5,000,000 017329AJ
Allentown Multi-Family Housing (Arcadia Assoc. Proj.)
Series 1990, 3.15%, LOC Sumitomo Trust & Banking,
VRDN 2,300,000 2,300,000 018469AB
Bucks County Ind. Dev. Auth. (PA Associates Proj.)
Series 1993, 3.65%, LOC Meridian Bank, VRDN (b) 1,715,000 1,715,000
118612GP
Cambria County Ind. Dev. Auth. Resource Recovery Rev.
(Cambria Cogen. Co. Proj.) Series 1989 V-1, 3.25%,
LOC Fuji Bank, VRDN (b) 5,000,000 5,000,000 132046AA
Carbon County Ind. Dev. Auth. Resource Recovery Rev.
(Panther Creek Partners Proj.), VT: (b)
Series 1990 A, 2.60% 2/25/94,
LOC Nat'l Westminster Bank 2,400,000 2,400,000 140991EF
Series1991 A, 2.35% 1/27/94,
LOC Nat'l Westminster 2,000,000 2,000,000 140991EM
Series 1991 A, 2.65% 2/28/94,
LOC Nat'l Westminster Bank 4,200,000 4,200,000 140991EG
Delaware Valley Reg. Fin. Auth. Local Gov't. Rev.,
VRDN:
Series 1985 A, 3.35%, LOC Marine Midland Bank 1,600,000 1,600,000
246579AD
Series 1985 B, 3.35%, LOC Marine Midland Bank 1,500,000 1,500,000
246579AE
Series 1986, 3.35%, LOC Marine Midland Bank 6,200,000 6,200,000
246579AJ
Emmaus Gen. Auth. Rev., Series 1989 H, 3.40%, VRDN 700,000 700,000
291380BT
Erie County Ind. Dev. Auth. Rev. (Carlisle Corp. Proj.)
Series 1993, 3.25%, LOC Trust Company Bank,
VRDN (b) 1,000,000 1,000,000 295206HY
Hazelton Area Ind. Dev. Auth. Energy Dev. Rev.
(Continental Energy Assoc. Proj.) Series 1986, 3.35%,
LOC Swiss Bank Corp., VRDN (b) 8,500,000 8,500,000 421875AA
Lehigh County Ind. Dev. Auth. Poll. Cont. Rev., VRDN:
(Allegheny Elec. Co.):
Series 1984 A, 3% LOC Rabobank Nederland 600,000 600,000 524808AH
Series 1984 B, 3%, LOC Rabobank Nederland 1,080,000 1,080,000
524808AK
Mercer County Ind. Dev. Auth. Dev. Rev.
(Penntecq Inc. Proj.) Series 1990, 3.20%,
LOC Dai-Ichi Kangyo Bank, VRDN (b) 4,000,000 4,000,000 587870AQ
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
PENNSYLVANIA - CONTINUED
Montgomery County Higher Ed. & Hlth. (Pottstown
Healthcare Corp. Proj.) Series 1992, 3.275%,
LOC Meridian Bank, VRDN $ 200,000 $ 200,000 613603HY
Montgomery County Ind. Dev. Auth. Rev.
(Sirius Dev. Assoc. Proj.) 3.40%,
LOC Provident Nat'l. Bank, VRDN (b) 1,500,000 1,500,000 613609KJ
Montgomery County Ind. Dev. Auth. (Limited
Partnership Proj.) Series 1992, 3.65%,
LOC Meridian Bank, VRDN (b) 2,080,000 2,080,000 613609MQ
North Lebanon Township (Grace Commty. Inc. Proj.)
Series 1992 B, 3.275%, LOC Meridian Bank, VRDN 3,755,000 3,755,000
660446AQ
Northampton County Ind. Dev. Auth.
(Citizens Utilities Company Proj.)
Series 1991, 2.70% 1/20/94, VT (b) 2,950,000 2,950,000 6635499S
Northumberland County Ind. Dev. Auth Rev., VRDN: (b)
(Foster Wheeler Carmel Proj.):
Series 1987 A, 3.25%, LOC Union Bank of
Switzerland 10,850,000 10,850,000 66707MAA
Series 1987 B, 3.25%,LOC Union Bank of
Switzerland 1,800,000 1,800,000 66707MAB
Pennsylvania Dev. Auth. Rev. (Continental Energy Assoc. Proj.)
Series 1986, 3.20%, LOC Swiss Bank, VRDN 2,500,000 2,500,000 708704AD
Pennsylvania Econ. Dev. Fin. Auth. Rev., VRDN: (b)
(Dodge-Regupol, Inc. Proj.) Series D-4, 3.40%,
LOC Pittsburgh Nat'l. Bank 2,000,000 2,000,000 708684CY
(Henry Molded Prod. Inc.) Series 1992 A-4, 3.40%,
LOC Pittsburgh Nat'l. Bank 1,000,000 1,000,000 708684FD
(Payne Printery Proj.) Series 1989 B-8, 3.40%,
LOC Pittsburgh Nat'l. Bank 375,000 375,000 708684AG
(Port Erie Plastics Proj.) Series 1989 D-9, 3.40%,
LOC Pittsburgh Nat'l. Bank 1,110,000 1,110,000 708684AS
(Respironics Inc. Proj.), 3.40%,
LOC Pittsburgh Nat'l. Bank 900,000 900,000 708684BC
(Suntory Water Group Proj.) Series1992 D, 3.25%
LOC Wachovia Bank & Trust, 4,900,000 4,900,000 708688AS
(The Babcock & Wilcox Co. Proj.) Series 1989 A-2,
3.40%, LOC Pittsburgh Nat'l. Bank 4,925,000 4,925,000 708688AM
Pennsylvania Econ. Dev. Fin. Auth. Solid Waste
Disposal Rev,VT.: (b)
(Inter-Pwr./Ahlcon Partner Proj.):
Series 1992 A, 2.70% 1/28/94,
LOC Banque Paribas 2,000,000 2,000,000 7086929Q
Series 1992 A, 2.70% 2/7/94,
LOC Banque Paribas 1,500,000 1,500,000 7086929N
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
PENNSYLVANIA - CONTINUED
Pennsylvania Energy Dev. Auth. Rev. (B &W Edensburg
Proj.) Series 1986, 3.30%, LOC Swiss Bank Corp.,
VRDN (b) $ 2,350,000 $ 2,350,000 708704AB
Pennsylvania Gen. Oblig. TAN 3.25% 6/30/94 10,000,000 10,026,071
709138E4
Pennsylvania Higher Ed. Assistance Agcy. (Student Loan)
Series 1988 A, 3.05%, LOC Fuji Bank, VRDN (b) 13,100,000 13,100,000
709163AF
Pennsylvania Higher Ed. Facs. Auth. Rev., OT:
(Thomas Jefferson Univ.) :
Series 1992 B, 2.70% 6/1/94, SBPA Credit Suisse 2,100,000 2,100,000
709174MX
Series 1992 C, 2.70% 6/1/94, SBPA Credit Suisse 12,900,000 12,900,000
709174MY
Pennsylvania Higher Ed. Loan Rev. Bonds
(Med. College of PA.), 12% 3/1/94 1,000,000 1,044,927 709170YC
Pennsylvania Housing Fin. Agcy. Residential Dev. Rev.
Custodial Receipts (Section 8 Assisted Capital), 3.10%,
(Liquidity Enhancement Citibank) (c) 4,005,000 4,005,000 708791F9
Pennsylvania Infrastructure Investment Auth. (Pennvest
Loan Pool Program) Series 1993, 2.75% 3/2/94,
SBPA PNC Bank, MT 3,000,000 3,000,476 708836CX
Pennsylvania Municipal Custodial Receipts: (c)
Series 1991 A-16, 3.30%, 9,490,000 9,490,000 55377EAH
Series 1993 A-38, 3.30%,
(Liquidity Enhancement Sakura Bank.) 4,330,000 4,330,000 709144DT
Pennsylvania State Gen. Oblig. Bond Rfdg. & Projs.
Series B, 6.10% 1/1/94, (MBIA Insured) 1,900,000 1,900,000 709138ZC
Pennsylvania State Higher Ed. Assistance Agcy.
(Student Loan) 2.95%, LOC Union Bank of
Switzerland, VRDN (b) 5,300,000 5,300,000 709163AG
Pennsylvania State University BAN, 3% 5/26/94 5,800,000 5,808,410
709235HD
Philadelphia Hosp. & Higher Ed. Auth. (Frankford Hosp.)
3.05%, LOC Mellon Bank, VRDN 4,400,000 4,400,000 717903RW
Philadelphia Ind. Dev. Auth. Commercial Dev. Rev.
(Airport Hotel Proj.) Series 1990, 3.25% LOC Citibank,
VRDN (b) 2,900,000 2,900,000 717818ML
Philadelphia Ind. Dev. Auth. Rev. (1411 Assoc. Proj.) 3.30%,
LOC Dai-Ichi Kangyo Bank, VRDN 3,900,000 3,900,000 717818FS
Philadelphia Ind. Dev. Auth. Multi-Family Hsg. Rev. Rfdg.
Bonds. (Harbor View Towers Proj.) Series 1993, 3.25%
LOC Sumitomo Bank,VRDN 1,000,000 1,000,000 717908AA
Philadelphia School Dist. Gen. Oblig. Partnership Ctfs.
3.40%, (Liquidity Enhancement Banque
Nationale De Paris) (c) 8,550,000 8,550,000 717880E3
Philadelphia School. Dist. Gen. Oblig. Rfdg. Tender Option
Bonds, 3%, (Liquidity Enhancement Morgan Guaranty
Trust Co. NY) (c) 2,000,000 2,000,000 717880E2
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
PENNSYLVANIA - CONTINUED
Philadelphia School Dist. Bonds Series B, 5.75% 7/1/94,
(MBIA Insured) $ 2,165,000 $ 2,195,728 717880YS
Philadelphia School Dist. TRAN, Series 1993-94, 3.625%
6/30/94 8,000,000 8,020,134 717880E5
Philadelphia TRAN, Series B, 3.25% 6/15/94,
LOC Corestates Bank 7,000,000 7,015,400 717811WR
Pittsburgh Urban Redev. Auth. Mtg. Rev., MT: (b)
Series 1992 A, 2.85% 6/1/94, GIC Barclays Bank 2,795,000 2,795,000
725299TD
Series 1992 B, 2.85% 6/1/94, GIC Barclays Bank 965,000 965,000
725299TE
Series 1992 C, 2.85% 6/1/94, GIC Barclays Bank 1,575,000 1,575,000
725299TF
Schuylkill County Ind. Dev. Auth. Resource Recovery Rev.
(Westwood Energy Prop.) Series 1985, 3.80%,
LOC Fuji Bank, VRDN 3,500,000 3,500,000 80839TAA
Venango Ind. Dev. Auth. Resource Recovery Rev., VT: (b)
(Scrubgrass Proj.):
Series 1990 A:
2.25% 2/18/94, LOC Nat'l Westminster Bank 4,500,000 4,500,000
92299BBK
2.60% 2/24/94, LOC Nat'l Westminster Bank 5,050,000 5,050,000
92299BBH
Series 1990 B, 2.35% 1/26/94,
LOC Nat'l Westminster Bank 2,550,000 2,550,000 92299BBL
Washington County Ind. Dev. Auth. Ind. Dev. Rev.
(Mac Plastics, Inc. Proj.) Series 1990, 3.45%,
LOC Nat'l. City Bank, VRDN (b) 805,000 805,000 938597AH

TOTAL INVESTMENTS - 100% $ 239,416,146
Total Cost for Income Tax Purposes $ 239,416,146

SECURITY TYPE ABBREVIATIONS
BAN - Bond Anticipation Notes
CP - Commercial Paper
FRDN - Floating Rate Demand Notes
MT - Mandatory Tender
OT - Optional Tender
RAN - Revenue Anticipation Notes
TAN - Tax Anticipation Notes
TRAN - Tax & Revenue Anticipation Notes
VRDN - Variable Rate Demand Notes
VT - Variable Tender
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals (AMT securities).
(c) Provide evidence of ownership in an underlying pool of municipal bonds.
INCOME TAX INFORMATION
At December 31, 1993, the fund had a capital loss carryforward of
approximately $9,500 of which $4,600, and $4,900 will expire on December
31, 1997 and 1998, respectively.
SPARTAN PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO

FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
DECEMBER 31, 1993

IASSETS 111. 112.

113.Investment in securities, at value (Note 1) - 114. $ 239,416,146
See accompanying schedule

115.Cash 116. 2,067,523

117.Interest receivable 118. 1,407,493

119. 120.TOTAL ASSETS 121. 242,891,162

ILIABILITIES 122. 123.

124.Payable for investments purchased $ 1,800,325 125.

126.Dividends payable 13,928 127.

128.Accrued management fee 93,553 129.

130. 131.TOTAL LIABILITIES 132. 1,907,806

133.INET ASSETS 134. $ 240,983,356

135.Net Assets consist of: 136. 137.

138.Paid in capital 139. $ 240,992,908

140.Accumulated net realized gain (loss) on 141. (9,552)
investments

142.INET ASSETS, for 240,990,957 shares outstanding 143. $ 240,983,356

144.INET ASSET VALUE, offering price and redemption 145. $1.00
price per share ($240,983,356 (divided by) 240,990,957 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1993

I146.INTEREST INCOME 147. $ 5,894,216

IEXPENSES 148. 149.

150.Management fee (Note 4) $ 1,092,498 151.

152.Non-interested trustees' compensation 1,549 153.

154. 155.TOTAL EXPENSES 156. 1,094,047

157.158.NET INTEREST INCOME 159. 4,800,169

IREALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 161. 2,251

(NOTE 1)
160.Net realized gain (loss) on investment securities

162.Increase (decrease) in net unrealized gain from 163. (4,269)
accretion
of market discount

164.165.NET GAIN (LOSS) 166. (2,018)

167.168.NET INCREASE IN NET ASSETS RESULTING FROM 169. $ 4,798,151
OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

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

1993 1992

IINCREASE (DECREASE) IN NET ASSETS

170.Operations $ 4,800,169 $ 7,178,538
Net interest income

171. Net realized gain (loss) on investments 2,251 10,111

172. Increase (decrease) in net unrealized gain from (4,269) 4,269
accretion of market discount

173. 4,798,151 7,192,918
174.NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM
OPERATIONS

175.Dividends to shareholders from net interest income (4,800,169) (7,178,538)

176.Share transactions at net asset value of $1.00 per 176,936,625 180,419,164
share
Proceeds from sales of shares

177. Reinvestment of dividends from net interest 4,536,853 6,791,752
income

178. Cost of shares redeemed (183,823,236) (233,716,275)

179. (2,349,758) (46,505,359)
Net increase (decrease) in net assets and shares
resulting from share transactions

180. (2,351,776) (46,490,979)
181.TOTAL INCREASE (DECREASE) IN NET ASSETS

INET ASSETS 182. 183.

184. Beginning of period 243,335,132 289,826,111

185. End of period $ 240,983,356 $ 243,335,132

</TABLE>

FINANCIAL HIGHLIGHTS

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

187. 1993 1992 1991 1990 1989

188.SELECTED PER-SHARE DATA

189.Net asset value, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
beginning of
period

190.Income from Inv .022 .029 .045 .059 .062
estment Operations
Net interest
income

191. Dividends from (.022) (.029) (.045) (.059) (.062)
net
interest income

192.Net asset value, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
end of period

193.TOTAL RETURN 2.21% 2.90%(dagger) 4.55%(dagger) 6.05%(dagger) 6.35%(dagger)

194.RATIOS AND SUPPLEMENTAL DAT
A

195.Net assets, end $ 240,983 $ 243,335 $ 289,826 $ 319,982 $ 176,998
of
period (000
omitted)

196.Ratio of expense .50% .47% .34% .13% .28%
s to
average net
assets

197.Ratio of expense .50% .50% .50% .57% .73%
s to
average net assets
before expense
reductions

198.Ratio of net inter 2.19% 2.88% 4.47% 5.92% 6.17%
est
income to average
net assets

</TABLE>

(dagger) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
NOTES TO FINANCIAL STATEMENTS
For the period ended December 31, 1993

1. SIGNIFICANT ACCOUNTING
POLICIES.
Spartan Pennsylvania Municipal High Yield Portfolio (the high yield fund)
is a fund of Fidelity Municipal Trust. Spartan Pennsylvania Municipal Money
Market Portfolio (the money market fund) is a fund of Fidelity Municipal
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 Municipal Trust and Fidelity Municipal Trust II (the
trusts) are organized as a Massachusetts and a Delaware business trust,
respectively. Each fund is authorized to issue an unlimited number of
shares. The following summarizes the significant accounting policies of the
money market fund and the high yield fund:
SECURITY VALUATION.
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.
HIGH YIELD 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. Short-term securities
maturing within sixty days are valued either at amortized cost or original
cost plus accrued interest, both of which approximate current value.
Securities for which quotations are not readily available through the
pricing service are valued at their fair value as determined in good faith
under consistently applied procedures under the general supervision of the
Board of Trustees.
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned. For the
municipal money market fund, accretion of market discount represents
unrealized gain until realized at the time of a security disposition or
maturity.
EXPENSES. Most expenses of each trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between 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 regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
losses deferred due to futures and options transactions.
REDEMPTION FEES. Shares held in the high yield fund less than 180 days are
subject to a redemption fee equal to .50% of the proceeds of the redeemed
shares. The fee, which is retained by the fund, is accounted for as an
addition to paid in capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective January
1, 1993, the funds adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the funds changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of December 31, 1992 have been restated as follows:
MONEY MARKET FUND. Paid in capital and accumulated net realized loss on
investments increased by $1,951.
HIGH YIELD FUND. Paid in capital and accumulated net realized loss on
investments decreased by $30,382.
2. OPERATING POLICIES.
FUTURES CONTRACTS AND OPTIONS. The high yield fund may invest in futures
contracts and write options. These investments involve, to varying degrees,
elements of market risk and risks in excess of the amount recognized in the
Statement of Assets and Liabilities. The face or contract amounts reflect
the extent of the involvement the high yield fund has in the particular
classes of instruments. Risks may be caused by an imperfect correlation
between movements in the price of the instruments and the price of the
underlying securities and interest rates. Risks also may arise if there is
an illiquid secondary market for the instruments, or due to the inability
of counterparties to perform.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Options traded
on an exchange are valued using the last sale price or, in the absence of a
sale, the last offering price. Options traded over-the-counter are valued
using dealer-supplied valuations.
3. PURCHASES AND SALES OF
INVESTMENTS.
HIGH YIELD FUND. Purchases and sales of securities, other than short-term
securities, aggregated $148,081,606 and $104,779,668, respectively. The
market value of futures contracts opened and closed amounted to
$107,776,140 and $107,776,140, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, Fidelity Management
& Research Company (FMR) pays all expenses except the compensation of
the non-interested Trustees and certain exceptions such as interest, taxes,
brokerage commissions and extraordinary expenses. FMR receives a fee that
is computed daily at an annual rate of .50% and .55% of average net assets
for the money market and high yield funds, respectively.
FMR also bears the cost of providing shareholder services to each fund. For
the period, FMR or its affiliates collected certain transaction fees from
shareholders which aggregated $14,534 and $5,050 for the money market and
high yield funds, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES -
CONTINUED
SUB-ADVISER FEE. As the money market fund's investment sub-adviser, FMR
Texas Inc., a wholly owned subsidiary of FMR, receives a fee from FMR of
50% of the management fee payable to FMR. The fee is paid prior to any
voluntary expense reimbursements which may be in effect, and after reducing
the fee for any payments by FMR pursuant to the fund's Distribution and
Service Plan.
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Fidelity Municipal
Trust and Fidelity Municipal Trust II
and the Shareholders of the Spartan
Pennsylvania Municipal High Yield
Portfolio and Spartan Pennsylvania
Municipal Money Market Portfolio:
We have audited the accompanying statements of assets and liabilities of
Spartan Pennsylvania Municipal High Yield Portfolio, a portfolio of the
Fidelity Municipal Trust, and Spartan Pennsylvania Municipal Money Market
Portfolio, a portfolio of Fidelity Municipal Trust II, including the
schedules of portfolio investments, as of December 31, 1993, the related
statements of operations for the year then ended, the statement of changes
in net assets for each of the two years in the period then ended, and the
financial highlights for each of the five years in the period then ended.
These financial statements and financial highlights are the responsibility
of the Funds' management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 1993, by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Spartan Pennsylvania Municipal High Yield Portfolio and Spartan
Municipal Money Market Portfolio as of December 31, 1993, the results of
their operations for the year then ended, the changes in their net assets
for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND
Boston, Massachusetts
January 28, 1994
TO VISIT FIDELITY

INVESTMENT ADVISER

Fidelity Management & Research
Company
Boston, MA
SUB-ADVISER
FMR Texas Inc.
Irving, TX
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Deborah F. Watson, Vice President
MONEY MARKET FUND
Thomas D. Maher, Assistant
Vice President - MONEY MARKET FUND
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
Marvin L. Mann*
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
United Missouri Bank, N.A.
Kansas City, MO
and
Fidelity Service Co.
Boston, MA
CUSTODIAN
United Missouri Bank, N.A.
Kansas City, MO
THE FIDELITY
TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
TDD Service 1-800-544-0111
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE

EXHIBIT 24(A)(8)
(2_FIDELITY_LOGOS)FIDELITY

HIGH YIELD TAX-FREE
PORTFOLIO
ANNUAL REPORT
NOVEMBER 30, 1993
CONTENTS

PRESIDENT'S MESSAGE 3 Ned Johnson on minimizing taxes.

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 last six
months.

INVESTMENTS 11 A complete list of the fund's
investments with their market value.

FINANCIAL STATEMENTS 43 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.

NOTES TO FINANCIAL 47 Footnotes to the financial
STATEMENTS statements.

REPORT OF INDEPENDENT 50 The auditor's opinion.
ACCOUNTANTS

There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Each figure
includes changes in a fund's share price, plus reinvestment of any
dividends (or income) and capital gains (the profits the fund earns when it
sells bonds that have grown in value). You can also look at the fund's
income.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1993 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS

High Yield Tax-Free 11.92% 62.80% 179.57%

Lehman Brothers Municipal Bond Index 11.09% 61.12% 182.71%

Average High Yield Municipal Bond Fund 11.00% 56.08% 226.94%

Consumer Price Index 2.68% 21.20% 44.07%

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - one, five, or ten years. For example, if you invested
$1,000 in a fund that had a 5% return over the past year, you would end up
with $1,050. You can compare these figures to the performance of the Lehman
Brothers Municipal Bond Index - a broad gauge of the municipal bond market.
To measure how the fund stacked up against its peers, you can look at the
average high yield municipal bond fund, which reflects the perform-ance of
31 high yield municipal bond funds tracked by Lipper Analytical Services.
Both benchmarks include reinvested dividends and capital gains, if any.
Comparing the fund's performance to the consumer price index helps show how
your fund did compared to inflation.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1993 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS

High Yield Tax-Free 11.92% 10.24% 10.83%

Lehman Brothers Municipal Bond Index 11.09% 10.01% 10.95%

Average High Yield Municipal Bond Fund 11.00% 9.27% 11.37%

Consumer Price Index 2.68% 3.92% 3.72%

AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
$10,000 OVER 10 YEARS

High Yield Muni Bond
11/30/83 10000.00 10000.00
12/31/83 10118.11 10012.50
01/31/84 10442.79 10377.46
02/29/84 10322.81 10272.95
03/31/84 10406.92 10286.00
04/30/84 10333.80 10301.84
05/31/84 9534.59 9690.12
06/30/84 9965.22 9900.49
07/31/84 10504.87 10413.24
08/31/84 10636.80 10646.81
09/30/84 10568.14 10575.26
10/31/84 10713.96 10707.98
11/30/84 10856.69 10865.60
12/31/84 11121.07 11069.22
01/31/85 11644.88 11708.25
02/28/85 11511.94 11416.24
03/31/85 11611.69 11514.77
04/30/85 11922.81 11936.21
05/31/85 12326.49 12350.51
06/30/85 12495.70 12480.07
07/31/85 12604.48 12504.53
08/31/85 12571.62 12417.25
09/30/85 12403.02 12292.70
10/31/85 12857.01 12713.85
11/30/85 13246.53 13169.90
12/31/85 13500.97 13285.66
01/31/86 14149.97 14068.19
02/28/86 14658.47 14625.99
03/31/86 14772.29 14630.67
04/30/86 14720.23 14641.79
05/31/86 14536.26 14403.42
06/30/86 14689.10 14540.83
07/31/86 14794.04 14629.09
08/31/86 15515.40 15284.04
09/30/86 15496.74 15322.40
10/31/86 15819.24 15587.02
11/30/86 16056.49 15895.80
12/31/86 16052.58 15851.92
01/31/87 16449.50 16329.23
02/28/87 16642.48 16409.57
03/31/87 16515.99 16235.62
04/30/87 15401.47 15420.92
05/31/87 15288.19 15344.43
06/30/87 15546.55 15794.95
07/31/87 15744.74 15956.05
08/31/87 15818.13 15991.96
09/30/87 15075.32 15402.33
10/31/87 15024.85 15456.86
11/30/87 15342.12 15860.43
12/31/87 15597.26 16090.57
01/31/88 16140.07 16663.72
02/29/88 16342.95 16839.85
03/31/88 15953.64 16643.67

04/30/88 16070.41 16770.16
05/31/88 16186.94 16721.69
06/30/88 16380.62 16966.33
07/31/88 16550.25 17076.95
08/31/88 16626.58 17091.98
09/30/88 16992.37 17401.34
10/31/88 17318.93 17708.48
11/30/88 17172.79 17546.27
12/31/88 17503.74 17725.77
01/31/89 17750.67 18092.34
02/28/89 17643.27 17885.90
03/31/89 17679.64 17843.15
04/30/89 18250.12 18266.75
05/31/89 18636.18 18646.15
06/30/89 18817.27 18899.37
07/31/89 18954.42 19156.59
08/31/89 18870.33 18969.04
09/30/89 18789.79 18912.14
10/31/89 18986.54 19142.86
11/30/89 19337.20 19477.87
12/31/89 19498.00 19637.58
01/31/90 19292.54 19545.29
02/28/90 19545.15 19719.24
03/31/90 19567.26 19725.16
04/30/90 19215.29 19583.13
05/31/90 19745.47 20010.05
06/30/90 19956.34 20186.14
07/31/90 20265.28 20482.87
08/31/90 20054.47 20185.87
09/30/90 20205.77 20197.98
10/31/90 20474.33 20563.56
11/30/90 21059.66 20976.89
12/31/90 21150.25 21069.19
01/31/91 21425.73 21351.52
02/28/91 21559.84 21537.28
03/31/91 21629.21 21545.89
04/30/91 21925.13 21832.45
05/31/91 22118.23 22026.76
06/30/91 22119.41 22004.73
07/31/91 22440.74 22273.19
08/31/91 22638.98 22567.20
09/30/91 22819.93 22860.57
10/31/91 23034.49 23066.32
11/30/91 23084.77 23130.90
12/31/91 23302.66 23628.22
01/31/92 23541.87 23682.56
02/29/92 23590.05 23689.67
03/31/92 23613.16 23699.14
04/30/92 23838.94 23910.06
05/31/92 24067.74 24192.20
06/30/92 24401.47 24598.63
07/31/92 25027.51 25336.59
08/31/92 24694.40 25088.29
09/30/92 24760.70 25251.37

10/31/92 24348.43 25003.90
11/30/92 24980.29 25451.47
12/31/92 25250.78 25711.08
01/31/93 25604.17 26009.33
02/28/93 26546.47 26950.86
03/31/93 26354.15 26665.18
04/30/93 26604.83 26934.50
05/31/93 26759.24 27085.34
06/30/93 27153.01 27537.66
07/31/93 27162.44 27573.46
08/31/93 27752.66 28146.99
09/30/93 28154.02 28467.86
10/31/93 28183.68 28521.95
11/30/93 27956.82 28270.96

$10,000 OVER 10 YEARS: Let's say you invested $10,000 in Fidelity High
Yield Tax-Free Portfolio on November 30, 1983. As the chart shows, by
November 30, 1993, the value of your investment would have grown to $27,957
- - a 179.57% increase on your initial investment. For comparison, look at
how the Lehman Brothers Municipal Bond index did over the same period. With
dividends reinvested, the same $10,000 would have grown to $28,271 - a
182.71% increase.

Income return 6.33% 6.69% 7.11% 7.31% 7.69%

Capital gain returns 1.58% 1.28% 1.87% 3.09% 0.08%

Change in share price 4.01% 0.24% 0.64% -1.49% 4.83%

Total return 11.92% 8.21% 9.62% 8.91% 12.60%

Income returns, capital gain returns, and changes in share price are all
part of a bond fund's total return. An income return reflects the dividends
paid by the fund. A capital gain return reflects the amount paid by the
fund to shareholders based on the profits it has from selling bonds that
have grown in value. Both returns assume the dividends or gains are
reinvested. Changes in the fund's share price include changes in the prices
of the bonds owned by the fund.
DIVIDENDS AND YIELD
PERIODS ENDED NOVEMBER 30, 1993 PAST 30 PAST 6 PAST 1
DAYS MONTHS YEAR

Dividends per share n/a 37.99(cents) 76.36(cents)

Annualized dividend rate n/a 2.86% 5.84%

Annualized yield 5.34% n/a n/a

Tax-equivalent yield 8.34% n/a n/a

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 $13.27 over
the past six months and $13.07 over the past year, you can compare the
fund's income over these two periods. The 30-day annualized yield is a
standard formula for all funds based on the yields of the bonds in the
fund, averaged over the past 30 days. This figure shows you the yield
characteristics of the fund's investments at the end of the period. It also
helps you compare funds from different companies on an equal basis. The
tax-equivalent yield shows what you would have to earn on a taxable
investment to equal the fund's tax-free yield, if you're in the 36% federal
tax bracket.
FUND TALK: THE MANAGER'S OVERVIEW

MARKET RECAP
Generally, interest rates fell
during the year ended November
30, 1993. As a result, bond prices
rose and most fixed-income
investors - including those in
tax-free bonds - enjoyed
attractive returns. The period
began amid expectations of
higher interest rates to come.
This was based on signs that the
economic recovery was finally
taking hold, as well as uncertainty
over the spending plans of the
president-elect. But as President
Clinton promised to tackle the
deficit and fight inflation, the bond
market signaled its approval. The
yield on the benchmark 30-year
Treasury bond declined steadily
and reached an historic low of
5.79% in mid-October. By the end
of the period, as inflation fears
returned, the 30-year bond was
yielding 6.30%. Two factors
affected tax-free bonds
specifically: on the positive side,
higher federal taxes - discussed
all year and approved in August
- - boosted demand. At the same
time, record new issuance kept
supplies high, which somewhat
dampened prices. Overall during
the period, tax-free bonds
performed well compared to other
fixed-income investments. The
Lehman Brothers Municipal Bond
Index - a broad measure of the
tax-free bond market - rose
11.09%. By comparison, the
Lehman Brothers Aggregate
Bond Index - which tracks
investment-grade taxable bonds
- - rose only 10.89%, due in part
to relatively poor performance by
mortgage-backed securities.
An interview with Anne Punzak,
Portfolio Manager of Fidelity
High Yield Tax-Free Portfolio
Q. ANNE, HOW DID THE FUND DO?
A. For the 12 months ended November 30, 1993, the fund had a total return
of 11.92%. That outpaced the average high yield municipal bond fund which
returned 11.00% over the same period, according to Lipper Analytical
Services.
Q. WHY DID THE FUND BEAT THE
AVERAGE?
A. It had a longer duration than many other funds of this type. That meant
its price could rise more as interest rates fell, which is what happened
over the past year. At the end of November the fund's duration was 8.1
years mainly due to its fairly large stake - nearly 45% on November 30 - in
bonds with maturities of 20 years or more. As interest rates fell, it paid
to invest in bonds with longer maturities since they appreciated more than
shorter-term bonds.
Q. SINCE TAKING OVER THE FUND IN OCTOBER, HAVE YOU MADE ANY CHANGES?
A. A few. I've begun to shift the focus in terms of particular state bonds
the fund owns. For example, recently I've started to increase the fund's
investments in California bonds because I think the state's economy may
have hit bottom. Also, I expect to gradually pare back to about half the
number of individual bonds the fund currently holds.
Q. MUNICIPAL RATING AGENCIES HAVE RECENTLY EXPRESSED CONCERN ABOUT
ELECTRIC UTILITY BONDS. ARE YOU WORRIED ABOUT HOW THE FUND'S 19% STAKE IN
THEM WILL BE AFFECTED?
A. No, because the rating agencies have singled out investor-owned electric
utilities as being at risk. Even though the fund has invested in some very
strong investor-owned utilities, I stick mainly to public electric
utilities. Investor-owned electric utilities are having to compete with one
another for large, industrial customers. But public electric utilities,
which serve primarily residential customers, tend to have their own
franchise and don't face much competition. I'm optimistic about public
electric utility bonds because they typically provide attractive yields and
should become scarce once refinancings are completed. That's because there
were major expansion programs during the '80s, which means there's little
need for future bond issues to help fund new plants. The scarcity could
help push prices up. I look for electric utilities with high ratings and
strong management teams.
Q. WHAT ABOUT THE FUND'S 27.9% STAKE IN HEALTH-CARE BONDS - WILL IT BE HURT
BY PRESIDENT CLINTON'S HEALTH-CARE REFORM PROPOSALS?
A. I don't believe so. In fact, I think that some hospitals could actually
benefit from health-care reform, especially those located in growing
suburban areas with strong HMO relationships that have done a good job
managing costs. Reform could also spur a number of consolidations within
the sector, which might offer some opportunities. For example, I'm most
interested in smaller, lower-rated hospitals that could benefit from being
taken over by a larger, higher-rated hospital. The acquired hospital's
bonds would assume the higher-rating of its acquirer. If the acquired
hospital's bonds were upgraded, the bonds could appreciate.
Q. HOW WOULD HIGH-YIELD BONDS WITHSTAND RISING INTEREST RATES?
A. I think they could do better than lower-yielding bonds for two reasons.
First, the return on a bond is based on its yield, or income return, and
its price return. When interest rates rise, bond prices tend to drop. But
because high-yield bonds offer high income return, they probably wouldn't
be as negatively affected as bonds that paid lower yields. Second, a period
of higher interest rates is often connected to bond holders' fears that the
economy is speeding up. Improvements in the economy, however, tend to
improve the credit quality of high yield bonds, which would be a positive
for prices. But I don't expect interest rates to rise, or for that matter,
fall much over the next six months.
Q. SO WHAT CAN INVESTORS EXPECT OVER THE NEXT 12 MONTHS?
A. Probably more modest returns. Over the past year bond investors have
enjoyed double digit returns. But going forward, I think they may see
returns more in line with historical averages. Even so, I expect tax-exempt
bonds to do better than taxable bonds, because the effects of higher taxes
could increase demand for municipals. Combine that with a dwindling supply
of tax-free bonds, and you have what's typically a positive environment for
municipals.
FUND FACTS
GOAL: to provide high current
income exempt from federal
income tax
START DATE: December 1, 1977
SIZE: as of November 30,
1993, over $2.1 billion
MANAGER: Anne Punzak,
since October 1, 1993;
manager, Fidelity Aggressive
Tax-Free Portfolio, since
January 1986; Fidelity Insured
Tax-Free Portfolio, since
October 1989; Spartan
Aggressive Municipal Bond
Fund, since April 1993;
Spartan Florida Tax-Free
Fund, since March 1992
(checkmark)
ANNE PUNZAK'S ECONOMIC
OUTLOOK:
"Although the U.S. economy
is still limping along, it's
healthier than it was a year
ago. Inflation, which when
rising can cause interest rates
to rise, appears to be in
check. Two early inflationary
signs - commodity prices
and wages - haven't shown
any real evidence of
rebounding. To me, that
signals that inflation could
hold steady for some time.
Even though economic
growth has picked up a little in
this country, inflation hasn't
risen. A low growth, low
inflation environment is
usually positive for bonds."
(bullet) Nearly half of the fund's
investments were concentrated
in two sectors with 28% in
health care bonds, and 19% in
electric utility bonds.
(bullet) Although the fund invests
primarily in long-term,
investment grade (Baa or
above) bonds, up to one-third
of its assets may be in lower
quality bonds. At the end of
November, about 7% of the
fund's assets were Ba-rated
or below.
DISTRIBUTION
The Board of Trustees of
Fidelity High Yield Tax-Free
Portfolio voted to pay on
December 20, 1993, to
shareholders of record at the
opening of business on
December 17, 1993, and on
January 3, 1994 to
shareholders of record at the
opening of business on
December 31, 1993, a
distribution of $.20 and $.30,
respectively, derived from
capital gains realized from
sales of portfolio securities.
INVESTMENT CHANGES

TOP FIVE STATES AS OF NOVEMBER 30, 1993
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO

Massachusetts 10.4 12.2

Colorado 9.8 9.6

Texas 5.2 4.5

Pennsylvania 4.9 3.2

Michigan 4.5 4.2

TOP FIVE SECTORS AS OF NOVEMBER 30, 1993
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO

Health Care 27.9 27.3

Electric Revenue 19.1 20.5

General Obligation 10.7 11.4

Industrial Development 7.1 6.2

Special Tax 6.9 4.1

AVERAGE YEARS TO MATURITY AS OF NOVEMBER 30, 1993
6 MONTHS AGO

Years 19.3 19.5

AVERAGE YEARS TO MATURITY SHOWS THE AVERAGE TIME UNTIL THE PRINCIPAL OF THE
BONDS IN THE FUND IS EXPECTED TO BE REPAID, WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF NOVEMBER 30, 1993
6 MONTHS AGO

Years 8.1 7.8

DURATION SHOWS HOW MUCH A BOND'S PRICE FLUCTUATES WITH CHANGES IN INTEREST
RATES. IF RATES RISE 1%, FOR EXAMPLE, THE SHARE PRICE OF A FUND WITH A
FIVE-YEAR DURATION WILL FALL 5%.
QUALITY DIVERSIFICATION AS OF NOVEMBER 30, 1993
(MOODY'S RATINGS)
Aaa 26.2%
Aa, A 35.6%
Baa 16.4%
Ba or B 7.2%
Non-rated 11.9%
Row: 1, Col: 1, Value: 11.9
Row: 1, Col: 2, Value: 7.2
Row: 1, Col: 3, Value: 16.4
Row: 1, Col: 4, Value: 35.6
Row: 1, Col: 5, Value: 26.2
THIS CHART EXCLUDES SHORT-TERM INVESTMENTS. WHERE MOODY'S RATINGS ARE NOT
AVAILABLE, WE HAVE USED S&P RATINGS.
INVESTMENTS NOVEMBER 30, 1993

Showing Percentage of Total Value of Investments in Securities

MUNICIPAL BONDS - 97.2 %
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
ALABAMA - 1.6%
Alabama Bldg. Renovation Fin. Auth. Rev.
7.45% 9/1/11 A $ 3,000 $ 3,424 010237AU
Alabama Mental Health Fin. Auth. Spl. Tax
7.375% 5/1/09 A 3,000 3,360 010316AV
Alabama Spl. Care Facs. Fing. Auth. Mobile
Hosp. Rev. (Daughters of Charity Providence)
10.125% 6/1/15 Aa 700 778 01040TAC
Birmingham Jefferson Civic Ctr. Auth. Spl. Tax
(Cap. Outlay) 7.25% 1/1/12 A 5,875 6,411 091156EY
Cullman Med. Park South Med. Clinic Board
Rev. (Cullman Reg'l. Med. Ctr.) Series A:
6.50% 2/15/13 Baa 4,000 4,040 230043AL
6.50% 2/15/23 Baa 7,000 7,044 230043AM
McIntosh Ind. Dev. Board Poll. Cont. Rev.
(Ciba-Geigy Corp.) 6% 8/1/07 - 2,665 2,655 581177AB
Shelby County Series S, 7.40% 8/1/07 - 5,000 5,393 821515EG
33,105
ALASKA - 0.5%
North Slope Borough Rfdg.:
Unltd. Tax Series G, 8.35% 6/30/98 Baa1 4,000 4,595 662523NR
Series B, 0% 1/1/03, (MBIA Insured) Aaa 9,000 5,715 662523RR
Series C, 10.20% 6/30/94 Baa1 475 492 662523LP
10,802
ARIZONA - 2.9%
Arizona Univ. Med. Ctr. Corp. Hosp. Rev. Rfdg.
5% 7/1/13, (MBIA Insured) Aaa 1,000 949
Chandler Cap. Appreciation Rfdg.:
0% 7/1/04, (FGIC Insured) Aaa 5,700 3,320 158843KK
0% 7/1/05, (FGIC Insured) Aaa 5,700 3,121 158843KL
0% 7/1/06, (FGIC Insured) Aaa 5,700 2,928 158843KM
0% 7/1/07, (FGIC Insured) Aaa 5,700 2,757 158843KN
0% 7/1/08, (FGIC Insured) Aaa 1,700 774 158843KP
0% 7/1/09, (FGIC Insured) Aaa 2,000 855 158843KQ
Maricopa County Ind. Dev. Auth. Hosp. Facs.
Rev. Rfdg. (Samaritan Health Svcs.) Series A,
7% 12/1/16, (MBIA Insured) Aaa 2,000 2,380 566820GU
Maricopa County Poll. Cont. Corp. Poll. Cont.
Rev. (Pub. Svc. Co. New Mexico - Palo Verde)
7.75% 11/1/09 Ba2 7,165 7,756 566854AG
Phoenix Rfdg. Series A, 5.25% 7/1/12 Aa 8,000 7,800 718814CZ
Phoenix Str. & Hwy. User Rev. Rfdg. (Jr. Lien)
Series A:
0% 7/1/12, (FGIC Insured) Aaa 5,000 1,719 718867MV
0% 7/1/13, (FGIC Insured) Aaa 4,850 1,558 718867MW
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
ARIZONA - CONTINUED
Pima County Ind. Dev. Auth. Ind. Rev. Rfdg.
(Lease Oblig.) (Irvington Proj. Tucson Elec. Pwr.
Co.) Series A, 7.25% 7/15/10, (FSA Insured) Aaa $ 5,000 $ 5,581 721774DA
Pima County Metropolitan Domestic Wtr. Impt.
Dist. Spl. Assessment Wtr. Rev. 6.20% 1/1/09,
(FGIC Insured) Aaa 1,260 1,331 72178EAR
Salt River Proj. Agric. Impt. Pwr. & Dist. Elec. Sys.
Rev. Series A, 5.70% 1/1/12 Aa 8,775 8,775 795747CP
Tucson & Pima County Ind. Dev. Auth. Single
Family Mtg. Rev. (Verex Mtg. Assurance, Inc.)
9.375% 2/1/14 BB- 4,145 4,285 898700DH
Tucson Wtr. Rev. Rfdg.:
Series A, 5.75% 7/1/18 A1 2,400 2,436 898796YL
5.50% 7/1/14 A1 3,450 3,403 898796ZA
61,728
ARKANSAS - 1.4%
Arkansas Dev. Fin. Auth. Rev. (Cap. Asset)
Series B, 7.10% 3/1/08 A 4,500 4,995 04108REQ
Arkansas Dev. Fin. Auth. Health Care Facs. Rev.
Rfdg. (Sisters Mercy Health Sys.) Series A,
5% 6/1/13 Aa 3,000 2,835 04108VAS
Arkansas Dev. Fin. Auth. Wastewtr. Rev.
(Revolving Loan Fund) Series A, 7% 6/1/14,
(MBIA Insured) Aaa 2,900 3,357 041086BW
Arkansas Univ. Rev. (Trustee) 7.20% 12/1/10 A 1,250 1,422 914083BT
Baxter County Hosp. Rev. Rfdg. & Impt.
7.50% 9/1/21 Baa 4,000 4,385 071808EY
Conway Elec. Sys. Rev. 5.70% 8/1/09 A 3,000 3,071 212582BH
Fayetteville Pub. Facs. Board Rev. Rfdg.
(Butterfield Trail Village Proj.) Series A,
9.50% 9/1/14 - 2,200 2,393 312670AK
North Little Rock Elec. Rev. Rfdg. Series A:
6.50% 7/1/10, (MBIA Insured) Aaa 3,840 4,382 660546DV
6.50% 7/1/15, (MBIA Insured) Aaa 1,000 1,156 660546DX
Pulaski County Health Facs. Board Rev. Rfdg.
(Sisters Charity Nazareth Corp.)
6.05% 11/1/09, (MBIA Insured) Aaa 2,290 2,416 74539QBS
Pulaski County Hosp. Rev. Rfdg. (Arkansas
Children's Hosp. Proj.) 10.125% 3/1/15 A- 800 859 745392BJ
31,271
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
CALIFORNIA - 2.8%
California Gen. Oblig. 4.75%, 9/1/23 Aa $ 5,000 $ 4,394 130627BZ
California Pub. Wks. Board Lease Rev. (California
Univ. Proj.) Series A, 5.50% 6/1/10 A1 2,500 2,488 13068GRE
California Statewide Cmmty. Dev. Auth. Rev.
Ctfs. of Prtn. 5.80%, 5/1/13 A+ 5,000 4,994 130909GV
Culver City Redev. Fing. Auth. Rev. Rfdg. Tax
Allocation 4.60%, 11/1/20, (AMBAC Insured) Aaa 5,000 4,350 230341BM
Del Norte County Pub. Wks. Rev. Rfdg. (Dept.
of Corrections) 5.125%, 12/1/08 A1 3,500 3,399 13068GSY
Duarte Redev. Agcy. Tax Allocation (Huntington
Drive-PH 2 Redev. Proj.) 9.25% 11/1/10,
(Pre-Refunded to 11/1/95 @ 102) - 1,380 1,551 263590BQ
Industry Urban Ind. Dev. Agcy. Rfdg.
(Civic Recreational Proj. #1) Series A,
7.375% 5/1/12 - 1,000 1,083 456567MG
Los Angeles County Metropolitan Trans. Auth.
(Sales Tax Rev. Sr.) Series B, 4.75% 7/1/13,
(AMBAC Insured) Aaa 5,000 4,588 544712BP
Metropolitan Wtr. Dist. Southern California
Wtrwks. 5.50% 7/1/13 Aa 9,000 8,910 592663LH
Northern Pwr. Agcy. Pub. Pwr. Rev. Rfdg.
(Geothermal Proj. #3) Series A,
5.80% 7/1/09 A 1,000 1,025 664843RZ
Orange County Dev. Agcy. Tax Allocation
(Santa Ana Heights Proj.) 6% 9/1/15 Baa1 2,800 2,779 684246CA
Oxnard Fing. Auth. Wastewtr. Rev. Rfdg.
5.50% 6/1/14, (FGIC Insured) Aaa 1,250 1,239 691874AS
Sacramento City Fing. Auth. (Cap. Appreciation
Tax Allocation Comb. Proj.) Series B,
0% 11/1/06, (MBIA Insured) Aaa 2,810 1,422 785849BG
San Joaquin Hills Trans. Corridor Agcy. Toll.
Road Rev. (Sr. Lien):
0% 1/1/17 - 3,500 700 798111AU
0% 1/1/19 - 20,000 3,475 798111AH
Sequoia Hosp. Dist. Rev. 5.375% 8/15/23 A 5,000 4,594 817393CA
University of California Rev. Rfdg. (Multiple Purp.
Projs.) Series C:
5.125% 9/1/13, (AMBAC Insured) Aaa 2,000 1,904 914113SM
5.25% 9/1/16, (AMBAC Insured) Aaa 6,500 6,272 914113SP
59,167
COLORADO - 9.8%
Adams County Poll. Cont. Rev. Rfdg. (Pub. Svc.
Co. Colorado Proj.) Series A, 5.875% 4/1/14,
(MBIA Insured) Aaa 2,750 2,857 005620AL
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
COLORADO - CONTINUED
Arvada Sales & Use Tax Rev. Rfdg. & Impt.
6.25% 12/1/12, (FGIC Insured) Aaa $ 4,000 $ 4,255 043229AV
Auraria Higher Ed. Ctr. Rev. (Student Fee)
Series B, 6.50% 11/1/16, (AMBAC Insured) Aaa 2,500 2,713 051533HX
Aurora Wtr. Rfdg. 4.75% 11/1/14 A1 3,540 3,266 051555T4
Avon Metropolitan Dist. Gen. Oblig. Rfdg. &
Impt. (Colorado Eagle Co.) Series 1990:
8% 11/1/00 - 1,295 1,429 054028EN
8.30% 11/1/10 - 2,505 2,809 054028EP
Boulder Larimer & St. Weld Counties Vrain Valley
School Dist. Rfdg. 6% 12/15/10,
(MBIA Insured) Aaa 1,500 1,581 101565RC
Colorado Board Agric. Rev. Rfdg. & Impt.
(Colorado Univ. Auxiliary Facs.)
6.40% 3/1/11, (MBIA Insured) Aaa 2,000 2,173 196695GW
Colorado Health Facs. Auth. Rev.:
(Commty. Provider Pooled Loan) Series A,
7.25% 7/15/17, (Cap. Guaranty Insured) Aaa 1,878 2,155 196473E8
(Hosp. North Colorado Med. Ctr.):
5.95% 5/15/12, (MBIA Insured) Aaa 1,400 1,482 196473Y8
6% 5/15/20, (MBIA Insured) Aaa 3,000 3,150 196473Y9
(Hosp. - Swedish Med. Ctr.) Series A:
7.25% 10/1/08 A 7,200 7,902 196473ZL
7.50% 10/1/20 A 10,000 11,100 196473ZM
6.80% 1/1/23 A 7,000 7,525 196473N3
(PSL Health Care Sys. Proj.) Series A:
6.75% 2/15/13 Baa 7,750 7,973 1964732C
7.25% 2/15/16, (FSA Insured) Aaa 8,000 9,180 196473C2
8.50% 2/15/21 Baa 6,250 7,148 196473C5
6.875% 2/15/23 Baa 500 518 1964732D
(Rocky Mountain Adventist) 6.625% 2/1/22 Baa 16,500 16,748 1964732M
(Sisters of Charity Health Care Sys.) Series A,
6.25% 5/15/12, (AMBAC Insured) Aaa 2,000 2,218 196473W3
Colorado Postsecondary Edl. Facs. Auth. Rev.
Rfdg. (Denver Univ.) 6.25% 3/1/12,
(Connie Lee Insured) AAA 2,700 2,842 196547DE
Colorado Springs Arpt. Rev. (Cap. Appreciation)
Series C:
0% 1/1/02 BBB 1,550 961 196612AZ
0% 1/1/04 BBB 1,530 826 196612BD
0% 1/1/09 BBB 1,655 627 196612BN
0% 1/1/10 BBB 1,500 529 196612BP
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
COLORADO - CONTINUED
Colorado Univ. Hosp. Auth. Hosp. Rev. Series A:
6.25% 11/15/12, (AMBAC Insured) Aaa $ 4,000 $ 4,314 914173AL
6.40% 11/15/22, (AMBAC Insured) Aaa 2,000 2,170 914173AM
Colorado Univ. Rev.:
(Biomedical Research Bldg. Proj.) 7% 6/1/09 A+ 5,725 6,440 914182E2
(Research Bldg. Revolving Fund)
6.125% 6/1/12, (MBIA Insured) Aaa 1,330 1,410 914182W4
Colorado Wtr. Resources Pwr. Dev. Auth. Clean
Wtr. Rev. Series A, 7% 9/1/12 Aa 2,500 2,822 196797BY
Denver City & County Arpt. Rev. Series A:
7.50% 11/15/06 Baa1 6,500 7,353 249181JQ
7.50% 11/15/12 Baa1 10,000 11,163 249181JR
7.25% 11/15/25 Baa1 11,300 12,374 249181JS
Denver City & County Ind. Dev. Rev. (Denver
Univ. Prog.) Series 1991, 7.50% 3/1/11 BBB 1,450 1,626 249188CZ
Fort Collins Storm Drain Rev. 6.625% 12/1/11 A1 1,000 1,081 347128BB
Fraser Ind. Dev. Rev. (Safeway Stores, Inc. Proj.)
10.25% 12/1/03 BB- 1,120 1,152 355472AG
Jefferson County Ctfs. of Prtn.:
6.65% 12/1/08, (MBIA Insured) Aaa 3,000 3,323 472723DQ
7.125% 12/1/10, (MBIA Insured) Aaa 250 286 472723CW
Jefferson County School Dist. #R-001,
6% 12/15/12, (AMBAC Insured) Aaa 8,490 8,968 472736XB
Jefferson County Single Family Mtg. Rev.
Series 1991 A, 8.875% 10/1/13,
(MBIA Insured) Aaa 710 771 472744BW
La Plata County School Dist. #9-R Durango:
6.55% 11/1/13, (FGIC Insured) Aaa 2,000 2,205 503768EW
6.60% 11/1/17, (FGIC Insured) Aaa 1,600 1,764 503768EX
Lafayette Wtr. Rfdg. & Impt. Series B,
6.25% 12/1/12, (AMBAC Insured) Aaa 2,000 2,155 506048GE
Larimer County School Dist. #R-1 Poudre Impt.
Unltd. Tax:
6.50% 12/15/11 A 5,000 5,438 517138PA
6.15% 12/15/16 A 2,500 2,625 517138PB
Logan County Health Care Facs. Rev. (Western
Health Network) 5.75% 1/1/08,
(MBIA Insured) Aaa 500 523 540627AX
Morgan County Co. Poll. Cont. Rev. Rfdg.
(1st Mtg. Pub. Svc. Co.) Series A,
5.50% 6/1/12, (MBIA Insured) Aaa 3,750 3,783 617100AH
Mountain Village Metropolitan Dist. San.
Miguel County Rfdg. 8.10% 12/1/11 - 2,000 2,200 624506CN
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
COLORADO - CONTINUED
Platte River Pwr. Auth. Pwr. Rev. Rfdg. Series BB,
6.125% 6/1/14 Aa $ 1,875 $ 1,969 727818BK
Poudre Valley Hosp. Dist. Hosp. Rev.
6.625% 12/1/11, (AMBAC Insured) Aaa 4,500 4,978 738581AT
Reg'l. Trans. Dist. Sales Tax Rev. Rfdg. & Impt.
6.25% 11/1/12, (FGIC Insured) Aaa 2,955 3,172 759136DL
South Suburban Park & Recreation Dist. Rfdg. &
Impt. Unltd. Tax 6.25% 2/15/13,
(AMBAC Insured) Aaa 2,000 2,142 840480CC
Thorton Sales & Use Tax Rev. Series A,
6.25% 9/1/12, (FGIC Insured) Aaa 3,000 3,228 885285DV
Vail Sales Tax Rev. Rfdg. & Impt. Series B,
6.125% 12/1/12, (MBIA Insured) Aaa 1,185 1,251 918789BU
206,653
CONNECTICUT - 0.7%
Connecticut Dev. Auth. Health Care Rfdg.
(Duncaster, Inc. Proj.) 6.75% 9/1/15 Aa3 1,225 1,323 207901BD
Connecticut Dev. Auth. Solid Waste & Elec. Rev.
(Ogden Martin Sys. Bristol, Inc.)
10% 7/1/14 BBB+ 6,000 6,660 207908AR
Connecticut Health & Edl. Facs. Auth. Rev.
(New Britain Mem. Hosp.) Series A,
7.50% 7/1/06 BBB- 5,000 5,400 207742PC
Norwalk Hsg. Auth. Mtg. Rev. (Monterey Village)
Series 1985 B, Section 8, 9% 11/1/99 BBB 2,195 2,299 668868BE
15,682
DELAWARE - 0.1%
Delaware Health Facs. Auth. Rev. Rfdg.
(Kent Gen. Hosp. Proj.) 5.25% 7/1/13,
(MBIA Insured) Aaa 3,000 2,850 246388GZ
DISTRICT OF COLUMBIA - 0.3%
District of Columbia Hosp. Rev. (Hosp. for
Sick Children) Series A, 8.875% 1/1/21 - 6,000 6,720 254764BS
FLORIDA - 2.9%
Dade County Health Facs. Auth. Hosp. Rev.
(South Shore Hosp. & Med. Ctr.) Series A,
7.60% 8/1/24, (FHA Guaranteed) AA+ 905 1,008 233904KP
Hillsborough County Port Dist. Port Rev.
Series 1984 A, 11% 6/1/94 785 797 432326CU
Jacksonville Health Facs. Auth. Hosp. Rev. Rfdg.
(Methodist Hosp. Proj.) Series A, 8% 10/1/06 - 2,250 2,199 469404HE
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
FLORIDA - CONTINUED
Jacksonville Health Facs. Ind. Dev. Rev. (Cypress
Village Proj.) (Nat'l. Benevolent Assoc.)
7% 12/1/22 Baa1 $ 2,000 $ 2,132 46940HBA
Tampa Cap. Impt. Prog. Rev.:
Series A, 8.25% 10/1/18 Aa 10,000 11,088 875148AL
Series B, 8.375% 10/1/18 A- 40,000 44,250 875148AV
61,474
GEORGIA - 0.8%
Atlanta Arpt. Facs. Rev. 6.30%, 1/1/07 A 2,500 2,525 047793AM
Atlanta Board of Ed. Ctfs. of Prtn. Rfdg.
2.85% 6/1/94, (FGIC Insured) Aaa 2,705 2,702 047801AT
Atlanta Wtr. & Swr. Auth. Rev. 4.50% 1/1/18 Aa 9,000 7,886 047861KH
Brunswick Wtr. & Swr. Rev. Rfdg. & Impt.
6.10% 10/1/19, (MBIA Insured) Aaa 1,500 1,622 117151FF
Savannah Port Auth. Poll. Cont. Rev. (Continental
Group, Inc. Proj.) 9.875% 3/1/00 Ba2 2,000 2,025 804863AW
16,760
GUAM - 0.1%
Guam Gov't. Ltd. Oblig. Hwy. Ltd. Tax Series A,
6.25% 5/1/07, (Cap. Guaranty Insured) Aaa 1,500 1,624 40065DBC
HAWAII - 0.4%
Hawaii Gen. Oblig. Rfdg. Series CI,
4.75% 11/1/09 Aa 7,000 6,554 419779NU
Honolulu City & County Rfdg. & Impt. Series B,
5.50% 10/1/11 Aa 3,000 3,030 438669PT
9,584
IDAHO - 0.9%
Boise City Independent School Dist. Rev.
5.40% 7/30/14 (AMBAC Insured) Aaa 3,590 3,577 097437KG
Boise Univ. Rev. Rfdg. & Impt. (Student Union &
Hsg. Sys.):
6.30% 4/1/15, (MBIA Insured) Aaa 800 860 097464JX
5.25% 4/1/17, (MBIA Insured) Aaa 1,000 970 097464KN
Boise Urban Renewal Parking Agcy. Rev. (Tax
Increment) Series A, B, C, 8.125% 9/1/15 A 2,600 2,863 097463CE
Idaho Falls Elec. Rfdg.:
0% 4/1/06, (FGIC Insured) Aaa 4,000 2,070 451182FC
0% 4/1/12, (FGIC Insured) Aaa 1,100 393 451182FJ
0% 4/1/13, (FGIC Insured) Aaa 7,150 2,422 451182FK
Idaho Health Facs. Auth. Rev. Rfdg. (Magic
Valley Reg'l. Med. Ctr.) 5.50% 12/1/07,
(AMBAC Insured) Aaa 3,525 3,622 451295LH
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
IDAHO - CONTINUED
Idaho Univ. Rev. (Student Facs. Fee)
6.30% 4/1/10 A $ 2,500 $ 2,659 451470HB
19,436
ILLINOIS - 3.8%
Chicago O'Hare Int'l. Arpt. Rev. Rfdg. (Sr. Lien)
Series A, 5% 1/1/12 A1 10,000 9,363 167592LP
Chicago O'Hare Int'l. Arpt. Spl. Facs. Rev. Rfdg.:
(Delta Airlines, Inc.) 6.45% 5/1/18 Ba3 1,750 1,750 167590BX
(United Airlines, Inc.) Series 1984 B,
8.85% 5/1/18 Baa1 655 760 167590BN
Chicago Rfdg. Series B, 5% 1/1/11,
(AMBAC Insured) Aaa 2,000 1,895 1674833W
Chicago Single Family Mtg. Rev.
7.125% 7/1/09, (Escrowed to Maturity) (b) A1 2,755 2,765 167685AW
Cook County Series A, 5.375% 11/15/12,
(MBIA Insured) Aaa 2,500 2,419 213183WR
Grayslake Multi-Family Hsg. Rev. (Country Squire
Apts.) 9.50% 12/1/25, (FHA Guaranteed) AA- 2,430 2,503 389649BD
Illinois Health Facs. Auth. Rev:
Rfdg. (Lutheran Gen. Health Sys.) Series C:
7% 4/1/14 A 1,500 1,674 45200KXP
6% 4/1/18 A 3,000 3,000 45200KXT
Rfdg. (OSF Healthcare Sys.) 6% 11/15/13 A1 5,000 5,013 45200KA2
(Hinsdale Hosp.) Series C, 9.50% 11/15/19,
(Pre-Refunded to 11/15/00 @ 102) (b) Baa1 3,220 4,093 45200KSU
(Mem. Hosp.) :
6.875% 5/1/00 BBB 1,700 1,768 45200KNY
7.125% 5/1/10 BBB 4,000 4,210 45200KNZ
7.25% 5/1/22 BBB 4,000 4,215 45200KQD
Lake County Forest Preserve Dist. Unltd. Tax (Cap.
Appreciation):
0% 12/1/07 Aa 10,440 4,881 508354FR
0% 12/1/08 Aa 12,505 5,487 508354FS
Metropolitan Pier & Exposition Auth. Dedicated
Tax Rev. (McCormick Place Expansion Proj.):
Series A:
0% 6/15/07, (FGIC Insured) (c) Aaa 4,800 4,236
0% 6/15/09, (FGIC Insured) Aaa 18,175 7,520 592247CQ
0% 6/15/10, (FGIC Insured) Aaa 5,000 1,938 592247CR
0% 6/15/16, (FGIC Insured) (c) Aaa 11,820 7,445 592247CU
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
ILLINOIS - CONTINUED
Northwest Suburban Muni. Joint Action Wtr.
Agcy. Wtr. Supply Sys. Rev. Series A,
5.90% 5/1/15, (MBIA Insured) Aaa $ 2,000 $ 2,060 667806FG
78,995
INDIANA - 1.1%
Fishers Econ. Dev. Rev. (1st Mtg. United Student
Funds, Inc.) 8.375% 9/1/14 - 1,250 1,330 338035BK
Indiana Univ. Rev. Rfdg. (Student Fee) Series H,
0% 8/1/09, (AMBAC Insured) Aaa 17,000 6,906 455167SB
Indianapolis Econ. Dev. Rev. Rfdg. & Impt.
(Nat'l. Benevolent Assoc.) 7.625% 10/1/22 Baa1 3,000 3,266 455261PQ
Indianapolis Local Pub. Impt. Bond Bank Rfdg.
Series D:
6.75% 2/1/14 A+ 4,000 4,440 455280QP
6.75% 2/1/20 A+ 6,000 6,398 455280QV
22,340
KANSAS - 0.4%
Kansas City Util. Sys. Rev. Rfdg. & Impt.
(Cap. Appreciation) 0% 9/1/10,
(AMBAC Insured) Aaa 6,690 2,576 484790FS
Kansas Dept. Trans. Hwy. Rev. Series A,
6% 9/1/12 Aa 3,000 3,128 485424BH
Wichita Hosp. Rev. Rfdg. & Impt. (St. Francis II
Reg'l. Med. Ctr.) Series A3, 6.25% 10/1/10,
(MBIA Insured) Aaa 2,500 2,712 967250NJ
8,416
KENTUCKY - 1.8%
Boone County Poll. Cont. Rev. Rfdg. (Dayton Pwr.
& Lt. Co.) Series A, 6.50% 11/15/22 A2 2,000 2,145 098792AG
Danville Multi-City Lease Rev. (Shelbyville)
Series H, 6.70% 7/1/11, (MBIA Insured) Aaa 2,430 2,712 236672GV
Henderson Elec. Lt. & Pwr. Rev. Rfdg.
5.70% 3/1/03 A 2,050 2,055 425092DF
Hopkins County Hosp. Rev. (Trover Clinic
Foundation, Inc.) 6.625% 11/15/11,
(MBIA Insured) Aaa 2,000 2,190 439748CK
Jefferson County Cap. Projs. Corp. Rev. (Muni.
Multiple Rfdg. Lease) Series A, 0% 8/15/11 A1 5,365 1,838 473020GW
Jefferson County Health Facs. Rev. (Jewish Hosp.
Healthcare Svcs., Inc.) 6.50% 5/1/15,
(AMBAC Insured) Aaa 6,500 7,085 472902DH
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
KENTUCKY - CONTINUED
Kentucky Econ. Dev. Fin. Auth. Med. Ctr. Rev.
Rfdg. & Impt. (Ashland Hosp. Corp.)
Series A, 6.125% 2/1/12,
(Cap. Guaranty Insured) Aaa $ 1,200 $ 1,248 491269AN
Kentucky Tpk. Auth. Econ. Dev. Road Rev. Rfdg.
(Revitalization Proj.) 5.50% 7/1/09,
(AMBAC Insured) Aaa 2,200 2,239 491552GN
Louisville & Jefferson County Metropolitan Swr.
Dist. Rev. Series A, 5.25% 5/15/12,
(MBIA Insured) Aaa 1,500 1,464 546587CH
Louisville Univ. Rev. Rfdg. (Consolidated Edl.
Bldgs.) Series I:
5.40% 5/1/08 A1 1,965 1,958 914391PU
5.40% 5/1/09 A1 2,360 2,328 914391PV
5.40% 5/1/10 A1 1,565 1,542 914391PW
Owensboro Elec. Lt. & Pwr. Rev. Series B,
0% 1/1/07, (AMBAC Insured) Aaa 10,000 4,988 691021GJ
Peery County Econ. Dev. Rev. Rfdg. (The Kroger
Co. Proj.) 6.60% 5/1/02 Ba3 2,435 2,499 714542AM
Winchester Ind. Bldg. Rev. Rfdg. (Kroger Co.)
7.75% 7/1/12 Ba3 1,000 1,100 972856DZ
37,391
LOUISIANA - 2.3%
Greater New Orleans Expressway Commission
Expressway Rev. Rfdg. 6% 11/1/16 A 5,000 5,125 392244BG
Lake Charles Hbr. & Term. Dist. Port Facs. Rev.
Rfdg. (Trunkline LNG Co. Proj.) Series 1992,
7.75% 8/15/22 Ba2 13,000 14,820 507729BM
Louisiana Offshore Term. Auth. Deepwtr. Port
Rev. Rfdg. (1st Stage) (Loop, Inc. Proj.)
Series E, 7.60% 9/1/10 A3 2,300 2,651 546510DA
Monroe-West Monroe Pub. Trust Fing. Auth.
Mtg. Rev. Rfdg. (Cap. Appreciation)
Series C, 0% 8/20/14 AA- 9,000 2,509 611382BU
New Orleans Audubon Park Commission
Aquarium Rev. Series 1992 A, 8% 4/1/12 5,000 5,388 647629AM
St. James Parish Poll. Cont. Rev. (B.F. Goodrich
Proj.) 14.50% 12/1/11 Baa1 500 631 790102AR
St. John Baptist Parish Sales Tax Dist. Rfdg.
Series 1989, 7.80% 12/1/14 Baa 2,700 3,146 790207BT
St. John Baptist Parish School Dist. #1 Unltd. Tax
5.20% 3/1/09 Baa 1,695 1,598 790229GB
St. Tammany Pub. Trust Fing. Auth. Rev. Rfdg.
(Cap. Appreciation) Series C, 0% 7/20/14 Aa 4,650 1,308 793499AE
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
LOUISIANA - CONTINUED
Shreveport Wtr. & Swr. Rev. 5.95% 12/1/14,
(FGIC Insured) Aaa $ 3,500 $ 3,666 825485LS
West Feliciana Parish Poll. Cont. Rev.
(Gulf States Util. Co.) Series C, 7% 11/1/15 Baa3 2,500 2,734 952789AW
Westside Habilitation Ctr. Cheneyville Rev. Rfdg.
(Intermediate Care Fac. Retirement)
8.50% 10/1/13 - 4,900 4,905 961500AJ
48,481
MAINE - 0.4%
State Str. Hsg. Preservation Corp. Hsg. Rev.
(Multi-Family Proj.) Series A:
7.20% 1/1/02 A 620 652 85748HAB
7.375% 1/1/12 A 3,505 3,698 85748HAC
7.50% 1/1/19 A 4,700 4,964 85748HAD
9,314
MARYLAND - 1.0%
Anne Arundel County Econ. Dev. Rev.
(Regency Club II Apts.) 9% 12/1/10,
(MBIA Insured) (FHA Guaranteed) Aaa 1,000 1,043 035902BR
Baltimore County Mtg. Rev.:
(Kingwood IV) 9.50% 8/1/10,
(FHA Guaranteed) AAA 1,000 1,041 059148TH
(Loch Raven Village) 10.10% 11/20/20,
(GNMA Coll.) AAA 1,390 1,447 059148RS
Howard County Mtg. Rev. (Heartlands Elderly
Apts. Proj.) 8.875% 12/1/10, (MBIA Insured)
(FHA Guaranteed) Aaa 250 266 442586JT
Maryland Commty. Dev. Administration Dept.
Hsg. & Commty. Dev. (Single Family Prog.)
4th Series, 7.40% 4/1/17 Aa 2,500 2,647 57419HPE
Maryland Health & Higher Edl. Facs. Auth. Rev.:
Rfdg.:
(Doctors Commty. Hosp.) 5.75% 7/1/13 Baa 2,500 2,406 574216FQ
(Francis Scott Key Medical Ctr.)
5% 7/1/13, (FGIC Insured) Aaa 2,500 2,375
574216CW (Holy Cross Hosp.) Issue A,
7.125% 7/1/10, (AMBAC Insured) Aaa 1,350 1,534 574215N9
Montgomery County Hsg. Opportunities
Commission Hsg. Rev. (Multi-Family)
Series B, 9.375% 7/1/15 Aa 985 1,033 613344CL
Prince Georges County Hosp. Rev.
(Greater Southeast Health Care Sys.)
6.375% 1/1/13 Baa 2,250 2,298 741710AW
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
MARYLAND - CONTINUED
Prince George's County Rfdg. (Consolidated Pub.
Impt. Ltd. Tax) 5.10% 10/1/04 A $ 1,000 $ 1,020 741701BH
Prince George's County Solid Waste Mgmt. Sys.
Rev. 5.25% 6/15/13 A 1,500 1,431 74172MBK
Queen Anne's County Econ. Dev. Rev. (Safeway
Stores Proj.) 7.75% 12/15/09 BB- 2,515 2,518 748235AA
21,059
MASSACHUSETTS - 10.0%
Birmingham Baptist Med. Ctr. Spl. Care Facs.
Fing. Auth. Rev. (Baptist Med. Ctr.) Series A,
5.50% 8/15/13, (MBIA Insured) Aaa 3,500 3,448 091104DP
Massachusetts Gen. Oblig. Ltd. Tax
(Consolidated Loan) Series C, 0% 12/1/04 A 6,000 3,443 575823J2
Massachusetts Health & Edl. Facs. Auth. Rev.:
(Beth Israel Hosp.) 8.98% 7/1/25,
(AMBAC Insured) (a)(f) Aaa 5,000 5,456 575851JP
(Brigham & Women's Hosp.) Series C,
7.125% 6/1/09 AA 1,000 1,114 575850YL
(1st Mtg.) (Fairview Extended Care) Series A:
10.125% 1/1/11 - 3,070 3,358 575850M7
10.25% 1/1/21 - 6,400 7,040 575850M4
(Metro West Health, Inc.) Series C,
6.50% 11/15/18, (AMBAC Insured) A 4,000 4,230 575851LP
(New England Med. Ctr. Hosp.) Series F,
6.50% 7/1/12, (FGIC Insured) Aaa 1,300 1,412 575851AF
(St. Luke's Hosp. New Bedford)
8.55% 8/15/23, (MBIA Insured) (a)(f) Aaa 2,600 2,681 575851C7
(Salem Hosp.) Series A, 6.75% 7/1/00 - 5,905 6,097 575849K2
(Tufts Univ.) Series C, 7.40% 8/1/18 A1 2,815 3,156 575851YL
Massachusetts Hsg. Fin. Agcy.:
(Hsg. Projs.) Series A:
6.30% 10/1/13, (AMBAC Insured) Aaa 11,000 11,344 575852VR
6.15% 10/1/15, (AMBAC Insured) Aaa 5,250 5,342 575852VS
(Multi-Family) Series 1984 B, 10.375%
12/1/09, (MBIA Insured) Aaa 1,000 1,058 575910BG
(Residential Dev. Section 8) Issue V Series A,
10.60% 12/1/03 A+ 800 824 575854KM
(Single Family Mtg. Purchase):
Series 1983 C, 10.125% 12/1/07 Aa 255 263 575853EK
Series 1984 A, 11.375% 12/1/08,
(Escrowed to Maturity) (b) Aa 215 223 575853FX
Massachusetts Ind. Fin. Agcy. Health Care Facs.
Rev. (Hampden Nursing Home Proj.) Series A,
9.75% 10/1/17 - 4,815 5,134
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
MASSACHUSETTS - CONTINUED
Massachusetts Ind. Fin. Agcy. Rev.:
(Atlanticare Med. Ctr.) Series A,
10.125% 11/1/14 - $ 7,300 $ 8,450 575914GZ
(Cap. Appreciation) (Massachusetts Biomedical
Research):
Series A-1, 0% 8/1/03 - 23,300 13,776 575914DT
Series A-2:
0% 8/1/04 - 5,000 2,775 575914EA
0% 8/1/06 - 26,800 12,998 575914EC
0% 8/1/09 - 15,800 6,260 575914EF
0% 8/1/10 - 11,000 4,070 575914EG
(1st Mtg. Reeds Landing):
7.75% 10/1/00 - 1,300 1,294 575914ZS
575909AE 8.625% 10/1/23 - 3,000 2,976 575914ZU
Massachusetts Muni. Wholesale Elec. Co. Pwr.
Supply Sys. Rev.:
Rfdg. Series A:
5.10% 7/1/08, (AMBAC Insured) Aaa 8,775 8,523 575765MT
575765MA 5% 7/1/10, (AMBAC Insured) Aaa 3,680 3,533 575765MU
Series A:
8.75% 7/1/18, (Pre-Refunded to 1/1/04
@ 100) (b) Baa1 165 187 575765NG
8.75% 7/1/18, (Pre-Refunded to 1/1/94
@ 100) (b) Baa1 30 30 575765NJ
8.75% 7/1/18, (Pre-Refunded to 7/1/94
@ 100) (b) Baa1 30 31 575765NX
6.375% 7/1/15 Baa1 29,055 29,636 575765BF
6% 7/1/18 Baa1 11,690 11,763 575765JG
7.72% 7/1/18, (AMBAC Insured) (a) (f) Aaa 5,000 4,750 575765MV
Series B, 6.125% 7/1/17 Baa1 6,165 6,288 575765BV
Series C, 6.625% 7/1/10 Baa1 4,500 4,804 575765KA
Series D, 6.125% 7/1/19 Baa1 8,905 9,061 575765LZ
Series E, 6.125% 7/1/19 Baa1 8,665 8,817
Massachusetts Univ. Ctfs. of Prtn.
(Telecommunications Sys.) Series A:
7.45% 11/1/97 BBB- 810 872 914442BF
7.70% 5/1/99 BBB- 1,190 1,286 914442BJ
7.70% 11/1/99 BBB- 1,240 1,341 914442BK
7.80% 5/1/00 BBB- 1,285 1,391 914442BL
210,535
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
MICHIGAN - 4.4%
Detroit Convention Facs. Rev. Rfdg. (Cobo Hall
Expansion Proj.) 5.25% 9/30/12 A $ 3,000 $ 2,831 251131BF
Detroit Hosp. Fin. Auth. Facs. Rev. (Michigan
Healthcare Corp. Proj.) 10% 12/1/20 B 29,310 32,534 251145AA
Dickinson County Econ. Dev. Corp. Poll. Cont.
Rev. Rfdg. (Champion Int'l. Corp. Proj.)
5.85% 10/1/18 Baa1 4,150 4,015 253195AA
Dickinson County Econ. Dev. Corp. Solid Waste
Disp. Rev. Rfdg. (Champion Int'l. Corp.)
6.55% 3/1/07 Baa1 5,000 5,219 253200AD
Grand Rapids San. Swr. Sys. Rev. Impt. & Rfdg.
7% 1/1/16 A1 2,195 2,415 386289BA
Michigan Hosp. Fin. Auth. Rev.:
Rfdg.:
(Bay Med. Ctr.) Series A, 8.25% 7/1/12 Baa1 1,000 1,133 59465CSP
(Brighton Hosp.) Series A,
8.625% 10/1/18 B 1,550 1,618 59465CHH
(Detroit Macomb Hosp. Corp.) Series A:
7.40% 6/1/13 B 1,160 1,156 59465CCV
7% 6/1/15 B 3,500 3,303
59465CCW (Daughters of Charity) 10% 11/1/15 Aa 2,900 3,273 5946483B
Michigan Hsg. Dev. Auth. Single Family Mtg.
Rev. Series A:
7.50% 6/1/15 Aa 470 503 594653HF
7.70% 12/1/16 Aa 1,775 1,888 594653EK
Michigan Pub. Pwr. Agcy. Rev. Rfdg. (Belle
River Proj.) Series A, 5.25% 1/1/18 A1 5,000 4,788 594570EH
Michigan South Central Pwr. Agcy. Pwr. Supply
Sys. Rev. Rfdg. Series 1991, 6.75% 11/1/10 A 2,000 2,175 594689BR
Michigan Strategic Fund Ltd. Oblig. Rev. (Mercy
Svcs. for Aging Proj.) 9.40% 5/15/20 - 9,295 10,178 594692XT
Pontiac Stadium Bldg. Auth. Rev. 6.60% 3/1/00 Baa 1,395 1,425 732616AY
Waterford Township Econ. Dev. Corp. Rev. Ltd.
Tax Oblig. (Canterbury Health Care):
8% 7/1/08 - 300 303 941458AT
8.375% 7/1/23 - 1,000 1,033 941458AU
Western Townships Util. Auth. Swr. Disp. Sys.:
Ltd. Tax 8.20% 1/1/18 BBB+ 2,000 2,244 959767AK
Rfdg.:
0% 1/1/05, (Cap. Guaranty Insured) Aaa 2,810 1,576 959767BC
6.50% 1/1/10, (Cap. Guaranty Insured) Aaa 7,720 8,251 959767BE
91,861
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
MINNESOTA - 3.2%
Centennial Independent School Dist. #12 Rfdg.
Series B, 4.875% 2/1/12, (FGIC Insured) Aaa $ 2,610 $ 2,444 150908DE
Duluth Econ. Dev. Auth. Health Care Facs. Rev.
(The Duluth Clinic Ltd.) 6.20% 11/1/12,
(AMBAC Insured) Aaa 1,500 1,603 26444CAX
Minneapolis & St. Paul Hsg. & Redev. Auth.
Healthcare Sys. Rev. (Healthspan Health Sys.
Corp.) (Health One Sys.) Series A, 4.75%
11/15/18, (AMBAC Insured) Aaa 5,000 4,475 603695DF
Minneapolis Hosp. Rev. Rfdg. (Fairview Hosp. &
Healthcare) 6.50% 1/1/11, (MBIA Insured) Aaa 2,000 2,193 603745MK
Minneapolis Hsg. & Redev. Auth. Mtg. Single
Family Rev. 6.75% 5/1/09, (FHA Guaranteed) A1 1,100 1,123 603746AA
Northern Minnesota Muni. Pwr. Agcy. Elec. Sys.
Rev. Rfdg. Series B, 5.50% 1/1/18,
(AMBAC Insured) Aaa 3,250 3,258 665444DQ
Rochester Health Care Facs. Rev. (Mayo
Foundation/Mayo Med. Ctr.):
RIB Series H, 9.08% 11/15/15 (a)(f) AA+ 9,000 9,911 771902CS
Series I:
5.90% 11/15/09 AA+ 2,000 2,135 771902CL
5.90% 11/15/10 AA+ 2,250 2,399 771902CM
St. Louis Park Hosp. Facs. Auth. Rev. (Health Sys.
Oblig.) 5.20% 7/1/23, (AMBAC Insured) Aaa 2,000 1,893 791748CQ
St. Paul Hsg. & Redev. Auth. Hosp. Rev.:
(Healtheast Proj.) Series C, 9.75% 11/1/17 Baa 2,110 2,466 792888FN
(St. Paul-Ramsey Med. Ctr. Proj.)
5.50% 5/15/13, (AMBAC Insured) Aaa 1,180 1,190 792888HU
St. Paul Hsg. & Redev. Auth. Tax Increment Rev.
(Downtown & 7th Place Proj.) 2.75% 9/1/94,
(AMBAC Insured) Aaa 2,000 2,003 792904BQ
Western Minnesota Muni. Pwr. Agcy. Supply Rev.:
Rfdg. Series A, 7% 1/1/13 (e) A 20,000 21,650 958697DX
Series A, 6.125% 1/1/16 A 8,775 9,005 958697CX
67,748
MISSISSIPPI - 0.9%
Claiborne County Poll. Cont. Rev. (Middle South
Energy, Inc. Proj.) Series C, 9.875% 12/1/14 - 5,000 6,144 179423AC
Hinds County Ctfs. of Prtn. (Welfare Dept. Proj.)
7.75% 3/1/09 A 1,095 1,215 433114AC
Hinds County Mtg. Rev. Rfdg. (Methodist Hosp. &
Rehabilitation) 5.60% 5/1/12,
(AMBAC Insured) Aaa 4,000 4,055 433142AL
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
MISSISSIPPI - CONTINUED
Mississippi Home Corp. Single Family Sr. Rev.
Rfdg. Series 1990 A, 9.25% 3/1/12,
(FGIC Insured) Aaa $ 735 $ 789 60535MAC
Mississippi Hosp. Equip. & Facs. Auth. Rev.
(Singing River Hosp. Sys. Proj.)
5.50% 3/1/13 Aaa 2,855 2,819 605360HB
Panola County Ind. Dev. Rev. Rfdg. (Kroger Co.)
7.125% 11/1/12 Ba3 3,250 3,449 698558AB
18,471
MISSOURI - 2.4%
Franklin County Reorganization School Dist. #R-XI
Rfdg.:
5.70% 3/1/08, (FGIC Insured) Aaa 700 718 353100CN
5.75% 3/1/13, (FGIC Insured) Aaa 1,000 1,023 353100CP
Grandview Ind. Dev. Auth. Ind. Dev. Rev. Rfdg.
(K mart Corp. Proj.) 6.50% 12/1/08 A 500 542 386778AA
Greene County Single Family Mtg. Rev.
9.375% 12/1/06, (AMBAC Insured) Aaa 105 111 394591DC
Kansas City Ind. Dev. Auth. Health Facs. Rev.
Rfdg. & Impt. (Menorah Med. Ctr. Proj.)
9.25% 6/1/16 - 3,500 3,763 484906AB
Mehlville School Dist. #09 Rfdg. 5.75% 2/15/09,
(MBIA Insured) Aaa 2,000 2,078 585191LJ
Missouri Health & Edl. Facs. Auth. Health Facs.
Rev. (Barnes Jewish-Christian Health)
5.25% 5/15/12 Aa 4,000 3,855 60635RJF
Missouri Health & Edl. Facs. Auth. Hosp. Facs.
Rev.:
(Heartland Health Sys. Proj.)
6.35% 11/15/17, (AMBAC Insured) Aaa 4,480 4,827
60635RCR (SSM Health Care) Series AA,
6.25% 6/1/07, (MBIA Insured) Aaa 1,000 1,095 60635RCM
Missouri Hsg. Dev. Commission Mtg. Purchase
(Single Family) 6.60% 11/15/10,
(FHA Guaranteed) Aa 1,500 1,536 606353MS
Missouri Reg'l. Convention & Sport Complex
Auth. Series A, 6.90% 8/15/21 A1 8,750 9,680 60636MAS
Missouri Univ. Rev. Rfdg. (Columbia Hosp. & Clinics)
Series A, 6.50% 11/1/11, (AMBAC Insured) Aaa 1,500 1,638 914488D8
New Madrid Pwr. Place Rev. 7.25% 6/1/03 Baa1 8,930 9,086 646819BD
St. Louis County Ind. Dev. Auth. Hosp. Rev.
(Daughters of Charity-DePaul Health)
10% 11/1/15 Aa 1,980 2,224 79130HAB
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
MISSOURI - CONTINUED
St. Louis County Reg'l. Convention & Sports
Complex Auth. Series B:
7% 8/15/11 A $ 1,000 $ 1,104 791340AR
7% 8/15/21 A 3,150 3,465 791340AS
St. Louis Reg'l. Convention & Sports Complex
Auth. Series C, 7.90% 8/15/21 - 3,000 3,300 791687AB
50,045
MONTANA - 0.8%
Forsyth Poll. Cont. Rev. Rfdg. (Washington Wtr.
Pwr. Proj.) Series A, 7.125% 12/1/13,
(MBIA Insured) Aaa 2,250 2,531 346668BH
Great Falls Ind. Dev. Rev. Rfdg. (K mart Corp.
Proj.):
6.50% 11/15/01 A2 200 221 390435PT
6.90% 5/15/06 A2 905 993 390435PU
Great Falls Wtr. & Swr. Rev. Series 1992,
6.40% 8/1/12, (FGIC Insured) Aaa 1,200 1,310 390472BX
Montana Board of Investment Payroll Tax
(Workers Compensation) Series 1991,
6.875% 6/1/11, (MBIA Insured) Aaa 6,900 7,710 61213HDC
Montana Health Facs. Auth. Hosp. Facs. Rev.
(Holy Rosary Hosp.) 5.25% 7/1/20,
(MBIA Insured) Aaa 2,750 2,606 61213EHH
Silver Bow Wtr. Inc. Wtr. Sys. Rev. (Butte-Silver
Bow Proj.) 6.50% 11/1/14, (FGIC Insured) Aaa 1,000 1,098 827429AR
16,469
NEBRASKA - 1.7%
Buffalo County Hosp. Auth. #1 (Sisters of Charity
Health Care) Series A, 6.625% 5/15/09,
(MBIA Insured) Aaa 1,000 1,104 119447DC
Douglas County Hosp. Auth.:
#1 (Immanuel Med. Ctr., Inc.) 6.90% 9/1/11,
(AMBAC Insured) Aaa 3,250 3,673 259228DE
#2 (Catholic Health) (Archbishop Mercy)
7.25% 11/1/21 A1 1,500 1,674 259230DT
Hastings Elec. Sys. Rev. Rfdg.:
5.20% 1/1/13 A 3,000 2,846 418604CZ
6.30% 1/1/19 A 4,500 4,793 418604CH
Lancaster County Hosp. Auth. #1 Hosp. Rev.
(Bryan Mem. Hosp. Proj.):
6.60% 6/1/12, (MBIA Insured) Aaa 1,000 1,103 513886DQ
6.70% 6/1/22, (FGIC Insured) Aaa 2,500 2,772 513886DR
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
NEBRASKA - CONTINUED
Nebraska Investment Fin. Auth. Hosp. Rev.
(Methodist Health Sys.):
6.65% 3/1/00, (MBIA Insured) Aaa $ 2,500 $ 2,784 639902BH
6.75% 3/1/01, (MBIA Insured) Aa 2,400 2,691 639902BJ
7% 3/1/06, (MBIA Insured) Aaa 1,000 1,128 639902BP
Nebraska Pub. Pwr. Dist. Rev. Rfdg. (Pwr. Supply
Sys.) 6.10% 1/1/10 A1 1,500 1,571 639683F3
Omaha Pub. Pwr. Dist. Elec. Rev. Rfdg. Series B,
6.15% 2/1/12 Aa 5,000 5,387 681793ZH
Scotts Bluff County Hosp. Auth. #1 Hosp. Rev.
(Reg'l. West Med. Ctr. Proj.)
6.45% 12/15/04 A 3,000 3,217 810143CG
34,743
NEW HAMPSHIRE - 0.6%
New Hampshire Business Fin. Auth. Poll. Cont.
Rev. Rfdg. (United Illuminating Co.) Series A,
5.875% 10/1/33 Baa3 2,500 2,391 64468CAE
New Hampshire Higher Edl. & Health Facs. Auth.
Rev. (Frisbie Mem. Hosp.) 9.50% 10/1/08 Baa 9,060 11,008 644618NQ
13,399
NEW JERSEY - 1.1%
New Jersey Econ. Dev. Auth. Econ. Dev. Rev.
(Statewide Realty-Vista Hotel Proj.)
11% 12/15/17 (d)(e) - 27,470 18,405 645775VZ
New Jersey Health Care Facs. Fing. Auth. Rev.
(Monmouth Med. Ctr.) 10.50% 7/1/14,
(HIB Insured) A 4,350 4,584 6457922Q
22,989
NEW MEXICO - 3.4%
Albuquerque Hosp. Rev. Rfdg. (Presbyterian
Health Care Sys.) 6.375% 8/1/07,
(FGIC Insured) Aa 500 544 013544HN
Albuquerque Rev. Rfdg. (The Evangelical
Lutheran) 5.90% 6/1/13, (Cap. Guaranty
Insured) Aaa 1,000 1,026 013638AP
Farmington Poll. Cont. Rev.:
Rfdg.:
(Pub. Svc. Co. of New Mexico) Series A,
6.375% 12/15/22, (MBIA Insured) Aaa 2,500 2,672 311450CR
(Pub. Svc. Co. of New Mexico San Juan Proj.):
Series A, 6.40% 8/15/23 Ba2 6,500 6,516 311450CU
Series X, 5.90% 4/1/07 Ba2 12,640 12,419 311450AF
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
NEW MEXICO - CONTINUED
Farmington Poll. Cont. Rev. - continued
Rfdg. (Southern California Edison) Series A,
5.875% 6/1/23, (MBIA Insured) Aaa $ 4,000 $ 4,105 311450CS
(Pub. Svc. Co. of New Mexico San Juan Proj.)
Series A, 6% 3/1/08 Ba2 14,480 14,299 311450AJ
Gallup Poll. Cont. Rev. Rfdg. (Plains Elec.
Generation Unltd. Tax) 6.65% 8/15/17,
(MBIA Insured) Aaa 14,150 15,600 364070AT
Las Cruces Health Facs. Rev. Rfdg. (Evangelical
Lutheran Proj.) 6.45% 12/1/17,
(Cap. Guaranty Insured) Aaa 2,515 2,691 517481AQ
New Mexico Univ. Rev.:
Rfdg.:
Series A:
6.25% 6/1/12 A1 2,000 2,188 914692TE
6% 6/1/21 A1 4,050 4,313 914692TH
Series B:
5.75% 6/1/12 A1 2,500 2,550 914692TF
5.75% 6/1/22 A1 205 208
6.50% 6/1/21 A1 1,000 1,084 914692TJ
70,215
NEW YORK - 4.4%
New York City Rfdg. Series D:
5.75% 8/15/07 Baa1 3,500 3,461 649654PF
5.75% 8/15/09 Baa1 3,000 2,940 649655MP
New York State Dorm. Auth. Rev.:
Rfdg. (State Univ. Edl. Facs.) Series A:
5.50% 5/15/13 Baa1 5,000 4,838 649834AQ
5.25% 5/15/15 Baa1 10,000 9,350 649834AS
(City Univ.) Series F, 5% 7/1/14 Baa1 5,000 4,538 649834QR
(City Univ. Sys. Consolidated) Series A,
5.75% 7/1/13 Baa1 5,000 4,963 649834HV
New York State Local Govt. Assistance Corp.:
Rfdg. Series C, 5.50% 4/1/17 A 23,750 23,423 649876JN
RIB 7.50% 4/1/21 (a)(f) A 4,000 3,760 649876JQ
Series B, 0% 4/1/08 A 5,000 2,294 649876BY
New York State Thruway Auth. Svc. Contract Rev.
(Local Hwy. & Bridge) 5.25% 4/1/13 Baa1 3,000 2,828 650017BW
New York State Tollway Auth. Gen. Rev. (Spl.
Oblig.) Series A:
0% 1/1/02 BBB 3,775 2,425 650009CV
0% 1/1/05 BBB 8,500 4,558 650009CY
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
NEW YORK - CONTINUED
New York & New Jersey Port (Delta Airlines, Inc.
Proj.) Series 1R, 6.95% 6/1/08 Ba1 $ 21,500 $ 22,978
Triborough Bridge & Tunnel Auth. Rev. Rfdg.
(Gen. Purp.) Series Y, 6% 1/1/12 AA 1,000 1,065 896029YS
93,421
NORTH CAROLINA - 2.1%
North Carolina Eastern Muni. Pwr. Agcy. Pwr. Sys.
Rev. Rfdg. Series C, 5% 1/1/21 A 6,000 5,415 658196TH
North Carolina Med. Care Commission Hosp. Rev.:
Rfdg. (Mercy Hosp. Proj.) 6.50% 8/1/15 A- 2,000 2,105 658202Y8
(Duke Univ. Hosp. Proj.) Series 1985 A,
8.625% 6/1/10 AA 1,000 1,094 658202LL
(Wesley Long Commty. Hosp. Proj.) Series B,
7.75% 10/1/17 (AMBAC Insured) Aaa 1,000 1,093 658202SK
North Carolina Muni. Pwr. Agcy. #1 Catawba
Elec. Rev. Rfdg.:
0% 1/1/08 A 10,000 4,538 658203QH
0% 1/1/09 A 13,050 5,497 658203QK
0% 1/1/10 A 21,585 8,499 658203QL
6% 11/1/11, (MBIA Insured) Aaa 3,500 3,771 658203QS
5.75% 1/1/15 A 2,475 2,480 658203QT
6.25% 1/1/17 A 6,500 6,752 658203QU
Pitt County Rev. (Pitt County Mem. Hosp.)
6.75% 12/1/14, (MBIA Insured) Aaa 2,000 2,230 724506BD
43,474
NORTH DAKOTA - 0.3%
Mercer County Poll. Cont. Rev. Rfdg. (Montana
Dakota Utils. Co. Proj.) 6.65% 6/1/22,
(FGIC Insured) Aaa 5,500 6,057 587850CY
OHIO - 2.3%
Broadview Heights Ind. Dev. Rev. (Royalview
Manor Dev.) Series A, 10.625% 7/15/14,
(FHA Guaranteed) - 675 713 111336AA
Eaton Ind. Dev. Rev. Rfdg. (Baxter Int'l., Inc. Proj.)
6.50% 12/1/12 A3 2,605 2,804 278200AC
Hamilton County Swr. Sys. Rev. Rfdg. & Impt.
Metropolitan Swr. Dist. Series A,
5.35% 12/1/07, (FGIC Insured) Aaa 2,475 2,512 407288FU
Hamilton Elec. Sys. Mtg. Rev.:
Rfdg. Series 1992 A,
6% 10/15/08, (FGIC Insured) Aaa 1,000 1,046 40727FCX
Series B, 6.125% 10/15/08, (FGIC Insured) Aaa 1,000 1,071 40727FCQ
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
OHIO - CONTINUED
Loveland City School Dist. Unltd. Tax
6.65% 12/1/15 A $ 3,500 $ 3,806 547252GN
Montgomery County Ind. Dev. Rev. Rfdg. (The
Kroger Co.) 7.45% 9/1/07 Ba3 4,700 5,082 613535FS
Mount Vernon Hosp. Rev. (Knox Commty. Hosp.)
7.875% 6/1/12 - 16,940 18,083 623646AM
Ohio Air Quality Dev. Auth. (Columbus & Southern
Pwr. Co.) Series A, 6.375% 12/1/20,
(FGIC Insured) Aaa 500 538 677525HA
Ohio Bldg. Auth. (Workers Complex W. Green
Bldg.) 4.75% 4/1/14 A 3,000 2,745 6775536N
Ohio Wtr. Dev. Auth. Rev. Rfdg. & Impt.
(Pure Wtr.) 6% 12/1/08, (AMBAC Insured) Aaa 3,000 3,172 6776582U
Warren County Hosp. Facs. Rev. Rfdg. & Impt.
(Otterbein Home Proj.) 7.20% 7/1/11,
LOC Fifth Third Bancorp Aa2 2,450 2,726 935158AV
Warren Hosp. Rev. Rfdg. (Warren Gen. Hosp.
Proj.) Series B, 7.20% 11/15/09 BBB 3,500 3,732 935482CM
48,030
OKLAHOMA - 0.7%
Grand River Auth. Rev. Rfdg. 5.50% 6/1/09 A 12,500 12,672 386442PJ
Oklahoma Tpk. Auth. Tpk. Rev. 1st Sr. Series A,
6.125% 1/1/20 A1 1,500 1,577 679111HT
Valley View Hosp. Auth. Rev. 10% 10/1/14,
(HIB Insured) A 1,140 1,174 920175BJ
15,423
OREGON - 1.0%
Astoria Hosp. Facs. Auth. Hosp. Rev.
(Columbia Mem. Hosp.) 7% 1/1/13 - 2,500 2,666 046279AR
Multnomah County School Dist. #40 Unltd. Tax
5.625% 6/1/12 AA- 1,200 1,221 625693DU
North Clackamas Parks & Recreational Dist. Rev.
(Recreational Facs.) 5.70% 4/1/13 A- 1,000 1,021 658624AP
Oregon Hsg. Edl. & Cultural Facs. Auth. Rev.:
(Lewis & Clark College Proj.) Series A,
7.125% 7/1/20, (MBIA Insured) Aaa 1,100 1,264 68608LAK
(Reed College Proj.) Series A, 6.75% 7/1/11 A+ 500 556 68608LAX
Portland Hosp. Facs. Auth. Hosp. Rev. (Legacy
Health Sys.):
Series A, 6.625% 5/1/11, (AMBAC Insured) Aaa 250 279 736698EA
Series B:
6.625% 5/1/11, (AMBAC Insured) Aaa 2,000 2,230 736698EB
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
OREGON - CONTINUED
Portland Hosp. Facs. Auth. Hosp. Rev. (Legacy
Health Sys.) - continued
6.70% 5/1/21, (AMBAC Insured) Aaa $ 11,000 $ 12,278 736698ED
21,515
PENNSYLVANIA - 4.7 %
Allegheny County Hosp. Dev. Auth. Health
Facs. Rev. (Allegheny Valley School):
8% 2/1/02 Baa 1,885 2,085 0172894R
8.50% 2/1/15 Baa 3,325 3,716 0172894S
Allegheny County Hosp. Dev. Auth. Rev.
(Allegheny Health Ed. & Research Corp.)
Series D, 10.625% 7/1/12, (Pre-Refunded
to 1/1/94 @ 102) (b) Aaa 500 513 017289RS
Allegheny County Ind. Dev. Auth. Rev. (K mart
Corp.) (Commercial Dev.) Series A,
11% 1/1/07 A2 2,630 3,800 017292DN
Butler County Hosp. Auth. Rev. (North Hills
Passavant Hosp.) Series A:
6.80% 6/1/06, (Cap. Guaranty Insured) Aaa 5,000 5,531 123592BC
6.90% 6/1/09, (Cap. Guaranty Insured) Aaa 5,000 5,556 123592BD
Delaware County Auth. Rev. (First Mtg.
Riddle Village Proj.) 9.25% 6/1/22 - 5,000 5,325 245913BF
Delaware County Ind. Dev. Auth. Envir. Impt.
Rev. (BP Oil Proj.) 5.875% 4/1/98 - 3,640 3,731 246014AD
Gettysburg Muni. Auth. College Rev.
(Gettysburg College Proj.) 6.60% 2/15/12 A 2,500 2,688 374311BH
Harrisburg Auth. Wtr. Rev. (Complimentary
Auction Rate B-3) 8.82% 7/15/15,
(FGIC Insured) (a)(f) Aaa 4,000 4,320 41473MCB
Lehigh County Gen. Purp. Auth. Rev.
(Wiley House) 9.50% 11/1/16 - 5,930 6,686 524805QM
Northumberland County Auth. Commonwealth
Lease Rev. 0% 10/15/13, (MBIA Insured) Aaa 11,830 3,845 667067AR
Pennsylvania Intergovernmental Coop. Auth. Spl.
Tax Rev.:
Rfdg. Series A:
5% 6/15/15 Baa 5,210 4,813 708840CH
5% 6/15/22, (MBIA Insured) Aaa 10,835 9,900 708840CJ
(City of Philadelphia Funding Prog.)
5.75% 6/15/15 Baa 7,000 7,000 708840BN
Philadelphia Auth. Ind. Dev. Rev. (Bakers Bay
Nursing Proj.) 10.25% 8/1/23,
(FHA Guaranteed) AAA 1,796 1,861 717818ER
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
PENNSYLVANIA - CONTINUED
Philadelphia Hosp. & Higher Ed. Facs. Auth.
Hosp. Rev. (Temple Univ. Hosp.) Series A,
6.50% 11/15/08 Baa1 $ 1,000 $ 1,068 717903RN
Philadelphia Muni. Auth. Rev. Rfdg. Lease
Series D:
6% 7/15/03 Ba 1,500 1,494 717904FX
6.125% 7/15/08 Ba 4,000 3,965 717904FY
Philadelphia Wtr. & Wastewtr. Rev.:
Rfdg. 5% 6/15/12, (FGIC Insured) Aaa 3,000 2,820 717893BG
8.27% 6/15/12, (FGIC Insured) (a)(f) Aaa 10,000 10,163 717893BF
Washington County Hosp. Auth. (Shadyside Hosp.
Proj.) 5.875% 12/15/09, (AMBAC Insured) Aaa 3,000 3,113 938592EK
Wyoming Ind. Dev. Auth. Poll. Rfdg. (Proctor &
Gamble Paper Proj.) 5.55% 5/1/10 Aa2 4,300 4,288 983283AD
98,281
PUERTO RICO - 0.3%
Puerto Rico Tel. Auth. Rev.:
RIB 8.03% 1/16/15, (MBIA Insured) (a)(f) Aaa 2,000 2,058 745297JT
6.95% 1/1/04, (AMBAC Insured) (a)(f) Aaa 4,000 4,075 745297HX
6,133
RHODE ISLAND - 0.6%
Newport Gen. Oblig. 6.80% 4/15/10 A1 605 665 652317SH
Rhode Island Depositors Econ. Protection Corp.
Spl. Oblig. Rfdg. Series A, 5.75% 8/1/12 Baa1 3,495 3,425 76218KEJ
Rhode Island Health & Edl. Bldg. Corp. Hosp.
Fing. Rev. (Roger Williams Hosp.)
7.75% 7/1/16 BBB 1,000 1,110 762241E5
Rhode Island Health & Edl. Bldg. Corp. Rev.
(Higher Ed. Facs. Johnson & Wales Univ.):
Rfdg. Series A, 5.25% 4/1/16,
(Connie Lee Insured) Aaa 4,000 3,775 762242FM
6.375% 4/1/12, (Connie Lee Insured) AAA 1,000 1,071 762242CB
6.25% 4/1/22, (Connie Lee Insured) AAA 1,000 1,058 762242CC
Rhode Island Hsg. & Mtg. Fin. Corp. (Home
Ownership Opportunity) Series 3-A,
7.80% 10/1/10 Aa 1,000 1,093 762211HP
12,197
SOUTH CAROLINA - 0.6%
Florence Ind. Rev. (Florence Business Technical
Assoc.):
11.25% 11/1/94 - 115 118 340322AJ
11.25% 11/1/14 - 6,500 6,663 340322AK
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
SOUTH CAROLINA - CONTINUED
Grand Strand Wtr. & Swr. Auth. Waterwks. &
Swr. Sys. Rev. Series 1991, 6.375% 6/1/12,
(MBIA Insured) Aaa $ 2,000 $ 2,245 386475BU
Rock Hill Ind. Rev. (Rock Hill Business Technical
Assoc. Proj.) 11% 10/1/14, LOC Canadian
Imperial Bank of Commerce - 3,000 3,011 772227AK
South Carolina Hsg. Auth. (Home Ownership
Mtg. Purchase) Series 1985 B,
9.375% 7/1/16 Aa 1,180 1,248 837117DG
13,285
SOUTH DAKOTA - 0.2%
Rapid City Civic Ctr. Facs. Rev. (Rushmore Plaza
Partners Ltd. Proj.) 11.50% 6/30/09 A 595 632 753354BC
South Dakota Lease Rev. (Trust Cfts.) Series A,
6.625% 9/1/12, (Cap. Guaranty Insured) Aaa 1,220 1,337 83756PCF
Spearfish School Dist. #40-2 Unltd. Tax
(Lawrence County) 7.30% 7/1/11 A 1,500 1,712 847328CE
3,681
TENNESSEE - 0.8%
Bradley County Ind. Dev. Board Ind. Dev. Rev.
Rfdg. (Kroger Co. - Peytons SE Proj.)
8.10% 5/1/12 Ba3 4,000 4,465 104565CK
Chattanooga-Hamilton County Hosp. Auth. Hosp.
Rev. (Erlanger Med. Ctr.) 5.50% 10/1/13,
(FSA Insured) Aaa 2,500 2,491 162362EP
Chattanooga Ind. Dev. Board Poll. Cont. Rev.
(Dupont E.I. de Nemours & Co.)
6.35% 7/1/22 Aa2 1,000 1,081 162420BL
Clarksville Wtr. Swr. & Gas Rev. Rfdg. & Impt.
(Cap. Appreciation):
0% 2/1/14, (MBIA Insured) Aaa 1,100 347 182618DY
0% 2/1/15, (MBIA Insured) Aaa 750 223 182618DZ
Knox County Health & Edl. Hsg. Facs. Board
Hosp. Facs. Rev. (Mercy Health Sys.) Series B,
5.875% 9/1/15, (AMBAC Insured) Aaa 1,500 1,538 499523LC
Memphis-Shelby County Aprt. Auth. Aprt. Rev.
Rfdg. 5.65% 9/1/15, (MBIA Insured) Aaa 1,500 1,509 586111CF
Tennessee Hsg. Dev. Auth. Mtg. Fin. Series A,
5.90% 7/1/18 A1 4,150 4,175 880460LG
15,829
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
TEXAS - 5.2%
Austin Util. Sys. Rev. Rfdg. 6% 11/15/13 A $ 3,750 $ 3,914 0524732P
Cass County Envir. Protection Rev.
(Int'l. Paper Co. Proj.) Series B,
5.70% 5/1/12 A3 1,925 1,925 148077AB
Corpus Christi Hsg. Fin. Corp. Single Family
Mtg. Rev. (Lomas & Nettleton Co.) Series A,
13.375% 6/1/13 AA- 65 68 220138BQ
Cypress-Fairbanks Independent School Dist. Rfdg.
Unltd. Tax Series A, 0% 2/15/12,
(PSF Guaranteed) Aaa 14,000 4,953 232760BG
Dallas Hsg. Corp. Cap. Proj. Rev. Rfdg.
(Section 8 Assorted Projs.):
7.70% 8/1/05 A 1,100 1,145 235292AM
7.85% 8/1/13 A 1,000 1,051 235292AN
East Texas Health Facs. Dev. Corp. Hosp. Rev.
(Mem. Foundation Hosp. - Palestine, Inc.):
7.25% 8/15/03 - 2,970 2,959 275573AA
7.80% 8/15/18 - 2,440 2,443 275573AB
Goose Creek Consolidated Independent School
Dist. Rfdg. (Cap. Appreciation):
0% 2/15/08, (PSF Guaranteed) Aaa 2,575 1,172 382604MA
0% 2/15/09, (PSF Guaranteed) Aaa 3,475 1,464 382604MB
0% 2/15/10, (PSF Guaranteed) Aaa 3,270 1,292 382604MC
Harris County Cultural & Ed. Facs. Fin. Corp. Rev.
(Space Ctr. Houston Proj.):
9% 8/15/00 - 6,000 6,878 414007AE
9.25% 8/15/15 - 18,920 22,397 414007AF
Harris County Rfdg. (Toll Road Sr. Lien) Series B,
6.625% 8/15/17, (AMBAC Insured) Aaa 1,000 1,074 414003YL
Houston Hsg. Auth. Rev. (Low Income Elderly Hsg.)
(1st Lien):
7.50% 7/1/16 - 420 428 442384OA
7.50% 7/1/18 - 405 413 442384OC
Houston Wtr. Conveyance Sys. Contract Ctfs. Prtn.
Series D, 6.375% 12/15/07, (AMBAC Insured) Aaa 1,500 1,658 442437EG
Port Arthur Hsg. Fin. Corp. Multi-Family Mtg. Rev.
(Port Arthur Udal Proj.) Series E,
9.625% 1/1/28, (FHA Guaranteed) AAA 485 509 73350MAB
Port Arthur Hsg. Fin. Corp. Single Family Mtg.
Rev. Rfdg. 8.70% 3/1/12 A 1,475 1,610 733500BV
Port Corpus Christi Ind. Dev. Corp. Rev. (Valero
Refining & Marketing Co.) Series A,
10.25% 6/1/17 Baa3 1,535 1,827 733906AB
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
TEXAS - CONTINUED
Port Dev. Corp. Ind. Dev. Rev. Rfdg. (Cargill, Inc.
Proj.) 7.70% 3/1/07 Aa2 $ 1,000 $ 1,134 733885AK
Tarrant County Hsg. Fin. Corp. Single Family Mtg.
Rev. Series A:
9% 11/15/95 Ba 170 169 876394DA
9.50% 5/15/03 Ba 1,075 1,074 876394DG
9.625% 5/15/14 Ba 255 255 876394DJ
Texarkana Health Facs. Dev. Corp. Hosp. Rev.
(Wadley Reg'l. Med. Ctr. Proj.)
7% 10/1/05, (MBIA Insured) Aaa 1,750 1,993 881834BC
Texas Gen. Oblig. Rfdg. (Veterans Land)
7.40% 12/1/20 Aa 2,500 2,781 882716LZ
Texas Hsg. Agcy. Mtg. Rev. Single Family:
(Verex Mtg. Assurance, Inc.) Series B,
11.25% 3/1/16 Aa 90 95 882482FM
Series 1983 A, 10.50% 9/1/09 Aa 90 92 882482DG
Texas Muni. Pwr. Agcy. Rev. Rfdg. (Cap.
Appreciation):
0% 9/1/05, (AMBAC Insured) Aaa 13,000 7,036 882555MX
0% 9/1/10, (AMBAC Insured) Aaa 4,000 1,560 882555NC
0% 9/1/12, (AMBAC Insured) Aaa 5,150 1,777 882555NE
Texas Nat'l. Research Lab. Commission Fing.
Corp. Lease Rev. (Superconducting Super
Collider) 7.10% 12/1/21 A 16,765 17,247 882585AP
Tomball Hosp. Auth. Rev. Rfdg. 6.125% 7/1/23 Baa 7,500 7,124 889854CV
Travis County Health Facs. Dev. Corp. Hosp. Rev.
(Daughters of Charity - Seton Med. Ctr. Proj.)
10.125% 11/1/15 Aa 1,000 1,128 89438HAE
Tyler Health Facs. Dev. Corp. Hosp. Rev. (East
Texas Med. Ctr. Reg'l. Health Sys.) Series B,
6.625% 11/1/11 Baa 7,045 7,194 902261CT
109,839
VERMONT - 2.0%
Burlington Elec. Rev. Series A, 6.25% 7/1/14,
(MBIA Insured) Aaa 3,000 3,195 122079EG
Vermont Colleges Rev.:
Rfdg. 5.125% 7/1/18 A 2,000 1,850
8% 7/1/18 AAA 2,250 2,675 924275AL
Vermont Edl. & Health Bldgs. Fing. Agcy. Rev.:
Rfdg. (Central Vermont Hosp. Proj.)
Series A, 8% 10/1/09 Baa1 2,500 2,700 924160NH
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
VERMONT - CONTINUED
Vermont Edl. & Health Bldgs. Fing. Agcy. Rev.: - continued
(Middlebury College Proj.):
6% 11/1/13 Aa $ 1,000 $ 1,039 924160TZ
6% 11/1/22 Aa 4,500 4,658 924160UA
(St. Michael's College Proj.) 6.50% 10/1/13 A- 3,000 3,199 924160SP
(Vermont Hosp. Med. Ctr.) 6% 9/1/22,
(FGIC Insured) Aa 1,000 1,020 924160UQ
Vermont Muni. Bond Bank:
Series 1:
5.375% 12/1/13 A 3,500 3,399 924211TV
6.25% 12/1/18 A 4,000 4,235 924211TB
Series 1991-1:
7% 12/1/11 A 1,360 1,533 924211RF
6.875% 12/1/22 A 2,385 2,671 924211RG
Series B, 7.20% 12/1/20 A 3,000 3,360 924211PT
Vermont Pub. Pwr. Supply. Auth. Rev. (McNeil
Proj.) Series C, 5% 7/1/15, (AMBAC Insured) Aaa 5,850 5,506 924275BC
41,040
VIRGINIA - 1.2%
Hopewell Ind. Dev. Auth. Resources Recovery Rev.
(Stone Container Corp.) 8.25% 6/1/16 - 4,350 4,307 439714AC
Lynchburg Ind. Dev. Auth. Facs. 1st Mtg. Rev.
Rfdg. (Central Health, Inc.) 8.125% 1/1/16 A1 3,000 3,386 551241CJ
Peninsula Ports Auth. Health Sys. Rev. (Riverside
Health Sys. Proj.) Series A, 6.625% 7/1/18 Aa 4,400 4,741 707164AZ
Peninsula Ports Auth. Hosp. Facs. Auth. Rev. Rfdg.
(Whittaker Mem. Proj.) 8.70% 8/1/23,
(FHA Guaranteed) Aa 1,500 1,738 707165DP
Portsmouth Pub. Impt. Rfdg. 5.45% 8/1/09 A1 1,000 1,006 737237M8
Richmond Redev. & Hsg. Auth. Mtg. Rev.
(Multi-Family Hsg. Pinebrook Proj.)
9.25% 10/1/20, (GNMA Coll.) AAA 750 828 765435CG
Virginia Beach Dev. Auth. Hosp. Facs. Rev.
(Virginia Beach Gen. Hosp.) Series A,
8.75% 12/1/17 A1 600 696 927739BW
Virginia Hsg. Dev. Auth. Commonwealth Mtg.
Series B, Sub-series B-2, 7.625% 7/1/17 Aa 2,000 2,108 928129H5
Virginia Pub. School Auth.:
(Henrico County) 5.10% 7/15/94 Aaa 1,600 1,624
Series C, 4.375% 1/1/95 Aa 4,400 4,444 92817FDC
Virginia Resources Auth. Wtr. & Swr. Sys. Rev.
Series A, 7.70% 11/1/10 Aa 180 209 928180MY
25,087
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
WASHINGTON - 4.5%
King County Pub. Hosp. Dist. #1 Hosp. Facs. Rev.
Rfdg. (Valley Med. Ctr.) 6.25% 9/1/09,
(AMBAC Insured) Aaa $ 1,730 $ 1,868 494787BE
Washington Pub. Pwr. Supply Sys. Nuclear
Proj. #1 Rev. Rfdg.:
Series A, 7.50% 7/1/15 Aa 3,430 3,846 939827SU
Series B, 7.25% 7/1/09 Aa 2,950 3,429 939827LV
7.65% 7/1/12 (a)(f) Aa 5,000 4,563 939827TR
Washington Pub. Pwr. Supply Sys. Nuclear
Proj. #2 Rev. Rfdg.:
Series A, 6.30% 7/1/12 Aa 7,000 7,473 939828PT
Series C:
0% 7/1/04 Aa 1,570 901 939828MG
0% 7/1/05 Aa 16,330 8,798 939828MQ
7.97% 7/1/10, (FGIC Insured) (a)(f) Aa 17,500 16,516 939828RS
Washington Pub. Pwr. Supply Sys. Nuclear
Proj. #3 Rev.:
Rfdg. Series A:
0% 7/1/09, (BIG Insured) Aaa 3,400 1,403 939830FZ
0% 7/1/10, (BIG Insured) Aaa 6,940 2,681 939830GJ
0% 7/1/11, (BIG Insured) Aaa 4,000 1,445 939830GK
0% 7/1/12, (BIG Insured) Aaa 4,000 1,365 939830GL
0% 7/1/13, (BIG Insured) Aaa 4,000 1,285 939830GA
0% 7/1/14, (BIG Insured) Aaa 3,350 1,018 939830GM
Rfdg. Series B, 7.125% 7/1/16 Aa 14,250 16,582 939830HJ
Rfdg. Series C, 0% 7/1/14 Aa 6,405 1,896 939830QC
7.65% 7/1/12 (a)(f) Aa 20,500 19,142 939830PR
94,211
WEST VIRGINIA - 0.6 %
West Virginia Parkway Econ. Dev. & Tourism
Auth. Series C, 9.20% 5/15/13,
(FGIC Insured) (a)(f) Aaa 10,000 10,550 956661BN
West Virginia School Bldg. Auth. Rev. (Cap. Impt.)
Series A, 6.75% 7/1/15 A 2,000 2,150 956540DM
12,700
WYOMING - 1.2 %
Natrona County Hosp. Rev. (Wyoming Med. Ctr.
Proj.) 8.125% 9/15/10 Baa1 4,500 5,113 638813AK
Wyoming Commty. Dev. Auth. Single Family Mtg.
Series B, 7.40% 6/1/31, (FHA Guaranteed) Aa 2,700 2,903 983219VA
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
WYOMING - CONTINUED
Wyoming Farm Loan Board Cap. Facs. Rev.:
Rfdg.:
6.20% 10/1/07 AA- $ 965 $ 1,038 983478CF
6.25% 10/1/08 AA- 1,015 1,090 983478CG
6.25% 10/1/12 AA- 2,000 2,112 983478CH
5.75% 10/1/20 AA- 7,000 7,228 983478CJ
0% 10/1/04 AA- 3,995 2,277 983478BL
0% 10/1/05 AA- 3,995 2,162 983478BM
0% 10/1/06 AA- 3,945 2,012 983478BN
25,935
TOTAL MUNICIPAL BONDS
(Cost $1,895,432) 2,045,465
MUNICIPAL NOTES (A) - 2.8 %

FLORIDA - 0.1 %
Dade County Health Facs. Auth. Hosp. Rev.
(Miami Childrens Hosp. Proj.) Series 1990,
2.35%, LOC Barnett Bank, VRDN VMIG1 2,100 2,100 233904KQ
GEORGIA - 0.1 %
Hapeville Dev. Auth. Ind. Dev. Rev. (Hapeville
Hotel Proj.) 2.35%, LOC Swiss Bank, VRDN P-1 1,200 1,200 411368AA
ILLINOIS - 0.2 %
Illinois Health Facs. Auth. Rev. (LaGrange Mem.
Health Sys.) Series 1990, 1.90%, LOC First
Nat'l. Bank of Chicago, VRDN VMIG1 4,300 4,300 45201HK2
INDIANA - 0.9 %
Indiana Health Facs. Fin. Auth. Rev. (Cap. Access
Designated Pooled) Series 1992, 2.20%,
LOC Comerica Bank, VRDN VMIG1 1,700 1,700 454798CR
Indiana Hosp. Equip. Fing. Auth. Rev.
Series 1985 A, 2.10%, (MBIA Insured)
BPA Bank of New York, VRDN VMIG1 17,500 17,500 454800AF
19,200
LOUISIANA - 0.1 %
Louisiana Pub. Facs. Auth. Dev. Rev. Ind. Dev.
(Kenner Hotel Ltd.) 2%, LOC Long-Term Cr.
Bank of Japan, VRDN - 2,850 2,850 546396WB
MUNICIPAL NOTES (A) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
MARYLAND - 0.0 %
Maryland Health & Higher Edl. Facs. Rev. (Pooled
Loan Prog.) Series A, 2.60% LOC Dai-Ichi
Kangyo Bank Ltd., VRDN VMIG 1 $ 800 $ 800 574215RC
MASSACHUSETTS - 0.4 %
Massachusetts Health & Edl. Facs. Auth. Rev.
(Cap. Asset Prog.) Series 1985 D, 2.15%,
(MBIA Insured) BPA Sanwa Bank, VRDN VMIG 1 9,000 9,000 575850MP
MICHIGAN - 0.1 %
Farmington Hills Hosp. Fin. Auth. Hosp. Rev.
(Botsford Hosp.) 1.90%, (MBIA Insured) BPA
Manufacturers Nat'l. Corp., Detroit, VRDN VMIG 1 2,200 2,200 311166AV
MINNESOTA - 0.3 %
Minnesota Higher Ed. Coordinating Board Rev.
(Supplemental Student Loan Prog.) Series 1984,
2.425%, LOC Mitsubishi Bank Ltd., VRDN - 2,410 2,410 604147BW
Minnesota Gen. Oblig. 2.35%, VRDN - 3,000 3,000
5,410
NEW JERSEY - 0.3 %
Hudson County Impt. Auth. Rev. (Essential Purp.
Pooled Gov't. Loan Prog.) Series 1986, 2.45%,
LOC Marine Midland Bank, VRDN A-1 3,645 3,645 443728AB
New Jersey Tpk. Auth. Tpk. Rev. Series 1991 D,
2.20%, (FGIC Insured) BPA Societe Generale,
VRDN VMIG 1 2,200 2,200 646139JR
5,845
OHIO - 0.1 %
Ohio State Univ. Rev. (Gen. Receipts)
Series 1986 B, 2.10%, BPA Fuji Bank, VRDN VMIG 1 1,000 1,000 677653QZ
PENNSYLVANIA - 0.2 %
Quakertown Hosp. Auth. Hosp. Rev. (HPS Group
Pooled Fing. Prog.) Series 1985 A, 2.35%,
LOC First Nat'l. Bank of Chicago, VRDN VMIG 1 2,000 2,000 747523AP
Schuylkill County Ind. Dev. Auth. Resources
Recovery Rev. (Westwood Energy Prop.)
Series 1985, 2.10%, LOC Fuji Bank, VRDN P-1 2,600 2,600 80839TAA
4,600
TOTAL MUNICIPAL NOTES
(Cost $58,505) 58,505
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,953,937) $ 2,103,970
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
(000S) (000S)
PURCHASED
215 Municipal Bond Index
Futures Contracts Dec. 1993 $ 21,876 $ (98)
THE VALUE OF FUTURES CONTRACTS PURCHASED AS A PERCENTAGE OF TOTAL
INVESTMENT IN SECURITIES - 1.0%
SOLD
270 U.S. Treasury Note Futures Contracts Dec. 1993 $ 30,603 $ 251
THE VALUE OF FUTURES CONTRACTS SOLD AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 1.5%
SECURITY TYPE ABBREVIATIONS
VRDN - Variable Rate Demand Notes
LEGEND
1. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
2. Security collateralized by an amount sufficient to pay interest and
principal.
3. Debt obligation initially issued in zero coupon form which converts to
coupon
form at a specified rate and date.
4. Non-income producing - issuer filed for protection under the Federal
Bankruptcy Code or is in default of interest payment.
5. 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 $17,779,000.
6. Inverse floating rate security is a security where the coupon is
inversely indexed to a floating interest rate multiplied by a specified
factor. If the floating rate is high enough, the coupon rate may be zero or
be a negative amount that is carried forward to reduce future interest
and/or principal payments. The price may be considerably more volatile than
the price of a compara- ble fixed rate security.
7. Standard & Poor's Corporation credit ratings are used in the absence
of a rating by Moody's Investors Service, Inc.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S S&P
RATINGS RATINGS
Aaa, Aa, A 53.2% AAA, AA, A 60.7%
Baa 14.1% BBB 12.5%
Ba 5.0% BB 3.0%
B 1.6% B 2.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 11.9%.
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities is as follows:
Health Care 27.9%
Electric Revenue 19.1
General Obligation 10.7
Others (individually less
than 10%) 42.3
TOTAL 100.0%
INCOME TAX INFORMATION
At November 30, 1993, the aggregate cost of investment securities for
income tax purposes was $1,953,985,000. Net unrealized appreciation
aggregated $149,985,000, of which $167,588,000 related to appreciated
investment securities and $17,603,000 related to depreciated investment
securities.
At November 30, 1993, the fund was required to defer $37,933,000 of losses
on futures contracts.
The fund hereby designates $8,400,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) NOVEMBER 30, 1993

ASSETS

Investment in securities, at value (cost $1,953,937) $ 2,103,970
(Note 1) - See accompanying schedule

Cash 1,986

Receivable for investments sold 18,863

Interest receivable 35,194

Other receivables 204

TOTAL ASSETS 2,160,217

LIABILITIES

Payable for investments purchased $ 18,097

Payable for fund shares redeemed 10,117

Dividends payable 2,788

Accrued management fee 737

Other payables and accrued expenses 288

TOTAL LIABILITIES 32,027

NET ASSETS $ 2,128,190

Net Assets consist of:

Paid in capital $ 1,926,817

Accumulated undistributed net realized gain (loss) on 51,187
investments

Net unrealized appreciation (depreciation) on:

Investment securities 150,033

Futures contracts 153

NET ASSETS, for 160,919 shares outstanding $ 2,128,190

NET ASSET VALUE, offering price and redemption price per $13.23
share ($2,128,190 (divided by) 160,919 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED NOVEMBER 30, 1993

INTEREST INCOME $ 138,518

EXPENSES

Management fee (Note 4) $ 8,997

Transfer agent, accounting and custodian fees and 2,662
expenses (Note 4)

Non-interested trustees' compensation 5

Registration fees 81

Audit 57

Legal 198

Reports to shareholders 61

Miscellaneous 34

TOTAL EXPENSES 12,095

NET INTEREST INCOME 126,423

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
(NOTES 1 AND 3)
Net realized gain (loss) on:

Investment securities 93,406

Futures contracts (17,281) 76,125

Change in net unrealized appreciation (depreciation) on:

Investment securities 39,130

Futures contracts 941 40,071

NET GAIN (LOSS) 116,196

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM $ 242,619
OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEARS ENDED NOVEMBER 30,

1993 1992

INCREASE (DECREASE) IN NET ASSETS

Operations $ 126,423 $ 130,302
Net interest income

Net realized gain (loss) on investments 76,125 18,201

Change in net unrealized appreciation (depreciation) 40,071 12,077
on
investments

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 242,619 160,580
FROM OPERATIONS

Distributions to shareholders from: (126,423) (130,302)
Net interest income

Net realized gain (30,740) (25,098)

Share transactions 820,243 732,349
Net proceeds from sales of shares

Reinvestment of distributions from: 92,165 95,370
Net interest income

Net realized gain 24,493 20,035

Cost of shares redeemed (969,090) (774,639)

Net increase (decrease) in net assets resulting from (32,189) 73,115
share transactions

TOTAL INCREASE (DECREASE) IN NET ASSETS 53,267 78,295

NET ASSETS

Beginning of period 2,074,923 1,996,628

End of period $ 2,128,190 $ 2,074,923

OTHER INFORMATION
Shares

Sold 62,985 57,784

Issued in reinvestment of distributions from: 7,044 7,529
Net interest income

Net realized gain 1,953 1,595

Redeemed (74,180) (61,095)

Net increase (decrease) (2,198) 5,813

</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED NOVEMBER 30,

1993 1992 1991 1990 1989

SELECTED PER-SHARE DATA

Net asset value, $ 12.720 $ 12.690 $ 12.610 $ 12.800 $ 12.210
beginning of period

Income from .764 .811 .845 .857 .893
Investment
Operations
Net interest income

Net realized and .700 .190 .310 .200 .600
unrealized gain
(loss) on
investments

Total from 1.464 1.001 1.155 1.057 1.493
investment
operations

Less Distributions (.764) (.811) (.845) (.857) (.893)
From net interest
income

From net realized (.190) (.160) (.230) (.390) (.010)
gain on
investments

Total distributions (.954) (.971) (1.075) (1.247) (.903)

Net asset value, end $ 13.230 $ 12.720 $ 12.690 $ 12.610 $ 12.800
of period

TOTAL RETURN 11.92% 8.21% 9.62% 8.91% 12.60%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of $ 2,128 $ 2,075 $ 1,997 $ 1,784 $ 1,738
period (in millions)

Ratio of expenses to .56% .57% .56% .57% .58%
average net assets

Ratio of net interest 5.85% 6.40% 6.72% 6.96% 7.10%
income to average
net assets

Portfolio turnover rate 53% 47% 44% 58% 71%

</TABLE>

NOTES TO FINANCIAL STATEMENTS
For the period ended November 30, 1993

1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity High Yield Tax-Free Portfolio (the fund) is a fund of Fidelity
Court Street Trust(the trust) and is authorized to issue an unlimited
number of shares. The trust is registered under the Investment Company Act
of 1940, as amended (the 1940 Act), as an open-end management investment
company organized as a Massachusetts business trust. The following
summarizes the significant accounting policies of the fund:
SECURITY VALUATION. Securities are valued based upon a computerized matrix
system and/or appraisals by a pricing service, both of which consider
market transactions and dealer-supplied valuations. Short-term securities
maturing within sixty days are valued either at amortized cost or original
cost plus accrued interest, both of which approximate current value.
Securities for which quotations are not readily available through the
pricing service are valued at their fair value as determined in good faith
under consistently applied procedures under the general supervision of the
Board of Trustees.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes information regarding income
taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and paid
monthly from net interest income. Distributions from realized gains, if
any, are recorded on the ex-dividend date.
2. OPERATING POLICIES.
FUTURES CONTRACTS AND OPTIONS. The fund may invest in futures contracts and
write options. These investments involve, to varying degrees, elements of
market risk and risks in excess of the amount recognized in the Statement
of Assets and Liabilities. The face or contract amounts reflect the extent
of the involvement the fund has in the particular classes of instruments.
Risks may be caused by an imperfect correlation between movements in the
price of the instruments and the price of the underlying securities and
interest rates. Risks also may arise if there is an illiquid secondary
market for the instruments, or due to the inability of counterparties to
perform.
2. OPERATING POLICIES -
CONTINUED
FUTURES CONTRACTS AND OPTIONS - CONTINUED
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Options traded
on an exchange are valued using the last sale price or, in the absence of a
sale, the last offering price. Options traded over-the-counter are valued
using dealer-supplied valuations.
3. PURCHASES AND SALES OF
INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $1,094,544,000 and $1,141,054,000, respectively.
The market value of futures contracts opened and closed amounted to
$1,683,982,000 and $1,854,623,000 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 ranging from
.15% to .37% and is based on the monthly average net assets of all the
mutual funds advised by FMR. The annual individual fund fee rate is .25%.
For the period, the management fee was equivalent to an annual rate of .42%
of average net assets.
The Board of Trustees approved a new group fee rate schedule with rates
ranging from .1325% to .3700%. Effective November 1, 1993, FMR has
voluntarily agreed to implement this new group fee rate schedule as it
results in the same or a lower management fee.
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service
Plan (the Plan), and in accordance with Rule 12b-1 of the 1940 Act, FMR or
the fund's distributor, Fidelity Distributors Corporation (FDC), an
affiliate of FMR, may use their resources to pay administrative and
promotional expenses related to the sale of the fund's shares. Subject to
the approval of the Board of Trustees, the Plan also authorizes payments to
third parties that assist in the sale of the fund's shares or render
shareholder support services. FMR or FDC has informed the fund that
payments made to third parties under the Plan amounted to $13,000 for the
period.
TRANSFER AGENT AND ACCOUNTING FEES. United Missouri Bank, N.A. (the Bank)
is the custodian and transfer and shareholder servicing agent for the fund.
The Bank has entered into a sub-
contract with Fidelity Service Co. (FSC), an affiliate of FMR, under which
FSC performs the activities associated with the fund's transfer and
shareholder servicing agent and accounting functions. The fund pays
transfer agent fees based on the type, size, number of accounts and number
of transactions made by shareholders. FSC pays for
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT AND ACCOUNTING FEES - CONTINUED
typesetting, printing and mailing of all shareholder reports, except proxy
statements. The accounting fee is based on the level of average net assets
for the month plus out-of-pocket expenses. For the period, FSC received
transfer agent and accounting fees amounting to $1,960,000 and $537,000,
respectively.
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Fidelity Court Street Trust and the Shareholders of
Fidelity High Yield Tax-Free Portfolio:
We have audited the accompanying statement of assets and liabilities of
Fidelity Court Street Trust: Fidelity High Yield Tax-Free Portfolio,
including the schedule of portfolio investments, as of November 30, 1993,
and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period
then ended and the financial highlights for each of the five years in the
period then ended. These financial statements and financial highlights are
the responsibility of the fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of November 30, 1993, by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Court Street Trust: Fidelity High Yield Tax-Free Portfolio as
of November 30, 1993, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years
in the period then ended, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND
Boston, Massachusetts
December 31, 1993
TO CALL FIDELITY

TO WRITE FIDELITY

Please locate the address that is closest to you. We'll give your
correspondence immediate attention and send you written confirmation upon
completion of your request. Please send ALL correspondence about retirement
accounts to Dallas.
(LETTER_GRAPHIC)(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 2269
Boston, MA 02107-2269
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Fidelity Investments
P.O. Box 30280
Salt Lake City, UT 84130-0280
(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
Additional Payments
P.O. Box 2656
Boston, MA 02293-0656
Fidelity Investments
Additional Payments
P.O. Box 620024
Dallas, TX 75262-0024
Fidelity Investments
Additional Payments
P.O. Box 31455
Salt Lake City, UT 84131-0455
OVERNIGHT EXPRESS
Fidelity Investments
Additional Payments
World Trade Center
164 Northern Avenue
Boston, MA 02210
SELLING SHARES
Fidelity Investments
P.O. Box 193
Boston, MA 02103-0878
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Fidelity Investments
P.O. Box 30281
Salt Lake City, UT 84130-0281
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions
World Trade Center
164 Northern Avenue
Boston, MA 02210
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02101-0193
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 620024
Dallas, TX 75262-0024
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
United Missouri Bank, N.A.
Kansas City, MO

Corporate Headquarters
82 Devonshire St., Boston, MA 02109
FIDELITY TAX-FREE BOND FUNDS
Aggressive Tax-Free
California Tax-Free High Yield
California Tax-Free Insured
High Yield Tax-Free
Insured Tax-Free
Limited Term Municipals
Massachusetts Tax-Free High Yield
Michigan Tax-Free High Yield
Minnesota Tax-Free
Municipal Bond
New York Tax-Free High Yield
New York Tax-Free Insured
Ohio Tax-Free High Yield
Spartan Aggressive Municipal
Spartan California Municipal High Yield
Spartan Connecticut Municipal High Yield
Spartan Florida Municipal Income
Spartan Intermediate Municipal
Spartan Maryland Municipal Income
Spartan Municipal Income
Spartan New Jersey Municipal High Yield
Spartan New York Municipal High Yield
Spartan Pennsylvania Municipal High Yield
Spartan Short-Intermediate Municipal
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE

EXHIBIT 24(A)(9)
(2_FIDELITY_LOGOS)FIDELITY

HIGH YIELD TAX-FREE
ANNUAL REPORT
NOVEMBER 30, 1993
CONTENTS

PRESIDENT'S MESSAGE 3 Ned Johnson on minimizing taxes.

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 last six
months.

INVESTMENTS 11 A complete list of the fund's
investments with their market value.

FINANCIAL STATEMENTS 25 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.

NOTES 29 Footnotes to the financial
statements.

REPORT OF INDEPENDENT 32 The auditor's opinion.
ACCOUNTANTS

PRESIDENT'S MESSAGE

Limited Term Municipals 12.24% 55.69% 153.02%

Lehman Brothers Municipal Bond Index 12.29% 62.86% 188.33%

Average Intermediate Municipal Bond 10.36% 51.74% 133.35%
Fund

Consumer Price Index 2.75% 21.00% 43.93%

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. For example, if
you had invested $1,000 in a fund that had a 5% return over the past year,
you would have $1,050. You can compare these figures to the performance of
the Lehman Brothers Municipal Bond Index - a broad gauge of the municipal
bond market that includes short-, intermediate-, and long-term bonds. To
measure how the fund stacked up against its peers, you can look at the
average intermediate municipal bond fund, which reflects the performance of
77 intermediate municipal bond funds tracked by Lipper Analytical Services.
Both benchmarks include reinvested dividends and capital gains, if any.
Comparing the fund's performance to the consumer price index helps show how
your fund did compared to inflation.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1993 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS

Limited Term Municipals 12.24% 9.26% 9.73%

Lehman Brothers Municipal Bond Index 12.29% 10.25% 11.17%

Average Intermediate Municipal Bond 10.36% 8.69% 8.79%
Fund

Consumer Price Index 2.75% 3.89% 3.71%

AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
$10,000 OVER 10 YEARS

Ltd. Term LB Muni Bond
12/31/83 10000.00 10000.00
01/31/84 10427.09 10364.50
02/29/84 10337.36 10260.13
03/31/84 10365.97 10273.16
04/30/84 10357.62 10288.98
05/31/84 9864.86 9678.02
06/30/84 10037.37 9888.13
07/31/84 10457.61 10400.24
08/31/84 10606.96 10633.51
09/30/84 10613.61 10562.06
10/31/84 10711.75 10694.61
11/30/84 10848.65 10852.04
12/31/84 10987.47 11055.40
01/31/85 11476.96 11693.63
02/28/85 11277.20 11401.99
03/31/85 11390.10 11500.39
04/30/85 11708.21 11921.31
05/31/85 11988.54 12335.09
06/30/85 12118.23 12464.49
07/31/85 12136.29 12488.92
08/31/85 12097.94 12401.75
09/30/85 12003.59 12277.36
10/31/85 12421.14 12697.98
11/30/85 12724.55 13153.46
12/31/85 12889.94 13269.07
01/31/86 13405.38 14050.62
02/28/86 13701.42 14607.73
03/31/86 13807.34 14612.41
04/30/86 13809.63 14623.51
05/31/86 13635.04 14385.44
06/30/86 13802.87 14522.68
07/31/86 13850.12 14610.83
08/31/86 14411.45 15264.96
09/30/86 14427.83 15303.27
10/31/86 14777.62 15567.56
11/30/86 14927.42 15875.95
12/31/86 14847.86 15832.13
01/31/87 15202.63 16308.84
02/28/87 15386.37 16389.08
03/31/87 15304.00 16215.36
04/30/87 14469.57 15401.67
05/31/87 14435.98 15325.28
06/30/87 14750.26 15775.23
07/31/87 14922.93 15936.13
08/31/87 14968.51 15971.99
09/30/87 14386.14 15383.10
10/31/87 14466.79 15437.56
11/30/87 14806.68 15840.63
12/31/87 15017.63 16070.48
01/31/88 15609.77 16642.91
02/29/88 15674.89 16818.83
03/31/88 15406.43 16622.89
04/30/88 15506.00 16749.22

05/31/88 15556.13 16700.82
06/30/88 15691.10 16945.15
07/31/88 15759.45 17055.63
08/31/88 15777.31 17070.64
09/30/88 15967.67 17379.62
10/31/88 16178.16 17686.37
11/30/88 16092.17 17524.36
12/31/88 16251.53 17703.64
01/31/89 16429.69 18069.75
02/28/89 16308.80 17863.57
03/31/89 16241.42 17820.88
04/30/89 16530.88 18243.95
05/31/89 16804.81 18622.87
06/30/89 16969.85 18875.77
07/31/89 17135.92 19132.67
08/31/89 17047.25 18945.36
09/30/89 17035.99 18888.53
10/31/89 17184.29 19118.97
11/30/89 17390.96 19453.55
12/31/89 17523.27 19613.07
01/31/90 17464.57 19520.89
02/28/90 17595.79 19694.62
03/31/90 17657.68 19700.53
04/30/90 17504.91 19558.69
05/31/90 17775.12 19985.07
06/30/90 17911.18 20160.93
07/31/90 18126.17 20457.30
08/31/90 18091.03 20160.67
09/30/90 18213.54 20172.77
10/31/90 18398.31 20537.89
11/30/90 18642.93 20950.70
12/31/90 18743.90 21042.89
01/31/91 18946.99 21324.86
02/28/91 19130.80 21510.39
03/31/91 19216.05 21518.99
04/30/91 19422.60 21805.20
05/31/91 19569.51 21999.26
06/30/91 19574.61 21977.26
07/31/91 19786.84 22245.38
08/31/91 19977.17 22539.02
09/30/91 20228.92 22832.03
10/31/91 20417.87 23037.52
11/30/91 20432.19 23102.02
12/31/91 20840.76 23598.72
01/31/92 20955.43 23652.99
02/29/92 21032.05 23660.09
03/31/92 20988.60 23669.55
04/30/92 21165.16 23880.21
05/31/92 21345.04 24162.00
06/30/92 21586.61 24567.92
07/31/92 22214.25 25304.96
08/31/92 22049.33 25056.97
09/30/92 22154.12 25219.84
10/31/92 21849.19 24972.69

11/30/92 22296.37 25419.70
12/31/92 22542.93 25678.98
01/31/93 22811.81 25976.86
02/28/93 23635.88 26917.22
03/31/93 23406.02 26631.89
04/30/93 23628.09 26900.88
05/31/93 23779.74 27051.52
06/30/93 24097.73 27503.28
07/31/93 24156.25 27539.04
08/31/93 24649.83 28111.85
09/30/93 24923.79 28432.32
10/31/93 24958.93 28486.34
11/30/93 24793.92 28235.67
12/31/93 25302.23 28831.44

$10,000 OVER 10 YEARS: Let's say you invested $10,000 in Fidelity Limited
Term Municipals on December 31, 1983. As the chart shows, by December 31,
1993, the value of your investment would have grown to $25,302 - a 153.02%
increase on your initial investment. For comparison, look at how the Lehman
Brothers Municipal Bond Index did over the same period. With dividends
reinvested, the same $10,000 would have grown to $28,833 - a 188.33%
increase.

Income return 5.54% 6.21% 6.77% 6.83% 6.96%

Capital gain returns 2.64% 1.12% 1.72% 0.57% 0%

Change in share price 4.06% 0.84% 2.70% (0.43)% 0.87%

Total return 12.24% 8.17% 11.19% 6.97% 7.83%

Dividends per share n/a 26.14(cents) 51.65(cents)

Annualized dividend rate n/a 5.13% 5.18%

Annualized yield 4.70% n/a n/a

Tax-equivalent yield 7.34% n/a n/a

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 $10.10 over
the past six months and $9.97 over the past year, you can compare the
fund's income over these two periods. The 30-day annualized yield is a
standard formula for all funds based on the yields of the bonds in the
fund, averaged over the past 30 days. This figure shows you the yield
characteristics of the fund's investments at the end of the period. It also
helps you compare funds from different companies on an equal basis. The
tax-equivalent yield shows what you would have to earn on a taxable
investment to equal the fund's tax-free yield, if you're in the 36% federal
tax bracket.
FUND TALK: THE MANAGER'S OVERVIEW

MARKET RECAP
Generally, interest rates fell
during the 12 months ended
December 31, 1993. As a result,
bond prices rose and most
fixed-income investors -
including those in tax-free bonds
- - enjoyed attractive returns. The
period began with worries of
rising interest rates. The
economic recovery was finally
taking hold, and the spending
plans of the president-elect were
still unclear. But the bond market
signaled its approval as
President Clinton promised to
reduce the deficit and fight
inflation. The yield on the
benchmark 30-year Treasury
bond declined steadily and
reached an historic low of 5.79%
in mid-October. By year-end, mild
inflation fears, fueled by a
strengthening economy, had
pushed up the yield on the
30-year bond to 6.35%. Two
factors affected tax-free bonds
specifically: on the positive side,
higher federal taxes - discussed
all year and approved in August
- - boosted demand. At the same
time, record new issuance kept
supplies high, which somewhat
dampened prices. Overall during
the period, tax-free bonds
performed well compared to other
fixed-income investments. The
Lehman Brothers Municipal Bond
Index - a broad measure of the
tax-free bond market - rose
12.29%. By comparison, the
Lehman Brothers Aggregate
Bond Index - which tracks
investment-grade taxable bonds
- - rose only 9.75%, due in part to
relatively poor performance by
mortgage- backed securities.
An interview with David Murphy, Portfolio Manager of Fidelity
Limited Term Municipals
Q. DAVID, HOW DID THE FUND PERFORM?
A. Quite well. Total return for the 12 months ended December 31, 1993 was
12.24%. That beat the average intermediate municipal bond fund tracked by
Lipper Analytical Services, which returned 10.36%.
Q. WHAT BOOSTED PERFORMANCE OVER THE PAST YEAR?
A. 1993 provided a near ideal environment for investing in municipal bonds.
I think the year could represent a high water mark for munis when we look
back on it. Interest rates fell during most of the year, which helped push
bond prices up. The price run-up was somewhat held
in check, however, by the record level of volume in the muni market, which
forced issuers to sell bonds at lower prices. A lot of this issuance was
due to a process known as prerefunding, which is popular when rates fall.
Issuers sell new lower-interest bonds, invest the proceeds in short-term
government securities, and pay off the old bonds at the earliest call date.
Essentially this wipes old, higher interest debt off the balance sheet.
Q. WHICH SPECIFIC STRATEGIES HELPED THE FUND?
A. The fund aggressively reached for high income, which helped total
return. I did this in four ways. First, over the last six months I kept at
least 35% of the fund's investments in bonds with 10- to 15-year
maturities. I felt these bonds had the most attractive yields when weighed
against their risk, and indeed they were among the best performers. The
yield curve flattened this year, meaning the difference in yields between
long and short-term bonds narrowed. So bonds with the longest maturities -
20 years or more - didn't have high enough yields to offset their increased
risk.
Q. WHAT ELSE?
A. Second, I inched up the fund's stake in student loans from 5.5% of the
fund at the end of June, to 8.5% at the end of December. These bonds offer
higher yields because there is a slight risk that they will be repaid
early. But, by using our internal research, I selected those I felt were
safe from prepayments. Third, I kept up to 18.5% of the fund in BBB-rated
bonds over the last six months. Those are the lowest quality bonds in which
the fund can invest, but their reward is higher yields. Finally, I had
about 30% of the fund invested in zero-coupon bonds through most of the
year. I buy these bonds at a discount and they're non-callable, which makes
their prices particularly sensitive to changes in interest rates. When
rates fell this year, these bonds performed very well.
Q. HOW DID YOU REDUCE THE RISKS ASSOCIATED WITH ZEROS AND BBBS?
A. To offset the volatility of the zero-
coupons, I bought some premium coupon bonds. You pay more for these issues,
but they offer higher yields. That helps steady the fund's income stream
since zero-
coupon bonds don't pay interest until they mature. Plus, premium coupon
bonds are much less volatile than the zero-coupons.
Q. WHAT ABOUT BBBS?
A. I helped offset their increased risk by investing more heavily in bonds
with the highest quality rating: AAA. During most of 1993, AA-rated bonds
weren't offering enough of an increase in yield - compared to AAA-rated
bonds - to compensate for their higher risk. So, I increased the fund's
stake in the higher rated AAA bonds from 36% a year ago to 39% on December
31. And I decreased its stake in AA-rated issues from 24% a year ago to 12%
by year's end. That helped lessen the amount of overall risk assumed by the
fund.
Q. YOU MUST HAVE REGRETS. WHAT WERE THEY?
A. Two come to mind. I had a 21% stake in general obligation bonds at the
end of the year, and I probably should have owned more. These bonds
performed well in '93. Investors bid up their prices, anticipating
improvements in the budgets of municipalities, based on a strengthening
economy. Also, housing bonds performed poorly. I decreased the fund's stake
in housing during the year, from 5.0% to 1.9%, but I wish I'd cut back
faster. Many housing bonds were hurt by prepayments, which happened when
homeowners refinanced their mortgages.
Q. WHAT'S YOUR OUTLOOK FOR THE NEW YEAR?
A. I think interest rates will stabilize and move within a narrow range
over the next six months. If that happens, the supply of muni bonds should
shrink because prerefundings would slow dramatically. Demand should remain
constant or increase, as investors try to beat higher taxes. These dynamics
should push up prices of muni bonds, which would help the fund. But as the
supply goes down, issuers will be offering lower yields on new bonds. I
believe investors may try to buy medium quality bonds, like BBBs, to
compensate. I expect to add up to 5% more in BBB-rated bonds to the fund in
the coming months. An improving economy should boost the credit ratings of
some of these issuers, which would make their bonds more valuable.
FUND FACTS
GOAL: high current income
free from federal taxes while
preserving principal
START DATE: April 15, 1977
SIZE: as of December 31,
1993, over $1.1 billion
MANAGER: David L. Murphy,
since December 1989;
manager, Spartan
Intermediate Municipal Fund,
since April 1993; Fidelity
New York
Insured Portfolio, since
October 1992; Spartan New
Jersey Municipal High Yield
Portfolio, since April 1991;
Spartan Short-Intermediate
Municipal Fund, since
December 1989
(checkmark)
DAVID MURPHY ON RISK VS.
REWARD:
"When I buy municipal bonds,
my goal is always to find the
highest yields possible, while
keeping risk in check. Over
the past six months, I've
found the best values in
municipal bonds with 10- to
12-year maturities. As interest
rates have fallen, yields on
bonds with longer maturities
- - 20 years or more - have
dropped more than yields on
shorter bonds. So it hasn't
made sense to go after too
many of the longer bonds
because their yields weren't
high enough to offset their
additional risk. But as rates
have stabilized and even
inched up a bit, bonds with
slightly longer maturities are
becoming more attractive. So
I've started to move some of
the fund's investments out of
10-year bonds and into those
with 13- to 15-year maturities.
"
(bullet) $290 billion dollars in
municipal bonds were issued in
the United States last year.
That broke the old volume
record, $235 billion, set in 1992.
DISTRIBUTION
The Board of Trustees of
Fidelity School Street Trust
voted to pay on February 7,
1994, to the shareholders of
record at the opening of
business on February 4,
1994 a distribution of $.02
derived from captial gains
realized from sales of portfolio
securities.
INVESTMENT CHANGES

TOP FIVE STATES AS OF NOVEMBER 30, 1993
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO

New York 11.1 6.8

Texas 10.3 10.3

Massachusetts 6.2 6.8

California 6.1 8.5

Washington 5.4 4.6

TOP FIVE SECTORS AS OF NOVEMBER 30, 1993
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO

General Obligation 21.4 22.9

Electric Revenue 17.0 16.9

Health Care 16.7 15.5

Escrowed/Pre-Refunded 10.1 9.5

Education 8.8 5.6

AVERAGE YEARS TO MATURITY AS OF NOVEMBER 30, 1993
6 MONTHS AGO

Years 10.3 9.4

AVERAGE YEARS TO MATURITY SHOWS THE AVERAGE TIME UNTIL THE PRINCIPAL OF THE
BONDS IN THE FUND IS EXPECTED TO BE REPAID, WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF NOVEMBER 30, 1993
6 MONTHS AGO

Years 8.0 7.2

DURATION SHOWS HOW MUCH A BOND'S PRICE FLUCTUATES WITH CHANGES IN INTEREST
RATES. IF RATES RISE 1%, FOR EXAMPLE, THE SHARE PRICE OF A FUND WITH A
FIVE-YEAR DURATION WILL FALL 5%.
QUALITY DIVERSIFICATION AS OF DECEMBER 31, 1993
(MOODY'S RATINGS)
Aaa 43.9%
Aa, A 31.7%
Baa 21.3%
Non-rated 2.6%
Row: 1, Col: 1, Value: 2.6
Row: 1, Col: 2, Value: 21.3
Row: 1, Col: 3, Value: 31.7
Row: 1, Col: 4, Value: 43.9
THIS CHART EXCLUDES SHORT-TERM INVESTMENTS. WHERE MOODY'S RATINGS ARE NOT
AVAILABLE, WE HAVE USED S&P RATINGS.
INVESTMENTS DECEMBER 31, 1993

Showing Percentage of Total Value of Investment in Securities

MUNICIPAL BONDS - 99.5%
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
ALABAMA - 2.2%
Alabama Docks Dept. Coal Rev. Rfdg. 10% 10/1/05,
(Pre-Refunded to 10/1/95 @ 103) (e) $ 7,355 $ 8,302 010515AM
Alabama Gen. Oblig. Rfdg. (Cap. Appreciation):
0% 3/1/01 11,000 7,961 010410ZP
0% 9/1/01 7,500 5,306 010410ZQ
Alabama Hsg. Fin. Auth. Single Family Mtg. Rev. Series B,
0% 10/1/14 37,650 4,407 010308HH
25,976
ALASKA - 3.7%
Anchorage Elec. Util. Rev. Rfdg. (Sr. Lien):
8% 12/1/06, (MBIA Insured) 1,775 2,252 033177SF
8% 12/1/07, (MBIA Insured) 1,310 1,665 033177SG
Anchorage Hosp. Rev. Rfdg. (Sisters of Providence Proj.)
Series 1991, 6.75% 10/1/02 2,575 2,907 033204CF
Hot Springs Ind. Dev. Rev. Rfdg. (Willamette Industries, Inc.)
6.65% 12/1/02 7,000 8,015 441089AA
North Slope Borough (Cap. Appreciation):
Series A:
0% 6/30/02, (MBIA Insured) 20,000 13,450 662523RD
0% 6/30/03, (MBIA Insured) 10,000 6,363 662523RF
Series B, 0% 1/1/02, (MBIA Insured) 13,500 9,298 662523RQ
43,950
ARIZONA - 0.6%
Gila County Ind. Dev. Auth. Poll. Cont. Rev.
(Inspiration Consolidated Copper Corp.) 11.25% 4/1/01,
(Pre-Refunded to 2/15/01 @ 100) (e) 2,230 2,612 375249AB
Phoenix Str. & Hwy. Rev. Rfdg. (Jr. Lien) 6.30% 7/1/03 3,720 4,185
718867LN
6,797
CALIFORNIA - 6.1%
ABAG Fin. Auth. for Nonprofit Corp. Cfts. of Prtn.
(Stanford Univ. Hosp.):
5% 11/1/04 3,400 3,447 00037EBA
5.125% 11/1/05 2,000 2,035 00037EBB
California Hsg. Fin. Agcy. Rev. (Home Mtg.) Series 1983 A,
0% 2/1/15 39,133 4,892 130329QE
California Pub. Wks. Board Lease Rev. (California Univ. Proj.)
Series A, 5.50% 6/1/14 4,000 4,040 13068GRB
California Statewide Commtys. Dev. Auth. Rev. Ctfs. of Prtn.
Rfdg. (Hosp. Triad Healthcare):
5.90% 8/1/01 3,300 3,498 130909CK
6% 8/1/02 4,145 4,420 130909CL
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
CALIFORNIA - CONTINUED
Fresno Swr. Rev. Series A-1, 5% 9/1/08, (AMBAC Insured) $ 5,000 $ 4,975
358229CD
Los Angeles County Ctfs. of Prtn. (Multiple Cap. Facs. Proj.)
7.76% 11/1/01 (a) 4,800 5,400 544663R9
Los Angeles Dept. Wtr. & Pwr. Wtrwks. Rev. 9% 4/15/04 1,610 2,087
544524GE
Los Angeles Unltd. Tax Series A, 5.25% 9/1/07 5,165 5,288 544350ZR
Northern California Pwr. Agcy.:
Multiple Cap. Facs. Rev. Series A:
6% 8/1/03, (MBIA Insured) 2,400 2,667 664842AH
6.10% 8/1/04, (MBIA Insured) 1,750 1,951 664842AJ
Pub. Pwr. Rev. Rfdg. (Geothermal Proj. #3) Series A:
5.60% 7/1/06 2,000 2,105 664843RT
5.80% 7/1/09 3,000 3,146 664843RZ
Port Oakland Port. Rev. Rfdg. Series F, 0% 11/1/05,
(MBIA Insured) 3,410 1,905 734897RP
Riverside County Trans. Commission Sales Tax Rev. Ltd. Tax
5.75% 6/1/07, (AMBAC Insured) 3,000 3,233 769125BG
San Francisco City & County Swr. Rev. Rfdg. 5.90% 10/1/08,
(AMBAC Insured) 2,000 2,150 797654HK
San Jose Redev. Agcy. Tax. Allocation (Merged Area
Redev. Proj.) 6% 8/1/07, (MBIA Insured) 2,500 2,722 798147KQ
Southern California Pub. Pwr. Auth. Pwr. Proj. Rev.:
0% 7/1/15, (Pre-Refunded to 7/1/00 @ 101) (b)(e) 2,000 2,127 842475DL
Series 11, 0% 7/1/15, (Pre-Prefunded to 7/1/00 @ 101) (e) 14,000
10,587 842475JW
72,675
COLORADO - 4.1%
Colorado Health Facs. Auth. Rev. Rfdg. (Rocky Mountain
Adventist) 6.25% 2/1/04 26,100 27,079 1964732L
Colorado Student Oblig. Bond Auth. Student Loan Rev.
Series A, 6.75% 9/1/99 4,150 4,534 196777GE
Denver City & County Arpt. Rev.:
Series A:
6.875% 11/15/00 1,950 2,106 249181JL
7.25% 11/15/03 1,000 1,120 249181JP
7.50% 11/15/06 4,000 4,530 249181JQ
9.75% 12/1/95 9,300 9,765 249181FA
49,134
CONNECTICUT - 0.2%
Connecticut Hsg. Fin. Auth. (Hsg. Mtg. Fin. Prog.) Series D,
8.50% 11/15/01 2,000 2,105 207745ZJ
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
DISTRICT OF COLUMBIA - 3.8%
District of Columbia:
Rfdg.:
Series A, 5.625% 6/1/02, (AMBAC Insured) $ 5,250 $ 5,578 254760N5
Series B, 0% 6/1/02, (MBIA Insured) 2,880 1,908 254760SH
Series A, 6.75% 6/1/06, (AMBAC Insured) 5,000 5,769
Series E, 5% 6/1/01, (FGIC Insured) 3,850 3,941 254760K2
5.60% 6/1/07, (AMBAC Insured) 2,000 2,083 254760U3
Hosp. Rev. Rfdg. (Medlantic Healthcare Group - Washington
Hosp. Ctr.):
Series A:
6.50% 8/15/96 1,100 1,148 254764BT
6.75% 8/15/98 2,600 2,779 254764BV
6.80% 8/15/99 2,600 2,792 254764BW
7% 8/15/05 5,730 6,260 254764BY
Series B:
5.80% 8/15/97 4,035 4,126 254764CY
6% 8/15/98 4,265 4,404 254764CZ
6.25% 8/15/00 4,805 5,033 254764DB
45,821
FLORIDA - 0.5%
Florida Tpk. Auth. Rev. Rfdg. Series A, 5.25% 7/1/07,
(FGIC Insured) 4,500 4,601 343136EX
Orlando & Orange County Expwy. Auth. Rev. Rfdg. (Jr. Lien)
Series A, 5% 7/1/08, (FGIC Insured) 1,755 1,746 686543KM
6,347
GEORGIA - 0.3%
Floyd County Hosp. Auth. Rev. Anticipated Ctfs.
(Floyd Med. Ctr. Proj.) 5% 7/1/05, (FGIC Insured) 3,140 3,171 343575DU
IDAHO - 0.5%
Idaho Falls Rfdg.:
0% 4/1/04, (FGIC Insured) 4,040 2,449 451182FA
0% 4/1/05, (FGIC Insured) 7,000 3,999 451182FB
6,448
ILLINOIS - 1.6%
Cook County Commty. College Dist. Gen. Oblig. #508
Ctfs. of Prtn. 8.30% 1/1/00, (FGIC Insured) 1,515 1,801 216084AD
Illinois Health Facs. Auth. Rev. Rfdg. (Palos Commty. Hosp.)
Series A, 9.375% 11/1/99 690 766 452008RF
Illinois Univ. Rev. (Auxiliary Facs. Sys.) 0% 10/1/07,
(MBIA Insured) 7,505 3,630 914353EV
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
ILLINOIS - CONTINUED
Metropolitan Pier & Exposition Auth. Dedicated
State Tax Rev. (McCormick Place Expansion Proj.)
Series A, 0% 6/15/07, (FGIC Insured) (b) $ 5,000 $ 4,538 592247CN
Rock Island County Ctfs. of Prtn.:
10% 12/1/97, (FGIC Insured) 965 1,166 772321AG
10% 12/1/98, (FGIC Insured) 940 1,166 772321AH
Rolling Meadows Multi-Family Mtg. Rev. Rfdg.
(Woodfield Gardens Apts. Proj.) 7.75% 2/1/04,
LOC Banque Paribas 5,000 5,206 775702BV
South Beloit Ind. Dev. Rev. Rfdg. (Beloit Corp. Proj.) 7.60%
12/1/11 1,000 1,150 836468AB
19,423
INDIANA - 1.9%
Hammond Poll. Cont. Rev. (Commonwealth Edison Co. Proj.)
9.125% 6/15/10 2,000 2,028 408405AB
Indiana Employment Dev. Poll. Cont. Rev. 5.70% 10/1/99 5,000 5,188
454901AB
Indianapolis Arpt. Fac. Rev. Economic Dev. Rfdg. (Federal
Express Corp. Proj.) 6.85% 4/1/17 (c) 7,000 7,175 455256AB
Marion County Hosp. Auth. Facs. Rev.:
Rfdg. (Univ. Heights Hosp.) 8.625% 10/1/99,
(AMBAC Insured) 3,950 4,780 569037JA
(Commty. Hosp. Indianapolis Proj.) 9.25% 5/1/98,
(Escrowed to Maturity) (e) 2,935 3,286 569037DB
22,457
IOWA - 0.5%
Iowa Student Loan Liquidity Corp. Student Loan Rev. Series A,
6.25% 3/1/00 5,080 5,493 462590BS
KANSAS - 0.5%
Kansas City Util. Sys. Rev. Rfdg. & Impt. 0% 3/1/04,
(AMBAC Insured) 8,750 5,327 484790FA
KENTUCKY - 0.3%
Kentucky Tpk. Auth. Resource Recovery Road Rev.
13.125% 7/1/09, (Pre-Refunded to 1/1/94 @ 102) (e) 5 5 491557EW
Owensboro Elec. Lt. & Pwr. Rev. Rfdg. Series B, 0% 1/1/02,
(AMBAC Insured) 5,825 3,997 691021HT
4,002
LOUISIANA - 3.8%
Bastrop Ind. Dev. Board Poll. Cont. Rev. Rfdg. (Int'l. Paper Co.
Proj.) 6.90% 3/1/07 21,800 24,525 070318AF
De Soto Parish Poll. Cont. Rev. (Int'l. Paper Co. Proj.)
Series A, 5.05% 12/1/02 7,500 7,688 241627AL
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
LOUISIANA - CONTINUED
Louisiana Pub. Facs. Auth. Rev. Student Loan Sr. Series A-1:
6.10% 3/1/00 $ 1,500 $ 1,601 54640AJU
6.10% 9/1/00 3,000 3,217 54640AJW
New Orleans Rfdg. (Cap. Appreciation)
0% 9/1/05, (AMBAC Insured) 16,000 8,860 647634XQ
45,891
MARYLAND - 0.3%
Prince George's County Med. Hosp. Rev.
(Dimensions Health Corp.):
7% 7/1/01 1,250 1,370 741710AJ
7.20% 7/1/06 1,750 1,936 741710AG
3,306
MASSACHUSETTS - 6.2%
Massachusetts Edl. Loan Auth. Loan Rev. Issue C,
7.40% 6/1/98, LOC Rabobank Nederland 4,470 4,599 575633BL
Massachusetts Gen. Oblig.:
Rfdg.:
Series A, 6.50% 8/1/04 5,500 6,236 575823X9
Ltd. Tax Series B, 5.20% 11/1/04 3,500 3,653 575826AM
0% 12/1/00 (b) 3,500 3,146 5758233Y
Massachusetts Health & Edl. Facs. Auth. Rev.:
Rfdg. (Children's Hosp. Corp.) Series B, 10% 1/1/95 220 234 575849LW
(Lawrence Gen. Hosp.) Series B, 7.25% 7/1/01 5,715 6,208 5758504G
(Waltham/Weston Hosp. & Med. Ctr.) Series B, 8% 7/1/02 3,900 4,495
575850L8
Massachusetts Hsg. Fin. Agcy. Single Family Mtg. Purchase
Series 1984 A, 11.375% 12/1/08 155 160 575853FX
Massachusetts Ind. Fin. Agcy. Ind. Rev. Rfdg. (Beloit Corp. Proj.):
Series A, 7.60% 12/1/11 1,000 1,150 575855F4
Series B, 6.50% 12/1/96 612 649 575855F5
Massachusetts Ind. Fin. Agcy. Rev. (Cap. Appreciation)
(Massachusetts Biomedical Research):
Series A-1:
0% 8/1/01 10,800 7,439 575914DW
0% 8/1/02 5,700 3,691 575914DY
Series A-2:
0% 8/1/04 10,800 6,170 575914EA
0% 8/1/05 5,100 2,735 575914EB
0% 8/1/07 5,800 2,719 575914ED
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
MASSACHUSETTS - CONTINUED
Massachusetts Muni. Wholesale Elec. Co. Pwr. Supply Sys. Rev.:
Rfdg. Series A, 6.75% 7/1/05 $ 3,610 $ 4,025 575765HZ
Series B, 6.625% 7/1/03 5,665 6,309 575765HW
Series E:
5.875% 7/1/03, (AMBAC Insured) 2,250 2,433 575765PM
6% 7/1/04, (AMBAC Insured) 7,320 7,970 575765PQ
74,021
MICHIGAN - 2.8%
Detroit Convention Facs. Rev. Rfdg. (Cobo Hall Expansion Proj.):
5.10% 9/30/04 8,050 8,070 251131BB
5.25% 9/30/06 11,380 11,366 251131BD
Flint Hosp. Bldg. Auth. Rev.:
Rfdg. (Hurley Med. Ctr.) 9.50% 7/1/06 3,000 3,278 339511AQ
(Hurley Med. Ctr.) Series B, 8.125% 7/1/06 2,220 2,448 339511BL
Michigan Bldg. Auth. Rev. Rfdg. (State Bldg. Ottawa Lansing)
7.40% 4/1/99, (MBIA Insured) (Escrowed to Maturity) (e) 1,245 1,393
594613QZ
Michigan Comprehensive Trans. Rev. 8.50% 5/1/95,
(FGIC Insured) 150 161 594636EK
Michigan Strategic Fund:
Ltd. Oblig. Rev. Rfdg. (Eaton Twp. K-mart Corp. Proj.)
5.90% 9/1/01 1,230 1,315 5946924H
Poll. Cont. Rev. (Chrysler Corp. Proj.) 5.70% 10/1/99 5,000 5,193
594693AN
33,224
MINNESOTA - 0.5%
Breckenridge Hosp. Facs. Rev. (Franciscan Sisters Healthcare)
Series B-1, 8.25% 9/1/97 1,090 1,194 106502AK
Southern Minnesota Muni. Pwr. Agcy. Pwr. Supply Sys. Rev.
Rfdg. Series B, 5.80% 1/1/07 5,000 5,331 843375MJ
6,525
MISSISSIPPI - 0.2%
Grenada County Poll. Cont. Rev. (Georgia-Pacific Corp. Proj.)
5.875% 12/1/96 2,250 2,303 397662AB
MISSOURI - 1.4%
Missouri Health & Edl. Facs. Auth. Health Facs. Rev.:
Rfdg. (Barnes-Jewish Inc. Christian-A) 5.10% 5/15/09 2,330 2,295
60635RJA
(Barnes-Jewish Inc. Christian-A) 6% 5/15/08 11,525 12,476 60635RHZ
Missouri Hsg. Dev. Commission (Cap. Appreciation)
0% 9/1/25, (FHA Insured) 74,925 2,341 606353Q5
17,112
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
MULTIPLE STATES - 6.3%
New England Ed. Loan Marketing Corp. Student Loan Rev.:
Rfdg.:
Sr. Issue:
Series A, 6.50% 9/1/02 $ 35,525 $ 39,610 643898AT
D, 6.20% 9/1/00 3,000 3,263 643898AX
D, 6.30% 9/1/02 7,815 8,606 643898AZ
Series G, 5.20% 8/1/02 8,250 8,507 643898BL
Issue A, 5.80% 3/1/02 1,500 1,613 643898BC
District of Columbia Metro Area Trans. Auth. Gross Rev. Rfdg.:
4.70% 7/1/03, (FGIC Insured) 5,000 5,031 938782AU
5% 1/1/06, (FGIC Insured) 3,400 3,426 938782AZ
6% 7/1/07, (FGIC Insured) 4,685 5,159 938782BC
75,215
NEBRASKA - 0.2%
Nebraska Investment Fin. Auth. Hosp. Rev. (Nebraska
Methodist Health Sys.) 6.85% 3/1/02, (MBIA Insured) 2,000 2,300
639902BK
NEVADA - 0.5%
Clark County School Dist. Ltd. Tax Series B, 0% 3/1/05,
(FGIC Insured) 6,570 3,754 181054UZ
Reno Hosp. Rev. (St. Mary's Regional Med. Ctr.) Series A,
5% 5/15/08, (MBIA Insured) 2,465 2,406 759836CS
6,160
NEW HAMPSHIRE - 0.1%
New Hampshire Higher Edl. & Health Facs. Auth. Rev.
(Androscoggin Valley Hosp.) Series A, 7.90% 11/1/98,
(GNMA Coll.) 825 847 644618HX
NEW JERSEY - 0.5%
New Jersey Health Care Facs. Fing. Auth. Rfdg.
(Atlantic City Med. Ctr.) Series C:
6.55% 7/1/03 2,200 2,420 64579CLB
6.80% 7/1/05 2,750 3,063 64579CLE
5,483
NEW YORK - 11.1%
Metropolitan Trans. Auth. Trans. Facs. Rev.:
Rfdg. Series 7:
0% 7/1/08 6,030 2,646 592597G9
0% 7/1/09 5,195 2,175 592597J6
0% 7/1/11 7,590 2,808 592597K2
Series B, 9.75% 7/1/95 3,825 3,997 592598AZ
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
NEW YORK - CONTINUED
New York City:
Series B:
7.50% 2/1/04 $ 6,000 $ 6,915 649652JZ
5.60% 8/15/05 2,625 2,658 649653MM
6.75% 10/1/06 7,440 8,091 649653LJ
Series D, 5.70% 8/15/06 4,900 4,961 649653MT
Series H, 7% 2/1/06 3,000 3,326 649653LA
Short Rites Series C, 7.16027% 8/1/03 (a) 22,000 24,558 649652MT
Sub-Series A-1, 5.70% 8/1/06 2,000 2,025 649653ML
Unltd. Tax. Series B, 7.50% 2/1/05 2,620 3,036 649653JL
New York City Health & Hosp. Corp.:
Rev. Series A, 3.40% 2/15/94 8,490 8,490 649674AK
2.649% 1/13/94, (AMBAC Insured) 3,000 3,000 649674BN
New York State Dorm. Auth. Rev.:
Rfdg. (New York City Univ.):
Series A, 5% 7/1/08, (MBIA Insured) 4,900 4,888 649834SR
Series E, 5.60% 7/1/04, (FGIC Insured) 3,255 3,475 649834SC
(New York City Univ. Sys. Consolidated):
Series D, 8.75% 7/1/02 2,700 3,372 649832JC
2nd Series A, 5.60% 7/1/04, (FGIC Insured) 1,915 2,044 649834GQ
(New York City Univ.) 2nd Series B, 6% 7/1/04,
(FGIC Insured) 5,000 5,481 649834SE
Rfdg. (New York State Univ. Edl. Facs.):
Series A, 5.50% 5/15/07, (FGIC Insured) 1,700 1,770 649834SF
Series B:
5.25% 5/15/04, (FGIC Insured) 11,750 12,205 649834RG
5.25% 5/15/09 2,500 2,450 649834MZ
(New York State Univ. Edl. Facs.):
Series A, 5.20% 5/15/06 3,000 2,970 649834VQ
Series C:
5.10% 5/15/03 3,980 3,980 649834VM
5.20% 5/15/04 4,185 4,190 649834VN
New York State Local Gov't. Assistance Corp.:
Rfdg. (Cap. Appreciation) Series C, 0% 4/1/13 6,510 2,287 649876JL
Series D, 5.10% 4/1/07 2,150 2,145 649876KF
New York State Urban Dev. Corp. Rev. 5.30% 1/1/05 3,170 3,154 650033C3
133,097
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
NORTH CAROLINA - 2.1%
North Carolina Eastern Muni. Pwr. Agcy. Pwr. Sys. Rev. Rfdg.:
Series A, 7.875% 1/1/02 $ 8,000 $ 9,590 658196JZ
Series B, 7% 1/1/08 3,000 3,506 658196NW
Series C, 5.25% 1/1/04 6,885 7,083 658196SS
North Carolina Muni. Pwr. Agcy. #1 Catawba Elec. Rev. Rfdg.
6% 1/1/04 4,750 5,166 658203QD
25,345
OHIO - 1.2%
Franklin County Rev. (Online Computer Library Ctr. Proj.):
Series 1991:
6.50% 7/15/98 745 802 353202AT
6.60% 7/15/99 895 974 353202AU
6.70% 7/15/00 960 1,062 353202AV
6.80% 7/15/01 800 895 353202AW
5.65% 4/15/01 500 521 353202BH
5.75% 4/15/02 1,030 1,078 353202BJ
5.90% 4/15/04 500 523 353202BL
6% 4/15/09 3,000 3,064 353202BM
Lake County Hosp. Impt. Facs. Rev. (Lake Hosp. Sys. Inc.)
6.875% 8/15/11, (AMBAC Insured) (Escrowed
to Maturity) (e) 3,800 4,546 509438DM
Montgomery County Wtr. Rev. Rfdg. (Greater Moraine
Beavercreek) 5% 11/15/03, (AMBAC Insured) 1,050 1,090 613562FG
14,555
OKLAHOMA - 4.2%
Grand River Dam Auth. Rev. Rfdg.:
8% 6/1/02 2,890 3,566 386442PL
5.50% 6/1/03 11,925 12,775 386442PC
5.70% 6/1/05 12,000 12,975 386442PE
5.875% 6/1/07 5,000 5,443 386442PG
Tulsa Ind. Auth. Hosp. Rev. (Tulsa Reg'l. Med. Ctr.):
Series A, 7.625% 6/1/06 12,000 13,440 899652BH
7% 6/1/06 2,080 2,280 899652BV
50,479
OREGON - 0.1%
Tri City Svc. Dist. Swr. Rfdg. 5% 9/1/02 1,620 1,693 895428BR
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
PENNSYLVANIA - 5.0%
Allegheny County:
Series C-34, 0% 2/15/02 (b)(d) $ 26,000 $ 24,765 017285N9
Hosp. Dev. Auth. Rev. (Southside Hosp.) Series A,
8.50% 6/1/01 4,730 5,097 017289F8
Allentown Area Hosp. Auth. Rev. (Sacred Heart Hosp.)
7.25% 7/1/96 2,425 2,534 018347DM
Delaware County Unltd. Tax Rfdg. 0% 11/15/03 5,500 3,417 246001QP
Northampton County Hosp. Auth. Rev. (Easton Hosp.)
Series B, 6.90% 1/1/02 3,660 3,857 663542CH
Pennsylvania Gen. Oblig. Pub. School Bldg. Auth. Lease
Rev. Series BG, 8.10% 11/1/94 245 253 709205YX
Philadelphia Untld. Tax Rfdg. Series A, 5.10% 5/15/02,
(FGIC Insured) 8,330 8,590 717812GK
Philadelphia Gas Wks. Rev. Rfdg. Fourteenth Series A,
4.90% 7/1/96 3,415 3,479 717823LR
Philadelphia Hosp. & Higher Ed. Facs. Auth. Hosp. Rev.
(Temple Univ. Hosp.) Series A:
5.10% 11/15/96 2,245 2,301 717903QN
5.40% 11/15/97 2,290 2,367 717903QQ
5.75% 11/15/97 2,675 2,805 717903QU
59,465
RHODE ISLAND - 0.2%
Rhode Island Student Loan Auth Student Loan Rev. Rfdg.
Series A, 6.40% 12/1/99 2,340 2,513 762315AN
SOUTH CAROLINA - 0.1%
Aiken County Ind. Rev. Rfdg. (Beloit Corp. Proj.)
7.60% 12/1/11 1,500 1,725 008760AX
TENNESSEE - 4.6%
Knox County Health Edl. & Hsg. Facs. Auth. Rev. (Sanders
Alliance Hosp. Facs.) Series C, 7.25% 1/1/10,
(MBIA Insured) (a)(f) 2,500 3,041 499523MN
Knox County Ind. Dev. Board Ind. Rev. Rfdg. (Station 82-4-B)
0% 2/1/16, (Escrowed to Maturity) (e) 5,625 1,434 499530KR
Metropolitan Gov't. Nashville & Davidson County Wtr. & Swr.
Rev. Rfdg. 0% 1/1/12, (FGIC Insured) (b)(d) 54,645 51,025 592098VM
55,500
TEXAS - 10.3%
Austin Util. Sys. Rev.:
Rfdg. Series A:
0% 11/15/01, (MBIA Insured) 15,000 10,425 0524734S
0% 5/15/02, (MBIA Insured) 16,130 10,868 0524734U
(Prior Lien) 9.90% 5/1/98 1,040 1,273 052473LV
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
TEXAS - CONTINUED
Dallas County Rfdg. Unltd. Tax Series A:
0% 8/15/05 $ 7,125 $ 4,026 2346495B
0% 8/15/06 6,700 3,559 2346495D
0% 8/15/07 3,605 1,798 2346495F
Harris County Gen. Oblig.:
Cap. Appreciation Rev. Rfdg. (Toll Road Subordinated Lien):
Series 1991:
0% 8/1/02 8,485 5,621 414003TC
0% 8/1/03 12,570 7,856 414003TE
0% 8/1/05 16,275 9,012 414003TG
0% 8/1/06 13,000 6,760 414003TH
Flood Cont. Dist. Rfdg. 0% 10/1/07 7,000 3,421 414018S7
Houston Wtr. & Swr. Sys. Rev. Rfdg. (Jr. Lien) 0% 12/1/15,
(FGIC Insured) (Pre-Refunded to 12/1/00 @ 103) (b)(e) 36,000 35,775
442436CW
Katy Independent School Dist. Gen. Oblig. Rfdg. Ltd. Tax
Series A, 0% 2/15/07, (PSF Guaranteed) 4,600 2,306 486062PR
Lewisville Independent School Dist. Gen. Oblig. Rfdg.
0% 8/15/08, (PSF Guaranteed) 5,000 2,250 5288272D
Memorial Villages Wtr. Auth. 7% 9/1/00 2,285 2,385 586056BK
Northside Independent School Dist. Gen. Oblig. Rfdg.
0% 2/1/05, (PSF Guaranteed) 6,155 3,508 6670263N
Round Rock Independent School Dist. Rfdg. Unltd. Tax
0% 2/15/07, (PSF Guaranteed) 7,645 3,832 779239L5
San Antonio Elec. & Gas Rev. Rfdg. Series B, 0% 2/1/09,
(FGIC Insured) 10,000 4,450 7962528E
Spring Independent School Dist. Rfdg. Unltd. Tax
0% 2/15/07, (PSF Guaranteed) 7,420 3,719 850000MZ
Texas Hsg. Agcy. Single Family Mtg. Rev. Series A,
10.75% 9/1/96 55 57 882482EF
122,901
UTAH - 4.9%
Intermountain Pwr. Agcy. Pwr. Supply Rev.:
Rfdg. Series G, 0% 7/1/12, (Pre-Refunded to
1/1/03 @ 101) (b)(e) 17,000 14,896 458840LD
Series 1985 B, 0% 7/1/11, (Pre-Refunded to
7/1/00 @ 101) (b)(d)(e) 33,470 36,482 458840GU
Salt Lake County Wtr. Conservancy Dist. Rev. (Cap. Appreciation)
Series A, 0% 10/1/06, (AMBAC Insured) 3,500 1,816 795697CM
Utah Board of Regents Student Loan Series A,
7.60% 11/1/00, (AMBAC Insured) 4,900 5,598 917546BL
58,792
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
VIRGINIA - 0.0%
Louisa Ind. Dev. Auth. Poll. Cont. Rev. (Virginia Elec. & Pwr.
Co. Proj.) 6.75% 5/1/06 $ 245 $ 245 546068AD
Virginia Hsg. Dev. Auth. Residential Mtg. (Single Family Mtg.)
Series 1983 B, 0% 9/1/14 2,705 342 928136FA
587
WASHINGTON - 5.4%
Washington Health Care Facs. Auth. Rev.
(Empire Health Ctr. Group) 3.25% 11/1/94, (MBIA Insured) 2,000 2,010
939780Z6
Washington Pub. Pwr. Supply Sys.:
Nuclear Proj. #1 Rev.:
Rfdg. Series C, 7.75% 7/1/03 1,000 1,210 939827MP
Series A, 7% 7/1/08 3,000 3,514 939827QU
Nuclear Proj. #2 Rev.:
Rfdg.:
Series A, 0% 7/1/06, (MBIA Insured) 12,875 6,743 939828QV
Series C, 7.625% 7/1/10 10,000 11,763 939828MT
Series A, 14.375% 7/1/01 2,000 2,968 939828KC
Nuclear Proj. #3 Rev.:
Rfdg. Series B:
7.375% 7/1/04 7,100 8,201 939830JH
0% 7/1/05, (MBIA Insured) 10,000 5,574 939830MA
0% 7/1/07 11,000 5,376 939830GQ
0% 7/1/10 16,000 6,380 939830HM
0% 7/1/11 9,500 3,551 939830HN
Series B, 0% 7/1/04, (MBIA Insured) 5,700 3,377 939830LU
Series C, 7.50% 7/1/08, (MBIA Insured) 3,000 3,738 939830PV
64,405
WISCONSIN - 0.7%
Beloit Ind. Dev. Rev. Rfdg. (Beloit Corp. Proj.) 7% 12/1/01 1,000 1,144
080644AD
Milwaukee Met. Swr. Dist. Series A, 5.10% 9/1/94 3,500 3,557 602409AY
Wisconsin Hsg. & Econ. Dev. Auth. Homeownership Rev.
Series A, 7.40% 9/1/07 3,265 3,461 976900D5
8,162
TOTAL MUNICIPAL BONDS
(Cost $1,113,506) 1,190,732
MUNICIPAL NOTES (A) - 0.5%
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
CONNECTICUT - 0.1%
Connecticut Spl. Assessment Unemployment Rev.
Series 1993 B, 2.95%, LOC Industrial Bank of Japan,
Mitsubishi Bank Ltd. Japan, VRDN $ 1,700 $ 1,700 207756AR
UTAH - 0.4%
Utah Board of Regents Student Loan Rev. Series 1988 B,
2.80%, (AMBAC Insured), BPA Swiss Bank, VRDN 4,500 4,500 917546BM
TOTAL MUNICIPAL NOTES
(Cost $6,200) 6,200
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,119,706) $ 1,196,932
FUTURES CONTRACTS
AMOUNT IN THOUSANDS EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
SELL
70 U.S. Treasury 5-Year Note Contracts March 1994 $ 7,762 $ 18
THE VALUE OF FUTURES CONTRACTS SOLD AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - .7%
SECURITY TYPE ABBREVIATIONS
VRDN - Variable Rate Demand Notes
LEGEND
1. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
2. Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
3. Security purchased on a delayed delivery basis (see Note 2 of Notes to
Financial Statements).
4. A portion of the security was pledged to cover margin requirements for
futures contracts and delayed delivery purchases. At the period end, the
value of securities pledged amounted to $18,671,000.
5. Security collateralized by an amount sufficient to pay interest and
principal.
6. Inverse floating rate security is a security where the coupon is
inversely indexed to a floating interest rate. The price will be more
volatile than the price of a comparable fixed rate security.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S S&P
RATINGS RATINGS
Aaa, Aa, A 70.8% AAA, AA, A 73.9%
Baa 19.0% BBB 14.8%
Ba 0.0% BB 0.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 2.6%.
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
General Obligation 21.4%
Electric Revenue 17.0
Health Care 16.7
Escrowed/Pre-Refunded 10.1
Others (individually less than 10%) 34.8
TOTAL 100.0%
INCOME TAX INFORMATION
At December 31, 1993, the aggregate cost of investment securities for
income tax purposes was $1,119,706,000. Net unrealized appreciation
aggregated $77,226,000, of which $78,854,000 related to appreciated
investment securities and $1,628,000 related to depreciated investment
securities.
The fund hereby designates $5,145,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) DECEMBER 31, 1993

ASSETS

Investment in securities, at value (cost $1,119,706) $ 1,196,932
(Notes 1 and 2) - See accompanying schedule

Cash 575

Receivable for investments sold 14,839
Regular delivery

Delayed delivery (Note 2) 8,155

Interest receivable 14,126

Receivable for daily variation on futures contracts 3

TOTAL ASSETS 1,234,630

LIABILITIES

Payable for investments purchased $ 14,357
Regular delivery

Delayed delivery (Note 2) 14,085

Dividends payable 6,181

Accrued management fee 393

Other payables and accrued expenses 242

TOTAL LIABILITIES 35,258

NET ASSETS $ 1,199,372

Net Assets consist of:

Paid in capital $ 1,121,427

Accumulated undistributed net realized gain (loss) on 701
investments

Net unrealized appreciation (depreciation) on:

Investment securities 77,226

Futures contracts 18

NET ASSETS, for 120,048 shares outstanding $ 1,199,372

NET ASSET VALUE, offering price and redemption price per $9.99
share ($1,199,372 (divided by) 120,048 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED DECEMBER 31, 1993

INVESTMENT INCOME $ 67,654
Interest

EXPENSES

Management fee (Note 4) $ 4,805

Transfer agent, accounting and custodian fees and 1,695
expenses (Note 4)

Non-interested trustees' compensation 5

Registration fees 123

Audit 45

Legal 14

Miscellaneous 15

TOTAL EXPENSES 6,702

NET INVESTMENT INCOME 60,952

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
(NOTE 1)
Net realized gain (loss) on:

Investment securities 33,719

Futures contracts 1,526 35,245

Change in net unrealized appreciation (depreciation) on:

Investment securities 37,899

Futures contracts (46) 37,853

NET GAIN (LOSS) 73,098

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM $ 134,050
OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

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

1993 1992

INCREASE (DECREASE) IN NET ASSETS

Operations $ 60,952 $ 49,164
Net investment income

Net realized gain (loss) on investments 35,245 7,126

Change in net unrealized appreciation (depreciation) 37,853 8,581
on
investments

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 134,050 64,871
FROM OPERATIONS

Distributions to shareholders from: (60,952) (49,164)
Net investment income

Net realized gain (26,367) (9,895)

In excess of net realized gain (1,842) -

TOTAL DISTRIBUTIONS (89,161) (59,059)

Share transactions 760,870 697,485
Net proceeds from sales of shares

Reinvestment of distributions from: 46,666 37,147
Net investment income

Net realized gain 22,920 8,089

Cost of shares redeemed (651,877) (468,495)

Net increase (decrease) in net assets resulting from 178,579 274,226
share transactions

TOTAL INCREASE (DECREASE) IN NET ASSETS 223,468 280,038

NET ASSETS

Beginning of period 975,904 695,866

End of period $ 1,199,372 $ 975,904

OTHER INFORMATION
Shares

Sold 76,683 72,686

Issued in reinvestment of distributions from: 4,678 3,879
Net investment income

Net realized gain 2,310 846

Redeemed (65,305) (48,857)

Net increase (decrease) 18,366 28,554

</TABLE>

FINANCIAL HIGHLIGHTS

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

1993 1992 1991 1990 1989

SELECTED PER-SHARE DATA

Net asset value, beginning of $ 9.600 $ 9.520 $ 9.270 $ 9.310 $ 9.230
period

Income from Investment .516 .573 .603 .615 .617
Operations
Net investment income

Net realized and unrealized .630 .180 .400 .010 .080
gain (loss) on investments

Total from investment 1.146 .753 1.003 .625 .697
operations

Less Distributions (.516) (.573) (.603) (.615) (.617)
From net investment income

From net realized gain on (.220) (.100) (.150) (.050) -
investments

In excess of net realized gain (.020) - - - -
on
investments

Total distributions (.756) (.673) (.753) (.665) (.617)

Net asset value, end of period $ 9.990 $ 9.600 $ 9.520 $ 9.270 $ 9.310

TOTAL RETURN 12.24% 8.17% 11.19% 6.97% 7.83%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period (in $ 1,199 $ 976 $ 696 $ 468 $ 442
millions)

Ratio of expenses to average net .57% .64% .68% .67% .66%
assets

Ratio of net investment income 5.19% 5.94% 6.41% 6.63% 6.70%
to average net assets

Portfolio turnover rate 111% 50% 42% 72% 55%

</TABLE>

NOTES TO FINANCIAL STATEMENTS
For the period ended December 31, 1993

1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Limited Term Municipals (the fund) is a fund of Fidelity School
Street Trust (the trust) (formerly Fidelity Limited Term Municipals) and is
authorized to issue an unlimited number of shares. The trust is registered
under the Investment Company Act of 1940, as amended (the 1940 Act), as an
open-end management investment company organized as a Massachusetts
business trust. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. Securities are valued based upon a computerized matrix
system and/or appraisals by a pricing service, both of which consider
market transactions and dealer-supplied valuations. Short-term securities
maturing within sixty days are valued either at amortized cost or original
cost plus accrued interest, both of which approximate current value.
Securities for which quotations are not readily available through the
pricing service are valued at their fair value as determined in good faith
under consistently applied procedures under the general supervision of the
Board of Trustees.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes information regarding income
taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS.
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 regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
futures and options 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.
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.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective January
1, 1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of December 31, 1992 have been reclassified to
reflect a decrease in paid in capital of $5,335,000 and a decrease in
accumulated net realized loss on investments of $5,335,000.
2. OPERATING POLICIES.
DELAYED DELIVERY TRANSACTIONS. The fund may purchase or sell securities on
a when-issued or forward commitment basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of the
underlying securities and the date when the securities will be delivered
and paid for are fixed at the time the transaction is negotiated. The fund
identifies securities as segregated in its custodial records with a value
at least equal to the amount of the purchase commitment.
FUTURES CONTRACTS AND OPTIONS. The fund may invest in futures contracts and
write options. These investments involve, to varying degrees, elements of
market risk and risks in excess of the amount recognized in the Statement
of Assets and Liabilities. The face or contract amounts reflect the extent
of the involvement the fund has in the particular classes of instruments.
Risks may be caused by an imperfect correlation between movements in the
price of the instruments and the price of the underlying securities and
interest rates. Risks also may arise if there is an illiquid secondary
market for the instruments, or due to the inability of counterparties to
perform.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Options traded
on an exchange are valued using the last sale price or, in the absence of a
sale, the last offering price. Options traded over-the-counter are valued
using dealer-supplied valuations.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $1,449,100,000 and $1,256,524,000, respectively.
The market value of futures contracts opened and closed amounted to
$347,894,000 and $349,749,000, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
fee computed daily and paid monthly, based on the fund's gross income at
the rate of 5% of the gross income and .15% of average net assets. Gross
income includes interest accrued less amortization of premium excluding
accretion of discount. For the period, the management fee was equivalent to
an annual rate of .41% of average net asset.
The Board of Trustees approved a reduction in the management fee from .15%
to .10% of average net assets which FMR voluntarily implemented on July 1,
1993.
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service
Plan (the Plan), and in accordance with Rule 12b-1 of the 1940 Act, FMR or
the fund's distributor, Fidelity Distributors Corporation (FDC), an
affiliate of FMR, may use their resources to pay administrative and
promotional expenses related to the sale of the fund's shares. Subject to
the approval of the Board of Trustees, the Plan also authorizes payments to
third parties that assist in the sale of the fund's shares or render
shareholder support services. FMR or FDC has informed the fund that
payments made to third parties under the Plan amounted to $49,000 for the
period.
TRANSFER AGENT AND ACCOUNTING FEES. United Missouri Bank, N.A. (the Bank)
is the custodian and transfer and shareholder servicing agent for the fund.
The Bank has entered into a sub-contract with Fidelity Service Co. (FSC),
an affiliate of FMR, under which FSC performs the activities associated
with the fund's transfer and shareholder servicing agent and accounting
functions. The fund pays transfer agent fees based on the type, size,
number of accounts and number of transactions made by shareholders. FSC
pays for typesetting, printing and mailing of all shareholder reports,
except proxy statements. The accounting fee is based on the level of
average net assets for the month plus out-of-pocket expenses. For the
period, FSC received transfer agent and accounting fees amounting to
$1,289,000 and $380,000, respectively.
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Fidelity School Street Trust (formerly Fidelity Limited
Term Municipals) and the Shareholders of Fidelity Limited Term Municipals:
We have audited the accompanying statement of assets and liabilities of
Fidelity School Street Trust: Fidelity Limited Term Municipals, including
the schedule of portfolio investments, as of December 31, 1993, and the
related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended
and the financial highlights for each of the five years in the period then
ended. These financial statements and financial highlights are the
responsibility of the fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 1993 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity School Street Trust: Fidelity Limited Term Municipals as of
December 31, 1993, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the
period then ended, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND
Boston, Massachusetts
February 4, 1994
TO CALL FIDELITY

TO WRITE FIDELITY

Please locate the address that is closest to you. We'll give your
correspondence immediate attention and send you written confirmation upon
completion of your request. Please send ALL correspondence about retirement
accounts to Dallas.
(LETTER_GRAPHIC)(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 2269
Boston, MA 02107-2269
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Fidelity Investments
P.O. Box 30280
Salt Lake City, UT 84130-0280
(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
Additional Payments
P.O. Box 2656
Boston, MA 02293-0656
Fidelity Investments
Additional Payments
P.O. Box 620024
Dallas, TX 75262-0024
Fidelity Investments
Additional Payments
P.O. Box 31455
Salt Lake City, UT 84131-0455
OVERNIGHT EXPRESS
Fidelity Investments
Additional Payments
World Trade Center
164 Northern Avenue
Boston, MA 02210
SELLING SHARES
Fidelity Investments
P.O. Box 193
Boston, MA 02103-0878
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Fidelity Investments
P.O. Box 30281
Salt Lake City, UT 84130-0281
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions
World Trade Center
164 Northern Avenue
Boston, MA 02210
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02101-0193
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 620024
Dallas, TX 75262-0024
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
David Murphy, Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
United Missouri Bank, N.A.
Kansas City, MO

Corporate Headquarters
82 Devonshire St., Boston, MA 02109
FIDELITY TAX-FREE BOND FUNDS
Aggressive Tax-Free
California Tax-Free High Yield
California Tax-Free Insured
High Yield Tax-Free
Insured Tax-Free
Limited Term Municipals
Massachusetts Tax-Free High Yield
Michigan Tax-Free High Yield
Minnesota Tax-Free
Municipal Bond
New York Tax-Free High Yield
New York Tax-Free Insured
Ohio Tax-Free High Yield
Spartan(Registered trademark) Aggressive Municipal
Spartan California Municipal High Yield
Spartan Connecticut Municipal High Yield
Spartan Florida Municipal Income
Spartan Intermediate Municipal
Spartan Maryland Municipal Income
Spartan Municipal Income
Spartan New Jersey Municipal High Yield
Spartan New York Municipal High Yield
Spartan Pennsylvania Municipal High Yield
Spartan Short-Intermediate Municipal
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE

Exhibit 5(b)
FORM OF
MANAGEMENT CONTRACT
between
FIDELITY MUNICIPAL TRUST:
FIDELITY MUNICIPAL BOND PORTFOLIO
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
MODIFICATION made this 1st day of January 1994, by and between Fidelity
Municipal Trust, a Massachusetts business trust which may issue one or more
series of shares of beneficial interest (hereinafter called the "Fund"), on
behalf of Fidelity Municipal Bond Portfolio (hereinafter called the
"Portfolio"), and Fidelity Management & Research Company, a
Massachusetts corporation (hereinafter called the "Adviser").
Required authorization and approval by shareholders and Trustees having
been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby
consent, pursuant to Paragraph 6 of the existing Management Contract
modified March 1, 1989, to a modification of said Contract in the manner
set forth below. The Modified Management Contract shall, when executed by
duly authorized officers of the Fund and the Advisor, take effect on the
later of January 1, 1994 or the first day of the month following approval.
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the supervision
of the Fund's Board of Trustees, direct the investments of the Portfolio in
accordance with the investment objective, policies and limitations as
provided in the Portfolio's Prospectus or other governing instruments, as
amended from time to time, the Investment Company Act of 1940 and rules
thereunder, as amended from time to time (the "1940 Act"), and such other
limitations as the Portfolio may impose by notice in writing to the
Adviser. The Adviser shall also furnish for the use of the Portfolio office
space and all necessary office facilities, equipment and personnel for
servicing the investments of the Portfolio; and shall pay the salaries and
fees of all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all personnel of
the Fund or the Adviser performing services relating to research,
statistical and investment activities. The Adviser is authorized, in its
discretion and without prior consultation with the Portfolio, to buy, sell,
lend and otherwise trade in any stocks, bonds and other securities and
investment instruments on behalf of the Portfolio. The investment policies
and all other actions of the Portfolio are and shall at all times be
subject to control and direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for the
performance by its affiliates of) the management and administrative
services necessary for the operation of the Fund. The Adviser shall,
subject to the supervision of the Board of Trustees, perform various
services for the Portfolio, including but not limited to: (i) providing the
Portfolio with office space, equipment and facilities (which may be its
own) for maintaining its organization; (ii) on behalf of the Portfolio,
supervising relations with, and monitoring the performance of, custodians,
depositories, transfer and pricing agents, accountants, attorneys,
underwriters, brokers and dealers, insurers and other persons in any
capacity deemed to be necessary or desirable; (iii) preparing all general
shareholder communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered, maintaining
the registration and qualification of the Portfolio's shares under federal
and state law; and (vii) investigating the development of and developing
and implementing, if appropriate, management and shareholder services
designed to enhance the value or convenience of the Portfolio as an
investment vehicle.
The Adviser shall also furnish such reports, evaluations, information or
analyses to the Fund as the Fund's Board of Trustees may request from time
to time or as the Adviser may deem to be desirable. The Adviser shall make
recommendations to the Fund's Board of Trustees with respect to Fund
policies, and shall carry out such policies as are adopted by the Trustees.
The Adviser shall, subject to review by the Board of Trustees, furnish such
other services as the Adviser shall from time to time determine to be
necessary or useful to perform its obligations under this Contract.
(c) The Adviser shall place all orders for the purchase and sale of
portfolio securities for the Portfolio's account with brokers or dealers
selected by the Adviser, which may include brokers or dealers affiliated
with the Adviser. The Adviser shall use its best efforts to seek to execute
portfolio transactions at prices which are advantageous to the Portfolio
and at commission rates which are reasonable in relation to the benefits
received. In selecting brokers or dealers qualified to execute a particular
transaction, brokers or dealers may be selected who also provide brokerage
and research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934) to the Portfolio and/or the other accounts
over which the Adviser or its affiliates exercise investment discretion.
The Adviser is authorized to pay a broker or dealer who provides such
brokerage and research services a commission for executing a portfolio
transaction for the Portfolio which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if the Adviser determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This determination may
be viewed in terms of either that particular transaction or the overall
responsibilities which the Adviser and its affiliates have with respect to
accounts over which they exercise investment discretion. The Trustees of
the Fund shall periodically review the commissions paid by the Portfolio to
determine if the commissions paid over representative periods of time were
reasonable in relation to the benefits to the Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor. The
Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of the
Fund are or may be or become interested in the Adviser as directors,
officers or otherwise and that directors, officers and stockholders of the
Adviser are or may be or become similarly interested in the Fund, and that
the Adviser may be or become interested in the Fund as a shareholder or
otherwise.
3. The Adviser will be compensated on the following basis for the services
and facilities to be furnished hereunder. The Adviser shall receive a
monthly management fee, payable monthly as soon as practicable after the
last day of each month, composed of a Group Fee Rate and an Individual Fund
Fee Rate.
(a) Group Fee Rate. The Group Fee Rate shall be based upon the monthly
average of the net assets of the registered investment companies having
Advisory and Service or Management Contracts with the Adviser (computed in
the manner set forth in the charter of each investment company) determined
as of the close of business on each business day throughout the month. The
Group Fee Rate shall be determined on a cumulative basis pursuant to the
following schedule.

Average Annualized
Net Fee Rate
Assets (for each level)

0 - $3 billion .3700%

3 - 6 .3400

6 - 9 .3100

9 - 12 .2800

12 - 15 .2500

15 - 18 .2200

18 - 21 .2000

21 - 24 .1900

24 - 30 .1800

30 - 36 .1750

36 - 42 .1700

42 - 48 .1650

48 - 66 .1600

66 - 84 .1550

84 - 120 .1500

120 - 174 .1450

174 - 228 .1400

228 - 282 .1375

282 - 336 .1350

Over 336 .1325

(b) Individual Fund Fee Rate. The Individual Fund Fee Rate shall be
.25%.
The sum of the Group Fee Rate, calculated as described above to the
nearest millionth, and the Individual Fund Fee Rate shall constitute the
annual management fee rate. One twelfth of the annual management fee shall
be applied to the average of the net assets of the Portfolio (computed in
the manner set forth in the Declaration of Trust of the Fund) determined as
of the close of business on each business day throughout the month.
(c) In case of termination of this Contract during any month, the fee
for that month shall be reduced proportionately on the basis of the number
of business days during which it is in effect, and the fee computed upon
the average net assets for the business days it is so in effect for that
month.
4. It is understood that the Portfolio will pay all its expenses other
than those expressly stated to be payable by the Adviser hereunder, which
expenses payable by the Portfolio shall, include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in
connection with the purchase or sale of securities and other investment
instruments; (iii) fees and expenses of the Fund's Trustees other than
those who are "interested persons" of the Fund or the Adviser; (iv) legal
and audit expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses relating to the registration and
qualification of the Fund and the Portfolio's shares for distribution under
state and federal securities laws; (vii) expenses of printing and mailing
reports and notices, and proxy material to shareholders of the Portfolio;
(viii) all other expenses incidental to holding meetings of the Portfolio's
shareholders, including proxy solicitations therefor; (ix) a pro rata
share, based on relative net assets of the Portfolio and other registered
investment companies having Advisory and Service or Management Contracts
with the Adviser, of 50% of insurance premiums for fidelity and other
coverage; (x) its proportionate share of association membership dues; (xi)
expenses of typesetting for printing Prospectuses and Statements of
Additional Information and supplements thereto; (xii) expenses of printing
and mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a party
and the legal obligation which the Portfolio may have to indemnify the
Fund's Trustees and officers with respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and engage
in other activities, provided, however, that such other services and
activities do not, during the term of this Contract, interfere, in a
material manner, with the Adviser's ability to meet all of its obligations
with respect to rendering services to the Portfolio hereunder. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Adviser,
the Adviser shall not be subject to liability to the Portfolio or to any
shareholder of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Contract shall continue in force until June 30,1994
and indefinitely thereafter, but only so long as the continuance after such
date shall be specifically approved at least annually by vote of the
Trustees of the Fund or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Contract may be modified by mutual consent, such consent on the
part of the Fund to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of
this paragraph 6, the terms of any continuance or modification of this
Contract must have been approved by the vote of a majority of those
Trustees of the Fund who are not parties to the Contract or interested
persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract without payment of any
penalty, by action of its Trustees or Board of Directors, as the case may
be, or with respect to the Portfolio by vote of a majority of the
outstanding voting securities of the Portfolio. This Contract shall
terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust or
other organizational document and agrees that the obligations assumed by
the Fund pursuant to this Contract shall be limited in all cases to the
Portfolio and its assets, and the Adviser shall not seek satisfaction of
any such obligation from the shareholders or any shareholder of the
Portfolio or any other Portfolios of the Fund. In addition, the Adviser
shall not seek satisfaction of any such obligation from the Trustees or any
individual Trustee. The Adviser understands that the rights and obligations
of any Portfolio under the Declaration of Trust are separate and distinct
from those of any and all other Portfolios.
8. This Agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Massachusetts, without giving effect to the
choice of laws provisions thereof.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, as now in effect or as
hereafter amended, and subject to such orders as may be granted by the
Securities and Exchange Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be signed in
their behalf by their respective officers thereunto duly authorized, and
their respective seals to be hereunto affixed, all as of the date written
above.

Exhibit 5(c)
Form of
MANAGEMENT CONTRACT
between
Fidelity municipal Trust:
FIDELITY INSURED TAX-FREE PORTFOLIO
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
Modification made this 1st day of January 1994 by and between Fidelity
Municipal Trust, a Massachusetts business trust which may issue one or more
series of shares of beneficial interest (hereinafter called the"Fund"), on
behalf of Fidelity Insured Tax-Free Portfolio (hereinafter called
the"Portfolio"), and Fidelity Management & Research Company, a
Massachusetts corporation (hereinafter called the"Adviser").
Required authorization and approval by shareholders and Trustees having
been obtained, the Fund, on behalf of the Portfolio, and the Advisor hereby
consent, pursuant to Paragraph 6 of the existing Management Contract
modified March 1, 1989, to a modification of said Contract in the manner
set forth below. The Modified Management Contract shall, when executed by
duly authorized officers of the Fund and the Adviser, take effect on the
later of January 1, 1994 or the first day of the month following approval.
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the supervision
of the Fund's Board of Trustees, direct the investments of the Portfolio in
accordance with the investment objective, policies and limitations as
provided in the Portfolio's Prospectus or other governing instruments, as
amended from time to time, the Investment Company Act of 1940 and rules
thereunder, as amended from time to time (the "1940 Act"), and such other
limitations as the Portfolio may impose by notice in writing to the
Adviser. The Adviser shall also furnish for the use of the Portfolio office
space and all necessary office facilities, equipment and personnel for
servicing the investments of the Portfolio; and shall pay the salaries and
fees of all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all personnel of
the Fund or the Adviser performing services relating to research,
statistical and investment activities. The Adviser is authorized, in its
discretion and without prior consultation with the Portfolio, to buy, sell,
lend and otherwise trade in any stocks, bonds and other securities and
investment instruments on behalf of the Portfolio. The investment policies
and all other actions of the Portfolio are and shall at all times be
subject to control and direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for the
performance by its affiliates of) the management and administrative
services necessary for the operation of the Fund. The Adviser shall,
subject to the supervision of the Board of Trustees, perform various
services for the Portfolio, including but not limited to: (i) providing the
Portfolio with office space, equipment and facilities (which may be its
own) for maintaining its organization; (ii) on behalf of the Portfolio,
supervising relations with, and monitoring the performance of, custodians,
depositories, transfer and pricing agents, accountants, attorneys,
underwriters, brokers and dealers, insurers and other persons in any
capacity deemed to be necessary or desirable; (iii) preparing all general
shareholder communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered, maintaining
the registration and qualification of the Portfolio's shares under federal
and state law; and (vii) investigating the development of and developing
and implementing, if appropriate, management and shareholder services
designed to enhance the value or convenience of the Portfolio as an
investment vehicle.
The Adviser shall also furnish such reports, evaluations, information or
analyses to the Fund as the Fund's Board of Trustees may request from time
to time or as the Adviser may deem to be desirable. The Adviser shall make
recommendations to the Fund's Board of Trustees with respect to Fund
policies, and shall carry out such policies as are adopted by the Trustees.
The Adviser shall, subject to review by the Board of Trustees, furnish such
other services as the Adviser shall from time to time determine to be
necessary or useful to perform its obligations under this Contract.
(c) The Adviser shall place all orders for the purchase and sale of
portfolio securities for the Portfolio's account with brokers or dealers
selected by the Adviser, which may include brokers or dealers affiliated
with the Adviser. The Adviser shall use its best efforts to seek to execute
portfolio transactions at prices which are advantageous to the Portfolio
and at commission rates which are reasonable in relation to the benefits
received. In selecting brokers or dealers qualified to execute a particular
transaction, brokers or dealers may be selected who also provide brokerage
and research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934) to the Portfolio and/or the other accounts
over which the Adviser or its affiliates exercise investment discretion.
The Adviser is authorized to pay a broker or dealer who provides such
brokerage and research services a commission for executing a portfolio
transaction for the Portfolio which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if the Adviser determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This determination may
be viewed in terms of either that particular transaction or the overall
responsibilities which the Adviser and its affiliates have with respect to
accounts over which they exercise investment discretion. The Trustees of
the Fund shall periodically review the commissions paid by the Portfolio to
determine if the commissions paid over representative periods of time were
reasonable in relation to the benefits to the Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor. The
Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of the
Fund are or may be or become interested in the Adviser as directors,
officers or otherwise and that directors, officers and stockholders of the
Adviser are or may be or become similarly interested in the Fund, and that
the Adviser may be or become interested in the Fund as a shareholder or
otherwise.
3. The Adviser will be compensated on the following basis for the services
and facilities to be furnished hereunder. The Adviser shall receive a
monthly management fee, payable monthly as soon as practicable after the
last day of each month, composed of a Group Fee Rate and an Individual Fund
Fee Rate.
(a) Group Fee Rate. The Group Fee Rate shall be based upon the monthly
average of the net assets of the registered investment companies having
Advisory and Service or Management Contracts with the Adviser (computed in
the manner set forth in the charter of each investment company) determined
as of the close of business on each business day throughout the month. The
Group fee rate shall be determined on a cumulative basis pursuant to the
following schedule.

Average Annualized
Net Fee Rate
Assets (for each level)

0 - $3 billion .3700%

3 - 6 .3400

6 - 9 .3100

9 - 12 .2800

12 - 15 .2500

15 - 18 .2200

18 - 21 .2000

21 - 24 .1900

24 - 30 .1800

30 - 36 .1750

36 - 42 .1700

42 - 48 .1650

48 - 66 .1600

66 - 84 .1550

84 - 120 .1500

120 - 174 .1450

174 - 228 .1400

228 - 282 .1375

282 - 336 .1350

Over 336 .1325

(b) Individual Fund Fee Rate. The Individual Fund Fee Rate shall be
.25%.
The sum of the Group Fee Rate, calculated as described above to the
nearest millionth, and the Individual Fund Fee Rate shall constitute the
annual management fee rate. One twelfth of the annual management fee shall
be applied to the average of the net assets of the Portfolio (computed in
the manner set forth in the Declaration of Trust of the Fund) determined as
of the close of business on each business day throughout the month.
(c) In case of termination of this Contract during any month, the fee
for that month shall be reduced proportionately on the basis of the number
of business days during which it is in effect, and the fee computed upon
the average net assets for the business days it is so in effect for that
month.
4. It is understood that the Portfolio will pay all its expenses other
than those expressly stated to be payable by the Adviser hereunder, which
expenses payable by the Portfolio shall, include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in
connection with the purchase or sale of securities and other investment
instruments; (iii) fees and expenses of the Fund's Trustees other than
those who are "interested persons" of the Fund or the Adviser; (iv) legal
and audit expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses relating to the registration and
qualification of the Fund and the Portfolio's shares for distribution under
state and federal securities laws; (vii) expenses of printing and mailing
reports and notices, and proxy material to shareholders of the Portfolio;
(viii) all other expenses incidental to holding meetings of the Portfolio's
shareholders, including proxy solicitations therefor; (ix) a pro rata
share, based on relative net assets of the Portfolio and other registered
investment companies having Advisory and Service or Management Contracts
with the Adviser, of 50% of insurance premiums for fidelity and other
coverage; (x) its proportionate share of association membership dues; (xi)
expenses of typesetting for printing Prospectuses and Statements of
Additional Information and supplements thereto; (xii) expenses of printing
and mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a party
and the legal obligation which the Portfolio may have to indemnify the
Fund's Trustees and officers with respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and engage
in other activities, provided, however, that such other services and
activities do not, during the term of this Contract, interfere, in a
material manner, with the Adviser's ability to meet all of its obligations
with respect to rendering services to the Portfolio hereunder. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Adviser,
the Adviser shall not be subject to liability to the Portfolio or to any
shareholder of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Contract shall continue in force until June 30, 1994
and indefinitely thereafter, but only so long as the continuance after such
date shall be specifically approved at least annually by vote of the
Trustees of the Fund or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Contract may be modified by mutual consent, such consent on the
part of the Fund to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of
this paragraph 6, the terms of any continuance or modification of this
Contract must have been approved by the vote of a majority of those
Trustees of the Fund who are not parties to the Contract or interested
persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract without payment of any
penalty, by action of its Trustees or Board of Directors, as the case may
be, or with respect to the Portfolio by vote of a majority of the
outstanding voting securities of the Portfolio. This Contract shall
terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust or
other organizational document and agrees that the obligations assumed by
the Fund pursuant to this Contract shall be limited in all cases to the
Portfolio and its assets, and the Adviser shall not seek satisfaction of
any such obligation from the shareholders or any shareholder of the
Portfolio or any other Portfolios of the Fund. In addition, the Adviser
shall not seek satisfaction of any such obligation from the Trustees or any
individual Trustee. The Adviser understands that the rights and obligations
of any Portfolio under the Declaration of Trust are separate and distinct
from those of any and all other Portfolios.
8. This Agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Massachusetts.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, as now in effect or as
hereafter amended, and subject to such orders as may be granted by the
Securities and Exchange Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be signed in
their behalf by their respective officers thereunto duly authorized, and
their respective seals to be hereunto affixed, all as of the date written
above.
[SIGNATURE LINES OMITTED]

Exhibit 5(d)
MANAGEMENT CONTRACT
between
FIDELITY MUNICIPAL TRUST:
Fidelity Michigan Tax-Free High Yield Fund
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
MODIFICATION made this 1st day of January, 1994, by and between Fidelity
Municipal Trust, a Massachusetts business trust which may issue one or more
series of shares of beneficial interest (hereinafter called the "Fund"), on
behalf of Fidelity Michigan Tax-Free High Yield Fund (hereinafter called
the "Portfolio") and Fidelity Management & Research Company, a
Massachusetts corporation (hereinafter called the "Adviser").
Required authorization and approval by shareholders and Trustees having
been obtained, the Fund, on behalf of the Portfolio and Fidelity Management
& Research Company hereby consent, pursuant to Paragraph 6 of the
existing Management Contract dated March 1, 1989, to a modification of said
Contract in the manner set forth below. The Modified Management Contract
shall, when executed by duly authorized officers of the Fund and the
Adviser, take effect on the later of January 1, 1994 or the first day of
the month following approval.
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the supervision
of the Fund's Board of Trustees, direct the investments of the Portfolio in
accordance with the investment objective, policies and limitations as
provided in the Portfolio's Prospectus or other governing instruments, as
amended from time to time, the Investment Company Act of 1940 and rules
thereunder, as amended from time to time (the "1940 Act"), and such other
limitations as the Portfolio may impose by notice in writing to the
Adviser. The Adviser shall also furnish for the use of the Portfolio office
space and all necessary office facilities, equipment and personnel for
servicing the investments of the Portfolio; and shall pay the salaries and
fees of all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all personnel of
the Fund or the Adviser performing services relating to research,
statistical and investment activities. The Adviser is authorized, in its
discretion and without prior consultation with the Portfolio, to buy, sell,
lend and otherwise trade in any stocks, bonds and other securities and
investment instruments on behalf of the Portfolio. The investment policies
and all other actions of the Portfolio are and shall at all times be
subject to the control and direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for the
performance by its affiliates of) the management and administrative
services necessary for the operation of the Fund. The Adviser shall,
subject to the supervision of the Board of Trustees, perform various
services for the Portfolio, including but not limited to: (i) providing the
Portfolio with office space, equipment and facilities (which may be its
own) for maintaining its organization; (ii) on behalf of the Portfolio,
supervising relations with, and monitoring the performance of, custodians,
depositories, transfer and pricing agents, accountants, attorneys,
underwriters, brokers and dealers, insurers and other persons in any
capacity deemed to be necessary or desirable; (iii) preparing all general
shareholder communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered, maintaining
the registration and qualification of the Portfolio's shares under federal
and state law; and (vii) investigating the development of and developing
and implementing, if appropriate, management and shareholder services
designed to enhance the value or convenience of the Portfolio as an
investment vehicle.
The Adviser shall also furnish such reports, evaluations, information or
analyses to the Fund as the Fund's Board of Trustees may request from time
to time or as the Adviser may deem to be desirable. The Adviser shall make
recommendations to the Fund's Board of Trustees with respect to Fund
policies, and shall carry out such policies as are adopted by the Trustees.
The Adviser shall, subject to review by the Board of Trustees, furnish such
other services as the Adviser shall from time to time determine to be
necessary or useful to perform its obligations under this Contract.
(c) The Adviser, at its own expense, shall place all orders for the
purchase and sale of portfolio securities for the Portfolio's account with
brokers or dealers selected by the Adviser, which may include brokers or
dealers affiliated with the Adviser. The Adviser shall use its best efforts
to seek to execute portfolio transactions at prices which are advantageous
to the Portfolio and at commission rates which are reasonable in relation
to the benefits received. In selecting brokers or dealers qualified to
execute a particular transaction, brokers or dealers may be selected who
also provide brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934) to the Portfolio
and/or the other accounts over which the Adviser or its affiliates exercise
investment discretion. The Adviser is authorized to pay a broker or dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Adviser determines in good faith that
such amount of commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer. This
determination may be viewed in terms of either that particular transaction
or the overall responsibilities which the Adviser and its affiliates have
with respect to accounts over which they exercise investment discretion.
The Trustees of the Fund shall periodically review the commissions paid by
the Portfolio to determine if the commissions paid over representative
periods of time were reasonable in relation to the benefits to the
Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor. The
Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of the
Fund are or may be or become interested in the Adviser as directors,
officers or otherwise and that directors, officers and stockholders of the
Adviser are or may be or become similarly interested in the Fund, and that
the Adviser may be or become interested in the Fund as a shareholder or
otherwise.
3. The Adviser will be compensated on the following basis for the services
and facilities to be furnished hereunder. The Adviser shall receive a
monthly management fee, payable monthly as soon as practicable after the
last day of each month, composed of a Group Fee Rate and an Individual Fund
Fee Rate.
(a) Group Fee Rate. The Group Fee Rate shall be based upon the monthly
average of the net assets of the registered investment companies having
Advisory and Service or Management Contracts with the Adviser (computed in
the manner set forth in the charter of each investment company) determined
as of the close of business on each business day throughout the month. The
Group Fee Rate shall be determined on a cumulative basis pursuant to the
following schedule:
Average Net Assets Annualized Fee Rate
(for each level)

0 - $ 3 billion .3700%

3 - 6 .3400

6 - 9 .3100

9 - 12 .2800

12 - 15 .2500

15 - 18 .2200

18 - 21 .2000

21 - 24 .1900

24 - 30 .1800

30 - 36 .1750

36 - 42 .1700

42 - 48 .1650

48 - 66 .1600

66 - 84 .1550

84 - 120 .1500

120 - 174 .1450

174 228 .1400

228 - 282 .1375

282 - 336 .1350

Over 336 .1325

(b) Individual Fund Fee Rate. The Individual Fund Fee Rate shall be
.25%.
The sum of the Group Fee Rate, calculated as described above to the
nearest millionth, and the Individual Fund Fee Rate shall constitute the
annual management fee rate. One twelfth of the annual management fee shall
be applied to the average of the net assets of the Portfolio (computed in
the manner set forth in the Fund's Declaration of Trust or other
organizational document determined as of the close of business on each
business day throughout the month.
(c) In case of termination of this Contract during any month, the fee
for that month shall be reduced proportionately on the basis of the number
of business days during which it is in effect, and the fee is computed upon
the average net assets for the business days it is so in effect for that
month.
4. It is understood that the Portfolio will pay all its expenses other
than those expressly stated to be payable by the Adviser hereunder, which
expenses payable by the Portfolio shall include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in
connection with the purchase or sale of securities and other investment
instruments; (iii) fees and expenses of the Fund's Trustees other than
those who are "interested persons" of the Fund or the Adviser; (iv) legal
and audit expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Fund and the Portfolio's shares for distribution under
state and federal securities laws; (vii) expenses of printing and mailing
reports and notices and proxy material to shareholders of the Portfolio;
(viii) all other expenses incidental to holding meetings of the Portfolio's
shareholders, including proxy solicitations therefor; (ix) a pro rata
share, based on relative net assets of the Portfolio and other registered
investment companies having Advisory and Service or Management Contracts
with the Adviser, of 50% of insurance premiums for fidelity and other
coverage; (x) its proportionate share of association membership dues; (xi)
expenses of typesetting for printing Prospectuses and Statements of
Additional Information and supplements thereto; (xii) expenses of printing
and mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a party
and the legal obligation which the Portfolio may have to indemnify the
Fund's Trustees and officers with respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and engage
in other activities, provided, however, that such other services and
activities do not, during the term of this Contract, interfere, in a
material manner, with the Adviser's ability to meet all of its obligations
with respect to rendering services to the Portfolio hereunder. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Adviser,
the Adviser shall not be subject to liability to the Portfolio or to any
shareholder of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Contract shall continue in force until June 30, 1994
and indefinitely thereafter, but only so long as the continuance after such
date shall be specifically approved at least annually by vote of the
Trustees of the Fund or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Contract may be modified by mutual consent, such consent on the
part of the Fund to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of this
paragraph 6, the terms of any continuance or modification of this Contract
must have been approved by the vote of a majority of those Trustees of the
Fund who are not parties to the Contract or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract without payment of any
penalty, by action of its Trustees or Board of Directors, as the case may
be, or with respect to the Portfolio by vote of a majority of the
outstanding voting securities of the Portfolio. This Contract shall
terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust or
other organizational document and agrees that the obligations assumed by
the Fund pursuant to this Contract shall be limited in all cases to the
Portfolio and its assets, and the Adviser shall not seek satisfaction of
any such obligations from the shareholders or any shareholder of the
Portfolio or any other Portfolios of the Fund. In addition, the Adviser
shall not seek satisfaction of any such obligation from the Trustees or any
individual Trustee. The Adviser understands that the rights and obligations
of any Portfolio under the Declaration of Trust or other organizational
document are separate and distinct from those of any and all other
Portfolios.
8. This agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Massachusetts, without giving effect to the
choice of laws provisions thereof.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, as now in effect or as
hereafter amended, and subject to such orders as may be granted by the
Securities and Exchange Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be signed in
their behalf by their respective officers thereunto duly authorized, and
their respective seals to be hereunto affixed, all as of the date written
above.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FIDELITY MUNICIPAL TRUST

on behalf of Fidelity Michigan Tax-Free High Yield Portfolio

</TABLE>

SEAL By /s/ J. Gary Burkhead

Senior Vice President

FIDELITY MANAGEMENT & RESEARCH
COMPANY

SEAL By /s/ J. Gary Burkhead

President

Exhibit 5(e)
MANAGEMENT CONTRACT
between
FIDELITY MUNICIPAL TRUST:
Fidelity Minnesota Tax-Free Portfolio
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
MODIFICATION made this 1st day of January, 1994, by and between Fidelity
Municipal Trust, a Massachusetts business trust which may issue one or more
series of shares of beneficial interest (hereinafter called the "Fund"), on
behalf of Fidelity Minnesota Tax-Free Portfolio (hereinafter called the
"Portfolio") and Fidelity Management & Research Company, a
Massachusetts corporation (hereinafter called the "Adviser").
Required authorization and approval by shareholders and Trustees having
been obtained, the Fund, on behalf of the Portfolio and Fidelity Management
& Research Company hereby consent, pursuant to Paragraph 6 of the
existing Management Contract dated March 1, 1989, to a modification of said
Contract in the manner set forth below. The Modified Management Contract
shall, when executed by duly authorized officers of the Fund and the
Adviser, take effect on the later of January 1, 1994 or the first day of
the month following approval.
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the supervision
of the Fund's Board of Trustees, direct the investments of the Portfolio in
accordance with the investment objective, policies and limitations as
provided in the Portfolio's Prospectus or other governing instruments, as
amended from time to time, the Investment Company Act of 1940 and rules
thereunder, as amended from time to time (the "1940 Act"), and such other
limitations as the Portfolio may impose by notice in writing to the
Adviser. The Adviser shall also furnish for the use of the Portfolio office
space and all necessary office facilities, equipment and personnel for
servicing the investments of the Portfolio; and shall pay the salaries and
fees of all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all personnel of
the Fund or the Adviser performing services relating to research,
statistical and investment activities. The Adviser is authorized, in its
discretion and without prior consultation with the Portfolio, to buy, sell,
lend and otherwise trade in any stocks, bonds and other securities and
investment instruments on behalf of the Portfolio. The investment policies
and all other actions of the Portfolio are and shall at all times be
subject to the control and direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for the
performance by its affiliates of) the management and administrative
services necessary for the operation of the Fund. The Adviser shall,
subject to the supervision of the Board of Trustees, perform various
services for the Portfolio, including but not limited to: (i) providing the
Portfolio with office space, equipment and facilities (which may be its
own) for maintaining its organization; (ii) on behalf of the Portfolio,
supervising relations with, and monitoring the performance of, custodians,
depositories, transfer and pricing agents, accountants, attorneys,
underwriters, brokers and dealers, insurers and other persons in any
capacity deemed to be necessary or desirable; (iii) preparing all general
shareholder communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered, maintaining
the registration and qualification of the Portfolio's shares under federal
and state law; and (vii) investigating the development of and developing
and implementing, if appropriate, management and shareholder services
designed to enhance the value or convenience of the Portfolio as an
investment vehicle.
The Adviser shall also furnish such reports, evaluations, information or
analyses to the Fund as the Fund's Board of Trustees may request from time
to time or as the Adviser may deem to be desirable. The Adviser shall make
recommendations to the Fund's Board of Trustees with respect to Fund
policies, and shall carry out such policies as are adopted by the Trustees.
The Adviser shall, subject to review by the Board of Trustees, furnish such
other services as the Adviser shall from time to time determine to be
necessary or useful to perform its obligations under this Contract.
(c) The Adviser, at its own expense, shall place all orders for the
purchase and sale of portfolio securities for the Portfolio's account with
brokers or dealers selected by the Adviser, which may include brokers or
dealers affiliated with the Adviser. The Adviser shall use its best efforts
to seek to execute portfolio transactions at prices which are advantageous
to the Portfolio and at commission rates which are reasonable in relation
to the benefits received. In selecting brokers or dealers qualified to
execute a particular transaction, brokers or dealers may be selected who
also provide brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934) to the Portfolio
and/or the other accounts over which the Adviser or its affiliates exercise
investment discretion. The Adviser is authorized to pay a broker or dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Adviser determines in good faith that
such amount of commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer. This
determination may be viewed in terms of either that particular transaction
or the overall responsibilities which the Adviser and its affiliates have
with respect to accounts over which they exercise investment discretion.
The Trustees of the Fund shall periodically review the commissions paid by
the Portfolio to determine if the commissions paid over representative
periods of time were reasonable in relation to the benefits to the
Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor. The
Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of the
Fund are or may be or become interested in the Adviser as directors,
officers or otherwise and that directors, officers and stockholders of the
Adviser are or may be or become similarly interested in the Fund, and that
the Adviser may be or become interested in the Fund as a shareholder or
otherwise.
3. The Adviser will be compensated on the following basis for the services
and facilities to be furnished hereunder. The Adviser shall receive a
monthly management fee, payable monthly as soon as practicable after the
last day of each month, composed of a Group Fee Rate and an Individual Fund
Fee Rate.
(a) Group Fee Rate. The Group Fee Rate shall be based upon the monthly
average of the net assets of the registered investment companies having
Advisory and Service or Management Contracts with the Adviser (computed in
the manner set forth in the charter of each investment company) determined
as of the close of business on each business day throughout the month. The
Group Fee Rate shall be determined on a cumulative basis pursuant to the
following schedule:
Average Net Assets Annualized Fee Rate
(for each level)

0 - $ 3 billion .3700%

3 - 6 .3400

6 - 9 .3100

9 - 12 .2800

12 - 15 .2500

15 - 18 .2200

18 - 21 .2000

21 - 24 .1900

24 - 30 .1800

30 - 36 .1750

36 - 42 .1700

42 - 48 .1650

48 - 66 .1600

66 - 84 .1550

84 - 120 .1500

120 - 174 .1450

174 228 .1400

228 - 282 .1375

282 - 336 .1350

Over 336 .1325

(b) Individual Fund Fee Rate. The Individual Fund Fee Rate shall be
.25%.
The sum of the Group Fee Rate, calculated as described above to the
nearest millionth, and the Individual Fund Fee Rate shall constitute the
annual management fee rate. One twelfth of the annual management fee shall
be applied to the average of the net assets of the Portfolio (computed in
the manner set forth in the Fund's Declaration of Trust or other
organizational document determined as of the close of business on each
business day throughout the month.
(c) In case of termination of this Contract during any month, the fee
for that month shall be reduced proportionately on the basis of the number
of business days during which it is in effect, and the fee is computed upon
the average net assets for the business days it is so in effect for that
month.
4. It is understood that the Portfolio will pay all its expenses other
than those expressly stated to be payable by the Adviser hereunder, which
expenses payable by the Portfolio shall include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in
connection with the purchase or sale of securities and other investment
instruments; (iii) fees and expenses of the Fund's Trustees other than
those who are "interested persons" of the Fund or the Adviser; (iv) legal
and audit expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Fund and the Portfolio's shares for distribution under
state and federal securities laws; (vii) expenses of printing and mailing
reports and notices and proxy material to shareholders of the Portfolio;
(viii) all other expenses incidental to holding meetings of the Portfolio's
shareholders, including proxy solicitations therefor; (ix) a pro rata
share, based on relative net assets of the Portfolio and other registered
investment companies having Advisory and Service or Management Contracts
with the Adviser, of 50% of insurance premiums for fidelity and other
coverage; (x) its proportionate share of association membership dues; (xi)
expenses of typesetting for printing Prospectuses and Statements of
Additional Information and supplements thereto; (xii) expenses of printing
and mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a party
and the legal obligation which the Portfolio may have to indemnify the
Fund's Trustees and officers with respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and engage
in other activities, provided, however, that such other services and
activities do not, during the term of this Contract, interfere, in a
material manner, with the Adviser's ability to meet all of its obligations
with respect to rendering services to the Portfolio hereunder. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Adviser,
the Adviser shall not be subject to liability to the Portfolio or to any
shareholder of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Contract shall continue in force until June 30, 1994
and indefinitely thereafter, but only so long as the continuance after such
date shall be specifically approved at least annually by vote of the
Trustees of the Fund or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Contract may be modified by mutual consent, such consent on the
part of the Fund to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of this
paragraph 6, the terms of any continuance or modification of this Contract
must have been approved by the vote of a majority of those Trustees of the
Fund who are not parties to the Contract or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract without payment of any
penalty, by action of its Trustees or Board of Directors, as the case may
be, or with respect to the Portfolio by vote of a majority of the
outstanding voting securities of the Portfolio. This Contract shall
terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust or
other organizational document and agrees that the obligations assumed by
the Fund pursuant to this Contract shall be limited in all cases to the
Portfolio and its assets, and the Adviser shall not seek satisfaction of
any such obligations from the shareholders or any shareholder of the
Portfolio or any other Portfolios of the Fund. In addition, the Adviser
shall not seek satisfaction of any such obligation from the Trustees or any
individual Trustee. The Adviser understands that the rights and obligations
of any Portfolio under the Declaration of Trust or other organizational
document are separate and distinct from those of any and all other
Portfolios.
8. This agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Massachusetts, without giving effect to the
choice of laws provisions thereof.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, as now in effect or as
hereafter amended, and subject to such orders as may be granted by the
Securities and Exchange Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be signed in
their behalf by their respective officers thereunto duly authorized, and
their respective seals to be hereunto affixed, all as of the date written
above.

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FIDELITY MUNICIPAL TRUST

on behalf of Fidelity Minnesota Tax-Free Portfolio

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SEAL By /s/ J. Gary Burkhead

Senior Vice President

FIDELITY MANAGEMENT & RESEARCH
COMPANY

SEAL By /s/ J. Gary Burkhead

President

Exhibit 5(f)
MANAGEMENT CONTRACT
between
FIDELITY MUNICIPAL TRUST:
Fidelity Ohio Tax-Free High Yield Fund
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
MODIFICATION made this 1st day of January, 1994, by and between Fidelity
Municipal Trust, a Massachusetts business trust which may issue one or more
series of shares of beneficial interest (hereinafter called the "Fund"), on
behalf of Fidelity Michigan Tax-Free High Yield Fund (hereinafter called
the "Portfolio") and Fidelity Management & Research Company, a
Massachusetts corporation (hereinafter called the "Adviser").
Required authorization and approval by shareholders and Trustees having
been obtained, the Fund, on behalf of the Portfolio and Fidelity Management
& Research Company hereby consent, pursuant to Paragraph 6 of the
existing Management Contract dated March 1, 1989, to a modification of said
Contract in the manner set forth below. The Modified Management Contract
shall, when executed by duly authorized officers of the Fund and the
Adviser, take effect on the later of January 1, 1994 or the first day of
the month following approval.
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the supervision
of the Fund's Board of Trustees, direct the investments of the Portfolio in
accordance with the investment objective, policies and limitations as
provided in the Portfolio's Prospectus or other governing instruments, as
amended from time to time, the Investment Company Act of 1940 and rules
thereunder, as amended from time to time (the "1940 Act"), and such other
limitations as the Portfolio may impose by notice in writing to the
Adviser. The Adviser shall also furnish for the use of the Portfolio office
space and all necessary office facilities, equipment and personnel for
servicing the investments of the Portfolio; and shall pay the salaries and
fees of all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all personnel of
the Fund or the Adviser performing services relating to research,
statistical and investment activities. The Adviser is authorized, in its
discretion and without prior consultation with the Portfolio, to buy, sell,
lend and otherwise trade in any stocks, bonds and other securities and
investment instruments on behalf of the Portfolio. The investment policies
and all other actions of the Portfolio are and shall at all times be
subject to the control and direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for the
performance by its affiliates of) the management and administrative
services necessary for the operation of the Fund. The Adviser shall,
subject to the supervision of the Board of Trustees, perform various
services for the Portfolio, including but not limited to: (i) providing the
Portfolio with office space, equipment and facilities (which may be its
own) for maintaining its organization; (ii) on behalf of the Portfolio,
supervising relations with, and monitoring the performance of, custodians,
depositories, transfer and pricing agents, accountants, attorneys,
underwriters, brokers and dealers, insurers and other persons in any
capacity deemed to be necessary or desirable; (iii) preparing all general
shareholder communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered, maintaining
the registration and qualification of the Portfolio's shares under federal
and state law; and (vii) investigating the development of and developing
and implementing, if appropriate, management and shareholder services
designed to enhance the value or convenience of the Portfolio as an
investment vehicle.
The Adviser shall also furnish such reports, evaluations, information or
analyses to the Fund as the Fund's Board of Trustees may request from time
to time or as the Adviser may deem to be desirable. The Adviser shall make
recommendations to the Fund's Board of Trustees with respect to Fund
policies, and shall carry out such policies as are adopted by the Trustees.
The Adviser shall, subject to review by the Board of Trustees, furnish such
other services as the Adviser shall from time to time determine to be
necessary or useful to perform its obligations under this Contract.
(c) The Adviser, at its own expense, shall place all orders for the
purchase and sale of portfolio securities for the Portfolio's account with
brokers or dealers selected by the Adviser, which may include brokers or
dealers affiliated with the Adviser. The Adviser shall use its best efforts
to seek to execute portfolio transactions at prices which are advantageous
to the Portfolio and at commission rates which are reasonable in relation
to the benefits received. In selecting brokers or dealers qualified to
execute a particular transaction, brokers or dealers may be selected who
also provide brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934) to the Portfolio
and/or the other accounts over which the Adviser or its affiliates exercise
investment discretion. The Adviser is authorized to pay a broker or dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Adviser determines in good faith that
such amount of commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer. This
determination may be viewed in terms of either that particular transaction
or the overall responsibilities which the Adviser and its affiliates have
with respect to accounts over which they exercise investment discretion.
The Trustees of the Fund shall periodically review the commissions paid by
the Portfolio to determine if the commissions paid over representative
periods of time were reasonable in relation to the benefits to the
Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor. The
Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of the
Fund are or may be or become interested in the Adviser as directors,
officers or otherwise and that directors, officers and stockholders of the
Adviser are or may be or become similarly interested in the Fund, and that
the Adviser may be or become interested in the Fund as a shareholder or
otherwise.
3. The Adviser will be compensated on the following basis for the services
and facilities to be furnished hereunder. The Adviser shall receive a
monthly management fee, payable monthly as soon as practicable after the
last day of each month, composed of a Group Fee Rate and an Individual Fund
Fee Rate.
(a) Group Fee Rate. The Group Fee Rate shall be based upon the monthly
average of the net assets of the registered investment companies having
Advisory and Service or Management Contracts with the Adviser (computed in
the manner set forth in the charter of each investment company) determined
as of the close of business on each business day throughout the month. The
Group Fee Rate shall be determined on a cumulative basis pursuant to the
following schedule:
Average Net Assets Annualized Fee Rate
(for each level)

0 - $ 3 billion .3700%

3 - 6 .3400

6 - 9 .3100

9 - 12 .2800

12 - 15 .2500

15 - 18 .2200

18 - 21 .2000

21 - 24 .1900

24 - 30 .1800

30 - 36 .1750

36 - 42 .1700

42 - 48 .1650

48 - 66 .1600

66 - 84 .1550

84 - 120 .1500

120 - 174 .1450

174 228 .1400

228 - 282 .1375

282 - 336 .1350

Over 336 .1325

(b) Individual Fund Fee Rate. The Individual Fund Fee Rate shall be
.25%.
The sum of the Group Fee Rate, calculated as described above to the
nearest millionth, and the Individual Fund Fee Rate shall constitute the
annual management fee rate. One twelfth of the annual management fee shall
be applied to the average of the net assets of the Portfolio (computed in
the manner set forth in the Fund's Declaration of Trust or other
organizational document determined as of the close of business on each
business day throughout the month.
(c) In case of termination of this Contract during any month, the fee
for that month shall be reduced proportionately on the basis of the number
of business days during which it is in effect, and the fee is computed upon
the average net assets for the business days it is so in effect for that
month.
4. It is understood that the Portfolio will pay all its expenses other
than those expressly stated to be payable by the Adviser hereunder, which
expenses payable by the Portfolio shall include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in
connection with the purchase or sale of securities and other investment
instruments; (iii) fees and expenses of the Fund's Trustees other than
those who are "interested persons" of the Fund or the Adviser; (iv) legal
and audit expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Fund and the Portfolio's shares for distribution under
state and federal securities laws; (vii) expenses of printing and mailing
reports and notices and proxy material to shareholders of the Portfolio;
(viii) all other expenses incidental to holding meetings of the Portfolio's
shareholders, including proxy solicitations therefor; (ix) a pro rata
share, based on relative net assets of the Portfolio and other registered
investment companies having Advisory and Service or Management Contracts
with the Adviser, of 50% of insurance premiums for fidelity and other
coverage; (x) its proportionate share of association membership dues; (xi)
expenses of typesetting for printing Prospectuses and Statements of
Additional Information and supplements thereto; (xii) expenses of printing
and mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a party
and the legal obligation which the Portfolio may have to indemnify the
Fund's Trustees and officers with respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and engage
in other activities, provided, however, that such other services and
activities do not, during the term of this Contract, interfere, in a
material manner, with the Adviser's ability to meet all of its obligations
with respect to rendering services to the Portfolio hereunder. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Adviser,
the Adviser shall not be subject to liability to the Portfolio or to any
shareholder of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Contract shall continue in force until June 30, 1994
and indefinitely thereafter, but only so long as the continuance after such
date shall be specifically approved at least annually by vote of the
Trustees of the Fund or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Contract may be modified by mutual consent, such consent on the
part of the Fund to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of this
paragraph 6, the terms of any continuance or modification of this Contract
must have been approved by the vote of a majority of those Trustees of the
Fund who are not parties to the Contract or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract without payment of any
penalty, by action of its Trustees or Board of Directors, as the case may
be, or with respect to the Portfolio by vote of a majority of the
outstanding voting securities of the Portfolio. This Contract shall
terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust or
other organizational document and agrees that the obligations assumed by
the Fund pursuant to this Contract shall be limited in all cases to the
Portfolio and its assets, and the Adviser shall not seek satisfaction of
any such obligations from the shareholders or any shareholder of the
Portfolio or any other Portfolios of the Fund. In addition, the Adviser
shall not seek satisfaction of any such obligation from the Trustees or any
individual Trustee. The Adviser understands that the rights and obligations
of any Portfolio under the Declaration of Trust or other organizational
document are separate and distinct from those of any and all other
Portfolios.
8. This agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Massachusetts, without giving effect to the
choice of laws provisions thereof.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, as now in effect or as
hereafter amended, and subject to such orders as may be granted by the
Securities and Exchange Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be signed in
their behalf by their respective officers thereunto duly authorized, and
their respective seals to be hereunto affixed, all as of the date written
above.

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FIDELITY MUNICIPAL TRUST

on behalf of Fidelity Ohio Tax-Free High Yield Portfolio

</TABLE>

SEAL By /s/ J. Gary Burkhead

Senior Vice President

FIDELITY MANAGEMENT & RESEARCH
COMPANY

SEAL By /s/ J. Gary Burkhead

President

Exhibit 11
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Municipal Trust and Shareholders of:
Fidelity Aggressive Tax-Free Portfolio
Fidelity Insured Tax-Free Portfolio
Fidelity Municipal Bond Portfolio
Fidelity Michigan Tax-Free High Yield Portfolio
Fidelity Minnesota Tax-Free Portfolio
Fidelity Ohio Tax-Free High Yield Portfolio
Spartan Pennsylvania Municipal High Yield Portfolio
We consent to the incorporation by reference into the Statements of
Additional Information in Post-Effective Amendment No. 64 to the
Registration Statement (File No. 2-55725) on Form N-1A (the "Registration
Statement") of our reports dated January 28, 1994 accompanying the
financial statements and financial highlights of each of the above
referenced Portfolios.
We also consent to the incorporation by reference in this Post-Effective
Amendment of our report dated December 31, 1993 accompanying the financial
statements and financial highlights of Fidelity High Yield Tax-Free
Portfolio (a Portfolio of Fidelity Court Street Trust, File No. 2-58774),
our reports dated January 28, 1994 accompanying the financial statements
and financial highlights of Fidelity Michigan Municipal Money Market
Portfolio, Fidelity Ohio Municipal Money Market Portfolio, and Spartan
Pennsylvania Municipal Money Market Portfolio (Portfolios of Fidelity
Municipal Trust II, File No. 33-43986), and our report dated January 28,
1994 accompanying the financial statements and financial highlights of
Fidelity Limited Term Municipals (a Portfolio of Fidelity School Street
Trust, File No. 2-57167).
All of the above financial statements and financial highlights are
incorporated by reference into the Statements of Additional Information
included in this Post-Effective Amendment.
We also consent to the references to our Firm under the captions "Auditor"
in the Statements of Additional Information and "Financial Highlights" in
the Prospectuses included in this Post-Effective Amendment.
/s/COOPERS & LYBRAND
COOPERS & LYBRAND
Boston, Massachusetts
February 14, 1994