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
FOR FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call --
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND
QUOTES*
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Just make a selection from this record-ed menu:
PRESS
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1.
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2.
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3.
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4.
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5.
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representative.
6.
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PRESS
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1.
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2.
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3.
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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.
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)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)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)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
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
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
MUNICIPAL BOND
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
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 PAST 10
YEAR YEARS YEARS
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.
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 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%
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 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
TO CALL FIDELITY
FOR FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call --
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(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
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
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
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)(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
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
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.
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 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%
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 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
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 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 FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call --
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(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.
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)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)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)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
TO VISIT 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
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
SpartanAggressive 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
