(2_FIDELITY_LOGOS)FIDELITY
MUNICIPAL BOND
PORTFOLIO
SEMIANNUAL REPORT
JUNE 30, 1994
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on bond market
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 7 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 10 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 11 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 28 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 32 Notes to the financial statements.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR
ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS. MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS
OF, OR
GUARANTEED BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE
FDIC, THE
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY,AND ARE SUBJECT TO INVESTMENT
RISK,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. NEITHER THE FUND NOR FIDELITY
DISTRIBUTORS
CORPORATION IS A BANK.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
The first half of the year has been an
unsettling time for bond investors. The bond market declined after the
Federal Reserve Board raised short-term interest rates from February
through May. These rate hikes caused bond yields to rise and bond prices to
fall. The board raised the rate again in August, and while nobody knows
whether rates will continue to go up, this may be a good time to review the
effect rising rates have on your bond fund investment, and consider how
well your current bond fund holdings match your original investment goals.
Most investors choose bond funds to generate income and to help diversify
their investment portfolios. Despite the recent market downturn, bond
mutual funds still satisfy these needs. Where investors have felt the
negative effect of rising rates is in the market value of their investment,
which has eroded as bond prices have fallen. It's important
to remember, however, that this loss in principal is only "on paper" until
you choose to sell your shares. That's why your investing time horizon is
key.
If your time horizon is short - one year or less - you may want to consider
shifting all or part of your bond fund investment into short-term
investments.
If you don't need your money within the next year, staying in your bond
fund may be the appropriate strategy for you. The longer your investing
time frame, the better your chances of retaining your principal investment
through periods of rising AND falling rates. For example, if you plan to
use your money in one to two years, a short-term bond fund may be the right
choice. If your time frame is two to four years, a fund with an
intermediate length average maturity may be best. If you have a longer-term
goal - say a child's college education that's 10 years away - you may be
willing to ride out the bond market's peaks and valleys in exchange for the
higher potential returns of a longer-term fund.
If you have questions, please call us at 1-800-544-8888. We would be happy
to send you a Fidelity FundMatch kit, which can help you determine the mix
of investments that is right for you. You might also find it convenient to
set up
a regular investment plan using the Fidelity Automatic Account BuilderSM.
We look forward to hearing from you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. 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 JUNE 30, 1994 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS
Municipal Bond -6.19% -1.51% 41.95% 166.98%
Lehman Brothers Municipal Bond Index -4.42% 0.20% 46.00% 178.71%
Average General Municipal Bond Fund -5.27% -0.93% 41.80% 165.60%
Consumer Price Index 1.51% 2.49% 19.26% 42.72%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, 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 performance of 199 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 JUNE 30, 1994 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Municipal Bond -1.51% 7.26% 10.32%
Lehman Brothers Municipal Bond Index 0.20% 7.86% 10.79%
Average General Municipal Bond Fund -0.93% 7.23% 10.23%
Consumer Price Index 2.49% 3.59% 3.62%
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
Municipal Bond (035)Lehman Muni Bond Index
06/30/84 10000.00 10000.00
07/31/84 10474.71 10518.00
08/31/84 10680.88 10753.92
09/30/84 10617.56 10681.65
10/31/84 10714.32 10815.71
11/30/84 10839.80 10974.91
12/31/84 11097.63 11180.58
01/31/85 11594.24 11826.04
02/28/85 11493.66 11530.98
03/31/85 11559.49 11630.49
04/30/85 11891.78 12056.17
05/31/85 12327.88 12474.76
06/30/85 12477.52 12605.62
07/31/85 12526.45 12630.33
08/31/85 12438.31 12542.17
09/30/85 12262.49 12416.37
10/31/85 12627.16 12841.88
11/30/85 13044.51 13302.51
12/31/85 13326.80 13419.44
01/31/86 14061.50 14209.85
02/28/86 14560.19 14773.41
03/31/86 14642.37 14778.14
04/30/86 14597.66 14789.37
05/31/86 14334.76 14548.60
06/30/86 14532.84 14687.39
07/31/86 14676.03 14776.55
08/31/86 15398.83 15438.09
09/30/86 15297.61 15476.84
10/31/86 15647.03 15744.13
11/30/86 15920.04 16056.02
12/31/86 15930.58 16011.70
01/31/87 16248.22 16493.82
02/28/87 16390.74 16574.97
03/31/87 16320.73 16399.27
04/30/87 15318.31 15576.36
05/31/87 15193.97 15499.10
06/30/87 15461.00 15954.15
07/31/87 15649.79 16116.88
08/31/87 15722.26 16153.15
09/30/87 14911.00 15557.58
10/31/87 15047.09 15612.65
11/30/87 15382.54 16020.30
12/31/87 15682.11 16252.75
01/31/88 16478.37 16831.68
02/29/88 16635.25 17009.59
03/31/88 16232.71 16811.43
04/30/88 16288.15 16939.19
05/31/88 16344.21 16890.24
06/30/88 16653.79 17137.34
07/31/88 16773.98 17249.08
08/31/88 16810.95 17264.26
09/30/88 17149.15 17576.74
10/31/88 17533.99 17886.97
11/30/88 17331.19 17723.12
12/31/88 17611.52 17904.43
01/31/89 17869.41 18274.70
02/28/89 17684.65 18066.18
03/31/89 17678.50 18023.00
04/30/89 18188.67 18450.87
05/31/89 18544.07 18834.09
06/30/89 18808.69 19089.86
07/31/89 18983.95 19349.67
08/31/89 18814.61 19160.24
09/30/89 18741.35 19102.76
10/31/89 18962.52 19335.81
11/30/89 19209.46 19674.19
12/31/89 19295.86 19835.52
01/31/90 19186.29 19742.29
02/28/90 19363.88 19918.00
03/31/90 19380.88 19923.97
04/30/90 19125.90 19780.52
05/31/90 19648.58 20211.74
06/30/90 19855.63 20389.60
07/31/90 20161.65 20689.33
08/31/90 19779.23 20389.33
09/30/90 19892.42 20401.57
10/31/90 20129.59 20770.83
11/30/90 20514.61 21188.33
12/31/90 20629.27 21281.56
01/31/91 20869.57 21566.73
02/28/91 20978.46 21754.36
03/31/91 21015.44 21763.06
04/30/91 21309.03 22052.51
05/31/91 21472.91 22248.78
06/30/91 21481.95 22226.53
07/31/91 21780.14 22497.69
08/31/91 22055.00 22794.66
09/30/91 22304.79 23090.99
10/31/91 22527.61 23298.81
11/30/91 22588.78 23364.05
12/31/91 23086.54 23866.37
01/31/92 23096.99 23921.27
02/29/92 23131.32 23928.44
03/31/92 23120.11 23938.02
04/30/92 23351.22 24151.06
05/31/92 23641.76 24436.05
06/30/92 24066.34 24846.57
07/31/92 24805.75 25591.97
08/31/92 24448.36 25341.17
09/30/92 24596.20 25505.89
10/31/92 24093.22 25255.93
11/30/92 24815.26 25708.01
12/31/92 25147.90 25970.23
01/31/93 25481.26 26271.49
02/28/93 26518.66 27222.51
03/31/93 26162.72 26933.95
04/30/93 26464.27 27205.99
05/31/93 26621.20 27358.34
06/30/93 27106.83 27815.22
07/31/93 27050.69 27851.38
08/31/93 27761.47 28430.69
09/30/93 28101.41 28754.80
10/31/93 28103.24 28809.44
11/30/93 27759.23 28555.91
12/31/93 28460.16 29158.44
01/31/94 28816.02 29490.85
02/28/94 27945.38 28727.04
03/31/94 26521.45 27557.85
04/30/94 26645.83 27792.09
05/31/94 26909.37 28033.88
06/30/94 26698.07 27871.28
$10,000 OVER 10 YEARS: Let's say you invested $10,000 in Fidelity
Municipal Bond Portfolio on June 30, 1984. As the chart shows, by June 30,
1994, the value of your investment would have grown to $26,698 - a 166.98%
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 $27,871 - a 178.71%
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)
TOTAL RETURN COMPONENTS
SIX YEARS ENDED DECEMBER 31,
MONTHS
ENDED
JUNE 30,
1994 1993 1992 1991 1990 1989
Dividend return 2.56% 5.83% 6.31% 6.81% 6.91% 7.30%
Capital appreciation -8.75 7.34% 2.62% 5.10% 0.00% 2.26%
return %
Total return -6.19 13.17% 8.93% 11.91% 6.91% 9.56%
%
DIVIDEND returns and capital appreciation returns are both part of a bond
fund's total return. A dividend return reflects the actual dividends paid
by
the fund. A capital appreciation return reflects both the amount paid by
the fund to shareholders as capital gain distributions and changes in the
fund's share price. Both returns assume the dividends or gains are
reinvested.
DIVIDENDS AND YIELD
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED JUNE 30, 1994 PAST 1 PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 3.70(cents) 22.70(cents) 47.08(cents)
Annualized dividend rate 5.57% 5.55% 5.47%
30-day annualized yield 5.56% - -
30-day annualized tax-equivalent yield 8.69% - -
</TABLE>
DIVIDENDS per share show the income paid by the fund for a set period. If
you annualize this number, based on an average share price of $8.08 over
the past month, $8.25 over the past six months and $8.61 over the past
year, you can compare the fund's income over these three periods. The
30-day annualized YIELD is a standard formula for all funds based on the
yields of the bonds in the fund, averaged over the past 30 days. This
figure shows you the yield characteristics of the fund's investments at the
end of the period. It also helps you compare funds from different companies
on an equal basis. The tax-equivalent yield shows what you would have to
earn on a taxable investment to equal the fund's tax-free yield, if you're
in the 36% federal tax bracket.
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Gary L. Swayze, Portfolio Manger of Fidelity Municipal
Bond Portfolio
Q. GARY, HOW HAS THE FUND PERFORMED?
A. It was a rough period for both the municipal bond market and the fund.
For the six months ended June 30, 1994, the fund had a total return of
- -6.19%. That lagged the average municipal fund, which returned -5.27% for
the same period, according to Lipper Analytical Services. For the 12 months
ended June 30, 1994, the fund returned -1.51%, compared to the average
return of -0.93%, again according to Lipper.
Q. WHAT ACCOUNTS FOR THE MUNICIPAL BOND MARKET'S PERFORMANCE OVER THE PAST
SIX MONTHS?
A. It was reacting to two developments, or more precisely, one development
and one expectation. The development was stronger than expected economic
growth in the last quarter of 1993, which was reported in early 1994. The
expectation was that if stronger economic growth continued, it would lead
to higher inflation. In addition, the Federal Reserve Board's decision to
begin to raise short-term interest rates also pressured bond prices,
especially in February and March.
Q. WHY DID THE FUND LAG THE
AVERAGE FUND?
A. Since I was fairly bullish on the municipal market going into 1994, I
had extended the fund's duration throughout 1993 - which is a measure of
its sensitivity to interest rate changes. The longer the duration, the more
sensitive the fund. In the first three months of the year, when interest
rates were first starting to climb, having a longer duration hurt the
fund's performance. But from March through June, the municipal market -
although volatile - began to show some signs of stabilization. Because my
long-term view is that inflation will stay low, I wanted to keep the fund's
core structure in place. So instead of changing the fund's structure, I
used futures to hedge against the market's decline.
Q. THERE'S BEEN A LOT OF TALK LATELY ABOUT DERIVATIVES. AREN'T FUTURES ONE
OF THE FINANCIAL ARRANGEMENTS KNOWN AS DERIVATIVES, AND DO YOU USE OTHERS?
A. Yes, a future is one type of derivative - meaning its market value is
derived from an underlying security or market index. We have used futures
and options in our municipal funds for years. More recently, I've also
started using a derivative known as an inverse floater - whose yield rises
as short-term rates fall, and vice versa. Inverse floaters act like very
long-term bonds, effectively increasing a fund's duration, which is good in
a falling interest rate environment, but can hurt the fund when interest
rates rise. During the past six months, inverse floaters made up less than
5% of the fund's total investments. By using these various derivatives, I
achieve increased flexibility in managing the fund's overall sensitivity to
changes in interest rates and, hopefully, can achieve higher levels of
income.
Q. WHAT CHANGES HAVE YOU MADE DURING THE PAST SIX MONTHS?
A. In terms of sector concentrations, I've pared back the fund's investment
in electric utility bonds to about 16% at the end of June, from about 21%
six months earlier. Fears of increased competition hurt some taxable
electric bonds. I am concerned that similar concerns might wash over to
tax-free electric bonds. I've held on to the electric utility bonds I think
are best poised to withstand a more competitive environment. I've also
slightly reduced the fund's stake in health care bonds. That's because the
sector has recently posted strong relative performance, and it isn't quite
as good of a value as it was earlier in the year. However, health care
bonds still make up the fund's largest sector concentration at 18.5% of
investments. Hospital bonds, in particular, should continue to benefit 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 help to calm concerns over health care reform.
Q. HAVE YOU CHANGED THE WAY YOU ALLOCATE THE FUND'S ASSETS AMONG STATES?
A. Over the period I increased the fund's stake in New York bonds, which
have done quite well on a relative basis. Many of the bonds are
state-appropriated, meaning that they rely on annual appropriations by the
legislature to meet all or part of their principal and interest payments.
They've done well primarily because the market expects them to be upgraded
in the next 12 months or so. California is now the fund's largest state
concentration. Recently, the rating agencies downgraded the state of
California's debt obligation that is linked directly to the state for debt
service payments. Mostly, these issues still carry two of the top three
rating categories, even after the downgrade. The bulk of the fund's
California holdings are either insured or not heavily reliant on the
state's finances so they shouldn't be affected by the downgrade. Should the
state's budget outlook begin to improve as the economy continues to build
momentum towards a gradual, belated, cyclical recovery, I anticipate that I
might begin moving from insured into non-insured bonds more closely tied to
those cyclical improvements.
Q. WHAT SHOULD WE EXPECT OVER THE NEXT SEVERAL MONTHS?
A. I continue to believe that much higher inflation isn't really a threat.
Interestingly, inflation - as measured in the Consumer Price Index - grew
more slowly during the first half of 1994 than the rate for all of 1993.
During the first half of this year, CPI inflation was 1.51% as compared to
2.75% for all of 1993. The question is: "Can moderate inflation continue?"
I think the answer is "yes." However, the market is still concerned about
inflation, which may cause more volatility in the next few months. Once we
see more definitive signs that the economy is slowing and inflation won't
be a threat, the market will most likely settle down. For now, I'll
continue to keep the fund's duration long - hedging it with futures when I
think market conditions warrant - and concentrate on generating an above
average income.
FUND FACTS
GOAL: high current income
free of federal income taxes
while preserving capital
START DATE: August 19, 1976
SIZE: as of June 30, 1994,
more than $1.0 million
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; joined
Fidelity in 1980
(checkmark)
GARY SWAYZE'S OUTLOOK FOR
INFLATION:
"Inflation is the single most
important factor that affects
bonds. If it stays low, or even
declines, bonds will benefit. In
my view, economic growth will
be moderate, in part because
consumer spending has
slowed and wage increases
are slight. Money supply may
also provide evidence of a
slowing economy. Usually in a
recovery, money supply will
pick up as demand for credit
increases. That higher
demand for credit actually
helps keep a recovery going.
But, lately, the money supply
growth has slowed. That
could be an indication that the
economic growth rate will
moderate, easing concerns
about inflation."
(solid bullet) The fund's average
duration - which measures
sensitivity to interest rate
changes - was 9.2 years at
the end of June. That was
longer than many of the fund's
competitors.
INVESTMENT CHANGES
TOP FIVE STATES AS OF JUNE 30, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
California 15.3 14.0
New York 11.7 8.5
Pennsylvania 7.5 8.6
Massachusetts 7.4 5.8
Texas 5.9 4.4
TOP FIVE SECTORS AS OF JUNE 30, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Health Care 18.5 20.5
Electric Revenue 16.1 21.5
General Obligation 11.8 8.5
Water & Sewer 11.3 10.3
Transportation 9.9 6.0
AVERAGE YEARS TO MATURITY AS OF JUNE 30, 1994
6 MONTHS AGO
Years 20.3 21.4
AVERAGE YEARS TO MATURITY SHOWS THE AVERAGE TIME UNTIL THE PRINCIPAL OF THE
BONDS IN THE FUND IS EXPECTED TO BE REPAID, WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF JUNE 30, 1994
6 MONTHS AGO
Years 9.2 9.6
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 JUNE 30, 1994
(MOODY'S RATINGS) % OF FUND'S INVESTMENTS
Aaa 33.9%
Aa, A 49.8%
Baa 13.1%
Non-rated 0.6%
Short-term investments 2.6%
Row: 1, Col: 1, Value: 2.6
Row: 1, Col: 2, Value: 1.6
Row: 1, Col: 3, Value: 12.1
Row: 1, Col: 4, Value: 49.8
Row: 1, Col: 5, Value: 33.9
WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P RATINGS.
INVESTMENTS JUNE 30, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
MUNICIPAL BONDS - 97.4%
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
ALABAMA - 0.3%
Cullman Med. Park South Med. Clinic Board Rev.
(Cullman Reg. Med. Ctr.) Series A, 6.50% 2/15/13 $ 4,000 $ 3,765
ALASKA - 0.1%
Valdez Marine Term. Rev. Rfdg. (Amerada Hess
Pipeline Corp.) 6.10% 2/1/24 1,500 1,382
ARIZONA - 0.5%
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 1,106
Scottsdale Ind. Dev. Auth. Hosp. Rev. Rfdg. (Scottsdale Mem.
Hosp.) Series 1987 A, 8.50% 9/1/17, (AMBAC Insured) 1,465 1,626
University Medical Ctr. Corp. Hosp. Rev. Rfdg. 5% 7/1/21,
(MBIA Insured) 3,000 2,475
5,207
CALIFORNIA - 14.4%
Anaheim Pub. Fing. Auth. Rev. Wtr. Util. (Lenain Filtration
Proj.) 5.25% 10/1/16 4,480 3,780
California Dept. Wtr. Resources Rev. (Central Valley Wtr. Sys. Proj.)
Series J-1, 7% 12/1/11 2,320 2,526
California Edl. Facs. Auth. Rev. Pooled College & Univ. Fing.
Rfdg. (Pepperdine Univ.) Series A, 5.50% 6/1/19,
(MBIA Insured) 2,500 2,241
California Gen. Oblig. 4.75% 9/1/23 12,000 9,075
California Health Facs. Fing. Auth. Rev.:
(Henry Mayo Newhall Hosp.) (Health Facs. Construction
Loan Prog.) Series A, 8% 10/1/18 2,000 2,175
(Pomona Valley Med. Ctr.) Series A, 7.375% 1/1/14 2,000 2,135
California Pub. Wrks. Board Lease Rev.:
Rfdg. (Dept. Corrections St. Prisons) Series A, 5% 12/1/19,
(AMBAC Insured) 5,000 4,113
(California Univ. Proj.) Series A:
5.50% 6/1/10 2,250 1,977
5% 6/1/23 6,000 4,590
California Statewide Commty. Dev. Auth. Rev. Ctfs. of Prtn.:
(Sister of Charity Leavenworth Sys.) 5% 12/1/14 2,750 2,289
(United Western Med. Ctrs.) (California Health Facs.
Contruction Loan Prog.) 6.75% 12/1/21 3,500 3,526
Chino Basin Reg. Fing. Auth. Rev. Rfdg. (Muni Wtr. Dist. Swr.
Sys. Proj.) 7% 8/1/09, (AMBAC Insured) 1,890 2,074
Fresno Swr. Rev. Series A-1, 4.75% 9/1/21, (AMBAC Insured) 9,000 7,009
Los Angeles County Metropolitan Trans. Auth. Sales Tax Rev.
Rfdg. Series A, 5% 7/1/21, (FGIC Insured) 9,170 7,416
Los Angeles County San. Dist. Fing. Auth. Rev. (Cap. Proj.)
Series A, 5% 10/1/23 4,500 3,634
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
CALIFORNIA - CONTINUED
Los Angeles County Trans. Commission Sales Tax Rev. Rfdg.
Series B, 6.50% 7/1/15, (FGIC Insured) $ 5,000 $ 5,050
Los Angeles Wastewtr. Sys. Rev. Rfdg. Series D,
4.70% 11/1/19, (FGIC Insured) 3,000 2,344
Metropolitan Wtr. Dist. Southern California Wtrwks.:
Rev. Rfdg. Series A, 5.75% 7/1/21 2,000 1,828
RIB 6.937% 10/30/20 INFL (e) 4,200 3,281
Northern California Pwr. Agcy. Pub. Pwr. Rev. Rfdg.
(Geothermal Proj. #3) Series A, 5.85% 7/1/10 1,875 1,774
Oakland Spl. Rfdg. Rev. Series 1988 A, 7.60% 8/1/21,
(FGIC Insured) 2,500 2,719
Orange County Dev. Agcy. Tax Allocation (Santa Ana
Heights Proj.) 6% 9/1/15 2,000 1,808
Orange County Wtr. Dist. Ctfs. of Prtn. Rfdg. Series A,
5.50% 8/15/14 3,000 2,681
Placer County Wtr. Agcy. Middle Fork Proj. Rev. Series A:
3.75% 7/1/12 7,820 6,021
3.75% 1/1/13 1,500 1,121
Pleasanton Joint Pwr. Fin. Auth. Series A, 6.20% 9/2/17 3,200 2,956
Sacramento Fing. Auth. Lease Rev. Rfdg. Series A,
5.40% 11/1/20, (AMBAC Insured) 7,000 6,160
Sacramento Muni. Util. Dist. Elec. Rev.:
Rfdg. Series G, 4.75% 9/1/21, (MBIA Insured) 5,000 3,881
Series D, 5.25% 11/15/20, (MBIA Insured) 3,000 2,528
San Bernardino County Ctfs. Prtn. (Med Ctr. Fing. Proj.)
5.50% 8/1/17 5,000 4,225
San Diego Swr. Rev. Series A, 5.25% 5/15/20,
(AMBAC Insured) 9,950 8,420
San Francisco Bldg. Auth. Lease Rev. (Dept. Gen. Svcs. Lease)
Series A, 5% 10/1/13 2,715 2,281
San Jose Redev. Agcy. Tax Allocation (Merged Area Redev. Proj.):
4.75% 8/1/22, (MBIA Insured) 3,645 2,770
4.75% 8/1/24, (MBIA Insured) 7,500 5,775
Southern California Pub. Pwr. Auth. Pwr. Proj. Rev. (San Juan
Proj. Unit #3) Series A, 5% 1/1/20, (MBIA Insured) 5,330 4,337
Three Valleys Muni. Wtr. Dist. Rev. Rfdg. Ctfs. of Prtn. 5%
11/1/14, (FGIC Insured) 1,200 1,010
Univ. of California Rev. Rfdg. (Multiple Purp. Proj.) Series C:
5% 9/1/14, (AMBAC Insured) 4,000 3,365
5.125% 9/1/18, (AMBAC Insured) 6,330 5,301
5% 9/1/23, (AMBAC Insured) 12,910 10,376
West & Ctrl. Basin Fin. Auth. Rev. (West Basin Ref. Proj.)
Series A, 5% 8/1/13, (AMBAC Insured) 5,000 4,238
154,810
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
COLORADO - 2.6%
Colorado Health Facs. Auth. Rev.:
(Kaiser Permanente Med. Care. Proj.)
Series A, 9.125% 8/1/15 $ 6,000 $ 6,375
(PSL Health Sys. Proj.) Series A, 6.875% 2/15/23 4,000 3,895
(Rocky Mountain Adventist) 6.625% 2/1/13 11,600 11,267
Loveland Wtr. Dist. 8.875% 11/1/05, (Escrowed to Maturity) (d) 2,905
3,577
Pueblo Single Family Mtg. Rev. Series A, 7% 8/1/10 2,395 2,394
27,508
CONNECTICUT - 1.2%
Connecticut Gen. Oblig. Unltd. Tax Series C, 3.90% 3/15/95 5,250 5,263
Connecticut Hsg. Fin. Auth. (Hsg. Mtg. Fin. Prog.):
Sub-Series B1, 7.55% 11/15/08 2,415 2,530
Series B, 6.70% 11/15/12 5,000 5,125
12,918
DELAWARE - 0.2%
De River & Bay Auth. Rev. Rfdg. 5% 1/1/17, (MBIA Insured) 2,250 1,873
DISTRICT OF COLUMBIA - 1.6%
District of Columbia Hosp. Rev.:
Rfdg. (Medlantic Healthcare Group): Series A,
5.25% 8/15/12, (MBIA Insured) 2,000 1,775
(Howard Univ.) Series 1990 A, 7.25% 10/1/20 9,815 10,551
(Washington Hosp. Ctr.) Series A, 7% 8/15/05 2,500 2,584
District of Columbia Rfdg. Series A-3, 5.60% 6/1/07,
(MBIA Insured) 2,300 2,211
17,121
FLORIDA - 5.0%
Broward County Wtr. & Swr. Util. Rev. Rfdg. 5.125% 10/1/15,
(AMBAC Insured) 1,000 858
Charlotte County Util. Rev. Rfdg. 5.25% 10/1/21,
(FGIC Insured) 2,000 1,705
Dade County Wtr. & Swr. Sys. Rev. Rfdg. 5% 10/1/13,
(FGIC Insured) 3,735 3,198
Daytona Beach Wtr. & Swr. Rev. (1st Lien) 6.75% 11/15/07,
(Escrowed to Maturity) (d) 500 539
Florida Board of Ed. Cap. Outlay Rfdg. Unltd. Tax (Pub. Ed.):
Series B, 5.20% 6/1/13 4,215 3,725
Series D:
5% 6/1/13 3,000 2,588
5% 6/1/15 5,000 4,275
5.125% 6/1/18 4,500 3,848
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
FLORIDA - CONTINUED
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 $ 1,242
Florida Tpk. Auth. Tpk. Rev. Rfdg. Series A:
5% 7/1/15, (FGIC Insured) 6,000 5,070
5% 7/1/16, (FGIC Insured) 7,500 6,309
Kissimmee Util. Auth. Elec. Sys. Rev. Rfdg. & Impt. 5.25%
10/1/18, (FGIC Insured) 2,965 2,565
Orlando Swr. Rev. 6.25% 4/1/06, (Escrowed to Maturity) (d) 500 521
Orlando Util. Commission Wtr. & Elec. Rev.:
Rfdg. Sub-Series D, 5% 10/1/23 4,250 3,436
5% 10/1/23 12,000 9,750
Reedy Creek Impt. Dist. Util. Rev. Rfdg. Series 1, 5% 10/1/14,
(MBIA Insured) 2,300 1,954
Univ. Commty. Hosp. Inc. Hosp. Rev. Rfdg. 7.50% 9/1/11,
(FSA Insured) 2,000 2,268
53,851
GEORGIA - 1.4%
Georgia Gen. Oblig. Series 89 A, 8.25% 4/1/95 1,000 1,031
Georgia Muni. Elec. Auth. (Proj. One Sub.) Series A,
6.5% 1/1/26, (AMBAC Insured) 10,000 10,038
Metro Atlanta Rapid Tran. Auth. 6.25% 7/1/18 4,065 4,014
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) 500 540
15,623
HAWAII - 0.8%
Honolulu City & County:
Ref. & Impt. Series B, 5% 10/1/13 5,000 4,300
Series A, 5.75% 4/1/10 4,000 3,855
8,155
ILLINOIS - 4.7%
Chicago O'Hare Int'l. Arpt. Rev. Rfdg.:
2nd Lien Series C-1, 5% 1/1/10, (MBIA Insured) 6,000 5,288
Senior Lien Series A:
5% 1/1/12 8,000 6,870
5% 1/1/16 7,500 6,244
Illinois Dedicated Tax Rev. (Civic Ctr.) Series A, 7% 12/15/13,
(AMBAC Insured) 2,500 2,684
Illinois Dev. Fin. Auth. Poll. Cont. Rev. (Pub. Svc. Co.)
Series 1990 B, 7.60% 9/1/13 1,000 1,083
Illinois Edl. Facs. Auth. Rev. (Loyola Univ.) (Unrefunded Balance)
Series A, 7.125% 7/1/21 3,645 3,845
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
ILLINOIS - CONTINUED
Illinois Health Facs. Auth. Rev.:
Rfdg.:
(OSF Healthcare Sys.) 6% 11/15/23 $ 3,200 $ 2,896
(Rush Presbyterian - St. Luke's Med. Ctr.) 7.40% 10/1/20 5,215 5,495
(Ingalls Health Sys. Proj.) 6.25% 5/15/24, (MBIA Insured) 3,160 3,030
(Mercy Hosp. & Med. Ctr.) 9.50% 1/1/15 2,000 2,138
(Rush Presbyterian-St. Lukes) 5.25% 11/15/20, (MBIA Insured) 3,000 2,501
Illinois Reg'l. Auth. Series A, 8% 6/1/17, (AMBAC Insured) 3,000 3,611
Metropolitan Pier & Expo. Auth. Dedicated State Tax Rev.
(McCormick Place Expansion Proj.) Series A:
0% 6/15/07, (FGIC Insured) (f) 3,000 2,524
0% 6/15/08, (FGIC Insured) 4,190 1,755
Zion Wtrwks. & Swr. Rev.:
6.40% 5/1/04 150 150
6.50% 5/1/05 205 206
50,320
INDIANA - 1.2%
Indiana Health Facs. Fing. Auth. Hosp. Rev. Rfdg.
(Methodist Hosp.) Series A, 5.75% 9/1/15 3,750 3,431
Indiana Trans. Fin. Auth. Hwy. Rev. Series A, 7.25% 6/1/15 1,000 1,091
Indianapolis Local Pub. Impt. Bond Bank Series D,
6.75% 2/1/20 1,400 1,414
Marion County Convention & Recreational Facs. Auth. Excise
Tax Rev. Rfdg. (Lease Rental) Series A, 5.375% 6/1/13,
(AMBAC Insured) 2,750 2,458
Mount Vernon Poll. Cont. Rev. (Gas Works) Series A,
7.25% 3/1/14 4,500 4,821
13,215
KENTUCKY - 1.2%
Jefferson County Poll. Cont. Rev. (Louisville Gas & Elec. Co.)
5.90% 4/15/23 (b) 5,000 4,363
Kentucky Tpk. Auth. Econ. Dev. Road Rev. Rfdg.:
(Cap. Appreciation) 0% 1/1/10, (FGIC Insured) (c) 10,055 3,783
(Revitalization Proj.) 5.50% 7/1/11, (AMBAC Insured) 4,000 3,730
Louisville & Jefferson Counties Metropolitan Swr. Dist. Rev.
Rfdg. Series B, 5.50% 5/15/23, (MBIA Insured) 1,750 1,553
13,429
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
MARYLAND - 2.9%
Maryland Health & Higher Ed. Facs. Auth. Rev.:
Rfdg.:
(Johns Hopkins Health Sys.) Series 1988, 7.50% 7/1/20 $ 7,000 $ 7,604
(Mercy Med. Ctr.) 5.50% 7/1/22, (AMBAC Insured) 1,500 1,322
(Francis Scott Key Med. Ctr.) 5% 7/1/23, (FGIC Insured) 2,000 1,618
(Doctors Commty. Hosp.) 5.50% 7/1/24 10,400 8,541
(Frederick Mem. Hosp.) 5.25% 7/1/13, (FGIC Insured) 2,250 1,991
(Good Samaritan Hosp.) 5.75% 7/1/13 2,600 2,392
(Maryland Univ. Med. Sys.) 5% 7/1/20, (FGIC Insured) 3,000 2,449
(Howard County Gen. Hosp.) 5.50% 7/1/21 3,000 2,464
Prince George's County Hosp. Rev. (Greater Southeast
Healthcare Sys.) 6.375% 1/1/23 2,800 2,582
30,963
MASSACHUSETTS - 7.1%
Massachusetts Gen. Oblig.:
Rfdg. Series A:
5.25% 2/1/08 5,000 4,563
5.50% 2/1/11 5,000 4,631
Cons. Loan Series A, 5% 1/1/12 3,900 3,398
Ltd. Tax Cons. Loan Series A, 5% 1/1/09 8,950 7,988
5% 8/1/06 5,000 4,569
Massachusetts Health & Edl. Facs. Auth. Rev.:
(Beth Israel Hosp.) 8.776% 7/1/25, (AMBAC Insured) INFL (e) 5,000 4,600
(Blood Institute) Series A, 6.50% 2/1/22 5,000 4,844
(Univ. Hosp.) Series C, 7.25% 7/1/19, (MBIA Insured) 3,500 3,741
Massachusetts Hsg. Fin. Agcy. (Hsg. Projs.) Series A:
6.30% 10/1/13 2,000 1,958
9.125% 12/1/20, (GNMA Coll.) 975 1,041
Massachusetts Ind. Fin. Agcy. Rev.:
Rfdg. (Harvard Commty. Health Plan)
Series B, 8.125% 10/1/17 5,000 5,425
(Massachusetts Biomedical) Series A-2, 0% 8/1/08 10,000 3,963
Massachusetts Muni. Wholesale Elec. Co. Pwr. Supply Sys. Rev.:
Series A:
5% 7/1/05, (AMBAC Insured) 4,100 3,828
6.75% 7/1/08 2,500 2,569
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
MASSACHUSETTS - CONTINUED
Massachusetts Muni. Wholesale Elec. Co. Pwr. Supply Sys. Rev. - continued
Series B:
Rfdg. 5% 7/1/17, (MBIA Insured) $ 4,000 $ 3,270
6.75% 7/1/08 4,995 5,132
6.75% 7/1/17 1,655 1,663
Massachusetts Port. Auth. Rev. 12.25% 7/1/97,
(Escrowed to Maturity) (d) 420 458
Massachusetts Tpk. Auth. Tpk. Rev. Series A, 5% 1/1/20 2,585 2,132
Massachusetts Wtr. Resources Auth. Gen. Rfdg. Series C,
5.25% 12/1/15 7,735 6,632
76,405
MICHIGAN - 3.8%
Michigan Hosp. Fin. Auth. Rev.:
Rfdg. (Sisters of Mercy Health Corp.)
5.375% 8/15/14, (MBIA Insured) 3,000 2,696
(Detroit Med. Ctr.) Series A, 6.25% 8/15/13 1,750 1,652
Michigan Hsg. Dev. Auth. Rental Hsg. Rev. Series B:
7.50% 4/1/10 6,000 6,413
5.70% 4/1/12 3,750 3,403
Michigan Pub. Pwr. Agcy. Rev. Rfdg. (Belle River Proj.)
Series A, 5.25% 1/1/18 13,500 11,627
Michigan Trunk Line Rev.:
Rfdg. Series B-1, 5.50% 10/1/21 2,500 2,194
Series A:
0% 10/1/09, (AMBAC Insured) 8,010 3,054
5.50% 10/1/21 5,000 4,388
Oakland County (Segment I & II Evergreen Farmington
Swr. Disp. Sys.):
5.50% 11/1/07 1,000 937
5.50% 11/1/08 1,000 940
Western Michigan Univ. Rev. Gen. Rfdg Series A, 5.50%
7/15/16, (FGIC Insured) 3,620 3,243
40,547
MINNESOTA - 2.3%
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 4,748
Minnesota Hsg. Fin. Agcy.:
Hsg. Dev. Series B, 9.375% 2/1/18 580 607
(Single Family Mtg.):
Series I, 6.25% 1/1/15 2,000 2,025
Series K, 6.40% 1/1/15 5,000 4,925
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
MINNESOTA - CONTINUED
Rochester Health Care Facs. Rev. (Mayo Foundation Med. Ctr.)
RIB Series H, 8.99% 11/15/15 INFL (e) $ 5,000 $ 4,675
St. Paul Hsg. & Redev. Auth. Hosp. Rev. (Healtheast)
Series A, 6.625% 11/1/17 4,000 3,865
Southern Minnesota Muni. Pwr. Agcy. Pwr. Supply Sys. Rev.
Series A, 4.75% 1/1/16 4,500 3,684
24,529
MISSISSIPPI - 0.1%
Mississippi Home Corp. Single Family Sr. Rev. Rfdg. Series
1990 A, 9.25% 3/1/12, (FGIC Insured) 980 1,029
MISSOURI - 0.6%
Kansas City Ind. Dev. Auth. Hosp. Rev. (Research Health
Svcs. Sys.) 9.375% 4/15/14, (MBIA Insured) 4,100 4,346
Kirkwood Ind. Dev. Auth. Health Care Corp. Rev. (St. Joseph
Hosp.) 7% 7/1/22 2,000 2,225
6,571
MONTANA - 0.3%
Montana State Health Facs. Auth. Rev. (Sisters of Charity
Leavenworth Sys.) 5% 12/1/23 4,500 3,645
MULTIPLE STATES - 0.5%
Washington Metro Area Trans. Auth. Gross Rev. Rfdg.
6% 7/1/09, (FGIC Insured) 5,500 5,500
NEBRASKA - 1.9%
Nebraska Pub. Pwr. Dist. Rev. Rfdg. (Pwr. Supply Sys.):
Series B, 5.25% 1/1/13 3,950 3,506
Series C:
5% 1/1/10 3,000 2,636
5% 1/1/17 8,100 6,814
Omaha Pub. Pwr. Dist. Elec. Sys. Rev. Series 1992 B,
6.20% 2/1/17 (c) 7,200 7,083
20,039
NEW HAMPSHIRE - 0.8%
New Hampshire Tpk. Sys. Rev. Rfdg.:
5.25% 2/1/19 8,500 7,268
5.75% 4/1/20 1,500 1,372
8,640
NEW JERSEY - 1.8%
Middlesex County Poll. Cont. Auth. Rev. Rfdg. (Fing. Poll.)
(Amerada Hess Corp.) 7.875% 6/1/22 (b) 7,750 8,156
New Jersey Health Care Facs. Fing. Auth. Rev. (Cathedral
Health) Series A, 7.25% 2/15/21, (FHA Guaranteed) 2,000 2,097
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
NEW JERSEY - CONTINUED
New Jersey Hsg. Fin. Agcy. Spl. Pledge Rev.:
Series 1, 8.25% 11/1/20 $ 600 $ 602
6.75% 11/1/20 705 714
New Jersey Hwy. Auth. Garden State Parkway Gen. Rev.:
10.25% 1/1/05, (Pre-Refunded to 1/1/95 @ 102) (d) 400 421
10% 1/1/09, (Pre-Refunded to 1/1/95 @ 102) (d) 750 788
(Senior Parkway) 5.75% 1/1/19 1,500 1,404
New Jersey Tpk. Auth. Tpk. Rev. Rfdg. 10.375% 1/1/03
(Escrowed to Maturity) (d) 1,585 1,920
New Jersey Wastewtr. Treatment Rev. Series A, 7.375%
5/15/08, (MBIA Insured) 2,650 2,859
18,961
NEW YORK - 11.7%
Metropolitan Trans. Auth. Svc. Contract (Trans. Facs.) Series 4:
7.75% 7/1/01 735 828
7.75% 7/1/02 1,420 1,592
Nasua County Rfdg. Gen. Impt. Series A, 2.90% 5/1/95,
(FGIC Insured) 4,000 3,980
New York City:
Series A-1:
5.75% 8/1/10 1,050 959
5.80% 8/1/13 1,160 1,041
Series B, 5.75% 8/15/13 3,000 2,678
New York City Muni. Wtr. Fin. Auth. Wtr. & Swr. Sys. Rev.:
Series A, 7% 6/15/09, (FGIC Insured) 2,500 2,678
Series 1992 A, 7% 6/15/09 1,500 1,583
New York State Dorm. Auth. Rev.:
Rfdg. (State Univ. Edl. Facs.):
Series A:
5.50% 5/15/13 7,500 6,684
5.25% 5/15/15 7,500 6,375
Series B, 5.25% 5/15/19 5,150 4,262
(City Univ. Sys. Consolidated):
Series A:
5.75% 7/1/13 6,000 5,483
2nd. Gen. 5.75% 7/1/13 3,330 3,043
5.75% 7/1/18 5,000 4,494
Series C, 7.50% 7/1/10 1,000 1,099
Series D, 7% 7/1/09 2,000 2,115
(Court Facs. Lease) Series A:
5.625% 5/15/13 2,000 1,783
5.25% 5/15/21 (c) 10,000 8,163
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
NEW YORK - CONTINUED
New York State Local Gov't. Assistance Corp. Rfdg.:
Series C:
5.50% 4/1/17 $ 2,500 $ 2,234
5% 4/1/21 (c) 26,350 21,442
Series E:
6% 4/1/14 5,000 4,819
5.25% 4/1/16 6,425 5,582
(Cap. Appreciation) Series C, 0% 4/1/13 12,000 3,540
New York State Med. Care Facs. Fin. Agcy. Rev.:
Rfdg. (Mental Health Svcs. Facs.) Series A, 8.875% 8/15/07 2,910 3,237
(North Shore Univ. Hosp. Mtg. Proj.) Series A, 7.20%
11/1/20, (MBIA Insured) 2,000 2,185
Triborough Bridge & Tunnel Auth. Rev.:
Rfdg. (Gen. Purp.) Series Y:
5.50% 1/1/17 13,075 11,702
6.125% 1/1/21 3,000 2,921
(Convention Ctr. Proj.) Series E, 7.25% 1/1/10 1,000 1,090
(Gen. Purp.) Series A:
4.75% 1/1/19 5,575 4,361
5% 1/1/24 5,000 4,000
125,953
NORTH CAROLINA - 1.7%
Brunswick Unltd. Tax Rfdg. 4.30% 3/1/95, (AMBAC Insured) 2,375 2,384
Durham Gen. Oblig. Pub. Impt. 4.70% 2/1/95 1,000 1,005
North Carolina Eastern Muni. Pwr. Agcy. Pwr. Sys. Rev.:
Rfdg.:
Series B, 7% 1/1/08 5,000 5,306
Series C, 5% 1/1/21 5,595 4,392
Series D, 5.875% 1/1/13 3,000 2,738
North Carolina Muni. Pwr. Agcy. #1 (Catawba Elec.) Rev. Rfdg.
5.75% 1/1/20, (MBIA Insured) 2,500 2,306
18,131
NORTH DAKOTA - 0.2%
Mercer County Poll. Cont. Rev. (Basin Elec. Pwr.) 10.50%
6/30/13, (AMBAC Insured) 500 524
North Dakota Univ. Rev. Rfdg. (Hsg. & Auxiliary Facs.)
Series A, 9.25% 4/1/14 2,000 2,128
2,652
OHIO - 1.8%
Columbus Unltd. Tax 12.375% 2/15/05 1,000 1,508
Cuyahoga County Hosp. Rev. (Fairview Gen. Hosp.)
7.375% 8/1/19 2,500 2,743
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
OHIO - CONTINUED
Franklin County Rfdg. Ltd. Tax 5.375% 12/1/21 $ 5,000 $ 4,494
Hamilton County Health Sys. Rev. (St. Francis-St. George
Franciscan) 9.375% 7/1/15 3,750 4,013
Ohio State Bldg. Auth. (Workers Comp.) 4.75% 4/1/14 6,000 4,995
Ohio Wtr. Dev. Auth. Rev. (Safe Wtr. Rfdg. & Impt.):
9.25% 12/1/12, (AMBAC Insured) (Pre-Refunded to
6/1/95 @ 103) (d) 150 161
(Unrefunded Balance) 9.25% 12/1/12, (AMBAC Insured) 80 86
Warren Hosp. Rev. Rfdg. (Warren General Hosp. Proj.)
Series B, 7.20% 11/15/09 1,500 1,474
19,474
OKLAHOMA - 1.5%
Grand River Dam Auth. Rev. Rfdg. 5.50% 6/1/10 10,000 9,237
Oklahoma Muni. Pwr. Auth. Pwr. Supply Sys. Rev.
(Independent Electrical Auth.) Series A:
4.75% 1/1/22, (FGIC Insured) 6,000 4,763
4.50% 1/1/28, (FGIC Insured) 3,000 2,220
16,220
OREGON - 0.3%
Oregon Health Hsg. Edl. & Cultural Facs. Auth. Rev.
(Lewis & Clark College Proj.) Series A, 6.125% 10/1/24,
(MBIA Insured) 1,600 1,580
Western Lane Oregon Hosp. Dist. (Sisters of St. Joseph of
Peace, WA) 5.75% 8/1/19, (MBIA Insured) 1,250 1,180
2,760
PENNSYLVANIA - 7.5%
Allegheny County Hosp. Dev. Auth. Rev. Rfdg.:
(Health Ctr. Presbyterian Univ.) Series A,
6% 11/1/12, (MBIA Insured) 3,500 3,399
(MaGee Women's Hosp.) 6% 10/1/13, (FGIC Insured) 3,500 3,399
Dauphin County Gen. Auth. Hosp. Rev. Rfdg. (Hapsco
Western Pennsylvania Hosp. Proj.) Series B, 6.25% 7/1/16,
(MBIA Insured) 2,500 2,441
Delaware County Auth. Hosp. Rev. 6% 12/15/20 3,000 2,700
Harrisburg Auth. Wtr. Rev. (Complimentary Auction Rate B-3)
8.42% 7/15/15, (FGIC Insured) INFL (e) 3,000 2,689
Montgomery County Higher Ed. & Health Auth. Rev.
(St. Joseph's Univ.) 6.50% 12/15/22, (Connie Lee Insured) 1,500 1,515
Pennsylvania Convention Ctr. Rev. Series A, 6% 9/1/19,
(FGIC Insured) 2,630 2,538
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
PENNSYLVANIA - CONTINUED
Pennsylvania Higher Edl. Facs. Auth. College & Univ. Rev.:
Rfdg. (Thomas Jefferson Univ. Hosp.) Series B, 9.25% 7/1/08 $ 4,050 $ 4,369
(Temple Univ.) 7.40% 10/1/10 7,050 7,455
Pennsylvania Intergovernmental Co-op. Auth. Spl. Tax Rev.:
Rfdg. Series A, 5% 6/15/15 4,000 3,400
(City of Philadelphia Funding Prog.) 5.75% 6/15/15 6,000 5,573
Pennsylvania State Univ. Rfdg. Series A, 5.10% 3/1/18 2,375 1,995
Pennsylvania Unltd. Tax Rfdg. & Projs. First Series 5% 4/15/08 5,000
4,525
Philadelphia Hosp. & Higher Ed. Hosp. Auth. Rev.
(Children's Hosp.) 5% 2/15/21 4,350 3,502
Philadelphia Wtr. & Wastewtr. Rev.:
Rfdg. Series 1993:
5.50% 6/15/06 5,000 4,731
5.50% 6/15/07 4,000 3,740
8.12% 6/15/12, (FGIC Insured) INFL (e) 5,000 4,275
Philadelphia Parking Auth. Parking Rev. (Arpt.)
7.375% 9/1/18, (AMBAC Insured) 1,750 1,894
Pittsburgh Special Dist. Gen. Oblig. 6.125% 9/1/17,
(AMBAC Insured) 3,000 2,970
Pittsburgh Wtr. & Swr. Auth. Wtr. & Swr. Sys. Rev. Rfdg.
Series A, 4.75% 9/1/16, (FGIC Insured) 15,335 12,499
Swarthmore Borough Auth. College Rev. 7.375% 9/15/18,
(Pre-Refunded to 9/15/98 @ 101.50) (d) 1,290 1,422
81,031
PUERTO RICO - 0.2%
Puerto Rico Infrastructure Fing. Auth. Spl. Tax Series 1988 A,
7.75% 7/1/08 2,000 2,165
SOUTH CAROLINA - 1.3%
Piedmont Muni. Pwr. Agcy. Elec. Rev. 11% 1/1/25,
(Pre-Refunded to 1/1/95 @ 103) (d) 3,000 3,191
South Carolina Ed. Dev. Auth (South Carolina Baptist Hosp.)
7.79% 8/1/15, (AMBAC Insured) INFL (e) 6,000 4,785
South Carolina Hsg. Fin. & Dev. Auth. (Homeownership
Mtg. Purchase) Series B, 7.875% 7/1/15 1,750 1,820
South Carolina Pub. Svc. Auth. Rev. Rfdg. (Independent
Electrical Auth.) Series C, 5.125% 1/1/32 5,000 3,963
13,759
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
TENNESSEE - 1.1%
Knox County Health Edl. & Hsg. Facs. Auth. (Sanders
Alliance Hosp. Facs.) Rev. Series C, 7.25%
1/1/10, (MBIA Insured) INFL (e) $ 2,660 $ 2,943
Metropolitan Nashville Arpt. Auth. Arpt. Rev. Series C,
6.60% 7/1/15, (FGIC Insured) 3,000 3,056
Shelby County Pub. Impt. Unltd. Tax Series A, 5.125% 3/1/18 2,770 2,372
Tennessee Hsg. Dev. Auth. Mtg. Fin. 5.70% 7/1/08 4,000 3,800
12,171
TEXAS - 5.9%
Austin Util. Sys. Rev. Rfdg. (Comb. Prior Lien) 5.75% 11/15/16,
(AMBAC Insured) 6,000 5,589
Austin Wtr. Swr. & Elec. Rev. Rfdg. 13.50% 11/15/97 3,200 4,008
Corpus Christi Hsg. Fin. Corp. Single Family Mtg. Rev.
(Lomas & Nettleton Co.) Series A, 13.375% 6/1/13 95 98
Dallas 6% 2/15/12 3,425 2,956
Dallas Fort Worth Reg'l. Arpt. Rev. Rfdg. Joint Series A,
7.375% 5/1/12, (FGIC Insured) 1,000 1,104
Harris County Cap. Appreciation Rev. Rfdg. (Toll Road
Subordinated Lien) 0% 8/1/06 4,245 2,064
Harris County Hosp. Dist. Mtg. Rev. Rfdg. 7.40% 2/15/10,
(AMBAC Insured) 3,000 3,360
Harris County (Toll Road Sr. Lien) Rfdg. 5% 8/15/16,
(FGIC Insured) 7,550 6,238
Houston Wtr. & Swr. Sys. Rev.:
Rfdg. (Jr. Lien) Series C, 0% 12/1/09, (AMBAC Insured) 3,000 1,133
(Prior Lien) Series B, 6.375% 12/1/14 6,000 5,963
North Texas Muni. Wtr. Dist. Upper Fork Wastewtr. Interest
Receipt Contract Rev. 5.50% 6/1/12, (FGIC Insured) 2,300 2,107
San Antonio Elec. & Gas Rev.:
Rfdg. Series B:
0% 2/1/09, (FGIC Insured) 16,500 6,662
0% 2/1/10, (FGIC Insured) 10,000 3,763
5% 2/1/14 8,865 7,535
Texas Wtr. Dev. Board Rev. (Revolving Fund Sr. Lien)
5.25% 7/15/15 4,000 3,494
Trinity River Wastewtr. Rev. Series A, 3.30% 8/1/94 1,450 1,450
Tyler Health Facs. Dev. Corp. Hosp. Rev. (East Texas Med.
Ctr. Reg'l. Health Sys.) Series B, 6.75% 11/1/25 6,240 5,958
63,482
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
UTAH - 1.0%
Intermountain Pwr. Agcy. Pwr. Supply Rev.:
Unltd. Tax Pwr. Rfdg. Series H, 6% 7/1/21 $ 520 $ 490
7.722% 7/1/21 INFL (e) 3,500 2,796
Salt Lake City Hosp. Rev. (Intermountain Health Care
Hosp., Inc.):
Series A, 8.125% 5/15/15 2,975 3,347
6.30% 2/15/15 2,375 2,357
West Valley City Muni. Bldg. Auth. Lease. Rev. (Muni. Facs.
Proj.) 7.70% 1/15/10, (BIG Insured) 2,000 2,239
11,229
VERMONT - 0.4%
Vermont Hsg. Fin. Agcy. (Single Family) Series 4, 6.40%
11/1/25, (FHA Insured) 4,815 4,744
VIRGINIA - 1.3%
Hampton Museum Rev.:
5.25% 1/1/09 2,325 2,094
5.25% 1/1/14 2,000 1,743
Lynchburg Ind. Dev. Auth. Facs. 1st Mtg. Rev. Rfdg.
(Central Health, Inc.) 8.125% 1/1/16 1,250 1,361
Prince William County Svc. Auth. Wtr. & Swr. Sys. Rev.
6.50% 7/1/21, (FGIC Insured) 1,500 1,624
Roanoke County Ind. Dev. Auth. Ind. Dev. Rev. (Dominion
Bankshares Corp. Proj.) 6.75% 8/1/01 750 780
Virginia Pub. Bldg. Auth. Bldg. Rev. Rfdg. Series A,
5.40% 8/1/09 2,790 2,612
Virginia Pub. School Auth. 6.50% 8/1/12 2,000 2,060
Virginia Resource Auth. Wtr. & Swr. Sys. Rev. Series B,
8.70% 11/1/11 1,750 1,874
14,148
WASHINGTON - 2.1%
Washington Pub. Pwr. Supply Sys. Rev.:
Nuclear Proj. #1:
Series D, 14.375% 7/1/01, (Escrowed to Maturity) (d) 250 342
5.30% 7/1/10 2,500 2,184
Nuclear Proj. #2:
Series A, 14.375% 7/1/01 3,405 4,741
7.77% 7/1/12 INFL (e) 5,600 4,263
Nuclear Proj. #3 Rfdg.:
Series B:
0% 7/1/06, (MBIA Insured) 5,000 2,388
0% 7/1/07, (MBIA Insured) 3,000 1,328
7.57% 7/1/12 INFL (e) 10,000 7,612
22,858
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
WEST VIRGINIA - 0.9%
West Virginia School Bldg. Auth. Rev. (Cap. Impt.) Series A,
6.75% 7/1/15 $ 3,000 $ 3,108
West Virginia State Hosp. Fin. Auth. Hosp. Rev.:
Rfdg. & Impt. (Cabell Hosp. Proj.) 7.875% 1/1/19 1,500 1,686
(Cabell Huntington Hosp. Inc. Proj.) Series B, 7.70% 1/1/19 4,000 4,464
9,258
WISCONSIN - 1.0%
Wisconsin Gen. Oblig. Unltd. Tax Series A, 5% 5/1/13 5,000 4,369
Wisconsin Health & Ed. Facs. Auth. Rev.:
(Felician Care, Inc.) Series A, 7% 1/1/15, (AMBAC Insured) 2,000 2,115
(St. Luke's Med. Ctr. Proj.) 7.10% 8/15/11, (MBIA Insured) 4,000 4,250
10,734
WYOMING - 0.2%
Wyoming Farm Loan Board Cap. Facs. Rev. Rfdg. 5.75%
10/1/20 2,500 2,313
TOTAL MUNICIPAL BONDS
(Cost $1,085,039) 1,049,088
MUNICIPAL NOTES (A) - 2.6%
CALIFORNIA - 0.9%
San Bernadino County TRAN, 4.5% 7/31/95 10,000 10,068
CONNECTICUT - 0.1%
Connecticut Spl. Assessment Unemployment Rev. Series 1993 B,
2.55%, LOC Industrial Bank of Japan, Mitsubishi Bank Ltd.
Japan, VRDN 1,100 1,100
ILLINOIS - 0.1%
Chicago O'Hare Int'l. Arpt. Spl. Facs. Rev. (American
Airlines, Inc.) Series 1984 C, 3.55%, LOC Long-Term Cr.
Bank of Japan, VRDN 1,500 1,500
MASSACHUSETTS - 0.3%
Massachusetts Health & Edl. Facs. Auth. Rev. (Cap. Asset Prog.)
Series C, 3%, (MBIA Insured), BPA Sanwa Bank, VRDN 2,600 2,600
MICHIGAN - 0.7%
Flint Hosp. Bldg. Auth. Rev. (Hurley Med. Ctr.) Series 1985, 3%,
LOC Comerica Bank, Detroit, VRDN 6,900 6,900
MUNICIPAL NOTES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
MINNESOTA - 0.5%
Minnesota Higher Ed. Coordinating Board Rev. (Supplemental
Student Loan Prog.) Series 1984, 2.375%, LOC Mitsubishi
Bank Ltd., VRDN $ 3,500 $ 3,500
Minnesota Gen. Oblig. Tender Option Ctfs. 5.25%
Series 137, (Liquidity Enhancement Bankers Trust), VRDN 2,000 2,000
5,500
TOTAL MUNICIPAL NOTES
(Cost $27,675) 27,668
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,112,714) $ 1,076,756
FUTURES CONTRACTS
AMOUNTS IN THOUSANDS EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
SOLD
750 U.S. Treasury Bond Contracts Sept. 1994 $ 75,914 $ 928
THE FACE VALUE OF FUTURES SOLD AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 7.1%
SECURITY TYPE ABBREVIATIONS
TRAN - Tax and Revenue Anticipation Notes
VRDN - Variable Rate Demand Notes
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) Security purchased on a delayed delivery basis (see Note 2 of Notes to
Financial Statements).
(c) 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
$26,731,000.
(d) Security collateralized by an amount sufficient to pay interest and
principal.
(e) Coupon is inversely indexed to a floating interest rate. The price will
be more volatile than the price of a comparable fixed rate security. The
rate shown is 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 77.1% AAA, AA, A 83.0%
Baa 13.0% BBB 10.5%
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 0.6%.
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
Health Care 18.5%
Electric Revenue 16.1
General Obligation 11.8
Water & Sewer 11.3
Others (individually less than 10%) 42.3
TOTAL 100.0%
INCOME TAX INFORMATION
At June 30, 1994, the aggregate cost of investment securities for income
tax purposes was $1,112,718,000. Net unrealized depreciation aggregated
$35,962,000, of which $21,257,000 related to appreciated investment
securities and $57,219,000 related to depreciated investment securities.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) JUNE 30, 1994 (UNAUDITED)
ASSETS
Investment in securities, at value (cost $1,112,714) $ 1,076,756
(Notes 1 and 2) - See accompanying schedule
Cash 1,062
Receivable for investments sold
Regular delivery 42,928
Delayed delivery (Note 2) 2,913
Interest receivable 21,541
Receivable for daily variation on futures contracts 1,099
TOTAL ASSETS 1,146,299
LIABILITIES
Payable for investments purchased $ 39,613
Regular delivery
Delayed delivery (Note 2) 15,180
Payable for fund shares redeemed 208
Dividends payable 1,761
Accrued management fee 390
Other payables and accrued expenses 162
TOTAL LIABILITIES 57,314
NET ASSETS $ 1,088,985
Net Assets consist of (Note 1):
Paid in capital $ 1,110,378
Accumulated undistributed net realized gain (loss) on 13,637
investments
Net unrealized appreciation (depreciation) on investments (35,030)
NET ASSETS, for 137,567 shares outstanding $ 1,088,985
NET ASSET VALUE, offering price and redemption price per $7.92
share ($1,088,985 (divided by) 137,567 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED JUNE 30, 1994 (UNAUDITED)
INTEREST INCOME $ 35,752
EXPENSES
Management fee (Note 4) $ 2,435
Transfer agent, accounting and custodian fees and 620
expenses (Note 4)
Non-interested trustees' compensation 4
Registration fees 50
Audit 22
Legal 3
Interest (Note 5) 1
Reports to shareholders 18
Miscellaneous 6
TOTAL EXPENSES 3,159
NET INTEREST INCOME 32,593
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
(NOTES 1, 2 AND 3)
Net realized gain (loss) on:
Investment securities 15,237
Futures contracts 2,222 17,459
Change in net unrealized appreciation (depreciation) on:
Investment securities (127,466)
Futures contracts 931 (126,535)
NET GAIN (LOSS) (109,076)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM $ (76,483)
OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS YEAR ENDED
ENDED JUNE 30, DECEMBER 31,
1994 1993
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 32,593 $ 70,575
Net interest income
Net realized gain (loss) 17,459 66,696
Change in net unrealized appreciation (depreciation) (126,535) 22,347
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (76,483) 159,618
FROM OPERATIONS
Distributions to shareholders: (32,593) (70,575)
From net interest income
From net realized gain (1,457) (58,286)
TOTAL DISTRIBUTIONS (34,050) (128,861)
Share transactions 342,528 581,372
Net proceeds from sales of shares
Reinvestment of distributions 22,062 88,248
Cost of shares redeemed (426,722) (630,380)
Net increase (decrease) in net assets resulting from (62,132) 39,240
share transactions
TOTAL INCREASE (DECREASE) IN NET ASSETS (172,665) 69,997
NET ASSETS
Beginning of period 1,261,650 1,191,653
End of period $ 1,088,985 $ 1,261,650
OTHER INFORMATION
Shares
Sold 41,829 66,164
Issued in reinvestment of distributions 2,690 10,106
Redeemed (52,065) (71,390)
Net increase (decrease) (7,546) 4,880
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED DECEMBER 31,
ENDED JUNE 30,
1994
(UNAUDITED) 1993 1992 1991 1990 1989
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, $ 8.690 $ 8.500 $ 8.470 $ 8.130 $ 8.130 $ 7.950
beginning of period
Income from .227 .487 .519 .526 .541 .556
Investment
Operations
Net interest income
Net realized and (.760) .600 .210 .410 - .180
unrealized gain
(loss)
Total from investment (.533) 1.087 .729 .936 .541 .736
operations
Less Distributions (.227) (.487) (.519) (.526) (.541) (.556)
From net interest
income
From net realized (.010) (.410) (.180) (.070) - -
gain on
investments
Total distributions (.237) (.897) (.699) (.596) (.541) (.556)
Net asset value, end of $ 7.920 $ 8.690 $ 8.500 $ 8.470 $ 8.130 $ 8.130
period
TOTAL RETURNB (6.19)% 13.17% 8.93% 11.91% 6.91% 9.56%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of $ 1,089 $ 1,262 $ 1,192 $ 1,163 $ 1,070 $ 1,054
period (in millions)
Ratio of expenses to .54%A .49% .49% .50% .50% .50%
average net assets
Ratio of net interest 5.54%A 5.51% 6.11% 6.35% 6.71% 6.90%
income to average
net assets
Portfolio turnover rate 91%A 74% 53% 33% 49% 64%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT ANNUALIZED.
NOTES TO FINANCIAL STATEMENTS
For the period ended June 30, 1994 (Unaudited)
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. Dividends are declared daily and paid
monthly from net interest income. Distributions to shareholders from
realized capital gains on investments, if any, are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
futures and options transactions and losses deferred due to wash sales. The
fund also utilized earnings and profits distributed to shareholders on
redemption of shares
as a part of the dividends paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder distribu-
tions will result in reclassifications to paid in capital. Any taxable gain
remaining at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
DELAYED DELIVERY TRANSACTIONS. The fund may purchase or sell securities on
a when-issued or forward commitment basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of the
under-lying 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 $515,379,000 and $611,347,000, respectively.
The market value of futures contracts opened and closed amounted to
$1,167,256,000 and $1,110,018,000, respectively.
4. FEES AND OTHER
TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, Fidelity Management &
Research Company (FMR) receives a monthly fee that is calculated on the
basis of a group fee rate plus a fixed individual fund fee rate applied to
the average net assets of the fund. The group fee rate is the weighted
average of a series of rates ranging from .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 annualized rate of .41% of average net assets.
The Board of Trustees approved a new group fee rate schedule with rates
ranging from .12% to .37%. Effective August 1, 1994, FMR has voluntarily
agreed to implement this new group fee rate schedule as it results in the
same or a lower management fee.
4. FEES AND OTHER
TRANSACTIONS WITH AFFILIATES-
CONTINUED
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 $431,000 and $186,000, respectively.
5. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or emergency
purposes to fund shareholder redemptions. The fund has established
borrowing arrangements with certain banks. Under the most restrictive
arrangement, the fund must pledge to the bank securities having a market
value in excess of 220% of the total bank borrowings. The interest rate on
the borrowings is the bank's base rate, as revised from time to time. The
maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $5,900,000. The weighted average
interest rate was 3.75%.
TO CALL FIDELITY
FOR FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call --
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND QUOTES*
1-800-544-8544
Just make a selection from this record-ed menu:
PRESS
For quotes on funds you own.
1.
For an individual fund quote.
2.
For the ten most frequently
requested Fidelity fund quotes.
3.
For quotes on Fidelity Select
Portfolios(registered trademark).
4.
To change your Personal
Identification Number (PIN).
5.
To speak with a Fidelity
representative.
6.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
ed menu:
PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
dividends).
2.
To change your Personal
Identification Number (PIN).
3.
To speak with a Fidelity
representative.
4.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL
VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS
MEANS THAT
YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO
ASSURANCE THAT
MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN
INVESTMENT IN
A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF
DIVIDENDS
AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES. 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 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
1907 West State Road 434
Orlando, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
2000 66th Street, North
St. Petersburg, FL
GEORGIA
3525 Piedmont Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
215 East Erie Street
Chicago, IL
One North Franklin
Chicago, IL
540 Lake Cook Road
Deerfield, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
LOUISIANA
201 St. Charles Avenue
New Orleans, LA
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
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
8180 Greensboro Drive
McLean, 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
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 770001
Cincinnati, OH 45277-0002
(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 770001
Cincinnati, OH 45277-0001
(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 620024
Dallas, TX 75262-0024
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Gary L. Swayze, Vice President
Thomas J. Steffanci, Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, 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
(registered trademark)
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
(registered trademark)
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
