FIDELITY
AGGRESSIVE MUNICIPAL
FUND
SEMIANNUAL REPORT
JUNE 30, 1996
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 7 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 10 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 11 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 27 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 31 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,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES,
CALL
1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST
OR SEND
MONEY.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Although stocks have managed to post solid returns through the first six
months of 1996, signs of strength in the economy have led to inflation
fears, causing some uncertainty in bond markets so far this year. In 1995,
both stock and bond markets posted strong results, while the year before,
stocks posted below-average returns and bonds had one of the worst years in
history.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
Keeping in mind that the effects of interest rate changes on your bond
investments will only be "paper" gains or losses unless you sell your
shares, staying in your bond fund may be appropriate if your investment
horizon is at least a year or more. The longer your investing time frame,
the more likely it is that you will retain your principal investment
through both up and down markets. For example, a 10-year time frame, such
as saving for a college education, enables you to weather these ups and
downs in a long-term fund, which has higher potential returns. An
intermediate-length fund could be appropriate if your investment horizon is
two to four years, and a short-term bond fund could be the right choice if
you need your money in one or two years.
If your time horizon is less than a year, you might want to consider moving
some of your bond investment into a money market fund, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
No matter what your investment horizon or portfolio diversity, it makes
good sense to follow a regular investment plan - investing a certain amount
of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
If you have any questions, please call us at 1-800-544-8888. We stand ready
to provide the information you need to make the investments that are right
for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. 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 securities that have grown in value). You can also look at the fund's
income to measure performance. If Fidelity had not reimbursed certain fund
expenses, the past ten years total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JUNE 30, 1996 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS
Fidelity Aggressive Municipal Fund -1.01% 5.26% 42.56% 117.25%
Lehman Brothers Municipal Bond Index -0.45% 6.64% 45.46% 120.15%
High Yield Municipal Debt Funds Averag -0.80% 5.83% 42.33% 108.44%
e
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or 10
years. For example, if you invested $1,000 in a fund that had a 5% return
over the past year, the value of your investment would be $1,050. You can
compare the fund's returns to the performance of the Lehman Brothers
Municipal Bond Index - which reflects the performance of the
investment-grade municipal bond market. To measure how the fund's
performance stacked up against its peers, you can compare it to the high
yield municipal debt funds average, which reflects the performance of 43
mutual funds with similar objectives tracked by Lipper Analytical Services,
Inc., over the past six months. Both benchmarks include reinvested
dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JUNE 30, 1996 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Fidelity Aggressive Municipal Fund 5.26% 7.35% 8.07%
Lehman Brothers Municipal Bond Index 6.64% 7.78% 8.21%
High Yield Municipal Debt Funds Average 5.83% 7.30% 7.60%
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
IMAHDR PRASUN SHR__CHT 19960630 19960723 114826 S00000000000001
Aggressive Municipal LB Municipal Bond
00012 LB015
1986/06/30 10000.00 10000.00
1986/07/31 10051.38 10060.70
1986/08/31 10319.63 10511.12
1986/09/30 10379.63 10537.50
1986/10/31 10604.22 10719.48
1986/11/30 10819.82 10931.84
1986/12/31 10805.70 10901.66
1987/01/31 11120.18 11229.91
1987/02/28 11303.94 11285.16
1987/03/31 11279.02 11165.54
1987/04/30 10744.84 10605.25
1987/05/31 10672.94 10552.65
1987/06/30 10909.27 10862.48
1987/07/31 11029.57 10973.28
1987/08/31 11091.86 10997.97
1987/09/30 10782.94 10592.47
1987/10/31 10631.07 10629.97
1987/11/30 10794.89 10907.52
1987/12/31 10958.98 11065.78
1988/01/31 11386.94 11459.95
1988/02/29 11544.43 11581.08
1988/03/31 11448.04 11446.74
1988/04/30 11474.56 11533.73
1988/05/31 11542.83 11500.40
1988/06/30 11736.09 11668.65
1988/07/31 11836.33 11744.73
1988/08/31 11905.91 11755.07
1988/09/30 12090.93 11967.83
1988/10/31 12299.26 12178.47
1988/11/30 12259.48 12066.91
1988/12/31 12427.99 12190.36
1989/01/31 12575.94 12442.45
1989/02/28 12558.56 12300.49
1989/03/31 12586.78 12271.09
1989/04/30 12848.49 12562.40
1989/05/31 13078.84 12823.32
1989/06/30 13252.96 12997.47
1989/07/31 13370.59 13174.36
1989/08/31 13350.64 13045.38
1989/09/30 13356.89 13006.51
1989/10/31 13368.89 13165.58
1989/11/30 13533.62 13395.98
1989/12/31 13609.24 13505.56
1990/01/31 13596.32 13441.67
1990/02/28 13704.22 13561.30
1990/03/31 13755.71 13565.37
1990/04/30 13668.98 13467.16
1990/05/31 13877.52 13761.15
1990/06/30 13991.52 13882.11
1990/07/31 14231.12 14086.18
1990/08/31 14090.85 13881.64
1990/09/30 14223.55 13889.56
1990/10/31 14319.64 14141.51
1990/11/30 14554.44 14425.90
1990/12/31 14627.74 14488.65
1991/01/31 14697.07 14683.09
1991/02/28 14841.26 14810.83
1991/03/31 14882.64 14816.16
1991/04/30 15078.49 15013.22
1991/05/31 15182.66 15146.69
1991/06/30 15238.91 15131.69
1991/07/31 15480.84 15316.00
1991/08/31 15698.45 15517.71
1991/09/30 15878.19 15719.75
1991/10/31 16002.02 15861.23
1991/11/30 16057.82 15905.48
1991/12/31 16349.78 16246.81
1992/01/31 16407.63 16283.85
1992/02/29 16446.63 16289.06
1992/03/31 16493.21 16295.09
1992/04/30 16648.31 16440.12
1992/05/31 16862.81 16633.62
1992/06/30 17086.81 16912.73
1992/07/31 17602.60 17419.77
1992/08/31 17428.00 17249.93
1992/09/30 17525.94 17362.74
1992/10/31 17321.55 17192.07
1992/11/30 17656.05 17499.98
1992/12/31 17849.07 17678.65
1993/01/31 18117.46 17884.26
1993/02/28 18753.03 18531.13
1993/03/31 18595.54 18335.26
1993/04/30 18787.40 18520.26
1993/05/31 18936.31 18624.34
1993/06/30 19250.51 18935.18
1993/07/31 19306.90 18959.99
1993/08/31 19723.23 19354.73
1993/09/30 19964.47 19575.18
1993/10/31 20004.84 19612.96
1993/11/30 19867.83 19440.17
1993/12/31 20282.45 19850.56
1994/01/31 20505.28 20077.25
1994/02/28 20039.51 19557.25
1994/03/31 19182.61 18760.88
1994/04/30 19273.75 18919.97
1994/05/31 19418.24 19084.01
1994/06/30 19355.38 18967.40
1994/07/31 19686.43 19315.08
1994/08/31 19743.56 19381.91
1994/09/30 19488.87 19097.38
1994/10/31 19168.23 18758.21
1994/11/30 18686.06 18419.06
1994/12/31 19102.36 18824.47
1995/01/31 19659.38 19362.47
1995/02/28 20170.44 19925.53
1995/03/31 20195.45 20154.47
1995/04/30 20229.18 20178.26
1995/05/31 20807.47 20822.14
1995/06/30 20639.93 20640.99
1995/07/31 20767.92 20836.67
1995/08/31 20987.90 21100.88
1995/09/30 21147.52 21234.45
1995/10/31 21402.10 21543.19
1995/11/30 21764.75 21900.60
1995/12/31 21946.54 22111.06
1996/01/31 22094.00 22278.00
1996/02/29 22028.49 22127.62
1996/03/31 21568.62 21844.83
1996/04/30 21502.99 21783.01
1996/05/31 21480.59 21774.30
1996/06/28 21725.14 22011.42
IMATRL PRASUN SHR__CHT 19960630 19960723 114831 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was invested
in Fidelity Aggressive Municipal Fund on June 30, 1986. As the chart shows,
by June 30, 1996, the value of the investment would have grown to $21,725 -
a 117.25% increase on the initial investment. For comparison, look at how
the Lehman Brothers Municipal Bond Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000 would
have grown to $22,015 - a 120.15% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return, and yield
of a fund that invests in
bonds will vary. That means if
you sell your shares during a
market downturn, you might
lose money. But if you can
ride out the market's ups and
downs, you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
SIX YEARS ENDED DECEMBER 31,
MONTHS
ENDED
JUNE 30,
1996 1995 1994 1993 1992 1991
Dividend return 2.92% 6.93% 6.15% 6.80% 7.31% 7.97%
Capital appreciation -3.93% 7.96% -11.97% 6.83% 1.86% 3.80%
return
Total return -1.01% 14.89% -5.82% 13.63% 9.17% 11.77%
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, 1996 PAST PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 5.68(cents) 34.13(cents) 68.71(cents)
Annualized dividend rate 6.21% 6.02% 6.02%
30-day annualized yield 5.99% - -
30-day annualized tax-equivalent yield 9.36% - -
</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 $11.13 over
the past month, $11.38 over the past six months and $11.41 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% 1996 federal tax bracket, but does not reflect the payment of
the federal alternative minimum tax, if applicable.
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Tanya Roy, Portfolio Manager of Fidelity Aggressive
Municipal Fund
Q. HOW DID THE FUND PERFORM, TANYA?
A. For the six months ended June 30, 1996, the fund returned -1.01%,
compared to a total return of -0.80% for the high yield municipal debt
funds average, according to Lipper Analytical Services. For the 12 months
ended June 30, 1996, the fund returned 5.26%, while the Lipper average had
a total return of 5.83%. Additionally, the Lehman Brothers Municipal Bond
Index had total returns of -0.45% and 6.64% for the six- and 12-month
periods, respectively.
Q. WHY DID THE FUND UNDERPERFORM ITS LIPPER PEER GROUP?
A. The fund's performance was hurt by its interest in the Ford Heights,
Illinois, incinerator project. In March, Governor Edgar signed a bill that
repealed a tax subsidy supporting three incinerator projects in the state,
including Ford Heights. Ford Heights later entered into bankruptcy
proceedings, and the fund subsequently sold its position in the bonds.
Q. WHAT WAS THE REST OF THE MARKET ENVIRONMENT LIKE OVER THE PERIOD?
A. It's been a fairly volatile six months. Yields rose during the period,
but the municipal market held its own, significantly outperforming U.S.
Treasuries. Within the muni market, the high-yield area did well generally.
Credit quality spreads - the difference in yields between high-yield and
investment-grade bonds - had been fairly tight entering the period and for
the most part remained that way, aided by a light supply of new issuance
coming to market. In fact, spreads continued to tighten a bit between Baa-
and Aaa-rated bonds, and the fund benefited from that tightening.
Q. LET'S TURN TO SOME OF THE SECTORS THE FUND HAD FOCUSED ON DURING THE
PERIOD. YOU'VE CONTINUED TO MAINTAIN A HIGH EXPOSURE TO HEALTH CARE . . .
A. That's right, and the fund's holdings in that sector performed well over
the past six months. As I mentioned in a prior report, I had viewed some of
the lower-rated bonds in health care as undervalued, due to lingering
concerns over health care reform and increased competition. That's why I
had focused on the area of long-term care, where I felt that private payers
would be more important, and government reimbursements would play less of a
factor. Those types of bonds were certainly aided during the period by the
tightening in the high-yield end of the market, and they've done well for
the fund.
Q. YOU'VE ALSO INCREASED THE FUND'S EXPOSURE TO ELECTRIC UTILITIES. WHAT
WAS BEHIND YOUR THINKING THERE?
A. That sector has been going through some changes related to deregulation
and increased competition. As a result, there have been some clear
performance differences among issuers, and the fund has been able to find
opportunities by leveraging the strength of Fidelity's credit research
team. We saw some spread widening that we viewed as more than was
justified, and we've tried to take advantage of those situations as they've
become available. Another area of recent focus that I might mention is
Industrial Development Bonds, or IDBs, where I found a number of
opportunities for the fund. For example, the fund owned obligations of
Kroger Co., a major supermarket company that continued to exhibit improving
financials. Airline bonds are another example. IDB bonds issued to finance
the expansion of Delta's facility at the Cincinnati/Northern Kentucky
Airport were boosted by Delta's recent credit upgrade by Moody's Investors
Service.
Q. WAS THERE ANY AREA YOU WOULD HAVE LIKED TO HAVE TAKEN BETTER ADVANTAGE
OF DURING THE PERIOD?
A. Looking back, I'd say that the fund might have benefited from a heavier
weighting in California. The state's economy has outpaced that of the
nation recently, and bonds in the state performed very well in the first
half of the year. We were somewhat underweighted
versus the index, and more exposure there would have helped the fund's
overall performance.
Q. WHAT DO YOU SEE AHEAD FOR THE MUNICIPAL MARKET?
A. I think we will continue to see reasonable economic growth in the months
ahead. If that happens, yields should stay within a narrow range from where
they are now. I am anticipating renewed discussion of tax reform during the
election season, which may contribute to increased volatility in the
municipal market. Beyond that, I'll continue to look for opportunities to
find relative value within the high-yield market.
Q. TANYA, WE UNDERSTAND THERE HAS BEEN A CHANGE TO THE FUND'S INVESTMENT
POLICIES . . .
A. That's right. As of June 24, 1996, the fund changed some of its debt
quality policies. The fund is no longer required to invest 65% of its
holdings in securities equivalent in quality to those rated A or below.
This change allows me more flexibility to invest in higher-quality
securities if I believe the return potential of lower-quality securities is
not commensurate with the risk. The fund was introduced in 1985, but the
Tax Act of 1986 significantly reduced the supply of lower-quality municipal
bonds by preventing or reducing the ability of certain issuers or sectors
of the market to issue tax-exempt bonds. For a while, a substantial supply
of these kinds of
bonds were available in the secondary market, but now that is no longer the
case. While the fund will still invest in lower-quality securities, it is
no longer required to do so to such a large extent.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: seeks high income by
investing in municipal
securities of any quality
START DATE: September 13,
1985
SIZE: as of June 30, 1996,
more than $859 million
MANAGER: Tanya Roy, since
October, 1995; also manager,
Fidelity Advisor High Income
Fund, since August 1995;
Fidelity Municipal Bond Fund,
March 1995 to October 1995;
joined Fidelity in 1987
(checkmark)
TANYA ROY ON SUPPLY AND
DEMAND IN THE MUNICIPAL
MARKET:
"Supply and demand forces
play an influential role in the
municipal market. Supply
comes in two forms: new bond
sales and refinancings, which
are also called refundings, in
which issuers typically replace
existing bonds with lower-cost
debt. The outlook for refunding
volume is highly sensitive to
interest rate levels and,
therefore, is difficult to predict.
The modest growth in new
debt sales we've seen so far in
1996 reflects several trends:
tighter fiscal management by
municipal governments;
industry consolidation,
particularly among hospitals
and electric utilities; and
heightened sensitivity of
taxpayers to government
costs. These trends could
result in a relatively small
increase in new issuance for
the rest of the year, although
we could see brief periods of
concentrated supply.
"Demand is derived from
individuals, mutual funds,
insurance companies, banks
and other sources, and
changes depending on
circumstances. For example,
individual investor demand
generally decreases when
rates are low, or when
alternatives such as stocks
provide competitive returns.
Higher interest rates or a
stock market correction can
bring higher demand for
municipals. However, the
ongoing issue of tax reform -
which has caused some
investors to worry that
municipals could lose their tax
advantage - could be an
offsetting factor."
INVESTMENT CHANGES
TOP FIVE STATES AS OF JUNE 30, 1996
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
New York 12.3 11.4
Massachusetts 9.8 9.6
Pennsylvania 7.9 6.9
California 7.0 8.0
Michigan 4.9 5.8
TOP FIVE SECTORS AS OF JUNE 30, 1996
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Health Care 24.0 23.8
Industrial Development 19.8 16.4
General Obligation 16.5 17.8
Electric Revenue 16.0 10.6
Transportation 4.6 6.4
AVERAGE YEARS TO MATURITY AS OF JUNE 30, 1996
6 MONTHS AGO
Years 17.5 17.5
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY DOLLAR
AMOUNT.
DURATION AS OF JUNE 30, 1996
6 MONTHS AGO
Years 7.1 7.4
DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH A
FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER FACTORS
ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE. ACCORDINGLY,
A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS EXAMPLE. BEGINNING
WITH THE REPORTING CYCLE OF JUNE, 1996, THE MODEL USED TO CALCULATE
DURATIONS MAY BE SLIGHTLY MODIFIED IN ORDER TO FURTHER REFINE THIS
INFORMATION. THESE CHANGES IN METHODOLOGY MAY PRODUCE ADJUSTMENTS IN
HISTORICAL DURATION FIGURES.
QUALITY DIVERSIFICATION (MOODY'S RATINGS)
AS OF JUNE 30, 1996 AS OF DECEMBER 31, 1995
Aaa 19.5%
Aa, A 16.1%
Baa 23.6%
Ba, B 9.0%
Caa 0.4%
Non-rated 30.0%
Short-term investments 1.4%
Aaa 18.9%
Aa, A 20.0%
Baa 20.8%
Ba, B 6.5%
Caa 0.5%
Non-rated 29.4%
Short-term investments 3.9%
Row: 1, Col: 1, Value: 2.3
Row: 1, Col: 2, Value: 29.0
Row: 1, Col: 3, Value: 1.5
Row: 1, Col: 4, Value: 9.0
Row: 1, Col: 5, Value: 22.6
Row: 1, Col: 6, Value: 16.1
Row: 1, Col: 7, Value: 19.5
Row: 1, Col: 1, Value: 3.9
Row: 1, Col: 2, Value: 28.4
Row: 1, Col: 3, Value: 1.5
Row: 1, Col: 4, Value: 6.5
Row: 1, Col: 5, Value: 20.8
Row: 1, Col: 6, Value: 20.0
Row: 1, Col: 7, Value: 18.9
SHOWN AS A PERCENTAGE OF THE FUND'S INVESTMENTS. WHERE MOODY'S RATINGS ARE
NOT AVAILABLE, WE HAVE USED S&P RATINGS. UNRATED DEBT SECURITIES THAT ARE
EQUIVALENT TO BA AND BELOW ACCOUNT FOR 28.1% AND 26.8% OF THE FUND'S
INVESTMENTS AT JUNE 30, 1996, AND DECEMBER 31, 1995, RESPECTIVELY.
INVESTMENTS JUNE 30, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
MUNICIPAL BONDS - 98.6%
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
ALABAMA - 0.5%
Cullman Med. Ctr. (Cullman Reg'l. Med. Ctr.)
Series A, 6.50% 2/15/23 Baa $ 4,000,000 $ 3,865,000
ARIZONA - 1.5%
Navajo County Ind. Dev. Auth. (Stone Container
Corp. Proj.) 7.40% 4/1/26 - 6,450,000 6,490,313
Sierra Vista Ind. Dev. Auth. Hosp. Rev. Rfdg.
(Sierra Vista Commty. Hosp. Projs.)
8.75% 12/1/16 - 4,000,000 4,300,000
Tucson Gen. Oblig. Rfdg. 6.75% 7/1/03
(FGIC Insured) Aaa 1,800,000 2,013,750
12,804,063
ARKANSAS - 0.3%
Little Rock Arpt. Passenger Facs. Charge Rev.
5.65% 5/1/16 (AMBAC Insured) Aaa 2,300,000 2,346,000
CALIFORNIA - 6.8%
California Hsg. Fin. Agcy. Rev. (Home Mtg.)
Series A, 5.30% 8/1/14 (MBIA Insured) Aaa 1,325,000 1,295,177
California Pub. Wrks. Board Lease Rev.:
(Various California State Univ. Projs.) Series A:
6.50% 9/1/05 A 1,155,000 1,245,956
5.25% 12/1/13 A 3,750,000 3,431,250
5.50% 6/1/14 A1 2,665,000 2,538,413
(Various Community College Projs.)
Series A, 5.50% 12/1/08 A1 2,415,000 2,372,738
Central California Joint. Pwrs. Ctfs. of Prtn. Health
Fing. Auth. Rfdg. (Commty. Hosp. of
Central California Proj.) 5% 2/1/23 A 2,230,000 1,817,450
East Bay Muni. Util. Dist. Wtr. Sys. Rev. Rfdg.
5.75% 6/1/04 (MBIA Insured) Aaa 2,000,000 2,092,500
Foothill/Eastern Trans. Toll Rd. Rev. (Sr. Lien)
Series A, 0% 1/1/08 Baa 2,500,000 1,471,875
Los Angeles Reg'l. Arpt. Impt. Corp. Lease Rev.
(Sub-Lease-Western Air Lines-Delta)
11.25% 11/1/25 Baa3 6,000,000 6,180,000
Northern California Pwr. Agcy. Pub. Pwr. Rev.
Rfdg. (Geothermal Proj.) Series A, 5.85%
7/1/10 (AMBAC Insured) Aaa 4,000,000 4,125,000
Port Oakland Port Rev. (Cap. Appreciation)
Series F, 0% 11/1/09 (MBIA Insured) Aaa 7,000,000 3,272,500
Riverside County Ctfs. of Prtn. Rfdg.
(Air Force Village West, Inc.)
Series A, 8.125% 6/15/20 - 7,000,000 7,210,000
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Sacramento Cogeneration Auth. Cogeneration
Proj. Rev. (Procter & Gamble Proj.):
7% 7/1/04 BBB- $ 1,200,000 $ 1,302,000
6.375% 7/1/10 BBB- 1,500,000 1,513,125
Sacramento Pwr. Auth. (Cogeneration Proj.)
6.50% 7/1/09 BBB- 2,200,000 2,255,000
San Diego County Regulation Trans. Commission
Sales Tax Rev. Second Series A,
6.25% 4/1/03 (FGIC Insured) Aaa 3,000,000 3,225,000
San Francisco City & County Arpts.
5.70% 5/1/26 (MBIA Insured) Aaa 2,000,000 1,912,500
Southern California Metropolitan Wtr. Dist.
Wtrwks. 5.55% 10/30/20 Aa 4,000,000 3,695,000
South Orange County Pub. Fin. Auth. Spl. Tax Rev.
(Foothill Area) Series C, 8% 8/15/08
(FGIC Insured) Aaa 1,000,000 1,221,250
Upland Ctfs. Prtn. (San Antonio Commty. Hosp.)
5.25% 1/1/08 A 3,500,000 3,307,500
West & Central Basin Fing. Auth. Rev.
(West Basin Rfdg. Proj.) Series A, 5% 8/1/13
(AMBAC Insured) Aaa 3,000,000 2,718,750
58,202,984
COLORADO - 3.3%
Colorado Health Facs. Auth. Rev Rfdg.
(Rocky Mountain Adventist) 6.625% 2/1/13 Baa 6,100,000 6,107,625
Denver City & County Arpt. Rev.:
Series A:
(Cap. Appreciation) 0% 11/15/05
(MBIA Insured) (e) Aaa 1,480,000 882,450
6.60% 11/15/97 (e) Baa 1,000,000 1,018,750
6.90% 11/15/98 Baa 3,850,000 3,989,563
7% 11/15/99 Baa 2,750,000 2,877,188Series C, 6.50% 11/15/06 (e) Baa
4,075,000 4,217,625Series D, 7.40% 11/15/01 Baa 3,000,000 3,240,000
Highlands Ranch Metropolitan Dist. #2
(CGIC Insured):
6.25% 6/15/07 Aaa 1,600,000 1,716,000
6.50% 6/15/10 Aaa 1,000,000 1,080,000
Hyland Hills Metropolitan Park & Recreational
Dist. Spl. Rev. Rfdg. 10% 7/1/06
(Pre-Refunded to 7/1/96 @ 101) (f) - 1,900,000 1,919,000
Mesa County Ind. Dev. Rev. (Joy Technologies,
Inc. Proj.) 8.50% 9/15/06 Ba1 1,250,000 1,317,188
28,365,389
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
CONNECTICUT - 1.8%
Connecticut Dev. Auth. Poll. Cont. Rev.
(United Illuminating Co. Proj.) 9.50% 6/1/16 BBB- $ 1,650,000 $ 1,727,781
Connecticut Health & Edl. Facs. Auth. Rev.
(New Britain Mem. Hosp.) Series A,
7.75% 7/1/22 BBB- 6,100,000 6,412,625
Eastern Connecticut Resources Recovery Auth.
Solid Waste Rev. (Wheelabrator Lisbon Proj.)
Series A (e):
5% 1/1/04 A- 900,000 869,625
5.50% 1/1/14 A- 5,000,000 4,556,250
5.50% 1/1/20 A- 2,250,000 1,996,875
15,563,156
DISTRICT OF COLUMBIA - 0.8%
District of Columbia Unltd. Tax Rfdg. Series C,
5.25% 12/1/03 (FGIC Insured) Aaa 2,170,000 2,159,150
District of Columbia Gen. Oblig. Rfdg. Series A,
5.875% 6/1/05 (AMBAC Insured) Aaa 1,250,000 1,284,375
District of Columbia Hosp. Rev. (Hosp. for Sick
Children) Series A, 8.875% 1/1/21 - 2,905,000 3,079,300
6,522,825
FLORIDA - 0.3%
Broward County Resources Recovery Rev.
(SES Broward Co. LP South Proj.)
7.95% 12/1/08 A 2,315,000 2,546,500
GEORGIA - 0.6%
Cobb County School Dist. Unltd. Tax
5% 2/1/97 Aa1 1,345,000 1,356,500
Georgia Gen. Oblig.:
Series B, 7.50% 4/1/97 Aaa 1,000,000 1,029,060
6% 3/1/04 Aaa 1,000,000 1,071,250
Georgia Muni. Elec. Auth. Pwr. Rev. Rfdg.
Series Z, 5.20% 1/1/06 A 2,000,000 1,957,500
5,414,310
ILLINOIS - 2.9%
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 5,044,500
Rfdg. (Delta Airlines, Inc.) 6.45% 5/1/18 Ba2 1,750,000 1,743,438
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
ILLINOIS - CONTINUED
Chicago O'Hare Int'l. Arpt. Rev. Rfdg.:
(Sr. Lien) Series A, 5% 1/1/12 A1 $ 4,000,000 $ 3,665,000
(2nd Lien) Series A,
6.375% 1/1/15 (MBIA Insured) Aaa 2,300,000 2,380,500
Chicago Park Dist. 6% 1/1/05 (FGIC Insured) Aaa 1,000,000 1,050,000
Cooke & Will Counties Township High School
Dist. Rev (#206) Series A, 0% 12/1/03
(AMBAC Insured) Aaa 2,100,000 1,428,000
Illinois Health Facs. Auth. Rev. (Glen Oaks
Med. Ctr.) Series D, 9.50% 11/15/15 Baa1 3,665,000 4,182,681
Metropolitan Pier & Expo Auth. Rev (McCormick
Place Expansion Proj.):
Dedicated State Tax Rev. Series A,
0% 6/15/08 (FGIC Insured) Aaa 4,000,000 2,020,000
Rfdg. (Cap. Appreciation)
0% 6/15/08 (MBIA Insured) Aaa 6,000,000 3,030,000
24,544,119
INDIANA - 1.3%
Burns Hbr. Solid Waste Disp. Facs. Rev.
(Bethlehem Steel Corp. Proj.)
8% 4/1/24 (e) - 3,180,000 3,370,800
Fishers Econ. Dev. Rev. (United Student Aid Funds,
Inc.) 8.25% 9/1/09 - 7,500,000 7,818,750
11,189,550
KENTUCKY - 2.3%
Kenton County Arpt. Board Arpt. Rev.
(Spl. Facs. Delta) Series A:
7.50% 2/1/20 (e) Baa3 3,600,000 3,825,000
7.125% 2/1/21 Baa3 12,000,000 12,495,000
Owensboro Elec. Lt. & Pwr. Rev. Series B
(AMBAC Insured):
0% 1/1/09 Aaa 2,000,000 980,000
0% 1/1/10 Aaa 4,440,000 2,042,400
19,342,400
LOUISIANA - 3.9%
Lake Charles Hbr. & Term. Dist. Port Facs. Rev.
Rfdg. (Trunkline LNG Co. Proj.) Series 1992,
7.75% 8/15/22 Baa2 14,900,000 16,445,875
Louisiana Pub. Facs. Auth. Ind. Dev. Rev. Rfdg.
(Beverly Enterprises, Inc.) 8.25% 9/1/08 - 1,650,000 1,740,750
Louisiana Gen. Oblig. Series A, 6.75% 5/15/03
(MBIA Insured) Aaa 4,000,000 4,385,000
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
LOUISIANA - CONTINUED
New Orleans Gen. Oblig. Rfdg. 0% 9/1/08
(AMBAC Insured) Aaa $ 10,000,000 $ 5,050,000
Port New Orleans Ind. Dev. Rev. Rfdg.
(Continental Grain Co. Proj.)
7.50% 7/1/13 BB- 3,000,000 3,090,000
West Feliciana Parish Poll. Cont. Rev. (Various
Gulf States Utils. Co. Proj.) 9% 5/1/15 Ba1 2,340,000 2,600,325
33,311,950
MARYLAND - 1.1%
Baltimore Consolidated Pub. Impt. Rfdg.
Series A (FGIC Insured):
7.50% 10/15/00 Aaa 2,225,000 2,475,313
7.25% 10/15/04 Aaa 1,545,000 1,774,819
Maryland Energy Fing. Administration Ltd. Oblig.
Solid Waste Disp. Facs. Recycling Rev.
(Hagerstown Fiber Ltd. Partners 94)
9% 10/15/16 - 3,000,000 2,760,000
Maryland Health & Higher Edl. Facs. Auth. Rev.
(Frederick Mem. Hosp.) 5.25% 7/1/13
(FGIC Insured) Aaa 2,300,000 2,199,375
9,209,507
MASSACHUSETTS - 9.8%
Massachusetts Bay Trans. Auth. Series B,
6.20% 3/1/16 A1 3,800,000 3,980,500
Massachusetts Muni. Wholesale Elec. Pwr.
Supply Sys. Rev.:
Series D, 6% 7/1/06 A 800,000 822,000
5.45% 7/1/18 (AMBAC Insured) Aaa 2,000,000 1,830,000
Massachusetts Gen. Oblig. Consolidated
Loan Unltd. Tax, Series A, 5% 1/1/14 A1 2,900,000 2,617,250
Massachusetts Gen. Oblig. Rfdg.
Series A, 6.25% 7/1/04 A1 3,505,000 3,776,638
Massachusetts Health & Edl. Facs. Auth. Rev.
(1st Mtg.) (Fairview Extended Care)
Series A, 10.25% 1/1/21 - 12,000,000 13,560,000
Massachusetts Ind. Fin. Agcy. Ind. Rev.:
(1st Mtg.) (Reeds Landing):
7.75% 10/1/20 - 1,000,000 1,026,250
8.625% 10/1/23 - 5,500,000 5,823,125
(Atlanticare Med. Ctr.) Series A,
10.125% 11/1/14 - 3,400,000 3,230,000
(Evergreen Ctr., Inc.) 9.25% 11/1/11 - 4,000,000 4,290,000
(Institute Dev. Disabilities) 9.25% 6/1/09 - 4,115,000 4,032,700
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
MASSACHUSETTS - CONTINUED
Massachusetts Ind. Fin. Agcy. Ind. Rev.: - continued
(Massachusetts Biomedical) Series A-2 :
0% 8/1/03 A1 $ 6,300,000 $ 4,236,750
0% 8/1/06 A 4,000,000 2,210,000
(Cap. Appreciation) 0% 8/1/09 A 6,000,000 2,647,500
Rfdg. (Emerson College) 8.90% 1/1/18 - 10,000,000 10,987,500
(Terra-Light, Inc.) 13% 11/1/01 A3 3,500,000 3,588,375
(Union Mission Proj.) 9.55% 9/1/26
(FHA Guaranteed) Aaa 3,985,000 4,577,769
Massachusetts Hsg. Fin. Agcy.
(Hsg. Rev. Rental) Series A,
6.60% 7/1/14 (AMBAC Insured) (e) Aaa 2,500,000 2,600,000
Massachusetts Wtr. Resources Auth. Gen. Rfdg.
Series C, 5.25% 12/1/15 A 5,000,000 4,650,000
New England Ed. Loan Marketing Corp.
4.75% 7/1/98 A1 2,750,000 2,756,875
83,243,232
MICHIGAN - 4.8%
Detroit Convention Facs. Rev. Rfdg.
(Cobo Hall Expansion Proj.) 5.25% 9/30/07 A 2,000,000 1,932,500
Detroit Hosp. Fin. Auth. Facs. Rev. (Michigan
Healthcare Corp. Proj.) 0% 12/1/20 (a) Caa 5,960,000 1,668,800
Flint Hosp. Bldg. Auth. Rev. (Hurley Med. Ctr.)
7.80% 7/1/14 Baa 4,750,000 5,058,750
Highland Park Hosp. Fin. Auth. Hosp. Facs. Rev. (a):
(Michigan Health Care Corp. Proj.) Series A,
9.875% 12/1/19 Caa 7,350,000 2,058,000
(Lakeside Commty. Hosp. Proj.) 0% 3/1/20 - 9,330,000 1,866,000
Michigan Hosp. Fin. Auth. Rev. Rfdg.
(Pontiac Osteopathic Hosp.) Series A:
6% 2/1/14 Baa1 1,500,000 1,361,250
6% 2/1/24 Baa1 3,500,000 3,097,500
Michigan Strategic Fund Ltd. Oblig. Rev.:
(Mercy Svcs. for Aging Proj.)
9.40% 5/15/20 - 11,500,000 12,980,625
(Great Lakes Pulp & Fiber Proj.)
10.25% 12/1/16 - 12,150,000 10,600,875
40,624,300
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
MINNESOTA - 1.0%
Minneapolis & St. Paul Hsg. & Redev. Auth.
Healthcare Sys. Rev. (Healthspan Health Sys.
Corp.) Series A, 4.75%
11/15/18 (AMBAC Insured) Aaa $ 4,000,000 $ 3,400,000
Minnesota Energy & Econ. Dev. Auth. Rev.
(Small Bus Dev. Lot 1) Series A,
9.25% 8/1/06 - 695,000 710,339
Minnesota Rfdg. Var. Purp. 6.90% 8/1/98
(Pre-Refunded to 8/1/98 @ 100) (f) Aaa 1,000,000 1,055,000
St. Paul Hsg. & Redev. Auth. Hosp. Rev.
(Healtheast Proj.):
Series A, 9.75% 11/1/17 Baa 2,455,000 2,629,919
Series B, 9.75% 11/1/17 Baa 1,000,000 1,067,500
8,862,758
MISSISSIPPI - 1.1%
Claiborne County Poll. Cont. Rev.:
(Middle South Energy, Inc. Proj.)
Series C, 9.875% 12/1/14 Ba1 6,195,000 6,930,656
(Sys. Energy Resource, Inc.) 6.20% 2/1/26 Ba1 3,000,000 2,793,750
9,724,406
MISSOURI - 2.4%
Boone County Ind. Dev. Auth. Ind. Rev. (1st Mtg.)
(Fairview Extended Care) Series A,
10.125% 1/1/11 - 2,270,000 2,769,400
Kansas City Ind. Dev. Auth. Rev.
(Bishop Spencer Place Inc. Proj.) 8% 9/1/24 - 7,720,000 7,720,000
Kansas City Ind. Dev. Auth. (Kingswood United
Methodist Manor Proj.) Series 1993,
9% 11/15/13 - 2,600,000 2,788,500
Lake Ozarks Commty. Bridge Corp. Sys. Rev.
6.40% 12/1/25 - 3,000,000 2,835,000
St. Louis Land Clearance Redev. Auth. Hsg. Dev.
Rev. (Westminster Place Apts. Proj.)
11% 12/15/15 - 4,290,000 4,375,800
20,488,700
NEVADA - 1.4%
Clark County Ind. Dev. Rev. (Southwest Gas Corp.)
Series A, 6.50% 12/1/33 Baa3 12,350,000 11,902,313
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
NEW HAMPSHIRE - 1.4%
New Hampshire Higher Edl. & Health Facs. Auth.
Rev. (1st Mtg.):
(Littleton Hosp. Assoc., Inc.) Series A,
9.50% 5/1/20 - $ 3,645,000 $ 3,877,369
(River Woods at Exeter):
8% 3/1/01 - 1,200,000 1,234,500
9% 3/1/23 - 3,170,000 3,411,713
(Valley Reg'l. Hosp.) 7.35% 4/1/23 - 3,835,000 3,580,931
12,104,513
NEW JERSEY - 4.4%
Camden County Impt. Auth. Lease Rev.:
(Dockside Refrigerated) (Holt) 8.40%
4/1/24 (e) - 2,750,000 2,691,563
(Holt Hauling & Warehousing):
9.625% 1/1/11 - 4,000,000 3,875,000
9.875% 1/1/21 - 3,000,000 2,891,250
New Jersey Econ. Dev. Auth. Econ. Dev Rev.:
Rfdg. (Holt Hauling & Warehouse):
Series G, 8.40% 12/15/15 - 5,000,000 5,056,250
Series H, 8.60% 12/15/17 (e) - 4,000,000 4,045,000
(Stolt Term. Proj.) 10.50% 1/15/18 - 3,500,000 3,815,000
11% 12/15/17 - 2,565,000 1,853,456
New Jersey Trans. Auth. (AMBAC Insured):
Rfdg. Series A, 6% 6/15/03 Aaa 4,035,000 4,267,013
Series A, 6% 6/15/04 Aaa 8,900,000 9,422,875
37,917,407
NEW MEXICO - 3.5%
Albuquerque Arpt. Rev. Rfdg. (AMBAC Insured):
6.50% 7/1/08 (c) Aaa 1,250,000 1,295,313
6.75% 7/1/09 (c) Aaa 1,150,000 1,201,750
Albuquerque Retirement Facs. Rev. Rfdg.
(La Vida Liena Proj.) Series A,
8.85% 2/1/23 - 2,050,000 2,162,750
Farmington Poll. Cont. Rev.
(Pub. Svc. Co. of New Mexico San Juan Proj.):
Rfdg. Series X, 5.90% 4/1/07 Ba2 5,170,000 5,014,900
Series A:
6% 3/1/08 Ba2 12,730,000 12,379,925
6.50% 9/1/09 Ba2 1,000,000 999,930
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
NEW MEXICO - CONTINUED
Grant County Hosp. Facs. Rev. Rfdg.
(Gila Reg'l. Med. Ctr. Proj.) 10% 2/1/12 - $ 3,915,000 $ 4,041,963
New Mexico Univ. Rev. Rfdg. Series A,
6% 6/1/21 A1 2,840,000 2,893,250
29,989,781
NEW YORK - 12.3%
New York City Gen. Oblig.:
Series B, 5.70% 8/15/02 Baa1 4,000,000 3,995,000
7.50% 2/1/03 Baa1 14,000,000 15,190,000
New York State Dorm. Auth. Rev. Rfdg.
(State Univ. Edl. Facs.):
Series A:
5.50% 5/15/09 Baa1 3,000,000 2,883,750
5.50% 5/15/10 Baa1 1,500,000 1,432,500
5.50% 5/15/13 Baa1 5,250,000 4,908,750
5.25% 5/15/15 Baa1 10,000,000 9,025,000
5.875% 5/15/17 Baa1 8,500,000 8,330,000
Series B, 5.50% 5/15/08 Baa1 3,000,000 2,902,500
New York State Energy Research & Dev. Auth.
Elec. Facs. Rev. (Long Island Lighting) Series A:
7.15% 12/1/20 (e) Ba1 10,100,000 9,986,375
6.90% 8/1/22 (e) Ba1 5,745,000 5,543,925
New York State Local Gov't. Assistance Corp.:
Rfdg.:
(Cap. Appreciation) Series C, 0% 4/1/13 A 10,000,000 3,850,000 Series
C, 5.50% 4/1/17 A 4,400,000 4,240,500 Series E, 5% 4/1/21 A
10,000,000 8,900,000Series C, 7% 4/1/21 (Pre-Refunded to
4/1/01 @ 102) (f) Aaa 4,000,000 4,440,000
New York State Mtg. Agcy. Rev. (Homeowner Mtg.)
Series 48, 6.05% 4/1/17 (e) Aa 5,000,000 4,956,250
New York State Pwr. Auth. Rev. & Gen. Purp.
Series CC, 5.125% 1/1/11 (FGIC Insured) Aaa 4,000,000 3,855,000
New York State Thruway Auth. Hwy. & Bridge
5% 4/1/97 A 2,500,000 2,509,950
New York State Thruway Auth. Svc. Contract Rev.
(Local Hwy. & Bridges) 5.90% 4/1/07 Baa1 1,810,000 1,805,475
New York State Urban Dev. Corp. Rev. Rfdg.
(Correctional Cap. Facs.) Series A,
6.40% 1/1/04 Baa1 4,000,000 4,195,000
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
NEW YORK - CONTINUED
Niagara County Ind. Dev. Agcy. Rev.
(Wintergarden Inn Assoc. Proj.)
10% 6/1/11 (a) - $ 4,210,000 $ 2,105,000
105,054,975
NEW YORK & NEW JERSEY - 0.7%
New York & New Jersey Port Auth. Spl.
Oblig. Rev.:
(Continental Airlines Corp./Eastern Airlines,
Inc./U.S. Air Laguardia Proj.)
9.125% 12/1/15 (e) B2 3,000,000 3,307,500
6.75% 10/1/19 - 3,000,000 2,996,250
6,303,750
NORTH CAROLINA - 0.9%
North Carolina Eastern Muni. Pwr. Agcy Pwr. Sys.
Rev. Rfdg.:
Series B, 7.25% 1/1/07 A 5,000,000 5,493,750
Series C, 7% 1/1/07 A 1,750,000 1,890,000
7,383,750
NORTH DAKOTA - 0.1%
North Dakota Hsg. Fin. Agcy. Rev.
(Hsg. Fin. Prog.) Series C, 3.85%
4/3/97 (FGIC Insured) (e) Aa 1,000,000 1,000,020
OHIO - 1.9%
Fairfield Econ. Dev. Rev. Rfdg. (Beverly
Enterprises Proj.) 8.50% 1/1/03 - 2,000,000 2,127,500
Ohio Solid Waste Rev. (Republic Engineered
Steels Proj.) 8.25% 10/1/14 (e) - 8,000,000 7,760,000
Ohio Wtr. Dev. Auth. Pollution Cont. Facs. Rev.
6.50% 12/1/03 (MBIA Insured) Aaa 2,925,000 3,202,875
Stark County Ind. Dev. Rev. Rfdg.
(Kroger Co. Proj.) 7.20% 9/1/12 Ba1 3,100,000 3,193,000
16,283,375
OKLAHOMA - 0.8%
Oklahoma County Ind. Auth. Rev. (Epworth
Village Proj.) Series A, 10.25% 4/1/19 - 2,935,000 3,155,125
Tulsa Muni. Arpt. Trust Rev (American
Airlines Corp. Proj.) 7.35% 12/1/11 Baa2 3,600,000 3,856,500
7,011,625
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
PENNSYLVANIA - 7.9%
Allegheny County Hosp. Dev. Auth. Health Facs.
Rev. (Allegheny Valley School):
8% 2/1/02 Ba1 $ 885,000 $ 907,125
8.50% 2/1/15 Ba1 3,795,000 3,937,313
Cumberland County Muni. Auth. Rev.
(Carlisle Hosp.) 6.80% 11/15/23 Baa 3,800,000 3,714,500
Delaware County Auth. Rev. (1st Mtg.
Riddle Village Proj.):
Series 1992, 8.75% 6/1/10 - 2,000,000 2,142,500
7% 6/1/00 - 500,000 504,375
9.25% 6/1/22 - 6,170,000 6,740,725
8.25% 6/1/22 - 4,500,000 4,736,250
Lehigh County Gen. Purp. Auth. Rev.
(Wiley House) 9.50% 11/1/16 - 5,930,000 6,152,375
Pennsylvania Convention Ctr. Auth. Rev. Rfdg.
Series A:
6.60% 9/1/09 (MBIA Insured) Aaa 3,000,000 3,277,500
6.75% 9/1/19 Baa 4,500,000 4,685,625
Philadelphia Gen. Oblig. (MBIA Insured):
6.25% 5/15/11 Aaa 3,400,000 3,523,250
6.25% 5/15/13 Aaa 3,835,000 4,026,750
Philadelphia Ind. Dev. Auth. Dev. Rev.
(Long Term Care, Maplewood) 8% 1/1/24 - 4,500,000 4,455,000
Philadelphia Ind. Dev. Auth.
(Philadelphia Arpt.) 7.75% 12/1/17 - 2,600,000 2,707,250
Philadelphia Wtr. & Swr. Rev. (Cap. Appreciation)
14th Series, 0% 10/1/05 (MBIA Insured) Aaa 3,000,000 1,848,750
Philadelphia Wtr. & Wastewtr. Rev.
(MBIA Insured) :
6.75% 8/1/04 Aaa 1,000,000 1,108,750
6.75% 8/1/05 Aaa 1,000,000 1,112,500
Philadelphia Hosps. & Higher Ed. Facs.
Auth. Hosp. Rev. Rfdg. 5.95% 7/1/03 Baa1 3,500,000 3,508,750
Pittsburgh Wtr. & Swr. Auth. Rev. Rfdg.
Series A, 0% 9/1/06 (FGIC Insured)
(Escrowed to Maturity) (f) Aaa 3,000,000 1,766,250
Somerset County Hosp. Auth. Rev.
(Health Care) (1st Mortgage-GF):
8.40% 6/1/09 - 1,900,000 2,004,500
8.50% 6/1/24 - 4,305,000 4,536,394
67,396,432
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
SOUTH CAROLINA - 2.1%
Charleston County Health Facs. Rev. Rfdg. (1st Mtg.
Episcopal Proj.) (Pre-Refunded to 4/1/01 @102) (f):
Series A, 9.75% 4/1/16 - $ 3,000,000 $ 3,663,750
Series B, 9.75% 4/1/16 - 2,110,000 2,576,838
Charleston County Resources Recovery Rev.
(Foster Wheeler) Series A, 9.25% 1/1/10 (e) A 4,500,000 4,865,625
South Carolina Pub. Svc. Auth. Rev. Rfdg.
Series A (MBIA Insured):
6.25% 1/1/04 Aaa 2,565,000 2,754,169
6.50% 1/1/08 Aaa 3,330,000 3,625,538
17,485,920
TENNESSEE - 0.6%
Springfield Dev. Board Ind. Dev. Rev. Rfdg.
(Kroger Co. Proj.) 7.25% 5/1/11 Ba1 3,500,000 3,657,500
Tennessee Gen. Oblig. Rfdg. Series B,
6% 5/1/05 Aaa 1,000,000 1,071,250
4,728,750
TEXAS - 4.3%
Alliance Arpt. Auth. Spl. Facs. Rev.
(American Airlines, Inc.) (e):
7% 12/1/11 Baa2 7,000,000 7,533,750
7.50% 12/1/29 Baa2 2,000,000 2,115,000
Brazos River Auth. Poll. Cont. Rev.
(Texas Util. Elec. Co. Proj.) Series A,
8.25% 1/1/19 (e) Baa2 5,620,000 6,041,500
East Texas Health Facs. Dev. Corp. Hosp. Rev.
(Memorial Foundation Palestine, Inc.)
7.80% 8/15/18 - 4,150,000 3,195,500
El Paso Wtr. & Swr. Rev. (MBIA Insured):
0% 3/1/05 Aaa 2,650,000 1,676,125
0% 3/1/06 Aaa 3,700,000 2,196,875
Harris County Cultural & Ed. Facs. Fin. Corp. Rev.
(Space Ctr. Houston Proj.):
Series A, 9.25% 8/15/23 - 1,435,000 1,365,044
Series B, 0% 8/15/23 - 3,630,000 907,500
Houston Hsg. Fin. Corp. Single Family Mtg. Rev.
(Verex Mtg. Assurance, Inc.) Series 1984 A,
10.875% 2/15/16 A 1,080,000 1,091,534
Round Rock Independent School Dist. Rfdg. &
School Bldg. Unltd. Tax 0% 8/15/09
(MBIA Insured) Aaa 7,430,000 3,547,825
Sabine River Auth. Poll. Cont. Rev. (Util. Elec.
Proj.) Series B, 8.25% 10/1/20 (e) Baa2 1,250,000 1,375,000
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
TEXAS - CONTINUED
San Antonio Elec. & Gas Rev. Rfdg.:
Series B, 0% 2/1/08 (FGIC Insured) Aaa $ 2,000,000 $ 1,047,500
5.80% 2/1/06 Aa1 3,000,000 3,127,500
Tarrant County Hsg. Fin. Corp. Single Family Mtg.
Rev. Series A, 9.50% 5/15/03 B 765,000 759,263
Texas Pub. Fin. Auth. Bldg. Rev. Rfdg.
(Cap. Appreciation) 0% 2/1/09
(MBIA Insured) Aaa 2,000,000 972,500
36,952,416
UTAH - 1.4%
Intermountain Pwr. Agcy. Pwr. Supply Sys. Rev.:
Rfdg. Series B, 6.25% 7/1/03
(MBIA Insured) Aaa 6,000,000 6,435,000
Series A, 6.50% 7/1/08 (AMBAC Insured) (c) Aaa 1,500,000 1,576,875
South Salt Lake City Ind. Rev. (Price Savers
Wholesale Club Proj.) 9% 11/15/13 - 3,650,000 4,088,000
Utah Hsg. Fin. Agcy. (Residential Mtg.)
(Cap. Appreciation) Series 1983 A,
0% 7/1/16 A+ 260,004 33,476
12,133,351
VERMONT - 0.3%
Vermont Ind. Dev. Auth. Ind. Dev. Rev. (Radisson
Hotel) Series B-1, 7.75% 11/15/15 - 2,000,000 2,152,500
VIRGINIA - 3.1%
Charlottesville Ind. Dev. Auth. Ind. Dev. Rev. Rfdg.
(Kroger Co. Proj.) 7.25% 5/1/10 Ba1 3,250,000 3,408,438
Loudoun County Ind. Dev. Auth. Residential Care
Facs. Rev. (Falcons Landing Proj.) Series A:
9.25% 11/1/04 - 1,100,000 1,155,000
8.75% 11/1/24 - 13,900,000 14,108,500
Southeastern Pub. Svc. Auth. Rev. Rfdg. Sr.
Series A (MBIA Insured):
5.15% 7/1/09 Aaa 4,000,000 3,845,000
5.25% 7/1/10 Aaa 4,000,000 3,855,000
Virginia Hsg. Dev. Auth. Residential Mtg.
(Single Family Mtg.) (Cap. Appreciation)
Series 1983 B, 0% 9/1/14 Aa 1,210,000 184,525
26,556,463
WASHINGTON - 3.6%
Douglas County Pub. Util. Dist. #1 Wells Hydroelec.
Rev. Rfdg. (Pacific Pwr. & Lt. Co.)
8.75% 9/1/18 A 1,395,000 1,736,775
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
WASHINGTON - CONTINUED
Washington Gen. Oblig. Rfdg. Series R,
5.60% 9/1/04 Aa $ 2,500,000 $ 2,590,625
Washington Pub. Pwr. Supply Sys. Rev.:
Rfdg. (Nuclear Proj. #1) Series B, 7% 7/1/08 Aa 1,000,000 1,112,500
Rfdg. (Nuclear Proj. #3) (Cap. Appreciation)
Series B, 0% 7/1/08 (MBIA Insured) Aaa 3,000,000 1,526,250
(Nuclear Proj. #2):
5.55% 7/1/10 (FGIC Insured) Aaa 5,300,000 5,101,250
5.40% 7/1/12 Aa 10,000,000 9,225,000
(Nuclear Proj. #3) 5.40% 7/1/12 Aa 10,000,000 9,125,000
30,417,400
WEST VIRGINIA - 1.4%
Kanawha County Ind. Dev. Rev. Rfdg.
(Topvalco, Inc. Proj.) 7.125% 11/1/12 Ba1 4,500,000 4,685,625
West Virginia Parkway Econ. Dev. Agcy.
5.831% 5/16/19 (FGIC Insured) Aaa 7,200,000 6,975,000
11,660,625
TOTAL MUNICIPAL BONDS
(Cost $843,993,814) 840,606,515
MUNICIPAL NOTES (D) - 1.4%
CALIFORNIA - 0.2%
California School Cash Reserve Program TRAN
Series 1995 A, 4.75% 7/3/96, LOC Industrial
Bank of Japan Ltd. (MBIA Insured) MIG 1 1,500,000 1,500,090
DELAWARE - 0.1%
Delaware Economic Dev. Auth. Rev.
(Delmarva Power & Light Co. Proj.) Series 88,
3.80% 10/1/17, VRDN (e) VMIG 1 1,000,000 1,000,000
LOUISIANA - 0.2%
West Baton Rouge Parish Ind. Dist. #3 Rev.
(Dow Chemical Co.) Series 1993, 3.80%
12/1/23, VRDN (e) P-1 1,700,000 1,700,000
MICHIGAN - 0.1%
Michigan Hsg. Dev. Auth. Rev. (Multi-Family
Rental Hsg.) Series 1994-C, 3.25% 4/1/19,
LOC Credit Suisse, VRDN A-1+ 600,000 600,000
MUNICIPAL NOTES - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
MISSOURI - 0.2%
Missouri Higher Ed. Loan Auth. Student Loan
Rev. (e):
Series 1988A, 3.40% 6/1/17, LOC National
Westminster Bank PLC, VRDN VMIG 1 $ 1,100,000 $ 1,100,000
Series 90A, 3.40% 12/1/05, LOC National
Westminster Bank PLC, VRDN VMIG 1 1,000,000 1,000,000
2,100,000
MULTIPLE STATES - 0.2%
Clipper Participating VRDN, Series 1995 1, 3.54%
(Liquidity Facility State Street Bank) (e)(g) VMIG1 1,371,998 1,371,998
TEXAS - 0.3%
Brazos River Auth. Poll. Cont. Rev. Rfdg.
(Texas Utils. Elec. Co. Proj.) Series 1995-A,
3.80%, LOC Morgan Guaranty Trust Co.,
VRDN (e) VMIG 1 1,000,000 1,000,000
Trinity River Auth. Poll. Cont. Rev. Coll.
(Texas Utils. Elec. Co. Proj.) Series 96-A,
3.80% (BPA Bank of New York)
(AMBAC Insured), VRDN (e) VMIG 1 1,700,000 1,700,000
2,700,000
VIRGINIA - 0.1%
Hopewell Ind. Dev. Auth. Rev. (Hadson Pwr.
13-Hopewell Proj.) Series 1990 A, 3.90%
LOC Credit Suisse, VRDN (e) - 1,200,000 1,200,000
TOTAL MUNICIPAL NOTES
(Cost $12,685,868) 12,172,088
TOTAL INVESTMENTS - 100%
(Cost $856,679,682) $ 852,778,603
SECURITY TYPE ABBREVIATIONS
TRAN - Tax and Revenue Anticipation Notes
VRDN - Variable Rate Demand Notes
LEGEND
1. Non-income producing - issuer filed for protection under the Federal
Bankruptcy Code or is in default of interest payment.
2. Standard & Poor's credit ratings are used in the absence of a rating by
Moody's Investors Service, Inc.
3. Security purchased on a delayed delivery basis (see Note 2 of Notes to
Financial Statements).
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.
6. Security collateralized by an amount sufficient to pay interest and
principal.
7. Provides evidence of ownership in one or more underlying municipal
bonds.
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 33.6% AAA, AA, A 32.7%
Baa 22.0% BBB 17.2%
Ba 8.1% BB 8.9%
B 0.5% B 0.0%
Caa 0.4% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.4%
The percentage not rated by either S&P or Moody's amounted to 30.0%. FMR
has determined that unrated debt securities that are lower quality account
for 28.1% of the total value of investment in securities.
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
Health Care 24.0%
Industrial Development 19.8
General Obligation 16.5
Electric Revenue 16.0
Others (individually less than 5%) 23.7
TOTAL 100.0%
INCOME TAX INFORMATION
At June 30, 1996, the aggregate cost of investment securities for income
tax purposes was $856,806,673. Net unrealized depreciation aggregated
$4,028,070, of which $28,638,887 related to appreciated investment
securities and $32,666,957 related to depreciated investment securities.
At December 31, 1995, the fund had a capital loss carryforward of
approximately $9,992,000 of which $1,443,000 and $8,549,000 will expire on
December 31, 2002, and 2003, respectively.
At December 31, 1995, the fund was required to defer approximately
$3,627,000 of losses on futures contracts and options.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JUNE 30, 1996 (UNAUDITED)
ASSETS
Investment in securities, at value (cost $856,679,682) - $ 852,778,603
See accompanying schedule
Cash 90,719
Interest receivable 14,884,660
TOTAL ASSETS 867,753,982
LIABILITIES
Payable for investments purchased $ 999,999
Regular delivery
Delayed delivery 4,067,937
Payable for fund shares redeemed 920,005
Distributions payable 1,365,573
Accrued management fee 316,671
Other payables and accrued expenses 164,801
TOTAL LIABILITIES 7,834,986
NET ASSETS $ 859,918,996
Net Assets consist of:
Paid in capital $ 886,843,901
Undistributed net interest income 1,321,813
Accumulated undistributed net realized gain (loss) on (24,345,639)
investments
Net unrealized appreciation (depreciation) on (3,901,079)
investments
NET ASSETS, for 76,696,409 shares outstanding $ 859,918,996
NET ASSET VALUE, offering price and redemption price per $11.21
share ($859,918,996 (divided by) 76,696,409 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED)
INTEREST INCOME $ 30,681,953
EXPENSES
Management fee $ 1,968,457
Transfer agent, accounting and custodian fees and 745,256
expenses
Non-interested trustees' compensation 1,616
Registration fees 23,535
Audit 24,599
Legal 2,199
Miscellaneous 8,425
Total expenses before reductions 2,774,087
Expense reductions (5,785) 2,768,302
NET INTEREST INCOME 27,913,651
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (10,406,351)
Futures contracts 130,354 (10,275,997)
Change in net unrealized appreciation (depreciation) on:
Investment securities (26,767,163)
Futures contracts (94,141) (26,861,304)
NET GAIN (LOSS) (37,137,301)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ (9,223,650)
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR ENDED
ENDED JUNE 30, DECEMBER 31,
1996 1995
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 27,913,651 $ 55,260,713
Net interest income
Net realized gain (loss) (10,275,997) (6,297,891)
Change in net unrealized appreciation (depreciation) (26,861,304) 71,821,694
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (9,223,650) 120,784,516
FROM OPERATIONS
Distributions to shareholders (26,591,838) (55,260,713)
From net interest income
From net realized gain (77,987) -
TOTAL DISTRIBUTIONS (26,669,825) (55,260,713)
Share transactions 70,628,651 169,649,889
Net proceeds from sales of shares
Reinvestment of distributions 18,760,794 39,176,940
Cost of shares redeemed (103,700,542) (160,585,909)
Redemption fees 39,342 166,032
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (14,271,755) 48,406,952
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS (50,165,230) 113,930,755
NET ASSETS
Beginning of period 910,084,226 796,153,471
End of period (including undistributed net interest $ 859,918,996 $ 910,084,226
income of $1,321,813 and $0, respectively)
OTHER INFORMATION
Shares
Sold 6,206,903 15,043,662
Issued in reinvestment of distributions 1,652,169 3,447,309
Redeemed (9,142,260) (14,137,312)
Net increase (decrease) (1,283,188) 4,353,659
</TABLE>
FINANCIAL HIGHLIGHTS
SIX MONTHS YEARS ENDED DECEMBER 31,
ENDED JUNE 30,
1996
(UNAUDITED) 1995 1994 1993 C 1992 1991
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, $ 11.670 $ 10.810 $ 12.330 $ 11.880 $ 11.800 $ 11.430
beginning of period
Income from .359 D .709 .770 .783 .834 .863
Investment
Operations
Net interest income
Net realized and (.478) .858 (1.473) .788 .208 .429
unrealized gain
(loss)
Total from (.119) 1.567 (.703) 1.571 1.042 1.292
investment
operations
Less Distributions (.341) (.709) (.770) (.783) (.834) (.863)
From net interest
income
From net realized (.001) - (.050) (.340) (.130) (.060)
gain
Total distributions (.342) (.709) (.820) (1.123) (.964) (.923)
Redemption fees .001 .002 .003 .002 .002 .001
added to paid in
capital
Net asset value, end $ 11.210 $ 11.670 $ 10.810 $ 12.330 $ 11.880 $ 11.800
of period
TOTAL RETURN B (1.01)% 14.89% (5.82) 13.63% 9.17% 11.77%
%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of $ 859,919 $ 910,084 $ 796,153 $ 952,225 $ 761,683 $ 653,818
period (000 omitted)
Ratio of expenses to .63% A .64% .63% .64% .64% .69%
average net assets
Ratio of net interest 6.36% A 6.24% 6.69% 6.37% 7.01% 7.46%
income to average
net assets
Portfolio turnover rate 35% A 39% 40% 54% 43% 30%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C EFFECTIVE JANUARY 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF INCOME,
CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES."
AS A RESULT, NET INTEREST INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
D SEE NOTE 1 OF NOTES TO FINANCIAL STATEMENTS: DISTRIBUTIONS TO
SHAREHOLDERS.
NOTES TO FINANCIAL STATEMENTS
For the period ended June 30, 1996 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Aggressive Municipal Fund (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 financial
statements have been prepared in conformity with generally accepted
accounting principles which permit management to make certain estimates and
assumptions at the date of the financial statements. The following
summarizes the significant accounting policies of the fund:
SECURITY VALUATION. Securities are valued based upon a computerized matrix
system and/or appraisals by a pricing service, both of which consider
market transactions and dealer-supplied valuations. Short-term securities
maturing within sixty days of their purchase date are valued either at
amortized cost or original cost plus accrued interest, both of which
approximate current value. Securities for which quotations are not readily
available are valued at their fair value as determined in good faith under
consistently applied procedures under the general supervision of the Board
of Trustees.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. 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, which may result in distribution
reclassifications, are primarily due to differing treatments for futures
and options transactions, market discount, capital loss carryforwards, and
losses deferred due to wash sales, futures and options, and excise tax
regulations.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect the per-share allocation between net investment income and realized
and unrealized gain (loss). Undistributed net interest income and
accumulated undistributed
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
net realized gain (loss) on investments may include temporary book and tax
basis differences which will reverse in a subsequent period. Any taxable
income or gain remaining at fiscal year end is distributed in the following
year.
During the period, the fund received payments from the trustees for
Michigan Health Care Corporation, a Detroit hospital system that filed for
bankruptcy in the spring of 1995. These amounts, which were recorded as
income for book purposes, remain undistributed to shareholders pending
determination by the bankruptcy courts as to their classification for
income tax purposes.
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.
2. OPERATING POLICIES.
DELAYED DELIVERY TRANSACTIONS. The fund may purchase or sell securities on
a when-issued or forward commitment basis. Payment and delivery may take
place a month or more after the date of
the transaction. The price of the underlying securities and the date when
the securities will be delivered and paid for are fixed at the time the
transaction is negotiated. The market value of the securities purchased or
sold on a when-issued or forward commitment basis are identified as such in
the fund's schedule of investments. The fund may receive compensation for
interest forgone in the purchase of a delayed delivery security. Losses may
arise due to changes in the market value of the underlying securities or if
the counterparty does not perform under the contract.
FUTURES CONTRACTS AND OPTIONS. The fund may use futures and options
contracts to manage its exposure to the bond market and to fluctuations in
interest rates. Buying futures, writing puts, and buying calls tend to
increase the fund's exposure to the underlying instrument. Selling futures,
buying puts, and writing calls tend to decrease the fund's exposure to the
underlying instrument, or hedge other fund investments. Losses may arise
from changes in the value of the underlying instruments, if there is an
illiquid secondary market for the contracts, or if the counterparties do
not perform under the contracts' terms.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Exchange-traded
options are valued using the last sale price or, in the absence of a sale,
the last offering price. Options traded over-the-counter are valued using
dealer-supplied valuations.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $150,046,955 and $163,620,686, respectively.
The market value of futures contracts opened and closed during the period
amounted to $10,786,379 and $19,413,762, 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 and is based on the monthly average net assets
of all the mutual funds advised by FMR. The rates ranged from .1100% to
..3700% for the period. In the event that these rates were lower than the
contractual rates in effect during the period, FMR voluntarily implemented
the above rates, as they resulted in the same or a lower management fee.
The annual individual fund fee rate is .30%. For the period, the management
fee was equivalent to an annualized rate of .45% of average net assets.
TRANSFER AGENT AND ACCOUNTING FEES. UMB Bank, n.a. (UMB) is the custodian
and transfer and shareholder servicing agent for the fund. The Bank has
entered into a sub-contract with Fidelity Service Co. (FSC), an affiliate
of FMR, under which FSC performs the activities associated with the fund's
transfer and shareholder servicing agent and accounting functions. The fund
pays account fees and asset-based fees that vary according to account size
and type of account. FSC pays for typesetting, printing and mailing of all
shareholder reports, except proxy statements. The accounting fee is based
on the level of average net assets for the month plus out-of-pocket
expenses. For the period, FSC received transfer agent and accounting fees
amounting to $564,401 and $156,052, respectively.
For the period, the transfer agent fees were equivalent to an annualized
rate of .13% of average net assets.
5. EXPENSE REDUCTIONS.
The fund has entered into arrangements with its custodian and transfer
agent whereby interest earned on uninvested cash balances was used to
offset a portion of the fund's expenses. During the period, the fund's
custodian and transfer agent fees were reduced by $1,382 and $4,403,
respectively, under these arrangements.
TO CALL FIDELITY
FOR FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call -
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND QUOTES*
1-800-544-8544
Just make a selection from this record-ed menu:
PRESS
For quotes on funds you own.
1.
For an individual fund quote.
2.
For the ten most frequently
requested Fidelity fund quotes.
3.
For quotes on Fidelity Select
Portfolios(registered trademark).
4.
To change your Personal
Identification Number (PIN).
5.
To speak with a Fidelity
representative.
6.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
ed menu:
PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
dividends).
2.
To change your Personal
Identification Number (PIN).
3.
To speak with a Fidelity
representative.
4.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL
VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS
MEANS THAT
YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO
ASSURANCE THAT
MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN
INVESTMENT IN
A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF
DIVIDENDS
AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES.
TO WRITE FIDELITY
If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and send
you written confirmation upon completion of your request.
(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
100 Crosby Parkway - KP2C
Covington, KY 41015-4399
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
851 East Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19100 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
811 Wilshire Boulevard
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
950 Northgate Drive
San Rafael, CA
1400 Civic Drive
Walnut Creek, CA
6300 Canoga Avenue
Woodland Hills, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
29 South Main Street
West Hartford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
90 Alhambra Plaza
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
4001 Tamiami Trail, North
Naples, FL
1907 West State Road 434
Orlando, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
2000 66th Street, North
St. Petersburg, FL
GEORGIA
3525 Piedmont Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
215 East Erie Street
Chicago, IL
One North Franklin
Chicago, IL
540 Lake Cook Road
Deerfield, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
LOUISIANA
201 St. Charles Avenue
New Orleans, LA
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
7401 Wisconsin Avenue
Bethesda, MD
1 West Pennsylvania Ave.
Towson, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
21 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
29155 Northwestern Hwy.
Southfield, MI
MINNESOTA
7600 France Avenue South
Edina, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
56 South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
505 Millburn Avenue
Short Hills, NJ
NEW YORK
1050 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
1271 Avenue of the
Americas
New York, NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
10 Bank Street
White Plains, NY
NORTH CAROLINA
4611 Sharon Road
Charlotte, NC
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
28699 Chagrin Boulevard
Woodmere Village, OH
1903 East Ninth Street
Cleveland, OH
OREGON
121 S.W. Morrison Street
Portland, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
5100 Poplar Avenue
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
7001 Preston Road
Dallas, TX
1155 Dairy Ashford
Houston, TX
2701 Drexel Drive
Houston, TX
1010 Lamar Street
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
UTAH
215 South State Street
Salt Lake City, UT
VERMONT
199 Main Street
Burlington, VT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
511 Pine Street
Seattle, WA
WASHINGTON, DC
1775 K Street, N.W.
Washington, DC
WISCONSIN
595 North Barker Road
Brookfield, WI
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Fred Henning Jr., Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L Mann *
Gerald C. McDonough *
Thomas R. Williams *
ADVISORY BOARD
William O. McCoy
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
UMB Bank, n.a.
Kansas City, MO
(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
and
Fidelity Service Co.
Boston, MA
CUSTODIAN
UMB Bank, n.a.
Kansas City, MO
(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
FIDELITY'S MUNICIPAL BOND FUNDS
Aggressive Municipal
California Insured Municipal Income
California Municipal Income
Insured Municipal Income
Limited Term Municipal Income
Massachusetts Municipal Income
Michigan Municipal Income
Minnesota Municipal Income
Municipal Income
New York Insured Municipal Income
New York Municipal Income
Ohio Municipal Income
Spartan(registered trademark) Aggressive Municipal
Spartan Arizona Municipal Income
Spartan California Intermediate Municipal Income
Spartan California Municipal Income
Spartan Connecticut Municipal Income
Spartan Florida Municipal Income
Spartan Intermediate Municipal Income
Spartan Maryland Municipal Income
Spartan Municipal Income
Spartan New Jersey Municipal Income
Spartan New York Intermediate Municipal Income
Spartan New York Municipal Income
Spartan Pennsylvania Municipal Income
Spartan Short-Intermediate
Municipal Income
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
